Industrial Decarbonisation: A Roadmap for British Industry

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Kickstarting the Green Industrial Revolution

In March of this year, the UK government published its Industrial Decarbonisation Strategy – the first of its kind to be issued by a major economy. With the UK also legislating for a national net-zero standard (by 2050) under the Climate Change Act 2008, a systematic and long-term roadmap is required to show how UK industry can decarbonise its operations and address the many abatement obstacles standing in the way. So how can world-famous ceramic goods from Stoke-on-Trent and steel from South Wales be made to the same quality standards, at an economically competitive price, with (net-) zero associated carbon emissions?

The strategy sets out a comprehensive approach for eliminating carbon emissions throughout the UK’s industrial sectors, including: ceramics, cement, chemicals, food and drink, glass, paper and pulp, and oil refining (which account for one sixth of total UK carbon emissions). The ambition behind the plan is to showcase the ways in which the country can continue to have an evolving industrial sector which aligns with a net-zero trajectory, without pushing UK businesses or carbon emissions abroad (carbon leakage), while opening up new avenues for sustainable, economic growth.

The government will set out to work in cooperation with devolved administrations, trade associations and the wider industrial sector up and down the UK as the strategy starts to come to life throughout 2021/22. This will see the introduction of a package of new policy, technical and financial support mechanisms to kickstart the route to net-zero. The catalysts for driving forwards industrial decarbonisation include the need to improve energy efficiency across industry, accelerate innovative technologies and infrastructure, and create new standards and markets for low carbon industrial products. All of these will play an integral role in helping the strategy to achieve its major targets and milestones.

Decarbonisation Targets and Milestones

The Industrial Decarbonisation Strategy commits the UK to achieve and implement:

  • Four major industrial regions linked up to necessary decarbonisation infrastructure by 2030, and the world’s first net-zero cluster by 2040
  • Around 3 MtCO2 of industry emissions captured by Carbon Capture, Usage and Storage (CCUS) by 2030 - the equivalent of planting 500 million trees
  • 20 TWh of fossil fuel use replaced by low carbon alternatives, such as hydrogen, zero-carbon electricity and bioenergy by 2030
  • Industry emissions down by two- thirds from 2018 levels by 2035
  • Mandatory low carbon product standards (with incrementally more stringent requirements) to be in place by the 2030s

Improving Energy Efficiency Across Industry

Energy and resource efficiency have been identified as pivotal areas for reducing emissions across industrial clusters and dispersed sites. Improved measures could see reductions of up to 13 MtCO2e per year by 2050, while simultaneously driving down costs of decarbonisation by reducing the amount of energy used/energy that needs to be converted to greener sources. While various schemes such as the EU-ETS, CCAs and ESOS have been designed to encourage energy efficiency measures across industrial portfolios, much more still needs to be done to achieve widespread and tangible improvements in energy performance.

The government will aim to boost the uptake and embedding of internationally-recognised energy management systems throughout industrial companies, including ISO 50001, to encourage the widespread collection and utilisation of energy consumption data. In turn, this will pinpoint identifiable opportunities for reducing consumption through bespoke efficiency measures which can be directly supported through the government’s existing and emerging decarbonisation policies/funding pots.

With 70% of UK industrial energy demands coming from heat (and steel and glass production wasting up to 50% of heat used), there will be a targeted focus on new heat recovery technologies. While the Industrial Heat Recovery Support (IHRS) programme and Industrial Energy Transformation Fund (IETF) have previously supported investments in new technologies, further research and testing will be carried out to advance the recycling of heat for thermal uses and converting waste heat to electricity.

Smaller, less energy intensive sites are also set to benefit under the strategy, with dedicated measures to help companies invest in technologies and initiatives designed to limit on-site energy demands. The government will issue an assortment of initiatives focusing on energy auditing programmes, efficiency standards, expert advice for SMEs and new funding opportunities. This approach will aim to support manufacturers who are located outside of major industrial clusters, but who collectively constitute a significant proportion of industry’s overall carbon footprint.

Promoting New Technologies, Innovation and Infrastructure

Reducing emissions in industrial processes will require a holistic transformation in the way manufacturers produce goods and consume energy. With coal, gas and oil making up around 55% of industrial energy consumption in 2019 (for heat), the utilisation of feasible fuel-switching technologies has been identified as a primary objective. To ensure the successful roll out of innovative and cutting-edge technologies, a series of new funding streams will be available to enable the effective deployment CCUS, hydrogen and electrification. This includes the £1 billion Net Zero Innovation Portfolio (NZIP), which will build upon the previous projects of the Energy Innovation Programme (EIP) to develop these areas, alongside advancing more disruptive technologies focusing around artificial intelligence, automation and digitalisation.

