National Gas boss warns businesses could be threatened if network scrapped
The head of the UK’s gas networks has urged the government not to scrap the country’s pipelines in favour of full-scale electrification of the grid, warning it risks jeopardising the viability of businesses and meeting demand to heat people’s homes.
Jon Butterworth, chief executive of National Gas, told City PM that he was “concerned” by proposals from the National Infrastructure Commission (NIC) to scrap support for hydrogen boilers and back electrification and heat pumps.
In its latest annual report, released today, NIC called for the government to prioritise heat pumps and electrification over hydrogen boilers and gas to meet the UK’s climate goals and drive down energy bills.
While Butterworth said he was “delighted” with the NIC’s push for carbon capture and hydrogen usage for heavy industry, he believed electrification would not be viable for smaller enterprises and homes.
National Gas supplies power to major industry, power station and distribution networks, with half a million businesses depending on existing gas infrastructure including industrial estates, restaurants and hotels.
“All of these are businesses intricately on the distribution network, and if you were to decommission the gas system, you can’t electrify these businesses because you need such high thermal energy. It doesn’t really answer what are they to do?” he said.
Butterworth also highlighted 23m homes dependent on gas – roughly 85 per cent of the country’s housing stock – with “no answer” for hard-to-heat homes in the report.
“I worry that there is a suggestion we decommission the gas distribution system without any alternative for millions of homes and hundreds of thousands of businesses,” he said.
GMB, one of the UK’s largest unions, also slammed the proposals as a future option for heating homes, and prioritise electrification and heat pumps.
GMB national secretary Andy Prendergast argued that “ripping out the gas network for 25m homes is expensive stupidity”.
He described the recommendation as “utterly farcical” and feared ignoring green hydrogen would scupper the country’s energy independence goals and risk tens of thousands of jobs in the gas industry.
“Hydrogen gas offers one of the few realistic green solutions for heating available without overloading our creaking energy network. At the exact moment the EU and US are pouring billions into developing hydrogen as a fuel, the UK looks set to throw in the towel,” he said.
GMB represents over half a million workers and has previously spoken out against energy policy proposals, with the union criticising Labour’s calls for rejecting new oil and gas licences in the North Sea.
However, the NIC has determined that electrification is the “only viable option” for decarbonising buildings at scale and slashing the UK’s reliance on fossil fuels.
It also believes this will drive down energy bills and help meet the UK’s climate targets such as decarbonising the electricity grid by 2035 and net zero carbon emissions over the next three decades.
The group calls for £1.3bn per year to 2035 to cover the full cost of heat pump installations for lower income households and £1.9bn per year to 2035 for an initial upfront subsidy of £7,000 to households installing a heat pump or connecting to heat networks.
By contrast, it urges the government to rule out the use of hydrogen for heating homes and focus hydrogen on power generation and industrial decarbonisation.
This decision was welcomed by Octopus Energy, one of the Big Six energy suppliers, with over 6m customers.
Rachel Fletcher, director of economics and regulation at Octopus, said: “Heat pumps already cost less to run than a gas boiler, and the recommendations from this report clearly shows they are the key to unlocking a cheaper, cleaner energy system when supported by the right policy.
“By committing to NIC’s suggestions, we can attract billions in investment to this country, use tech and flexible consumer demand to drive down costs and create more savings for both homeowners and taxpayer.”
Liam Hardy, policy analyst at Green Alliance, believed the report got the balance right between backing hydrogen for heavy industry usage but not for home heating.
He said: “Hydrogen will play a key role in decarbonising several areas of the economy, particularly in industry and the power sector. But it has downsides, being limited in supply at least in the short term, and if it leaks it has a warming impact. Heat pumps are the cheaper, safer, cleaner option for home heating.”
The UK relies on gas to provide heating for 85 per cent of homes, with the country’s housing stock among the least energy efficient in Europe.
Last month, the government bolstered subsidies for heat pumps last month to £7,500 per installation, while also rowing back the transition dates from oil and gas powered boilers.
Westminster’s Science and Technology Committee have also questioned the role of hydrogen in heating homes.
The UK is targeting 10GW of hydrogen generation by the end of the decade, but NIC argues this should be targeted at heavy industry and manufacturing.
These calls were part of a wider push for vast investment in the UK’s infrastructure to boost economic growth, which it warned required a fresh approach from the government.
It has pushed for further stability in the UK’s investment regime – with stable policies to provide investors certainty and build supply chain – alongside reforming the planning system so that major projects can be green-lit more easily, including community benefits in return for hosting key infrastructure.
However, the commission calculates this will require public sector investment to be increased sharply to £30bn per year until 2040 – which is at the top of the funding envelope set by HM Treasury for the Commission’s recommendations of up to 1.3 per cent per year.
Meanwhile, private sector investment will need to increase from around £30bn-40bn over the last decade to £40bn-£50bn in the 2030s and 2040s.
Sir John Armitt, chair of the National Infrastructure Commission, said: “We stand at a pivotal moment in time, with the opportunity to make a major difference to this country’s future. But we need to get on with it.
“People often talk about infrastructure as the backbone of our economy: what our infrastructure needs now is the collective mettle to turn commitments into action that will reap rewards for decades to come.”
A government spokesperson said: “Delivering high quality infrastructure is the foundation of our future growth.
“We are delivering over £600bn of planned public sector investment in infrastructure, R&D and defence over the next five years, including an unprecedented package to improve connections in our city regions and billions to decarbonise buildings”.
The government is expected to respond formally to the assessment within 12 months.