Embedded Greenhouse Gas emissions

Supplying process heat with low carbon emissions to industry is required to avert climate change. One of most credible viable pathways to this is converting Natural Gas into Hydrogen for transport to industry through pipes but also ability to store in salt caverns. Carbon Dioxide that is a by product but rather than releasing Carbon Dioxide to atmosphere capturing the Carbon Dioxide and storing it underground.
This change would increase accounted for costs of energy of industry along the line as would any decarbonisation strategy, but it is quite reasonable for the transition costs to be seen as investment, that is paid back with reduced social costs. It is vital that costs of climate change are (relatively) incorporated into energy use and thus embedded in goods, with any green house emissions. If there is a mis-match between how countries treat these costs it would be reasonable strategy to subsidise these costs to ensure exports still competitive in short term. And a complimentary option is to apply a Carbon Sales Tax where carbon costs not passed through energy costs which would act like tariffs on imports for the embedded emissions within the imported goods, and even services, from countries that did not have equivilant investment in low carbon emission energy. The revenue needs to be recycled to support those affected by costs in form of universal income and/or services, as well as measures supporting translation such as investment in energy saving / decarbonisation. But in medium term if UK had first mover advantage with low carbon emission hydrogen supplied to industry then exports from that industry such as steel and glass and those made with from these such as cars could command a low embedded emission premium, as treaties evolve to take embedded carbon emissions, allowing costs to recovered.

An advantage of moving first to capture carbon dioxide from converting methane to hydrogen is you can do this at a steady state all year round with being able to store large amounts of hydrogen in salt caverns for then supplying the winter heating peak demand as well as industry. With a relatively steady supply of Carbon Dioxide to store this means more efficient sizing of carbon capture and storage, over the sizing just for electric production which would have to be sized for the peak electric and then not used to full outside of that peak time, with vast range of fluctuation. It is critical that we start scaling up rapidly the development of carbon capture and storage. A commitment to convert the gas networks to hydrogen is the best driver for this, underwriting the investment.

Over time you would add in other hydrogen sources than just from Nature Gas (Methane) such as electrolysis using off peak electric surpluses with mass role out of intermittent renewable electric sources such as wind turbines. But at first the best way to scale up is by converting natural gas which leverages the already large amount of valuable assets for supplying natural gas.

For more about converting the existing Gas Distribution Networks to Hydrogen see: https://h21.green/

Also see:

FT on investment costs for decarbonising steel.