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Decarbonising the Manufacturing Sector – The Challenges

26th May 2021
Things have certainly changed since the height of the first Industrial Revolution when Britain was known as the “Workshop of the World”. But manufacturing still plays an essential role in the UK economy, contributing £170 billion annually – 9% of the UK’s GDP, and providing 2.6 million direct jobs (ONS, Annual Business Survey, 2020) as well as over 5 million jobs across the value chain.

The manufacturing sector has a lot of positives to shout about, but a significant challenge is the scale of the associated carbon emissions. It is estimated that the manufacturing sector is responsible for 20% of the UK’s greenhouse gas emissions, with two-thirds of these thought to be from energy intensive users such as steel, glass, and ceramic manufacturers. However, this also demonstrates the vast potential for industrial decarbonisation and demonstrates the impact that this could have in helping meet the UK’s 2050 net-zero target.

Intensive energy users stand to gain significant carbon savings and potential cost savings by switching from fossil fuels to low carbon technologies. If this is a win-win situation for industry and Government, why has quicker progress not been made?

The reason progress has been slow is that decarbonisation can create many challenges for the manufacturers. Some low carbon technologies are currently in the early stages of development and not yet easily deployable at a commercial level. One of the other hurdles that manufacturers face when deploying low carbon technologies or launching an energy efficiency initiative is that they are having to compete with other organisational priorities for capital investment. A recent survey conducted in conjunction with Manufacturing Management Magazine showed that 57% of manufacturers struggle to access funding for sustainability initiatives.

Operators that are currently heavily reliant on natural gas are also likely to see their costs rise and possibly lose some competitiveness when they eventually move to switch to a renewable source. This creates a risk of “carbon leakage”. Carbon leakage is a phrase coined by the EU emissions trading system (EU ETS) to refer to a business transferring its production to other countries that have laxer emissions constraints. This would have a demonstrable impact on both domestic and global climate change goals. Government, private sector suppliers, renewable providers, and low carbon technology providers need to work with the industry to overcome these barriers in the coming decades. Any action taken will need to be consistent with the UK’s international obligations, both under the Paris Agreement and wider international trade rules.

Decarbonising the manufacturing sector is going to be no mean feat. To achieve net zero, the sector would need to cut its emissions by at least 90% by 2050, which is the equivalent to taking all the cars off the roads today (HM Government, Industrial Decarbonisation Strategy, March 2021). The government and the private sector need to work in harmony to transform how manufacturers can contribute to the net zero ambition and creating the opportunity for a new decarbonised industrial revolution.

In our next blog we’ll discuss how some of the challenges can be efficiently and effectively met.

Inenco work with over 250 of the UK’s leading manufacturers, many of whom are currently on their journey to net zero. The challenge is daunting, and the road is long, but through clever investment, clear strategy, and strong partnerships Inenco is helping manufacturers change for the better.

If you would like to hear more about your business can cut its carbon call one of our experts on 01253 785294.