That this House has considered the potential merits of an innovation centre for energy transition in Peterborough.
It is a pleasure to serve under your chairmanship, Sir George. Once again, I have the pleasure of making the case for my super city of Peterborough. In February, I hosted a reception in Parliament to launch the business case for a facility in Peterborough for researching and developing hydrogen technologies. I want to attract high-skilled, high-wage jobs to my growing city; I made that key promise to the people of Peterborough, and this proposal is an excellent opportunity to achieve that as it would bring globally competitive research and development technologies to the UK.
I want the UK be a green, low-carbon economy. We should be proud that we have made enormous strides in that regard since 2010. Investment in technology, not punitive measures that would make working people colder and poorer, is the way to continue the drive towards net zero and make the UK competitive over the coming decades. We must drive productive growth in new industries and technologies.
Partners in Peterborough including the city council, Anglia Ruskin University, TWI and key businesses are developing their case for a high-growth energy cluster at the new university campus on Peterborough’s Embankment. It is the culmination of a 10-year plan to transform the local economy and 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 to the international community’s transition to new energies.
I congratulate the hon. Gentleman on securing this debate, and I support his efforts to increase Peterborough’s potential. Does he agree that if we are ever to come close to our net zero target, investment is needed on a large scale? I support what he is saying and agree that university research, corralling the best and brightest minds, is essential. Does he envisage that that will include university students from across the whole of the United Kingdom and will lead to a UK-wide centre with UK and global benefits?
The hon. Gentleman must have had a sneak glance at my speech, because that is exactly what I am going to say.
We must do that while creating new high-skilled and well-paid job opportunities in Peterborough. The ambition is to create a new research institute called the global innovation centre for energy transition, through which to attract large global energy production companies, including Shell, BP and the Abu Dhabi National Oil Company, and a consortium of domestic industrial high energy users. Foundation industries, such as steel, glass and concrete producers, will 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 carbon dioxide, 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 the establishment of the centre and fund a 10-year programme of research and development worth £150 million. These firms will pool resources, knowledge and investment at sufficient scale, as well as scientific expertise, to generate the enabling technologies to produce new products and systems that will allow the new market to form and grow.
Excitingly, 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, improving access to better quality jobs, and increasing aspirations and wages for local residents. That is important to the UK and to Peterborough.
First, there is the obvious case for transitioning towards more sustainable, greener energy sources. Hydrogen can form an important part of our future energy mix in the UK, but 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. Those include protective inner coatings or non-metallic network materials to safely store, transport and distribute hydrogen. The UK Government plan to assemble sufficient evidence by September 2024 to enable a decision to be made in 2025 on whether to upgrade 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 the transformation.
As I stated earlier, the promise that I made to my constituents was to create a higher-skilled, higher-wage economy. This is part of my vision for Peterborough, and we are making great tracks in achieving it. The innovation centre is part of that, and it will only accelerate the fantastic progress that we are already making.
11:17 am
The Parliamentary Under-Secretary of State for Energy Security and Net Zero (Amanda Solloway)
As always, it is a great pleasure to be here under your chairmanship, Sir George. I sincerely thank my hon. Friend the Member for Peterborough (Paul Bristow) for securing this incredibly important debate, for articulating with such passion and feeling how much he cares for the constituency of Peterborough, and for championing the potential of clean technologies and the significant benefits that they will bring to the UK economy.
Before I get on to the specific topic of the innovation centre, I would like to make special mention of the work that the city of Peterborough is doing, and its green ambitions. Last month, two Peterborough organisations scooped the top prizes at the east of England energy efficiency awards. The first is a cause close to my heart, because green energy is vital to our economy and to the future of our planet, but it is also really important to help vulnerable consumers and to ensure that we are helping on the affordability agenda. The second organisation was Peterborough City Council, which won local authority of the year. The council has helped more than 700 households become more energy efficient in the past year.
When I hear that people are trying to make a difference, I am reminded that the energy transition is all about the opportunities. It is about opportunities for lower bills for customers, opportunities for warmer homes for the vulnerable, and opportunities to create jobs, skills and resilient communities—all of which my hon. Friend mentioned—all while protecting our planet against the worst effects of climate change.
