5. Industry, Innovation & Investment: Wales’ Net-Zero Future with Ben Burggraaf

Heavy industry is at the heart of the net-zero challenge - powering modern life while producing a significant share of global emissions.

Karen Brooks is joined by Ben Burggraaf, Chief Executive Officer of Net Zero Industry Wales, to explore how sectors like steel, cement, chemicals and manufacturing can decarbonise, and what it will take to drive innovation and investment at scale.

Because this transition isn’t just about cutting emissions - it’s about building the infrastructure, investment and policy to make change possible.

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Transcript

SPEAKER_00 0:16

Heavy industry sits at the heart of net zero challenge. Across the world and particularly here in the UK, sectors like steel, cement, chemicals and manufacturing are responsible for a significant share of emissions. But these industries also support thousands of jobs, regional economies and materials that underpin modern society. In Wales, that question is being tackled head on. Net Zero Industry Wales brings together some of the country's largest industrial players working collaboratively to accelerate decarbonisation across the industrial clusters. Today I'm joined by Ben Bergeraff, CEO of Net Zero Industry Wales, to explore how Welsh industry is navigating the transition to net zero and what role hydrogen could play in powering the industries of the future. So, um Ben, welcome. Thank you for coming to join me today. So tell me a little bit about what you do at Net Zero Industry Wales and what your objectives as CEO are.

SPEAKER_02 1:21

So thanks, Karen, for having me in the first place. Yeah. I'm pretty very welcome to be here today to talk about what we do in Net Zero Industry Wales. Um, NetZero Industry Wales is actually a spin-out of the South Wales Industrial Cluster, um, also known as SWIC. That actually was part of the six clusters that were uh formed and also were supported through the Industrial Decarbonisation Challenge Fund that Innovate UK ran on behalf of DESNES. And that again was in response to I think the original 10-point plan that was published by I think Prime Minister Boris Johnson at the time to have four uh industrial clusters decarbonized by 2030. Um, I think once the kind of project that we call the Insight Wars Industrial Cluster came to an end, the industrial um uh parties that were part of this kind of larger collaboration they approached Walsh government and said it would be great if we could have a not-for-profit independent company that helps with the implementation of the plan so the plan actually could be stayed uh current because the moment you publish a plan it is already out of date the day after it was published. So, um, but also really how to work in a collaborative way with uh with government uh on that implementation. So we are a private public sector partnership, so 50% of our core funding comes from Welsh government, uh and the other 50% from from industrial um uh partners. Welsh government actually agreed um to that, but on the condition that it became a pan Wales organization rather than only being South Wales centric. So we're not only uh supporting the South Wales industrial cluster, we've also been uh helping um uh the kind of like Northeast Wales industrial decarbonisation cluster set up, which is a primarily D site and Rexum. Um they also have about two million tons of emissions, uh and uh under that kind of like uh cluster heading, we've also developed a done a cluster plan there as well with Innovate UK uh support as part of the dispersed cluster funds. But they all have come to an end now, and we now find need to find our own way of actually still uh ensuring that those plans are implemented.

SPEAKER_00 3:37

Okay, because you've got a f another four years before you get to 2030. Um so how are you doing on implementing those plans and getting to that decarbonisation?

SPEAKER_02 3:49

Uh I think we're doing better than three years ago because we're we were established in 2022, we're going for just over three years, it'll be four years in October. I think there are a couple of key things missing, particularly in Wales, and that's particularly around infrastructure. So we see in North Wales, actually, in Northeast Wales, we see actually a good kind of level of um progress, particularly um I think in the wake of the high net cluster. So you see Pagewood Cement, but also projects like Konoski Power Station and the uh ParkEtfer from Infinium actually starting to get into the track one kind of process, and that enables those kind of like companies to start their decarbonisation journey, and it's it's a significant proportion of the Northeast Wales emissions. But what we see in South Wales is we're fully dependent on what we call non-pipeline transport of CO2 because in South Wales we don't have a large um CO2 store on a doorstep, and um, therefore, we have to have a shipping solution, or also sometimes called a non-pipeline transport solution, that enables some of the businesses that fully depend on um on carbon capture and storage to actually start to decarbonize. Now that NPT element is also important in the same way that actually CCS clusters are very important to initiate large-scale hydrogen production. You see that in high net where CCS and hydrogen are fully integrated with each other.

SPEAKER_00 5:22

Um, we also can I just ask you about CCS.

SPEAKER_02 5:24

Oh, it's carbon capture and storage. Oh, of course, yeah, yeah, yeah.

SPEAKER_00 5:28

So just try not to go too much into acronyms, yeah.

