Improved infrastructure is needed across the UK, both for economic growth and to meet climate goals, and is something that can be achieved – as long as the right policy steps are taken now, according to the National infrastructure Commission.
Unveiling its second National Infrastructure Assessment, the Commission set out a programme of transformation for the country’s energy, transport and other key networks over the next 30 years. This includes embracing electrification as the only viable way of decarbonising buildings at scale, cutting reliance on fossil fuels and lowering energy bills over the long-term, as well as to meet climate targets.
This includes backing heat pumps, with the Commission laying out a fully costed programme of support for government to help households make the switch. This would include covering the full cost of heat pump installations for lower income households through to 2035, working out at around £1.3bn a year, with additional support for energy efficiency improvements and devolution to local authorities to make local energy efficiency programmes.
It would also see £1.9bn a year through to 2035 for an initial upfront subsidy of £7,000 to help households install a heat pump or connect to heat networks, in addition to zero percent financing for the remaining costs, as well as £3.2bn a year to 2035 to improve energy efficiency and install heat pumps across the public estate and social housing.
While there has been talk of hydrogen for heating, the Commissioned called on government to rule it out and instead prioritise hydrogen for power generation and industrial decarbonisation. It highlighted the need for new networks to be in place by 2035 to cater for the storage and transmission of hydrogen and carbon, allowing heavy industry to decarbonise and remain competitive in global markets.
It also set out the need for substantial additional electricity storage capacity and demand side response to increase the short-term flexibility of the grid, tipping 60GW being needed by 2035, before also looking at how long-term flexibility from power plants driven by hydrogen, or gas with carbon capture and storage, will be needed. It wants to see effective business models to incentivise private investment in such plants, suggesting 30TWh would be needed by 2035. This equates to around 6% of projected total electricity demand in that year.
However, as the call for business models alludes to, realising these recommendations will call for significant public and private investment in infrastructure to help the UK rebalance its economic geography, meet climate obligations, improve resilience and enhance the natural environment. The government must sustain its commitment to a sharp increase in public sector investment in infrastructure to around £30bn a year until 2040, while private sector investment must hit between £40-50bn over the 2030s and 2040s.
This is going to take a new approach from government to lure in this investment, considering global competition, with the Commission suggesting this should include policy stability; pro-investment regulation; and speeding up the planning system for major projects, especially energy transmission schemes.
