Wilf Lytton is Senior Researcher at Bright Blue and co-author of Pressure in the pipeline: decarbonising the UK’s gas.
Much of the energy we use in the UK comes from a single source: natural gas. Cheap and plentiful, it is used to power all manner of things – from cookers and boilers to power stations and gas-fuelled lorries – accounting for some 39 per cent of our total energy use.
Like flicking a switch, we hardly notice its existence, but grumble when our energy bills go up. Last year saw gas and electricity prices rise on two occasions, a trend that has become a source of much ire for British consumers and politicians. The energy price cap, introduced earlier this year, is not a long-term solution: it can only guarantee affordable gas prices so long as wholesale costs remain stable. Indeed, energy prices will rise again this April, despite the cap.
Burning fossil natural gas adds significantly to greenhouse gas emissions, particularly from homes and gas power stations. In fact, in 2016, the natural gas contributed to over a third of the UK’s total emissions. The Government faces a significant challenge: to provide the investment and incentives necessary to more deeply decarbonise UK gas, so this country achieve its current and likely future emissions reduction target, whilst avoiding further consumer price rises.
There are no straightforward solutions here, but Ministers can put in place measures that clearly signal to the actors in the gas market they want it to deliver clean and affordable gas. Bright Blue’s report new report, Pressure in the pipeline, recommends new policies.
First, Government needs to enable much greater usage of low carbon alternatives to natural gas. The UK is home to a cottage industry of low-carbon alternatives. In fact, there’s a good chance that a small proportion of the gas that ends up in your home already comes from one of more of the 100 or so anaerobic digestion plants in the UK that are connected to the gas network. These small-scale operations convert the nation’s food waste into biomethane. Biomethane produced in this way has the potential to replace up to 10 per cent of the natural gas we currently use.
The UK also hosts around half a dozen trial projects that are demonstrating the potential for using hydrogen to heat our homes. When hydrogen gas burns, it produces only water, making it one of the cleanest fuels to use. There is also a readily available supply of feedstock from which to produce hydrogen. However, manufacturing it sustainably requires a significant amount of energy, and there are technical challenges around using hydrogen that are still being resolved.
However, just as renewable energy has become the lowest cost form of electricity generation as a result of long-term policy decisions by government, so too are effective policies needed to ensure that environmentally sustainable alternatives to natural gas become the norm. A priority should be for Ofgem to introduce a new ‘low-carbon gas obligation’ in the next price control framework from April 2021. This will achieve two things: it will enable the UK to decarbonise its heating sector and it will do that at the lowest possible cost, without distorting the market, removing the need to subsidise alternatives to natural gas.
Furthermore, existing Gas Safety Regulations that restrict the use of biomethane and hydrogen in the gas network – particularly those concerning safety management and calculation of thermal energy – should be reformed so as to enable a higher proportion of low carbon gases to flow in the gas network.
Second, the UK Government must deliver a programme of energy efficiency improvements in homes across the country. Many of Britain’s homes have languished in a state of poor energy efficiency, leaving householders with expensive energy bills and exacerbating the problem of fuel poverty. It is clear that many homes can benefit from low-cost energy efficiency improvements, but homeowners either lack the financial resources or awareness to implement these.
Historically, Government schemes to improve energy efficiency have been overly complex and poorly targeted. Instead, regulation should leverage the private sector’s ability to deliver improvements in homes. By increasing energy efficiency requirements for boilers and introducing Home Affordability Assessments, private sector actors could be encouraged to deliver energy efficiency improvements to UK homes.
Natural gas remains one of the cheapest forms of energy we have today, though for how much longer that will be true is unclear. However, what we don’t pay for now – its carbon dioxide emissions – we will be forced to pay for in decades to come. Complacency is not an option: we cannot afford to continue burning natural gas for much longer. And the sooner we seriously pursue alternatives, the less costly it will be.