Decarbonising UK heat network can create 20,000 jobs and add £2.3bn per year to the Northern Economy by 2050

20,000 new jobs could be created and £2.3bn per year added to the economy of the North of England if the UK heat network is de-carbonised, according to a new KPMG report commissioned by Northern Gas Networks, which was published today.

The report, Energising the North, finds that by building on existing capabilities and exploiting opportunities in smart power, decarbonised gas and transport, the Northern regional economy (comprising the North West, the North East and Yorkshire and The Humber) would see a boost of over 65%.

The findings also suggest that if hydrogen were to become a key fuel in heat and transport, as is being examined in the H21 Leeds City Gate project, the Northern economy could grow by up to £2.3 bn and create an additional 7,000 jobs.

Energising the North panel at House of Commons

The report demonstrates how the Northern Energy Economy is leading the de-carbonisation agenda in the UK through pioneering projects such as the Northern Gas Networks H21 Leeds City Gate project; the Smart Grids Centre at Newcastle University; the Siemens wind turbine plant in Hull and the extensive electric car manufacturing by Nissan in Sunderland.

It also calls on the government to make low carbon energy a centre-piece of its industrial strategy for the North. This is part of the report’s four part plan, which calls for continued investment in the Northern energy economy, research and development and for the whole energy sector to work together and share innovations to achieve full de-carbonisation by 2050.

The report also details the huge contribution the energy sector in the North already makes to the regional and UK economy. From 1997 to 2014, the Northern energy sector accounted for c23% of total UK economic value for the energy sector. In 2014, the Northern energy sector contributed some £3.5bn in Gross Value Added (GVA) to the regional and UK economy.

The report was launched today at an event in the House of Commons attended by MPs, government officials and representatives of the energy sector.

Speaking at the launch of the report, Mark Horsley, CEO of Northern Gas Networks, said: “We are experiencing a paradigm shift in the way energy is developed and delivered, and this report demonstrates how the North is leading the way for energy innovation across gas, electricity and transport.

“Initiatives such as our H21 Leeds City Gate project, which shows that conversion to a hydrogen gas network is achievable, demonstrate the way in which the North is leading the rest of the country in de-carbonisation technology.

“As the government announces its industrial strategy, we call on them to examine closely the findings of this report and to make low carbon energy investment a centre piece of its strategy for the North.”

Andrew Percy MP, Minister for the Northern Powerhouse, said: “The Northern energy sector is already contributing significantly to the UK economy: from 1997 to 2014 it accounted for around 23% of total UK economic value for the energy sector.

“Now today’s report finds that the energy sector has the potential to increase growth across the North by up to £2.3bn a year by 2050. This growth would be built upon existing capabilities and exploiting opportunities in smart power, decarbonised gas and transport. By making the most of these opportunities, the Northern energy sector can create an additional 20,000 jobs.

“The infrastructure is already in place and the Government is working across the region to invest in, support and develop the businesses required to super-charge the Northern Powerhouse.”

Robert Hull, Power and Utilities Director, KPMG, said: “There is already a strong energy sector in the North, but with the continued innovation in low carbon technology there is an opportunity to drive further economic growth across the region. To deliver this there needs to be a step-change in the approach to energy provision, with increased emphasis on exploiting innovation and gaining efficiencies across power, heat and transport.

“This is why transforming the region’s energy sector should be at the heart of both the government’s industrial strategy, and its Northern Powerhouse agenda. It will be important not to miss this opportunity to realise secure, clean and lowest cost energy while also delivering economic growth.”