• Gas Users Organisation

Government funding needs to support a strategic plan for gas

The government's Department of Business Energy and Industrial Strategy (BEIS) is currently consulting over the "Future Support for Low Carbon Heat", which covers the subsidies for gas produced from renewable sources, and the grants for households moving to heating options believed to have lower carbon emissions.

Our belief is that the decarbonisation of domestic heating needs to be achieved in a way that does not adversely affect gas consumers. Gas is popular because it is clean, convenient and relatively cheap.

We welcome the fact that the BEIS has a policy objective of supporting increased injection of biomethane, which is green gas made from renewable sources, however, the question of Feed-in-Tariff tiering (the levels at which the subsidies are paid) cannot be separated at the strategic level, from the proposition from BEIS that only biomethane from anaerobic digestion (AD) will be supported (this is the process where organic fuel decomposes and releases gas), with no proposed support for biomethane (bioSYN) from gasification (a different process of releasing gas where the fuel is heated without a flame - a bit like burning toast - to release gas), and with no support for hydrogen ( a zero carbon gas). Biomethane from gasification can be produced on a bigger scale than from AD, and is necessary to decarbonise the grid.

We believe that it is in the interests of consumers that there should be a long- term strategic commitment to maintaining the gas grid infrastructure, and decarbonising the gas carried by it. Of course, there is an obvious gain to be achieved by blending up to 20% hydrogen into the grid, which the Keele trials have established is safe and effective.

However, the heavy lifting for carbon neutral gas needs to carried by biomethane produced from gasification. The nature of the gasification process means that the supply chains of waste and biomass, and the gasification part of the process, and indeed any carbon capture and sequestration processes, could be repurposed should there be a later switch to hydrogen in the grid.

The Feed-In-Tariffs being proposed under the Green gas Support Scheme are not adequate to support a fledgling gasification sector come down the cost curve from its current development stage (promising, but with higher capital, and engineering, commissioning and procurement overheads reflective of a manufacturing sector in its phase of early adoption), towards the costs that a mature industry would enjoy, much closer to the costs of fossil natural gas.

Indeed, we believe the decision to completely exclude gasification from the scheme is a strategic mistake.

The second part of the consultation refers to the Clean Heat Grant, and we welcome the review of subsidies which we believe reflects the fact that the current subsidies from the Domestic Renewable Heat initiative have not always secured good value for public money: by January 2020, a total of £141.9 million in subsidies has been paid under the Domestic Renewable Heat Initiative (RHI) scheme towards 5812 ground source heat pumps. A huge average subsidy of £24,415 per installation.

We remain sceptical that subsidising the installation of heat pumps is the best way of decarbonising properties that are isolated from the gas grid, given that bioLPG is commercially available from Calor, and can be “dropped in” to properties heated by bottled gas, without any expensive retrofit of their heating system, and which achieve significant, and cost effective, reductions in greenhouse gas emissions

While heat pumps are an efficient form of electric heating, they are not as such a form of renewable heating if the electricity supplied from the grid is from non-renewable sources.

Furthermore, while heat pumps offer efficiency advantages for space heating, they typically do not achieve sufficient temperature to serve domestic hot water, without further lifting the water temperature, either by additional electric resistive heating, or use of gas in a hybrid heat pump system. For that reason, we do not see the logic behind hybrid heat pumps being excluded from the scheme.

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