After the Trilemma – Greg Clark announces a new policy direction
Secretary of State for Business, Energy and Industrial Strategy, Greg Clark today announced that the electricity trilemma requiring government to balance the competing demands of energy cost, security and carbon emissions was coming to an end.
In a speech responding to Dieter Helm’s controversial cost of energy review, Clark set out a new direction for energy policy, declaring that “cheap power is now green power… the policy dilemma as the trilemma is coming to an end. This new direction is to be built around four principles; market, insurance, agility and no free riders. Clark embraced Helm’s recommendations to allow businesses to have more control over energy markets but stopped short of announcing large-scale reform. He stated that the Government would still intervene on issues of insurance and optionality. He also announced a series of regulatory reviews to ensure that new technologies such as storage and demand side response are able to compete across energy networks.
Clark recognised the intrinsic uncertainties in our energy transition and stated that there was no way to assign probabilities to heat decarbonisation pathways. Hydrogen or electrification, we just don’t know! Similarly predicting what the mobility market will look like in the future is difficult.
Clark also promised that the UK would develop a new Carbon Capture, Utilisation and Storage (CCUS) action plan to deliver the technology at scale in the 2030s, dependent on the cost reduction of the technology.
What does this mean for hydrogen?
The trilemma might be over for the power sector, with cheap renewables on the rise, but the battle to decarbonise heat and transport rages on. Hydrogen offers an opportunity to use those gains made by the power sector to decarbonise those tougher energy domains. Electrolysis must be considered in regulatory reviews as a means of providing flexibility and storage as well as cross sector decarbonisation.
The endorsement of CCUS by the Secretary is very welcome as a key enabler of clean large scale hydrogen production through steam methane reforming. To date, this has been the key missing puzzle piece for Hydrogen projects such as H21 and HyNet that are working towards decarbonising the natural gas grid through conversion to hydrogen produced in this way.
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