20 November 2023

The 2023 National Infrastructure Assessment

On 18 October 2023, the National Infrastructure Commission (NIC) published the findings of its Second National Infrastructure Assessment.

The five yearly review aims to set an agenda for action over the next 30 years, and this second iteration of the report highlights a ‘pressing need to modernise infrastructure’ if the UK is to achieve economic growth and meet its climate goals.

What’s new in the 2023 NIC report?

As with its first report, published in 2018, the NIC’s 2023 report is explicit about the need for significant investment and decisive action. It also restates the need for a focus on the three Cs: congestion, capacity and carbon. This time, an overhaul of the energy system is the report’s central theme and the 2023 report includes bold recommendations on the future role of gas, a call for policy that actively encourages industrial decarbonisation, and a fully-costed programme of government support for households to make the switch from gas for heating.

Let’s take a look at the recommendations which will have most impact on the gas industry, if the government decides to adopt them.


The electrification of domestic heat

The NIC believes that electrification of heat is the only viable option for decarbonising buildings at scale. It recommends that the government fully subsidises the costs of installing a heat pump for one third of households, based on income; with £7K support and zero percent finance for all others to switch to a heat pump or heat network.

The NIC tells us that in the next 30 years, the country will need:

  • a larger electricity system running mostly from renewable power sources
  • heat pumps and networks to replace gas boilers in homes and businesses.

While the move to an electrified energy system makes a lot of sense for domestic users - and enabling more renewables to reach the grid is crucial to net zero progress - the NIC is possibly optimistic about the affordability and feasibility of heat pump installation for many households - and about achieving the transition to electrified domestic heat within the required timeframes. The report recommends banning all new connections to the gas grid by as soon as 2025 and ending the sale of all new fossil-fuelled boilers by 2035.

The resulting increase in electricity demand would also have to be met quickly, reliably and sustainably; no mean feat considering that, according to data from National Grid ESO, around a third of all electricity is currently generated from gas.

These considerations combine to suggest that decarbonising the UK’s gas system should remain a top priority, even if 100% electrification of domestic heat is the eventual goal. By taking a ‘whole system’ approach now, and stimulating investment in hydrogen, biogas and carbon-capture-and-storage (CCS) technology, our government could create a low-carbon gas system capable of supporting energy stability during the net zero transition and beyond, while also reducing the long-term cost of energy for domestic users.

Gas blending  is one of the ways investment in hydrogen could be encouraged. Blending methane with biogas or with up to 20% hydrogen for injection into our existing gas supply would require no new infrastructure or gas system changes, would not require domestic users to make any changes, and would create a sizable and reliable demand for low carbon alternatives to natural gas. This is not necessarily at odds with the NIA’s insistence that hydrogen is ‘ruled out as an option [for heating individual buildings] to enable an exclusive focus on switching to electrified heat’. It would in fact align well with their end-game and help the UK to achieve carbon savings while electrification is rolled out.


The critical role of gas and gas storage

The 2023 NIC report recognises the role of decarbonised gas in building a secure, net zero energy system, telling us that, ‘it’s critical that government establishes effective business models that ‘incentivise investment in large scale hydrogen and gas with carbon capture and storage power stations that can provide electricity even during extended calm or cloudy periods’.

It sees the role of gas as twofold:

  • to generate low carbon electricity
  • to support industrial decarbonisation.

With this in mind, the report recommends that the government increases deployment of hydrogen power stations and CCS, to provide 30TWh of persistent flexible generation by 2035, and scales up the building of hydrogen storage facilities to provide a minimum of 8TWh within the same timeframe.

The report not only recognises the role of gas in electricity generation, it also recommends gas storage as a measure to protect the energy system from price shocks. The ‘strategic energy reserve’ would be controlled by the Secretary of State and could be released into the market to generate electricity and mitigate the impact of geopolitical or other events on energy prices in the future.

It’s important to highlight how critical gas storage will be to creating a secure and resilient future energy system - and the report perhaps fails to recognise its full potential. While electricity storage and demand side response will be able to provide short term flexibility for in-day demand, only gas currently has the potential to provide high volume, long term flexibility over days, weeks or entire seasons. With battery technology still some way from being able to provide the capacity required, it may be that reliance on gas storage becomes a more prominent feature of our future energy system than the NIC’s report suggests. Decommissioning the existing gas infrastructure may not be the wisest way forward.


Decarbonising UK industry

As a part of the fundamental changes which the NIC recommends for our country’s energy infrastructure, the report states that we will need: ‘industry running on electricity where possible, but, where it is not, new infrastructure to supply clean hydrogen, or capture and transport the carbon emitted from burning fossil fuels to underground stores.’

To achieve this, we are told, industry will need clarification from the government on which routes to decarbonisation are open to them, and certainty on which supporting infrastructure will be available and by when. The NIC recommends the development of a hydrogen and carbon transmission pipeline and storage network, with a CCS system capable of storing at least 50MtCO2e by 2035. It also provides a recommended timeline of actions to achieve this, beginning with the setting out of a vision for the initial core network by the close of 2024.


Setting realistic goals for the future

The Second National Infrastructure Assessment report makes for really interesting reading. As an industry, we would no doubt add our voices to their call for improved planning processes, reformed regulation and the removal of obstacles to fast, cost-efficient delivery on new infrastructure projects. We know things can be done better, and that other countries are achieving more, faster. Meanwhile, media coverage informs us that ‘Green experts and campaigners [have] urged ministers to take action on the report’s findings without delay’. Frustration with our government’s failure to take climate action at pace is widely acknowledged, and creating the policy that underpins meaningful infrastructure change is central to that.

Conversely, it’s possible that some of the details within and omissions from the report might raise questions; particularly when it comes to hydrogen, biogas and the use of CCUS in energy from waste plants. While the NIC’s report provides an excellent call to action, collaboration with UK businesses and gas industry experts would help to refine the recommendations made and help the government to plot a realistic and practical path forward.

Get in touch

To learn more about how Xoserve supports the decarbonisation of gas, take a look at our decarbonisation knowledge centre.

If you have any feedback on the 2023 National Infrastructure Assessment, or have any questions or suggestions for our Decarbonisation Team, please email us.

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2023 National Infrastructure Assessment

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