SPEAKER_02 5:35

Yeah, so CCS is carbon capture and storage. Um, and I think for large-scale hydrogen production, we found also through all the cluster plan development that actually you need to have some form of what they call blue hydrogen, so that this natural gas that it will convert it into hydrogen and the CO2 you then capture and utilize and uh utilize the CCS or the carbon capture technology storage technology for to actually create that large-scale hydrogen production, and that's really important for future pipeline development, particularly if we want to produce hydrogen in a resilient way for larger industrial um natural gas users, and they want the fuel switch. Now, if you look at the carbon capture storage element as well as hydrogen combined, uh uh provide around 70 to 80 percent of the total emissions reduction for industry in Wales, and so it's a really large element of that.

SPEAKER_00 6:28

Yeah. Um what about green hydrogen though? Should should that be in the mix?

SPEAKER_02 6:34

Oh, absolutely, yeah, yeah. Any colour of hydrogen. I don't like to talk about green, purple, yellow, whatever colour that might be. I think we're talking about in general about low-carbon hydrogen. Uh, and so I think everything is in the mix, and particularly when we see um in 20, 30 years large volumes of floating offshore wind, or I have to say nowadays deep water uh wind, because some of the deep water wind solutions are not necessarily floating solutions. That's a whole different podcast of its own, I think. Yeah, we won't get that. Um but once that starts to be deployed at scale, I think then I think hydrogen also starts to play a role, particularly with utilizing um that source of energy in a much more efficient way. So, this what they call this dual vector approach, not only producing electricity but also hydrogen from from from wind, offshore wind, I think will become a really important part of our overall resilience kind of story. Um, and we see some of those kind of projects start to emerge, and particularly with dolphin hydrogen, uh, where I think they're developing a world's first floating or deep water wind generation combined with uh electrolysis using seawater. And they want to scale up very rapidly. So, as part of our hydrogen valley bit, what we're currently are are putting together and want to submit on the 15th of April, you see some of those um projects actually staking forefront to center. It's a very innovative because it falls effectively between the contracts for difference, also known as CFD, as well as the hydrogen accelerator round hard kind of process because you factor you have two projects. You have a wind project and you have a hydrogen production project that are actually co-located at the same location, yeah, and there's no actually grid involved. So that's the kind of like interesting about that that particular project. But yeah, it plays a really important part uh of the overall mix.

SPEAKER_00 8:36

So they'll actually be producing hydrogen out at sea or back uh uh back on land?

SPEAKER_02 8:42

Uh in in the dolphin hydrogen um specific option there is it's it's only uh directly offshore production of hydrogen. Okay. Um once it gets up skill, they even want to put a pipeline in. And that's again, it's an is a it's a complex regulatory challenge as well as a technological challenge. But yeah, that's all all in development.

SPEAKER_00 9:03

Okay, and and you mentioned regulation there. Um what for you in in uh South Wales it's obviously um GW Shift's uh region, but you're you're looking at the whole of Wales. What's the biggest um challenges that you need government to fix for you um to really get to that decarbonisation? Is there anything, is there regulation that's needed?

SPEAKER_02 9:27

I I think there is, I think definitely regulations needed. I think particularly when we talk about hydrogen pipelines. So the hydrogen transfer business model um I think is really important to unlock investment into larger scale hydrogen pipeline. So it was great to see. I think a couple of weeks ago where um Destnes announced the support for a hydrogen pipeline, I think, um co-located with the East Coast kind of like carbon capture storage kind of cluster. Um, but yeah, that's a really important element, and currently uh investment or ongoing kind of like development expenditure, so expenditure, or costs that are basically incurred by detailed design processes for those pipelines are currently not allowed to be spent under the kind of regulatory regime, um, I think it's off-gen. So um, and I think that kind of like uh is currently halting quite a lot of the development and progress um for hydrogen pipelines in South Wales but also in North Wales. So we have two projects: one is called Highline Cymru, which effectively in its first phase connects Milford Haven up to Port Albert, but we also have a project that's called Highline Cymray Goglet, which is North Wales, and that connects up D-side with Wrexham and builds on the kind of high nets across border then into from the northwest of England into into D Side up in in northeast Wales and then goes down into Wrexham and connects up one of the largest industrial states uh in Europe, um but yeah, regulation plays a really big role, and that uncertainty is not helping the situation at the moment because it's not very clear when when these companies like Wales and West Hatilities are actually able to start investing in those pipelines. And I think they're eagerly awaiting the hydrogen strategy which is still due out from UK government. Um but Welsh government already has been very clear about the role that these hydrogen pipelines plays in order in for them to actually reach their own carbon budgets and particularly 2035 and and beyond. And so they already spelled out the need for these hydrogen pipelines. But I think that's the biggest regulatory hurdle with regards to hydrogen specifically, and as already said earlier, that the non-pipeline transport element is also intrinsically linked to this, and again, we haven't got any certainty yet on uh whether they can access these CO2 uh business models as well. And currently that's only accessible for um pipeline connected projects at the moment. Again, we see change there where I think that they're planning to open up a Pathfinder process um later on this year for the East Coast cluster, as well as they're currently consulting on the non-pipeline transport and how that should be implemented in in the UK. And so that I think we see how they call the real kind of like change of that space. Um, but I think we're still at least five to seven years away before we see any of those projects really coming to fruition and making significant changes to our emissions. Um so I think we still have a bit of a long time to go.

