Chancellor Jeremy Hunt has been warned that the UK will fail to meet its net zero targets unless carbon capture is rolled out at scale.
The Scottish Affairs Committee says Scotland could be the natural home for green hydrogen as the UK looks beyond fossil fuels.
The committee has called on Mr Hunt to use next week’s Budget to confirm that the Acorn project in northeast Scotland, currently on a reserve list, will go ahead.
Existing infrastructure in Scotland allows for opportunities to reform gas into hydrogen at St Fergus, and the nation has access to secure geological storage of carbon due to North Sea oil and gas fields.
Further, the Committee was told at an inquiry that there are 180GW of recoverable installed wind capacity in Scottish waters, which vastly exceeds Scotland’s and much of the UK’s needs, presenting a unique opportunity for the UK to take a leading position in the global hydrogen export market.
Yet despite this, and ambitious targets being set by both the UK and Scottish governments, policy progress appears lacking, says the committee.
Witnesses told the inquiry that there does not appear to be a sense of urgency in the numerous areas requiring attention before hydrogen can be rolled out.
This includes key decisions on hydrogen production, planning decisions, storage and transportation. Interim targets to assess progress and a timeline of when key milestones will be met will be critical for industry confidence.
The committee said it is “disappointed with the lack of priority the UK Government has given to the Acorn Project in St Fergus, Aberdeenshire, bumping it to the ‘reserve cluster’. “
The Committee believes there is no justification for failing to approve the project when it is shovel ready.
As St Fergus is the first landing point for 35% of all natural gas used in the UK, it says the project can take the gas and reform it into clean burning hydrogen with the CO2 emissions captured, removed and stored.
The committee says next week’s Budget provides the ideal opportunity for the UK Government to outline funding details for the Acorn Project to finally allow it to get off the ground.
Scottish Affairs Committee Chair, Pete Wishart, said: “Net zero is little more than a pipe dream without carbon capture.
“The hydrogen potential is clearly there, and our Committee is impressed with projects where energy companies are piloting green energy projects around Scotland making use of our vast renewable energy potential.
“But the twin-track approach that the UK Government is committed to introducing, leaves gaping policy holes: none more so than around carbon capture.
“It is deeply disappointing that the Acorn Project, that already has much of the necessary infrastructure in place, has been put on the back-burner and the lack of any certainty is majorly denting industry confidence. Clarity must be given at next week’s Budget.
“If the policy gaps are addressed, and the UK Government jumps on the opportunities in Scotland, we could be a major exporter of clean energy with thriving clusters and local economies.”
The UK Government is due to make a decision on hydrogen in home heating by 2026. In anticipation of this, the Committee recommends that the UK Government mandates hydrogen-ready boilers in all suitable properties as soon as practicable.