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The next step on the road to carbon net zero: industrial decarbonisation strategy

18th March 2021 – The government has announced the next stage of the plan to achieve carbon net zero by 2050 by unveiling the Industrial Decarbonisation Strategy.

This adds more detail to the 10 Point Plan for a Green Industrial Revolution published last year. The new strategy sets out the government’s vision for building a competitive, greener future for the manufacturing and construction sector and aims to accelerate progress by cutting emissions by two-thirds in just 15 years.

The new strategy will be underpinned by supporting existing industry to decarbonise and encouraging the growth of new, low carbon industries in the UK to protect and create skilled jobs and businesses in the UK, as well as giving businesses long-term certainty to invest in home-grown decarbonisation technology, such as that which can capture and store carbon emissions from industrial plants.

Kickstarting low carbon & carbon capture

The blueprint also includes measures to build on the UK’s leading efforts in moving towards greener energy sources, with an expectation of 20 terawatt hours of the UK industry’s energy supply switching from fossil fuel sources to low carbon alternatives by 2030 – helping industry to increase its use of low carbon energy sources to around 40% of industry’s total energy consumption.

To kick start the process, £171 million from the Industrial Decarbonisation Challenge has been allocated to 9 green tech projects in Scotland, South Wales, North West, Humber and Teesside in England, to undertake engineering and design studies for the rollout of decarbonisation infrastructure, such as carbon capture, usage and storage (CCUS) and hydrogen.

A further wave of public sector decarbonisation

The Government has also unveiled the 429 successful bidders for the Public Sector Decarbonisation Fund (PSDF) and also announced a further £75 million of funding that is open for bids in a second tranche as soon as 7th April. However, this is a significant downscaling from the near £1 billion allocated to date. The first wave of grants has funded low carbon heating systems, such as heat pumps, and energy efficiency measures like insulation and LED lighting and does appear heavily skewed towards local government and schools focused projects.

The current regime of Energy Saving Opportunities Scheme (ESOS) and Streamlined Energy & Carbon Reporting (SECR) regimes could be overtaken or augmented or see the emergence of a new form of display energy certification. The government indicated its intention to introduce new rules on measuring the energy and carbon performance of the UK’s largest commercial and industrial buildings, including office blocks and factories, in England and Wales. More detail is yet to emerge but the initial announcement indicates that… “commercial and industrial buildings will join a national performance-based ratings system that will ensure for the first-time owners and tenants are aware how effectively they are using energy and are made accountable for it.”

UK ETS Free Allocation Review call for evidence

The UK Emissions Trading System (UK ETS) is the government’s new ‘carbon cap-and trade’ system, created to promote cost-effective decarbonisation; capping emissions and allowing businesses to cut carbon where it is cheapest to do so. This scheme replaces and closely mirrors the previous EU ETS. In this post-Brexit world, the government is now calling for evidence on how the use of free allocations can better incentivise emissions reduction, and protect energy intensive, trade exposed industries from the risk of carbon leakage. This seems to be thinly veiled code for achieving an equitable balance between achieving the net zero ambition whilst protecting the competitiveness of the country’s industrial base and avoiding disinvestment from the UK.

Other key commitments within the Strategy include:

  • to use carbon pricing as a tool for getting industry to take account of their emissions in business and investment decisions.
  • to establish the right policy framework to ensure uptake of fuel switching in industry from fossil fuels to low carbon alternatives such as hydrogen, electricity, or biomass.
  • to establish a targeted approach to mitigate against carbon leakage that meets the government’s domestic and global climate goals, while keeping businesses competitive.
  • to develop proposals for new product standards, enabling manufacturers to clearly distinguish their products from high carbon competitors.
  • to explore the role of coordinated action on public procurement to create demand for green industrial products, helping to drive down costs and allowing a broader market to develop.
  • use the government’s Infrastructure Delivery Taskforce, named ‘Project Speed’, to ensure the land planning regime is fit for building low carbon infrastructure.
  • to work with the recently re-constituted Steel Council to consider the implications of the recommendation of the Climate Change Committee to ‘set targets for ore-based steelmaking to reach near-zero emissions by 2035’.
  • support the skills transition so that the current and future workforce benefit from the creation of new green jobs.
  • an expectation that industrial emissions will fall by two-thirds by 2035, and by at least 90% by 2050, compared to 2018 levels.
  • an expectation that at least 3 megatons of CO2 is captured within industry per year by 2030, compared to minimal levels at present.

A delicate balance

This strategy is the latest of many sustainability initiatives that are expected to be announced this year ahead of the delayed UN Climate Change Summit (COP26) that should start in Glasgow on 1st November this year.

The UK hopes to become a world leader in rolling out low carbon policies and technologies and sees this as a way of driving economic growth. However, there will need to be a delicate balancing act. Many UK Industries have access to overseas manufacturing facilities and there is a risk that high energy taxes in the UK will persuade those companies to move production overseas where energy is cheaper. In most cases, those countries produce electricity that is more polluting than the UK and so could result in a net increase in global emissions.

Whilst we all want to lead by example, we must not forget that climate change is a global problem that requires global cooperation to achieve a common goal. The real challenge for the UK is not only to develop solutions but to persuade the rest of the world to adopt them! The most important announcement this year will hopefully be the adoption of new commitments by key countries at COP26.

To find out more about how we can help you on your own decarbonisation journey speak to one of our experts on 08451 46 36 26 or email us at enquiries@inenco.com.