The Humber is ready, now we need clear and stable policy to deliver - Iain Harris
The Budget brought reduced grant funding for other carbon capture use and storage.
This week’s Budget sent an important signal that the Humber remains at the heart of the UK’s industrial future. Continued grant funding for the Humber-based Viking carbon capture and storage (CCS) project is welcome and so too was the progress on the second round of hydrogen projects and continued commitment to offshore wind.
It wasn’t all good news. The Budget also brought reduced grant funding for other carbon capture use and storage (CCUS) and hydrogen projects, and a move towards loans and equity for projects still in development. As the Carbon Capture and Storage Association has said, this increases uncertainty for both mature and future projects.
What the Humber needs now is clear policy and long-term, growth-focused thinking. We understand the need to prioritise defence, but believe this can be achieved at the same time as re-industrialisation for the region.
Over recent years, the UK Government has run a series of competitions and processes for hydrogen and carbon capture. Each time, industry in the Humber has answered. Companies have mobilised, worked together across the cluster and developed world-leading projects across a range of technologies. Innovative and to be built at scale, they can deliver growth for the region and the country, while supporting the Government’s climate targets.
Together, these projects could unlock up to £44 billion of private investment in the Humber, according to analysis in The Case for the Humber Industrial Cluster report by global management consulting firm Baringa. They could add up to £6 billion in GVA every year and create more than 20,000 new local jobs, while their supply chains reach businesses across the country. This will be a game-changer for the Humber, for growth across the whole UK economy, and for the next generation of industry built in a region that already generates around a fifth of the UK’s electricity.
Yet every time the goalposts move, whether a change to the funding route, a delay to a government project competition, or new market rules, industry must stop, reassess and react. Business models are reworked, investment decisions slip and investors watch how the UK treats the projects it has asked industry to bring forward.
Many of our members are international companies, choosing between the UK and other markets competing hard for the same capital. Uncertainty in the Humber is noticed in boardrooms far beyond it.
The Budget points to loans, equity and the new Energy Wealth Fund. Industry urgently needs clarity on how these will work, when funding will be available and how these options will enable final investment decisions in this Parliament. Without it, projects that are ready to invest risk stalling while the guidelines are rewritten.
Investment in the Humber can protect UK energy security, generate internationally competitive and affordable industrial energy, and deliver decarbonisation at the same time. It can also secure the foundational industries, from chemicals and power generation to refining, that the UK cannot afford to lose.
The Humber is determined to deliver. Our members have done what was asked of them. What they need now is the fiscal certainty and clarity to turn plans into projects on the ground. The Humber Energy Board will keep working with Government to make that happen.
Dr Iain Harris is Managing Director of the Humber Energy Board.