SPEAKER_00 12:46

And is it is it all about emissions or is it um you know uh the recent activities that we've seen in the Middle East, you know, is it more about energy security now or or does it is it all still focused on that decarbonisation?

SPEAKER_02 13:04

No, I think you're right, Gary. That's a good question. I think it's not only about uh decarbonisation. I think but I think the the production of an abundance level of uh of low carbon energy, I think we already see it attracts a lot of investment in other places like Canada and Scandinavia, particularly predominantly nuclear and and um and hydroenergy are driving some of this. But I think it is for South Wales, but also to a certain extent to the northeastern Wales, the opportunity to almost um reinvent itself and actually restart a new some people called green, I would say low-carbon industrial uh energy uh revolution. Um, and I think that is a really important aspect because I think if you look at Welsh's manufacturing base, uh has seen many companies close over the last 20 years. We've seen a lot of deindustrialization, and that's not only for South Wales the case, it's also for the northeast of England for also Scotland. Uh, Grange Mount is a good recent example of that, or I have to say a bad example because it's it's a not a very positive story. Um, but I think it's a real opportunity to reinvent itself and find a new way of becoming globally cost competitive over a long period of time. This is not a silver bullet, but I think this transition to lower kind of carbon sources, I think it's uh it's something that is is will continue even despite the kind of negative political connotations now around net zero. But it's really important to get energy security and become uh create a bit of sovereignty as well in our manufacturing process. And I think recent events, whether it's um the the the invasion of Ukraine, but also more uh recently the the Iranian kind of uh and Gulf kind of uh the kind of Middle East conf conflict. I was seeing how they called really kind of like uh our vulnerability with regards to energy costs, and that energy security piece will come in, and then on top of that, we have our global race for materials, whether it's rare earth materials or or any other kind of raw materials. So I think we need to be in a position in Wales, uh, but I think why the UK that we become actually much more inventive about keeping materials in our own nation so electric vehicles once the end of life, make sure that we don't let them leave the UK, find a way of recycling that lithium so we create some sovereignty, and I think that that kind of like circular kind of thinking about actually making better use of the materials we have in the UK and be less dependent on importer materials from elsewhere. I think will be an also a väldigt part not only from an ekonomik perspektiv, but also I think from a strategic and defense. And so I've seen key projects to actually recuperat ra material från existing industrial waste hägelt streams like for example, as mounts from kohl först. There's actually a real kind of impetus around that again. Hydrogen plays an inkly important role in there of refining those materials and making sure that they actually are meeting similar levels of quality as an important kind of equivalent would have been so, and raw um material. So that's again a very interesting thing. And we're currently working, um, we have submitted a local innovation partnership fund bit that actually really features that material security and energy security online alongside of each other, and we call it industrial resilience. And I think that is ultimately the aim, I think, of um of some of the work we're doing is to to instill that industrial resilience in the in the kind of like industrial heartlands of Wales and make sure that those jobs can continue to go, but in a way that is actually more uh sustainable uh to the environment, but also much more sustainable uh from an economic perspective, because a lot of those businesses have not been financially sustainable for the last decades.

SPEAKER_00 17:19

You know, we talked a little bit about industry and government, and where does academia come in here? Is it needed to uh develop these plans or to deliver these plans? What's your thoughts around that?

