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North West Business Leadership Team STFC, Daresbury Laboratory, Sci-Tech Daresbury, Keckwick Lane Warrington WA4 4AD Telephone: 01925 864186 email: [email protected] www.nwblt.co.uk Sir Mark Walport Chief Executive UK Research and Innovation Polaris House Swindon SN2 1FL 26 February 2019 Dear Sir Mark Wallport Industrial Clusters Mission – North West Industrial Strategy Challenge Fund – Industrial Decarbonisation The North West region is delighted to respond to UKRI’s request for a letter of support for the Industrial Clusters Mission. In this letter we will set out the decarbonisation challenge in the region, the engaged partners, the delivery model and the funding position. The North West Cluster comprising the Liverpool and Manchester City Regions and Cheshire is one of the most vibrant clusters in the UK with a wide range of energy intensive industries. We have already begun to address the many challenges of industrial decarbonisation and the region is characterised by a number of existing complementary initiatives, whose maturity and staggered implementation timescales, we believe, with Government support, will allow the North West to meet the challenge of becoming the UK’s first zero carbon industrial cluster by 2040. These activities are not bespoke to our region however and we are working closely with colleagues in North Wales via the activities of the Mersey Dee Alliance such that we optimise and share learning and maximise the replicability of our successes to other parts of the UK. Innovation will be key to the success of our plan and the region is also supported by a network of experts in the field of industrial decarbonisation, from our major Universities and from the private sector. 1 Regional background The North West region has a long tradition in manufacturing and the Port of Liverpool has served, and continues to serve, as a key international transport hub for imports and exports. The last 40 years has seen the North West build on its traditional strengths in chemicals, textiles, shipping and engineering and diversify into modern high technology sectors including ICT, biotechnology, pharmaceuticals, aerospace, and telecommunications. The region now has the largest concentration of advanced manufacturing and chemicals production in the UK. Manufacturing has remained at the forefront of the regional economy and it retains its position (in GVA terms) as the leading UK manufacturing region. Our challenge With this concentration of successful and growing manufacturing companies, comes the significant challenge of industrial de-carbonisation - the region of north Cheshire alone uses 5% of UK power. Our challenge of developing the UK’s first zero carbon industrial cluster by 2040, will be achieved through harnessing the renewable resources of the region to deliver a multi- vector industry. The delivery of this energy securely, will enable existing industry to decarbonise, whilst simultaneously accelerating GVA growth in the region, increasing productivity and driving inward investment to capitalise on the region’s attractive proposition of zero carbon, low cost energy, skilled workforce and quality of place. We will pioneer the deployment of low-carbon energy resources including wind, solar, smart grid, tidal and small modular nuclear. Our closely coupled energy and industry network within the region, will enable the development of a hydrogen economy to existing and developing industries. Additionally, further decarbonisation will be realised through the deployment of carbon capture utilisation and storage (CCUS) via a uniquely viable low cost and risk approach, facilitated by existing infrastructure. By 2030 this industry and innovation led approach will reduce carbon emissions by tens of millions tonnes per year and create at least 33,000 new jobs. This will set the region on a trajectory to 2050 emissions targets growing employment levels as the collective benefits are achieved. The negotiations held for the challenge Previously, the North West region was characterised by key players working as individual collaborations within LEP or project boundaries, with periodic sharing of knowledge or best practice via industry or public sector energy fora. The negotiations for this challenge have led to the formation of a single entity, encompassing the decarbonisation activities of Liverpool, Cheshire and Greater Manchester, combined with existing industrial clusters in the areas of Hydrogen, CCUS, large scale Smart Grid, Small Modular Nuclear and Tidal technologies. This is the North West Cluster, which comprises senior industry figures at Chair, CEO and Senior Exec level, who themselves represent the interests of many senior industrialists (see below and letters of support), together