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Northern Gas Networks issues green transition bond for hydrogen network

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Image: NGN

Northern Gas Networks (NGN) has issued a green transition bond, allowing the public for the first time to participate in a hydrogen-ready network.

NGN has partnered with Abundance, the UK’s leading ethical investment investing site, to launch the bond, which will help finance the upgrading of pipelines to ready the gas delivery network for hydrogen transport.

It is the first time a managed electricity provider has sold a renewable transition bond to the general public, helping everybody to share in the transition to net zero emissions.

The investment in Northern Gas Networks Finance Plc aims to collect £1 million in a lower-risk, long-term investment with a 10-year return of 1.6%. The minimum investment, as with all Abundance goods, is just £5.

Unlike natural gas, which is currently exported through the UK’s gas network, hydrogen emits no carbon when used, rendering it a suitable fuel for homes and industry in order to reach the government’s goal of net zero carbon emissions by 2050.

Three-quarters of the region’s pipework has already been converted from metallic mains to polyethylene as part of NGN’s efforts to transition the network to net zero, and the investment will eventually replace a further 2,900 km by 2026. This has two big pollution-cutting benefits: it provides a hydrogen-ready gas network and has an effect on carbon targets by reducing emissions from the network’s day-to-day service.

Heating our homes and industries accounts for one-third of UK greenhouse emissions, raising a major obstacle to decarbonisation. With natural gas heating eight out of ten UK households, the possibility of piping in clean-burning hydrogen as an alternative fuel provides promising prospects for the transition to a low-carbon electricity future.

The UK energy sector is facing an exciting transition. Whilst focus is often placed on how energy production must change, the networks that distribute our energy must change too. At NGN, we’re delivering on a clear plan for a Net Zero carbon network by 2050. Working in collaboration with our regulator, Ofgem, central government and the energy industry across the UK, our research is proving that hydrogen offers a safe, affordable and deliverable Net Zero solution, and with this investment we want our customers to be involved in this important transition. Repurposing the gas network to transport hydrogen is likely to be the least disruptive and most cost effective solution to zero carbon home heating for the vast majority of the UK homes.

Mark Horsley, CEO, Northern Gas Networks.

NGN provides gas to 2.7 million households and businesses throughout the North East, Northern Cumbria, and most of Yorkshire and Humber.

Subject to Health and Safety Executive clearance, NGN will begin selling a hydrogen-natural gas mix to 670 homes near Gateshead in late spring 2021. Later this year, they expect to conduct their first live trials of 100% hydrogen on an unoccupied portion of the network.

We want to give the communities we serve the opportunity to help with this transition by investing directly into our pipe replacement programme. It provides a means by which we can engage with each other on the energy transition, build trust and create a roadmap to Net Zero that feels like a just transition for all.

Gareth Mills, NGN’s Director of Regulation and Strategic Planning.

Abundance’s customers want to back a range of solutions to deliver a Net Zero future, and this is the first time we’ve been able to offer them something that directly tackles heating in the home. It’s also the first time we’ve worked with a major utility which has chosen crowdfunding to enable their customers to participate directly in the Net Zero transition. The development of hydrogen, alongside other technologies like heat pumps, offers a practical solution that will make a real difference to cutting emissions. The UK needs urgent investment in the infrastructure that can deliver this if we are going to meet our targets to decarbonise how we heat our homes.

Bruce Davis, co-founder and Managing Director, Abundance.
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