SPEAKER_02 17:31

I think we're already ventured on the role of academia firstly is to help train our people, isn't it? Because academia in principle are educational institute, and they really provide us with the talent of the future and particularly fill those jobs. So um I think that's a primary. I think research is also a very important element to this. And that's not only important now to actually reduce the kind of burden that's that sits with UK like HM Treasury at the moment, yeah. Um, but also I think on long-term post 2020 to make the industrial heartlands we talked about cost competitive because energy is a really important cost element to that. So if you already start to build in long-time additional energy costs over time, you make them inherently less competitive for the long time when the government support will drop out, and that will be over 20 years. So I think this is where academia and ongoing um innovation plays a big role, and we've seen that actually happening in the launch pad. So we run a launch pad in South West Wales, where hydrogen again was a really important theme alongside circular economy as well as offshore wind. And we've seen projects like um marine power systems that actually are developing more cost-effective kind of like floating, or I have to say deep sea structures because they're not floating, they're technically actually fixed to the bottom, but other with a very long adequate uh connection. Um and these kind of like projects are they're aimed to bring the cost down of a given wind turbine solution, and and we've seen similarly projects being supported there on bringing carbon capture storage technology, particularly for food and beverage companies, uh, and they're claiming to be only currently a third of the price of what currently is is done through aiming technology. So I think these these projects, if supported with innovation, I think with support of academia, can really start to to turn the dial on this um carbon versus cost kind of discussion and bring them much closer together.

SPEAKER_00 19:35

Okay, which it's definitely needed. So um so Ben uh you know planning for these things, um, you know, whether it be for um uh you know, in terms of the communities they're going into or um the energy infrastructure, we've talked about how um it's not just about hydrogen. You you joked about my uh title of this podcast, the only way is hydrogen. How do you plan for what the energy system should be, what it should look like, and and how important is that for Wales?

SPEAKER_02 20:11

Really, I think when you talk about regional infrastructure, it's not only informing those strategic plans, but it's also then needs to be coming through HM Treasury with the appropriate level of support that is equivalent to its emission burden to actually enable that that infrastructure to actually be built. And I think that combination is really important when it comes to um regional infrastructure and and and all the decisions that come with it.

SPEAKER_00 20:37

Yeah, okay. So um what you're kind of really saying is that that investment, I mean, you're talking about Wales, so in the GW shift, we talk about um the southwest as well, which uh also has um areas of of low uh employment and has industrial pockets, not like uh we see in Wales, but those areas haven't had the same kind of investment because there was this levelling up and people look to the north um and then into Scotland. But actually, there's a lot going on in this region that can really help in terms of the uh development of the economy uh across the UK.

SPEAKER_02 21:17

Yeah, I I think that's that's just good. I think I think what's been not V very visible to other parts of Wales. I think Wales has inherent nature um to actually do things quietly well, not scream about it. So they have not been very good in in really bringing out the business case in the same way. I think the Northern Powerhouse has done that fantastically. I don't think it's it's a it's it's lock, or it's actually it's it's like a it's it's something that that's just come out of nothing. I think there's been a clear, consistent kind of messaging coming from that. And I think we start to see that team will's approach in the same way that's happened in the northern northern part as well. Um is to come through. Through and say we actually have a really strong portfolio of projects that actually could make a really large, meaningful contribution to the economic growth objectives of the existing government. So please also spend a problem to actually support those because if you unlock that, that could actually have a real good impact on the growth aspirations, but also it enables what we call this just transition. Because I think when you're going through this kind of process, you you can't leave people behind and regions behind. I think there needs to be a much more concerted effort in how do you actually distribute these kind of like support mechanisms more equally over a longer period of time to different regions. So I think North of England is currently in pole position, they're doing things well, they're implementing stuff. I think the time is coming now for other parts of the UK, Scotland and Wales, to get its own kind of uh equivalent to also allow them to transition in that way.

SPEAKER_00 23:04

And it has it has the right resources and infrastructure and a plan.

SPEAKER_02 23:08

It is as a plan. I think that's the important thing. And a strong investment case. So we've done all the numbers, we've run all the numbers. In the past, people were questioning is it value for money? I think it is really value for money. So this factor three that often has been referred to as every pound of taxpayer money needs to generate three times as much radical value. I think we can really meet that in Wales overall. Yeah.

SPEAKER_00 23:34

Are we punching our weight in the world on uh our transition to um more cleaner energy?

SPEAKER_02 23:42

I I think we're not um even close to our potential. I think but that's the important part. We have a lot of potential. I think there are some like the reason why industry hasn't been doing very well and aren't competitive at the moment is is because it has always been, particularly after the closure of the coal mines, been dependent of increasingly dependent on imported raw materials as well as imported fuel. Yeah, so um and I think the fact that we had a lot of abundant source of of energy on our doorstep in oil or gas, but coal, particularly in South Wales, allowed us to actually absorb the additional cost of importing those raw materials and still have a competitive, high-quality product, then you're going to lose the battle from a competitiveness perspective. And I think a lot of people don't appreciate that actually those those larger corporations they have to run 48 years, 48 weeks of the years to break even, and the last four weeks, if they run well, it's profit, and that's wiped away with just an energy spike or a shutdown because they have the wrong raw material, you know, all of that. Any operational instability will cause that, and that also makes them inherently conservative. Yeah. So I think what actually the transition means and the fact that we have an abundance of carbon storage, we can store much more than we ever will emit in Europe, and we have the ability to store for most of Europe. What a competitive advantage is that. If you think about that, then I think that becomes a really important differentiator in the very long term. And we talk about post-2040, 50 when we deploy all that. But that makes UK again almost the envy of the rest of the world if we do it properly. And I think that's the potential people talk about. But we have to go to this transition period and we have to have the patience. We need to have also the kind of like resilience in and also in the belief that this is the right way to go in order to get prosperity for our future generations.