Earlier this month, at the Innovation Zero awards ceremony, I addressed a room of hundreds of innovative people and companies about the multiple benefits of the net zero transition. There is no better place for net zero innovation than the United Kingdom. We have attracted £300 billion of private and public investment in low-carbon sectors since 2010, with £100 billion more anticipated by 2030. That is why I was so pleased to hear about the potential establishment of an innovation centre in the city of Peterborough.
It is apt that we find ourselves talking about hydrogen and its immense potential in the energy transition. The Government see low-carbon hydrogen as a critical component of our broader strategy to deliver net zero and energy security, as well as to create economic growth. We have been delivering our 2021 hydrogen strategy through our £240 million net zero hydrogen fund to provide capital support to low-carbon hydrogen projects, and the hydrogen production business model to provide revenue support.
11:25 am
Sitting suspended.
Many of the foundation industries’ 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 and may present serious safety risks. Significant research is needed to develop safe materials, equipment and operating procedures to allow the transition of those industrial processes from natural gas to hydrogen. There are no other plans in the UK to attract research and development activity in this emerging sector.
Global firms are looking at addressing specific aspects of the broader challenge. Those disparate efforts will create a patchwork of solutions. By attracting a critical mass of the key players to integrate their R&D programmes in the UK, there is an opportunity to lock those firms into a joint endeavour for decades to come. That in turn provides 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 R&D in the UK, expanding the network of UK institutes that can create an anchoring effect, which makes it difficult for the energy companies to disengage and disintegrate their R&D efforts in this specific field. The ultimate benefit of attracting and integrating global R&D efforts is the opportunity to link intellectual property into UK supply chains for myriad technical applications, including design, manufacturing and services.
The second reason for developing the technology and why it should be done in Peterborough relates to the opportunity to develop a high-value industry that can provide opportunities for high-skilled workers and help to level up the regional economy. The business structure of Peterborough has transitioned over the last few decades from industries based in engineering and manufacturing to lower value services in retail, wholesale, transport and storage, accommodation and food services. Employment has remained relatively high, but average wages are 9% lower than the national average.
Peterborough was on a trend towards the classic low-wage, low-skill equilibrium, but in recent years it has emerged as an increasingly innovative economy. It is now among the 15 cities with the highest number of business start-ups and patents in the UK. The move towards more knowledge-intensive industries can also be observed when looking at the make-up of its industrial structure, with five high-performing business sectors, including advanced engineering and manufacturing, agri-tech, food and drink, digital and creative, energy and environment, and financial services.
Making further progress is not without its challenges. Peterborough has for a long time been an education cold spot, with low levels of participation in higher education and low skill levels among the working-age population. It has limited wage and productivity growth, at 6% below the national average. Skills of level 4 and above are lower than in the wider region, but are now improving quickly. We are turning a corner. The new university has helped to turn the situation around and will accelerate the trend, providing the necessary skill base for existing firms and new science and tech businesses that can be attracted into the city by a new research centre.
Although there are signs that industry formation is improving, with new start-ups in knowledge-intensive industries, the local ecosystem is fragmented and lacks strong links to higher education and research institutions. The proposed R&D facility will provide the demand-side driver for innovation and growth. It will accelerate the positive progress we are making with recent investment and levelling-up projects in our city.
The future for Peterborough will benefit from a new rail upgrade with faster links into London and across the east of England to Cambridge and other neighbouring cities and towns, and the development of the city centre around the new station quarter will provide new, affordable, grade A commercial premises that will help to attract new businesses into Peterborough. The regeneration of the station quarter, combined with an R&D facility for green energy at the university campus, will create better links to London and Cambridge, enabling greater spill-out effects.
The immediate benefits of a new research facility and R&D programme stem from rapidly establishing an innovative ecosystem that generates increasing demand for high-skilled workers in Peterborough and the fens. They include the creation of 100 direct jobs in R&D and 200 indirect jobs in related science, technology, engineering and maths activity. The R&D programme will also create 500 indirect and induced jobs through the participation of 150 local firms in global supply chains, as well as new business start-ups and spinouts.
There will be a substantial positive economic impact on Peterborough city and the surrounding region. Investment in the R&D programme will generate a positive impact in new opportunities for graduate-level employment, encouraging both participation in higher education and, more important, the local retention of graduates. As we become a more skilled working city, it is important to retain our graduates. The R&D centre will allow us to do just that.
