How does the UK Supply Chain bring about change to support NetZero and the new Hydrogen Strategy?
Adapting to the market not trying to force the market to adapt to us
17 August 2021
Article by Colin Elcoate, CEO of Alderley
Last week’s launch of a new IPCC Report on the science of climate change presents a stark warning on the urgent need to cut global carbon emissions.
While climate change remains a global challenge, the UK supply chain has many opportunities to helping decarbonise the country’s energy system and to support others as economies transition away from fossil fuels.
Indeed, just this week we have seen the launch of a new UK Hydrogen Strategy that aims to ‘kick-start’ a new world-leading H2 economy in the country creating 9,000 jobs and billions of investment by 2030.
As part of the launch, government has published a consultation that examines how the cost gap between low carbon hydrogen and fossil fuels can be overcome. This has all been welcomed by the EIC (Energy Industries Council) that supports the UK supply chain in identifying opportunities abroad.
What is the supply chain opportunity?
Alongside the UK’s first hydrogen strategy, plans are already underway for CCUS clusters to be built across the regions.
It’s right that the UK is exploring two well-established technologies as part of a bundle of solutions to meet NetZero. CCUS has been around for 40 years. Equally, hydrogen technologies have been around decades. For example, Alderley produced its first hydrogen refuelling station over 10 years ago.
What has been lacking is that the two technologies have never been deployed at large scale because of the lack of firm political will and because there was no economic driver for industries to invest in capturing carbon. Why capture carbon when there is no market for the by-product?
First, as we set off on this long journey to NetZero, we need the right political direction and regulatory set up in the UK to establish the foundations for successful CCUS and hydrogen industries to be developed and deployed at scale. The new Hydrogen Strategy is an important milestone in this regard.
If we get this right, the UK will not just be able to decarbonise its own economy but will be able to position itself as an exporter of new technologies and know-how – expertise, innovation, skills, and IP.
The UK opportunity
There is a fantastic opportunity for the UK supply chain to develop new technology and know-how on UK projects in CCUS and hydrogen, which can then be exported around the world especially if this build-out is supported by a strong localisation policy. Moreover, it makes no sense to talk about NetZero but then manufacture low carbon solutions and ship them around the world.
By using its existing knowledge and expertise from decades of work in the energy sector, UK businesses can further build in its network of manufacturing facilities around the world. This isn’t without precedent as UK metering-solutions manufacturers, like Alderley, were able in the past to export their expertise globally.
Lessons have also perhaps been learnt from other industries such as wind where the UK has by far the biggest generation capacity but relies largely on a European supply chain and investment.
This time, for CCUS and hydrogen, we need to ensure that the innovation and expertise is home-grown and that UK supply chain opportunities are maximised.
Key areas of focus for solutions-providers in the supply chain
One thing is clear – there are great opportunities for companies in the UK supply chain to lead new industry areas, the following are just a few examples.
One of the key opportunities for solutions-providers in the supply chain is standardisation. Modular factory-built construction will provide efficiencies by driving down costs, increasing quality and shortening lead times.
As global economies accelerate the pace of the energy transition, we must be able accurately to measure hydrogen and carbon dioxide, as well as other greenhouse gases. In either liquid or gas form, these fluids are tricky to measure to the fiscal standards demanded by other liquids and gases in the energy sector. We will need to develop new innovative solutions to do this.
If we can’t measure these fluids accurately, we’re missing half the pieces of the jigsaw. This is an opportunity for supply chain companies like Alderley and the whole measurement industry to pull together and deliver new solutions with common standards in place.
From a UK perspective, does this watershed moment in the energy transition provide Government with an opportunity to insist on localisation and the potential for joint ventures with UK companies like Alderley?
- Measurement standards
Accurately measuring greenhouse gas emissions is crucial to our world’s future. We won’t be able to measure the impact of new technologies if we don’t have common standards, codes and practices. With measurement specialists like Alderley prevalent in the supply chain, why can’t the UK lead this?
If we’re going to focus on removing greenhouse gases then we will need to upgrade our ability to assess, monitor and audit them.
- IR4 / IoT / Digitalisation
Remote monitoring and measurement augmented by AI and machine-learning need to be built into standardised designs from the outset. This will improve the availability, reliability, safety, and maintainability of new energy systems.
It will unlock cost savings (monetary and carbon footprint) as travel and deployments will be needed less. Maintenance will only be provided when predicted by intelligent systems. This is something important for offshore hydrogen production. The UK has the skills and technology to do this. We just need to build standard designs from the beginning …
Other areas of interest to the UK supply chain will include advanced manufacturing technologies, service and maintenance and of course financing and disruptive business models all of which are part of the bigger picture.
I believe that we’re on the right track to deliver the change that will not only help us make a more sustainable UK and global energy sector but also seize the opportunities to create new jobs, skills, and technology.
The proposed UK capability mapping by UKECS (UK Energy Supply Chain) will quickly highlight areas where the UK has strengths and gaps – this is crucial when scoping a potential new industry opportunity. Government policy will be important also in helping industry fill in those gaps with support on localisation.
Collaboration is key. The UK has an outstanding supply chain and workforce therefore UK content must be maximised. While many of the skills we need are already in the energy industry, skills suited to developing digital (IoT) and modularisation may have to lean heavily on advanced industries such as aerospace, nuclear and telecoms.
There is a once-in-a-generation opportunity for British companies across the supply chain to build new capabilities, innovate, develop, and employ people with new skills to support the world’s NetZero goals.
It is too good an opportunity to miss.