SPEAKER_00 26:04

And is that part of the issue really that um we see whether you know it's it's government, it's industry, it's um technology development, that it's about jam in the future rather than jam in the today. And people want the jam today, they want to see energy prices going down, they want to have jobs, they want uh you know good growth in the in the country, and they want it sort of immediately, but we need to play a longer game.

SPEAKER_02 26:37

Yeah, but you are like like if you you do it from a business perspective, you don't only focus on the jam of in 10, 20 years' time because you run out of business, you don't have a business anymore. So I think you need to do all of it, but but but you can't just have one in the expense of the other.

unknown 26:55

Yeah.

SPEAKER_02 26:56

So I think like what we tend to do is to focus the limit the resources on the stuff that actually hurt us the most now. And I would really advocate that we start to really think about what are we doing, had to go, now to resolve the issues, but then the other part needs to be used in order to get really into the space that we actually are looking at the long term, and that's I think Norwegians have done that really well with their oil funds, and I think this is a famous story and a well-known story that 50% of all the revenues they put into a sovereign wealth fund, and that not only pays for their investment kind of like into renewables and other stuff, but also pays for their equivalent in the NHS and other social security. And I think it's and and but the other 50% we use then to to relieve the pains of the here and now. I think we need to go to a similar model where we not only reduce the pain of the here and now, because I think that's really important, but also I think we'll think about what we can do in the long term to to really make best use of that enormous potential that UK has, in particular in a world which needs to be less dependent on fossil fuels, like we've been historically, in order to mitigate some of the kind of like changes that we've we will see as a result of climate change.

SPEAKER_00 28:19

Yeah, and the and the variables that we see that that come which we couldn't predict as well. And so I I just wanted to pick up on you talked about um you know industrialization, industrial revolution. Are we now talking about an energy revolution that could what be what uh uh makes the UK a really prosperous place in the future?

SPEAKER_02 28:44

I think it's not only an energy revolution, of course it's an energy revolution because we uh we want to be shifting towards less fossil fuels. So we have currently an economy that's in Wales is over 90% dependent on fossil fuels. I think it's also I think an industrial revolution in the sense that that link to the point earlier made around materials and the use of AI and other kind of like technologies that will emerge. Um so it's not only where we get the energy from, it's also how we utilize that energy and how do we utilize that energy to actually make better use of the materials we already have. And I think that needs to venture into also other kind of sectors, like for example, I always say to people, okay, why are we first designing the buildings, then creating the bill of materials, and then sourcing the bill the materials from other places of the world rather than actually saying, you know, what materials are are being created on our doorstep, what kind of building can we create as a result of that, and design something like that, whether it's with wood or with steel or you know, rather than having to get ethical equipment all the way from other places of the world, and I think it that is a whole different way of thinking, and then on top of that, we have to then think about okay, when we design these kind of new structures, um, cars or whatever that is, are we actually designing them to also be disassembled and actually reused again? So, so in order to have really high-quality steel, you need to have high quality scrap, and I think that is the real kind of challenge about also how you maintain that. And I think it's goes wider than just manufacturing, it goes into how we utilize equipment and and and that material as well, and how we design that with in mind for it to be reused, yeah, and I think that is a really important shift, uh uh I think alongside the energy transition. Um I think and that will determine whether you're going to be competitive or not.

SPEAKER_00 30:53

Yeah. So it's reuse as well as energy.

SPEAKER_03 30:57

Yes. Yeah. Okay.

SPEAKER_00 30:59

Yeah. I like it. Yeah, it's a really important part, I think. Yeah. Yeah. Thank you. And I think that a lot of people are more focused on that these days. And also about that, that, that um local focus, that um what do we have here? I think that's a really good message. So thank you very much for joining me today, Ben. We could have carried on talking forever, but um, we have to stop somewhere. Um, really lovely. Lots of lots of really interesting stuff there. So thank you for joining me today.

SPEAKER_02 31:29

It was my pleasure, Karen. Thank you for having me today.