How the Humber can help meet tech sector's power demand - Richard Gwilliam

For much of the last decade, Britain’s industrial decarbonisation strategy has rested on a simple premise: government would provide policy certainty and sufficient financial incentive for private capital to follow.

That assumption is no longer holding. Not because industry has lost its ambition, nor because the technology has failed, but because of a single, stark constraint: public affordability.

The energy trilemma has always required governments to balance security, sustainability and cost. Whilst security of supply always prevails, in the balance between cost and sustainability today it appears that the pendulum is swinging in favour of cost.

When governments face pressure on public finances, there is a risk that projects requiring long-term revenue support or significant contingent liabilities become progressively harder to justify, regardless of their long-term economic benefits. That matters enormously for industrial regions like the Humber.

For years we have built strategies around public intervention unlocking transformational private investment in carbon capture and hydrogen, and whilst the rationale for those projects remains compelling, the fiscal case is becoming harder to sustain. It is tempting to conclude that this represents the end of industrial decarbonisation; it doesn’t – but it does signal the end of its primary funding model.

Precisely as governments become less able to fund industrial transformation, another force is emerging that may prove even more powerful: electricity demand. For much of the last 20 years electricity demand in Britain was largely flat and predictable, but that is changing.

The electrification of transport and heating is starting to impact both the profile and demand for power in the UK, but the most profound change is coming from the tech sector, where the growth of data centres is adding demand now, and will lead to sustained increases in demand for decades to come.

Whilst the immediate fear is that an enhanced demand for power will further drive up prices, especially at a time when the grid queue is under duress, we need to think about this as a positive opportunity for regions like the Humber that possess power capacity, transmission infrastructure and industrial land; because access to electrons will be a fundamental determinant of future economic prosperity.

Which brings me back to my original point – if the appetite for decarbonisation to be funded by the public purse is diminishing, the technology sector may yet become one of the largest financiers of the industrial energy transition.

Globally, the world’s largest technology companies continue to invest heavily in reducing the environmental impact of their operations. Although the rapid expansion of AI infrastructure has made many of their climate targets more challenging to achieve, tech companies are responding by becoming some of the world’s largest corporate purchasers of low- and carbon-free electricity, investing in advanced energy technologies and committing billions of dollars to long-term carbon removal markets.

Industrial regions capable of supplying power today with long-term plans for decarbonisation can therefore become more attractive locations for future digital investment.

This is particularly significant for the Humber – we have the assets, the infrastructure, the resources, the skills and the supply chains to support today’s requirements and a long-term pathway championed by industry, to support decarbonisation.

For decades the region has been viewed primarily through the lens of decarbonising existing industries. Perhaps we should increasingly think about it as enabling entirely new industries.

The opportunity is not simply to reduce emissions, it is to attract globally mobile capital seeking access to clean, reliable power at scale, driving a renewed impetus for technologies like carbon capture and hydrogen - initiated at electricity generating assets and providing the regional scale infrastructure for adjacent industries to decarbonise.

Government will remain essential in setting market frameworks, planning for regional growth through industrial strategy, delivering planning and grid reform, and enabling infrastructure.

But the principal source of capital may increasingly come from companies whose demand for clean electricity is creating entirely new economic incentives.

AI, the technology often portrayed as creating new environmental challenges, may become one of the strongest commercial drivers of industrial decarbonisation. Not because governments demand it, but because the market values it.

Richard Gwilliam is Chair of the Humber Energy Board