with senior members of the City Regions, Local Enterprise Partnerships and academic community. This consortium has chosen the North West Business Leadership Team (NWBLT) as the natural focal point, around which to coalesce the various interests. The NWBLT is widely respected and has extensive experience of enabling clear visionary thinking for the region as whole, ensuring consideration and alignment with neighbouring projects to deliver outcomes of regional and national significance. The North West Cluster have now formed a steering group, to co-ordinate industrial carbon reduction initiatives across the region chaired by myself. The group will meet frequently to develop a Business Plan to establish a net zero carbon industrial cluster by 2040. 2 Our industrial support:- NWBLT Hynet Centurion Cheshire Energy Hub LCR Low Carbon Arup Cadent Element Burns & McDonnell Inovyn Energy Atkins CF Fertilisers Inovyn BGS Pilkington BASF Eni ITM Power C-Tech Innovation BOC Linde Electricity NW Essar Storengy Cadent Orsted Orsted Peel Group EA Technology Arup Siemens Progressive Encirc SP Energy Networks Energy Peel Group Essar Cadent Urenco National Grid Alstom Encirc Peel Environemental ABB /Protos Scottish Power Energy BRE Networks Storengy MTC / AMRC Urenco Cammell Laird Jaguar Land Rover Unilever Our industry-agreed method for delivery As discussed, the regional leadership has aligned to create an innovative, sustainable and low- cost multi-vector energy system delivering decarbonisation, energy security, growth, prosperity and opportunities for all. Within this energy system, we will create a zero carbon infrastructure with, CCUS and Hydrogen at the forefront of our activities (inevitably given the scale of the challenge and our own ambitious targets), supported by a wide variety of other industrial low carbon reduction initiatives including large scale industrial Smart Grids, Small Modular Nuclear and innovative Tidal technologies. A brief summary of these key initiatives is as follows:- CCUS and Hydrogen The North West is recognised as having the lowest cost opportunity for CCS in the UK – utilising the depleted Hamilton Gas Field in the East Irish Sea. HyNet1 has received Government funding under the CCUS Innovation Competition to undertake a pre-FEED study for CCUS initially supporting existing business (Essar and CF Fertilisers) with the ability to connect Protos and attract inward investment. The NW Hydrogen Alliance http://www.nwhydrogenalliance.co.uk/ has formed as an umbrella organisation to support hydrogen and CCUS initiatives in the North West. Hynet https://hynet.co.uk/ - Cadent led initiative to decarbonise gas networks across the NW – providing the potential for a 20% blend in the general gas network and 100% supply to industry – centralised hydrogen generation would be supported by CCS. This project has been split into multiple phases to ensure lowest risk, no-regrets deployment of CCUS infrastructure which is hydrogen production ready: • Phase 1: Industrial CCUS with anchor sources at CF Fertilisers Ince Plant (400 kTCO2 / yr) and Essar Oil’s Stanlow Refinery (800 kTCO2 / yr). Storage in repurposed Liverpool Bay fields owned and operated by Eni. Financial Investment Decision in 2022 and Operational by 2024. 3 • Phase 2: Hydrogen Production using Autothermal Reforming (ATR) at Essar Oil’s Stanlow Refinery site, producing 6TWh of low carbon hydrogen (1,600 kTCO2 / yr). Just over half of hydrogen production will be utilised for industrial fuel switching, with the remainder blended into the natural gas distribution network. Financial Investment Decision in 2022 and Operational by 2025. • Phase 3: Further expansion of the regional hydrogen economy (to include further fuel switching and fuel cell applications for transport) and the storage of emissions captured from other industrial facilities in the North West and South Wales (up to 15MT CO2 / yr). Operational by the late 2020s. The project benefits from superb economics measured on a £/TCO2 abatement cost due to the close proximity of storage sites, largely repurposed existing infrastructure and the low cost of CO2 capture, particularly from the fertiliser plant. We are confident that the overall costs of CO2 capture, transport and storage from the HyNet project will be competitive against any other CCUS project in the UK. To facilitate the project, industrial partnerships have been formed and substantial project funding has already been unlocked to undertake technical and project development in four key areas: • CCUS: pre-FEED and Environmental Scoping commencing Mar ’19 (£900k plus substantial self-funding from Eni). Partnership of Cadent, Progressive Energy, Essar Oil, CF Fertiliser, Peel and University of Chester with support from Eni. • Hydrogen Production: pre-FEED of