CCUS: Capturing and storing carbon emissions at the source across industrial clusters will play a crucial role in reaching a net-zero standard. The UK is leading in the development of the technology and related infrastructure requirements, with UK Research and Industrial Research Innovation (UKRI) continuing to develop engineering and technical design elements throughout the early 2020s. A new £1 billion CCS Infrastructure Fund will help to provide industry with the resources and certainty to deploy the technology at scale and pace. In the longer-term, further business models and financial support will remain necessary to share economic risk, scale up activity across different regions and ensure effective coordination between sectors.

Hydrogen: Emerging hydrogen technology will play a pivotal part in decarbonisation efforts as the main fuel switching opportunity for industrial processes. With sufficient access to hydrogen across the UK, consumption of the (potentially) zero-carbon fuel could be as high as 86 TWh by 2050. To galvanise the deployment of hydrogen production and use, a £240 million Net Zero Hydrogen Fund has been formed to boost both commercial CCUS-enabled (blue) and electrolytic (green) hydrogen. The government will publish a Hydrogen Strategy in 2022 to further detail how industry can utilise the available funding, infrastructure and technology provisions to be rolled-out in the coming decades.

Electrification: With many low temperature electrification technologies already being commercially viable, the switching to low/zero-carbon electricity for manufacturing products holds great potential. In fact, it is already technically possible to electrify up to half of present industrial consumption and this could reduce emissions by 6-12.3 MtCO2e by 2050. However, with the ongoing disparity between gas and electrification costs, the government has identified need to develop approaches which focus on fairness and affordability in absorbing costs between government, industry and consumers. This barrier will need to be overcome if electrification is to become commercially-viable and widely adopted across industry.

Creating New Standards and Markets for Low Carbon Products

The government is committed to ramp up efforts to introduce low carbon standards for industrial products, an area that has historically been slow-moving due to a lack of available data on the carbon intensity of products, and an embryonic market demand for such goods which (often, to date) warrant a higher price. Frameworks will therefore be put in place to help standardise the carbon accounting and reporting for products across different industries, in order to incorporate embodied emissions, lifecycle assessments, environmental impacts, recyclability and emissions in-use.

These steps will enable consumers to identify low carbon products and understand how their purchases can propel the transition to net-zero, while supporting the long-term development of markets and supply chains for products with lower carbon footprints.

In the next 12 months, a call for evidence will be carried out on emissions reporting and defining low carbon products. Voluntary low carbon standards could therefore be introduced by 2025, leading to mandatory standards in the mid to late-2020s and increasingly stringent standards from 2030. With the government spending £292 billion on procurement (in 2018/19), including £81 million on UK- made steel, the role of public procurement will be explored as an enabler for securing low carbon standards within tendering requirements.

COP26 will be used to seek joint commitments from countries around the world to leverage public procurement requirements and introduce national product standards, while ensuring that carbon reduction targets work in harmony with free trade agreements. This will help to strengthen the markets for low carbon products, limit restrictions on trade and reinforce the shared vision for reducing carbon emissions through the optimisation of flexible and competitive markets.

The Decarbonisation Road Ahead

The Industrial Decarbonisation Strategy stands as a forward-thinking roadmap to ensure that Britain’s industrial sector contributes to the country’s national net-zero target while supporting economic growth (and acting as a blueprint for other industrialised nations). The high-level investment and commitment to new and innovative technologies offers a range of diverse opportunities for the UK’s industrial manufacturers, energy generators and technology developers to work in partnership to deliver creative and state-of-the-art net-zero solutions.

The decarbonisation road ahead will no doubt have to overcome complex technical and economic hurdles along the way. Will CCUS and hydrogen be deployed quickly enough across the UK? Can electricity costs be significantly reduced to enable large-scale electrification? Is there sufficient commercial appetite for low carbon industrial product standards? Britain’s Green Industrial Revolution is about to come of age, and only time can tell.

More: Research Notes, Carbon, Carbon Capture, Usage and Storage (CCUS), Decarbonization, Energy Innovation Programme (EIP), Industrial Energy Transformation Fund (IETF), Industrial Heat Recovery Support (IHRS), Net-Zero, Net Zero Innovation Portfolio (NZIP), UK Research and Industrial Research Innovation (UKRI)

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David Carlyon