On Friday I found myself, rather unusually as the Member of Parliament for Peterborough, on a site visit to Cambridge. However, I want to reassure my constituents that I was talking at the Welding Institute in Cambridge about a project that could benefit the city of Peterborough. At that meeting, I promised that I would try to raise that project at the earliest opportunity, so I am thrilled that I have the opportunity to raise it in this estimates day debate, as well as to scrutinise the Department’s spending.
I thank my right hon. Friend the Member for Preseli Pembrokeshire (Stephen Crabb) for securing this important debate, because there is an opportunity and an immediate need for the UK to accelerate its transition towards a greener, low-carbon economy, which will drive productive growth in new industries and technologies. Partners in Peterborough, including Peterborough City Council, the mayoral combined authority, Anglia Ruskin University and key businesses, are developing their case for a high-growth energy cluster at the new university campus on Peterborough’s river embankment. The cluster, which is the culmination of a 10-year plan to transform the local economy, will platform technology-focused foreign direct investment in the UK to drive growth in the green economy and address some of the most challenging obstacles in the international community’s transition to new energies.
The ambition is to create a new research institute—the global innovation centre for energy transition—to attract large global energy production companies, including Shell, BP and ADNOC, as well as a consortium of domestic industrial high-energy users and foundation industries such as steel, glass and concrete producers, to develop the new technologies needed for the safe transmission, distribution and use of hydrogen in industrial and domestic applications. The ecosystem created will also focus on related technologies for the storage of hydrogen and CO2, as well as the production of sustainable aviation fuels.
Global energy and technology companies are ready to partner with the UK Government to invest in establishing the centre and fund a 10-year programme of research and development worth £150 million. The firms will pool resources, knowledge and investment of sufficient scale and scientific excellence to generate the enabling technologies to produce the new products and systems that will allow this new market to form and grow. The R&D programme will create opportunities for local businesses and supply chains to link into the research institute’s global network, attracting R&D investment into the east of England from large knowledge-intensive businesses in Europe, the US and the Gulf states. That, in turn, will increase demand for higher-level skills and improve access to better-quality jobs, as well as helping to reverse decades of relative economic stagnation by increasing the aspirations and wages of local residents in a city that, over the past 20 or 30 years, has not received the infrastructure investment it merits. Although Peterborough—my city—is fantastic, it does have pockets of relative disadvantage, and initiatives such as this can help to transform it into a high-wage, high-skill economy.
So why is this project needed? The UK’s natural gas network is currently unsuitable for the transportation of hydrogen, which can permeate and cause failure in steel pipes—a phenomenon known as hydrogen embrittlement.
New transmission networks will need to be developed from new materials, including protective inner coatings or non-metallic network materials, to store, transport and distribute hydrogen safely. The Government plan to assemble sufficient evidence by September 2024 to enable a decision to be made in 2025 on the upgrade of the national grid distribution network. The global innovation centre for energy transition can be operational in 2026 and ready to develop the solutions to enable that transformation to take place.
Additionally, in many of the foundation industries, the process equipment for the production of glass, steel and concrete, although having shown the ability to use hydrogen cost-effectively in pilot trials, is at risk of component failure, possibly presenting serious safety risk. Significant research is needed to develop safe materials, equipment and operating procedures to allow the transition of these industrial processes from natural gas to hydrogen.
There are no other plans in the UK to attract R&D activity in this emerging sector. Global firms are all looking at addressing specific aspects of the broader challenge. Those efforts will create a patchwork of solutions—they are disparate—but attracting a critical mass of the key players to integrate their R&D programmes in the UK offers the opportunity to lock those firms into a joint endeavour for decades to come. That, in turn, would provide the UK with the opportunity to find ways of convening its science base as a partnership—with, for instance, the Henry Royce Institute and the High Value Manufacturing Catapult—to create a solutions network bespoke to the challenges around the transmission, storage and use of hydrogen and CO2.
In a stepwise manner, we can use the opportunity to integrate this research and development in the UK, expanding the network of UK institutes. That would create an anchoring effect that would make it difficult for energy companies to disengage and disintegrate their R&D efforts in this specific field. The ultimate benefit of attracting and integrating these global R&D efforts is the opportunity to link intellectual property into the UK supply chains for myriad technical applications, including design, manufacturing and services. The immediate benefits of a new research facility and R&D programme would stem from rapidly establishing an innovation ecosystem that generates increasing demand for high-skilled workers in Peterborough and the fens, including the creation of 100 direct jobs in R&D and 200 indirect jobs in related science, technology, engineering and mathematics.
The R&D programme would also create 500 indirect jobs and induced jobs through the participation of 150 local firms in global supply chains, as well as new business start-ups and spin-outs. There would be a substantial positive economic impact on Peterborough city and the surrounding region, such that an investment in the R&D programme would generate positive effects on new opportunities for graduate-level employment, encouraging local participation in higher education and the local retention of graduates.
When people become 18 in Peterborough, the thing they often do is leave. We need to keep those people anchored in the industries of the future in my city. However, wider benefits will accrue to the rest of the UK as a whole from this proposal. The global market
for these new technologies is huge. The forecast value for global hydrogen transmission and distribution pipe networks has been estimated to be $530 billion, or £427 billion, by 2050. By anchoring the underpinning knowledge for these solutions here in the UK via the global innovation centre, we would significantly increase the chances for British firms, including those regionally around Peterborough and those connected through hubs in Middlesbrough and Port Talbot, to be integrated into future supply chains.
Having the technology delivered here also gives the UK first mover advantage for the global roll-out of new technologies. What do we need to do to make that happen? The proposal to build a new research institute on the university campus in Peterborough presents a huge opportunity for the regional and national economy. To achieve it, we will need to build on existing expertise and import key elements of the Greater Cambridge innovation ecosystem into Peterborough. Creating connectivity between the two cities would help to rebalance growth across the region. We will also need to encourage more residents into higher education, enabling access to higher-value jobs.
In my area, the proportion of the working-age population with high-level qualifications at level 4 and above stands at 36.3%. That is below the regional average of 39.6% and the national average of 43.6%. However, that position is also improving, as the gap has narrowed by more than half since 2018. If Peterborough matched the national average for skills, an extra 9,130 people would have NVQ level 4 qualifications or above. The establishment of this new university in Peterborough has provided an essential component for an innovation ecosystem investing in human capital to improve higher level skills to meet local economic needs, as well as providing vital interactions between businesses and higher education.
A new research institute on top of that university is now needed to build on those developments and to raise demand for higher skilled jobs in the local economy. It would attract global firms and connect research and industry via a bespoke facility and R&D programme that could translate research into practice in the local economy. That would provide a strong future energy sector focus to what is a fragmented innovation ecosystem, and it would harness regional, national and global opportunities in this emerging sector.
The proposal for a global innovation centre for energy transition at Peterborough has the potential to leverage significant economic benefits for Peterborough and the UK as a whole. The investment proposals are expected to generate £160 million of private investment over 10 years from 2025. There is a need for public investment in this. Against an investment of £30 million, the proposal provides a benefit-cost ratio of 3.3, which represents very good value for money. This global innovation centre would be a game-changer for a city such as Peterborough. It is a drop in the ocean when it comes to overall investment, but it would benefit not only Peterborough, but our green energy future and the UK as a whole, and we could be at the forefront of these emerging technologies.
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