UK at risk of falling behind in race to become green hydrogen global leader, Johnson Matthey says
One of Britain’s biggest companies has warned that the UK risks squandering its lead in one of the most important green technologies because of the government’s reluctance to support its companies.
Johnson Matthey, the chemicals and metals company which is currently responsible for most of the world’s catalytic convertors, told Sky News it has intellectual property which could help the UK become a world leader in the production of green hydrogen.
But it warned that, with the United States now providing hundreds of billions of dollars of subsidies for those making similar products in America, the UK risked losing out on this part of the green industrial revolution.
In an exclusive interview, chief executive Liam Condon said: “I think the risk is that over time we will lose another leading, cutting-edge industry where the UK could be a global champion.
“I think batteries is gone – we’ve lost that. That race is, from my point of view, over.
“In hydrogen, the UK can still be a global champion. But we’ve got to move with a sense of urgency.
“The risk is if we don’t move with that sense of urgency, we will lose that next round of innovation as well. That’s real jobs for the future. Future-proof jobs for the next decade.”
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Could companies building things like industrial-scale batteries soon head across the Atlantic?
Mr Condon’s comments come amid growing consternation that the UK government has so far refused to provide any response to the US Inflation Reduction Act (IRA) – the $400bn set of green subsidies introduced by the White House.
Although the UK has a more developed renewable energy system than the US, the act is designed to incentivise companies to produce green products – be they solar panels, batteries or hydrogen plants – on American soil.
Many companies, Johnson Matthey included, have begun to shift investment across to the US.
Recently AMTE Power, the UK’s only home-grown battery company, told Sky News that it was considering relocating some of its production to the US.
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Subsidies in the United States might tempt one of the UK’s only battery producers to shift manufacturing there, Sky News revealed.
However, while many countries, including the US, struggle to compete with China in battery production, the race to dominate hydrogen remains far more open.
While the quest to turn hydrogen into a mainstream source of energy is not new and frequently suffers from undue hype, even sceptics agree that the fuel will play an important role in the green transition, especially as a backup source of energy for when the wind isn’t blowing and the sun isn’t shining.
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Johnson Matthey produces some of the critical membranes and electrodes used in the most advanced hydrogen fuel cells, not to mention in the electrolysers which can turn water into the flammable gas without producing any carbon emissions.
However, it has already pivoted some of its investment into the US, recently announcing a long-term partnership deal with American hydrogen firm Plug Power.
The chancellor says Britain will have to wait until at least the autumn for more details of its response to the Inflation Reduction Act, and he hinted in a recent Sky News interview that the response may not include many subsidies.
But Mr Condon said: “The lack of certainty and clarity is a problem today.
“A lot of jobs are getting created in the US right now. Some of those jobs could be created in the UK but, because of the lack of clarity and certainty, they’re not.”
A government spokesperson said: “We are leading the world in reaching net zero and are cutting emissions faster than any other G7 country. And the UK is one of the top three countries in the world for our record investment in clean energy.
“We’re investing £30bn to support our green industrial revolution with up to £20bn for carbon capture, utilisation, and storage.
“We’ve also kick-started the hydrogen sector in the UK, with the first projects announced in our £240m net zero hydrogen fund – helping to deliver this new clean power source. This will create thousands of green jobs and help deliver on our priority to grow the economy.”
Business
Vivergo: How US-UK trade deal could bring about collapse of huge renewable energy plant in Hull
The smell of yeast still hangs in the air at the Vivergo plant in Hull but the machines have fallen quiet.
More than 100 lorries usually pass through here each day, carrying 3,000 tonnes of wheat. It is milled, fermented and distilled. The final product is bioethanol, a renewable fuel that is then blended into E10 petrol.
This is a vast operation. It took several years to build, with considerable investment, but it is on the verge of closing down. Management and staff are holding out for a last-minute reprieve from the government but time is running out.
It’s been a turbulent journey. The plant was already being annihilated by US rivals, losing about £3m a month. Vivergo and Ensus, based in Teesside, blamed regulations that enable US companies to earn double subsidies.
They were pushing for regulatory change but then a killer blow: The US-UK trade deal, which allows 1.4 billion litres of American ethanol into the UK tariff-free (down from 19%).
“We’ve effectively given the whole of the UK market to the US producers,” said Ben Hackett, managing director at Vivergo.
“If we were to have the same support that the US industry has, if we could use genetically modified crops, we wouldn’t need that tariff. We would be able to compete. If we had the same energy costs. We wouldn’t need those tariffs.”
The government has the weekend to come up with a plan that could keep the business running. If it fails, Vivergo will begin issuing redundancy notices to its 160 staff.
Ben Hackett
It’s a devastating prospect for workers, many of them live in Hull and are nervous about alternative opportunities in the area.
Mike Walsh, a logistics manager who has been working at the plant for 14 years, said: “It’s not a great place to be at the moment. It’s a very well paid, very high-skilled role and they’ve (Vivergo) given everybody an opportunity in an area that doesn’t pay that well…. The jobs market isn’t as good as what people would like. So it does impact the local economy.”
He called on the government to “help us, save us, give this industry a future”.
His colleague Claire Wood, lead productions engineer, said: “I moved here after a career in oil and gas for 10 years, partly because I want to be part of the transition to renewable fuels. I can see so much potential here and it’s absolutely devastating to know that this place might be closed very, very shortly and that all that potential just goes away.”
Thousands more could be affected. Haulage companies may have to lay off truck drivers and farmers could also suffer a blow.
Vivergo makes bioethanol using wheat. That wheat is bought from farms from Yorkshire and Lincolnshire.
Claire Wood
The National Farmers Union has sounded the alarm, saying: “Biofuels are extremely important for the crops sector, and their domestic demand of up to two million tonnes can be very important to balance supply and demand and to produce up to one million tonnes of animal feed as a by-product.”
Another bioproduct is carbon dioxide. The gas can be captured and used to put the fizz in drinks or injected into packaging to preserve food.
If Vivergo and Ensus were to go, Britain would lose as much as 80% of its output of carbon dioxide. Supplies are already tight across Europe, meaning this decision could compound shortages across a range of sectors, from meat-packing to healthcare.
The industry is calling on the government to help. Vivergo says it needs temporary financial support but that the government must create a regulatory and commercial environment in which it can thrive.
It says rules that award double subsidies to companies that use waste product in their bioethanol must be changed. At present, these rules are being used by US companies that make ethanol from Uldr – a by-product of processing corn. They argue this is not a genuine waste product.
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Another option is to grow the market. Industry leaders are calling on ministers to increase the mandated renewable fuel content in petrol from 10% to 15% and for an expansion into aviation fuels. That would allow British companies to carve out a space.
The government has been locked in talks with the company since June.
It said: “We will continue to take proactive steps to address the long-standing challenges it faces and remain committed to a way forward that protects supply chains, jobs and livelihoods.”
However, the time for talking is almost over.
Mr Hackett said he had no idea how the government would respond but he was firm with his stance, saying: “In times of global uncertainty, losing that energy certainty and supply from the UK is a problem.
“I think what they’re missing out on is the future growth agenda. We’re the foundation on which the green industrial strategy can be built. We make bioethanol that today decarbonises transport. Tomorrow it will decarbonise marine. It will decarbonise aviation.”
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