Part 3: Licensing of Hydrogen Pipeline Projects
Section 130: Key definitions for Part 3
- Section 130 defines key terms that are used in Part 3.
Section 131: Designation
- Section 131 provides the Secretary of State with the power to designate, by notice, a consenting person in relation to a hydrogen pipeline project. The Secretary of State may only exercise the power to designate if the conditions set out in subsection (2) are met.
- An individual designation can only relate to one hydrogen pipeline project, but a person who is designated in relation to one project can be designated separately in relation to another.
- Designation triggers the ability for the Secretary of State to use other powers in this new Part to implement a Regulated Asset Base model (RAB) in respect of the designated person and project, such as powers to grant, extend and/or modify a gas transporter licence.
Section 132: Designation: procedure
- Section 132 requires the Secretary of State to publish a statement setting out the procedure that is expected to be followed in determining whether to exercise the power to designate a person in relation to a hydrogen pipeline project, as well as setting out how the Secretary of State expects to determine whether the conditions to designation under subsection (2) of Section 131 are met.
- This section also sets out various procedural requirements that apply in respect of the exercise of the Secretary of State’s power to designate, including requirements as to the content and publication of a designation notice.
Section 133: Revocation of designation
- Section 133 makes provision about the circumstances in which a person’s designation in relation to a hydrogen pipeline project may be revoked, and about the procedure for revocation. A designation may be revoked if: either of the conditions under subsection (2) of Section 131 cease to be met in relation to the project, the Secretary of State determines that a condition to which the designation is subject has not been met, or the person consents to the designation being revoked.
- Subsection (4) makes clear that the revocation of a designation does not affect anything done by the Secretary of State in relation to the person’s gas transporter licence under or by virtue of this new Part while the person was designated in relation to the project.
Section 134: Grant, extension or restriction of gas transporter licence by Secretary of State
- Section 134 allows the Secretary of State, in specified circumstances, to exercise certain powers conferred on the Gas and Electricity Markets Authority ("GEMA" or "the Authority") by section 7 of the Gas Act 1986 to grant, extend or restrict gas transporter licences. Those circumstances include, for example, where the licences are to be granted to, or are or were held by, designated persons and authorise the conveyance of hydrogen through pipes for the purposes of the person’s designated project.
- This section is intended, alongside others, to provide the Secretary of State with powers to implement, via gas transporter licence conditions, a RAB in respect of hydrogen pipeline projects.
- Subsection (6) requires the Secretary of State to have regard to specified matters when granting or extending a gas transporter licence by virtue of this section.
- Subsection (8) makes clear that a gas transporter licence granted, extended or restricted by the Secretary of State by virtue of this section has effect for all purposes as if it had been granted, extended or restricted by the GEMA.
Section 135: Applications for grant etc of gas transporter licence
- Section 135 confers a power for the Secretary of State to make regulations about the making, consideration and determination of relevant applications for the grant, extension or restriction of a gas transporter licence. Subsection (2) defines a "relevant application".
- Subsection (5) requires the Secretary of State to consult the GEMA before making regulations under this section.
- Subsection (6) provides that so far as regulations under this section apply to an application for the grant, extension or restriction of a gas transporter licence, section 7B(1) to (2A) of the Gas Act 1986 does not apply to that application.
Section 136: Modification of gas transporter licence by Secretary of State
- Subsection (1) of this section gives the Secretary of State power to modify the conditions or terms of a designated person’s gas transporter licence, as well as standard conditions of gas transporter licences and certain documents or agreements such as industry codes. Subsection (2) provides that such modifications can only be made for the purpose of facilitating or supporting the financing of the design, construction, commissioning or operation of a hydrogen pipeline project (or of hydrogen pipeline projects generally) or promoting value for money in connection with a hydrogen pipeline project (or in connection with hydrogen pipeline projects generally).
- Subsection (3) requires the Secretary of State to have regard to specified matters when modifying the conditions or terms of a designated person’s gas transporter licence under subsection (1). Subsection (4) gives the Secretary of State power to modify the conditions or terms of a gas transporter licence held by a person who is or was a designated person where modification is in connection with the revocation of the person’s designation in relation to a hydrogen pipeline project.
Section 137: Scope of modification powers under section 136
- Section 137 makes provision about the scope of the modifications that the Secretary of State may make under section 136.
Section 138: Procedure etc relating to modifications under section 136
- Section 138 sets out various procedural requirements relating to modifications under section 136.
- Subsection (1) requires the Secretary of State, before making a modification, to consult the holder of any licence being modified, the GEMA and such other persons as the Secretary of State considers appropriate.
- Subsection (3) requires the Secretary of State to publish details of any modifications as soon as reasonably practicable after they are made.
Section 139: Information and advice
- Section 139 confers power on the Secretary of State to make regulations about the provision and publication of information and advice in connection with the carrying out of functions under or by virtue of this new Part.
- Subsection (3) provides that restrictions on disclosure of information under section 105(1) of the Utilities Act 2000 do not apply to a disclosure required by virtue of this section.
Section 140: Conditions of gas transporter licences for conveyance of hydrogen
- Subsection (2) of this section provides that conditions described in subsection (3) may be included in a gas transporter licence so far as it authorises a person to convey hydrogen through pipes in connection with the carrying on of a hydrogen pipeline project (a "relevant licence" as defined by subsection (1)). These conditions include mandating that a licence holder comply with a direction requiring it to share with a "candidate" information in relation to the activities authorised by the licence.
- The candidate can be an applicant, or potential applicant, for a relevant licence, or a person considering whether to apply for financial support for activities relating to the production, transportation, storage or use of hydrogen (for example, the hydrogen production business model).
- Subsection (4) sets out limitations to modifications of the conditions of relevant licences under section 8(3) of the Gas Act 1986. In granting a relevant licence, the Secretary of State or the GEMA (as appropriate) may only modify conditions of that licence under section 8(3) of the Gas Act 1986 if they are of the opinion that the licence holder would not be unduly disadvantaged in competing with other holders of relevant licences, and no other holder of a relevant licence would be unduly disadvantaged in competing with other holders of such licences (including the holder of the licence to be modified).
Section 141: Secretary of State directions to the GEMA
- Subsection (1) of this section requires the GEMA, in exercising functions in relation to relevant gas transporter licences, to comply with general or particular directions given to it by the Secretary of State for the purpose of promoting value for money in connection with a hydrogen pipeline project (or in connection with hydrogen pipeline projects generally).
- Subsection (2) defines a "relevant gas transporter licence" as a gas transporter licence, held by a designated person, that authorises the conveyance of hydrogen through pipes in connection with the person’s designated project.
Section 142: Repeal of Part 3
- Section 142 enables the Secretary of State, by regulations, to repeal any of the preceding provisions of this new Part. For example, when government intervention is considered to be no longer required in the allocation and implementation of a RAB in respect of hydrogen pipeline projects.
- Subsection (2) provides that if any of the provisions remain in force on 31 December 2040 and each five-year anniversary of that date (a "relevant date"), the Secretary of State is required to consider whether it is appropriate to repeal that provision and, if satisfied that it is not appropriate to do so, to publish a statement explaining why not. Such statement must be published no later than three months after the relevant date.
