This guest Q&A with David Parkin is part of WSP’s energy economies campaign.
What kind of economic impact do you expect HyNet to have on the North West over the next few years?
HyNet enables companies to retain high-value manufacturing jobs through the energy transition. The North West has the biggest manufacturing sector anywhere in the UK, employing some 355,000 people. All of these manufacturing industries will need to transition to net zero by 2050, or they will no longer be in existence.
We will also be building new infrastructure, and that creates capital investment, jobs and subsequently operating jobs for this infrastructure in the future. And a lot of the construction will be local resource, which will create a local economic stimulus.
And we are definitely starting to see investment coming into the region because of the HyNet project. US company Fulcrum BioEnergy, for example, has chosen the North West over other European locations for its sustainable aviation fuel plant. This is partly thanks to its good access to Manchester Airport – but it is also because they can connect to the HyNet system.
What are the challenges for such a large infrastructure project?
What the UK has done in coming up with this concept of a cross-sectoral industrial cluster based on geography – based on place – is world leading, because it allows us to share the infrastructure costs and risks across a number of different types of industry.
The biggest challenge is in unifying the commercial structure, because there is a complex set of interfacing support systems. Hydrogen production has one support mechanism, hydrogen distribution has a different support mechanism, and carbon capture storage has yet another. We have about 40 partners on HyNet, and all of these need to integrate and communicate with each other.
There is some risk involved in the planning permissions and consents and public perception, because this is major infrastructure development. We may face project delays if we need to do more environmental surveys, or if there is concern from members of the public that we have to address.
In terms of technology, however, I don’t think the risk is high: the engineering isn’t much more difficult than regular oil and gas sector engineering or chemical process engineering.
Does the industry receive much support from the government?
The structure that the government has put in place to support carbon capture, utilisation and storage is world leading. And the economics of CCUS have improved simply because of the growth in the carbon price. The support mechanism pays the difference between the carbon price and the cost of capture, so the amount of support provided decreases as the carbon price increases. If the carbon price gets high enough, CCUS will pay for itself.
In the current round of funding and allocation, the government is prepared to support capture of about 3 million tonnes of CO2 from industrial emissions per year. This constitutes only a third of the emissions ready to be captured by companies that want to decarbonise. At HyNet alone we capture 4.5 million tonnes of CO2 today, a figure that’s likely to increase to up to 7 million tonnes of CO2 over the next few years as HyNet grows.
If the government can expand its ambition, then the interest is there in the market sector to increase the volume of carbon captured.
Is there a clear pathway for HyNet to reach net zero?
In our hydrogen manufacturing plant, we will produce CCS-enabled hydrogen – also known as blue hydrogen – using natural gas as a feedstock. In that process, we will capture about 97% to 98% of the waste CO2 and place it in our pipeline to store.
In the medium to long term, we envisage a big role for green hydrogen on the HyNet projects. The challenge we face with green hydrogen is simply a question of scale. Currently, we don't have enough renewable electricity for the demands of the electricity sector in the first place, so the idea of converting this electricity into hydrogen for industry on such a large scale is implausible for the time being.
I think we will see an investment cycle or two of blue hydrogen production, with increasing amounts of green hydrogen coming into the picture over the next few decades as the UK builds more offshore wind.
Find out more about Hynet at www.hynet.co.uk
Want to find out more about delivering local economic growth as part of the energy transition, visit: www.wsp.com/energyeconomiesuk
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