London — The UK will step in and fund the Joint European Torus nuclear fusion program in Oxfordshire, England, if the European Commission drops the contract due to Brexit, finance minister Philip Hammond said Wednesday.
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The minister, in a spring budget statement, also announced a consultation on green gas and issued calls for evidence on offshore oil and gas decommissioning and on a new energy efficiency scheme for businesses.
On fusion, the government would set aside GBP60 million ($79.2 million) to guarantee Torus funding over 2019-2020, "giving the world-leading experts working at the facility certainty to continue their ground-breaking fusion energy research."
And to help meet UK climate targets, the government would consult later this year on the "appropriate mechanism" to increase the proportion of green gas in the grid, "helping to reduce dependence on burning natural gas in homes and businesses," Hammond said.
It would also introduce a Future Homes Standard by 2025, ensuring new-build homes had low carbon heating and met "world-leading levels of energy efficiency," he said.
Hammond also launched a call for evidence soliciting suggestions from the oil and gas industry on how to support the nascent offshore decommissioning industry.
Steps have already been taken to simplify the tax treatment of decommissioning. Now the government wants to ensure ageing North Sea infrastructure is taken out of service with a minimum cost to the public finances. It also wants to encourage the growth of a decommissioning sector able to offer its expertise overseas in other oil provinces.
Industry body Oil & Gas UK expects decommissioning costs to amount to GBP1.5 billion ($2 billion) annually in 2018-27.
Michael Burns of legal firm Ashurst said it was encouraging for the oil and gas industry that the government continued to engage on decommissioning, "so that decommissioning can become a part of the value chain that is capitalized on, rather than generally being regarded as a liability issue."
And while the government had until now focused on decarbonizing electricity, it was encouraging to see the intention "to develop concrete proposals to support investment in green gas," the firm's Antony Skinner said.
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There are already a number of initiatives under way in the UK to move decarbonize gas.
Northern Gas Networks and Cadent -- together with Norway's Equinor -- late last year proposed the conversion of parts of the UK gas grid to hydrogen starting in 2028.
The project, forecast to cost GBP22.7 billion ($29.2 billion), aims to convert 3.7 million homes and 40,000 businesses and industries in the north of England to hydrogen by 2034.
It proposes a six-phase UK rollout that could see a further 12 million homes across the rest of the country converted to hydrogen by 2050.
Cadent is also developing a GBP900 million ($1.2 billion) integrated hydrogen project.
The HyNet project would include construction of a hydrogen production facility in the northwest of England to supply hydrogen to local industry -- such as oil refineries and manufacturing plants -- and heat homes.
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