However, the wider benefits will also accrue to the UK as a whole. The global market for these new technologies is huge. The forecast value of global hydrogen transmission and distribution pipe networks is estimated to be £427 billion by 2050. By anchoring the underpinning knowledge for these solutions into the UK via the global innovation centre, we significantly increase the chances for British firms—those regionally around Peterborough, and those connected through hubs in Middlesbrough and Port Talbot—to be integrated into future supply chains.
Having the technology developed here also gives the UK first-mover advantage for the global roll-out of new technologies. 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 inherent connectivity between the two cities, which will help to rebalance growth across the region.
We will also need to encourage more residents into higher education, enabling access to higher-value jobs. Currently, the proportion of the working-age population with high-level qualifications at level 4 and above is 36.3%. That is below the regional average of 39.6% and the national average of 43.6%. However, that position is also improving, and 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 an NVQ level 4 qualification or above.
The establishment of the 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 is now needed to build on these developments and to raise demand for higher-skilled jobs in the local economy by attracting global firms and connecting research and industry via a bespoke facility and an R&D programme that can translate research into practice in the local economy. That would provide a strong future energy sector focus to what is currently a fragmented innovation ecosystem, and it would harness regional, national and global opportunities in this emerging sector.
The proposals for a global innovation centre for energy transition at Peterborough have the potential to leverage significant economic benefits for Peterborough and the whole UK. The investment proposals are expected to generate approximately £160 million of private sector investment over 10 years from 2025, against a public investment of £30 million. That would provide a benefit-cost ratio of 3.3, which represents exceptionally good value for money.
We need an urgent meeting with Ministers to realise this opportunity for the UK and for my city. It involves several Departments, spanning trade, energy and levelling up. I hope that the Minister can say today that she is willing to take part in this effort, help me convene such a meeting and get the project moving. I am proud of the progress we are making in Peterborough. As I stated earlier—
We have set out our plans to deliver up to 10 GW of low-carbon hydrogen capacity in the United Kingdom by 2030, subject to affordability and value for money. That is why the green industries growth accelerator—GIGA—exists. With funds of over £1 billion, it supports the expansion of strong and sustainable clean energy supply chains across the United Kingdom, including carbon capture, utilisation and storage, hydrogen, electricity networks, nuclear, and offshore wind. GIGA’s ambition is to grow the supply chain for the clean technologies we need for the future. By growing local supply chains, it will increase local skills, as my hon. Friend mentioned, along with the prosperity of the region. From what I have seen already, businesses are clamouring to find, train and keep highly skilled individuals, especially in rapidly growing sectors. To tackle emerging and future workforce demands, we are working with the green jobs delivery group, which will produce a green jobs plan for publication in the first half of 2024.
As my hon. Friend rightly observes in his proposals for the innovation centre, transport and infrastructure are crucial to creating a hydrogen economy. In the British energy security strategy, we committed to designing by 2025 new business models for hydrogen transportation and storage infrastructure, which will be essential to growing the hydrogen economy. My Department is developing business models at pace to provide the necessary support to bring forward that infrastructure investment. Alongside that, we are assessing the growing evidence on emerging hydrogen transportation and storage network needs to determine what infrastructure is required, where and when.
I recognise the role of the proposed innovation centre and its support for the sustainable aviation fuel industry. Building domestic SAF production capacity represents not only a significant economic opportunity, but a way to decarbonise aviation. The UK’s SAF programme is one of the most comprehensive in the world. We have committed to a target of 10% SAF in the United Kingdom aviation fuel mix by 2030. Our jet zero strategy sets out how we plan to achieve net zero emissions from UK aviation by 2050 while continuing to support the growth of this important sector.
Leadership is often said to be the ability to translate a vision into reality. The United Kingdom’s leadership in research and innovation is clear, and it will help us to secure the opportunities from the energy transition. My hon. Friend asked for a meeting across Departments, and I am very conscious that we need to do that; it is very important to achieving our net zero ambition and to supporting ideas such as the innovation centre. I commit today to facilitate that meeting.
I thank my hon. Friend again for organising this incredibly important debate and for reminding us of the importance of this innovation and of how we think about the future of our economy, the climate and our planet. I look forward to hearing further views on this topic.