At the end of June 2017, the Committee on Climate Change launched its annual report to Parliament on the UK’s progress to lower emissions and improve UK resilience to the risks from climate change. In the 2016 Progress, the CCC highlighted the ‘policy gap’ that government needed to fill to achieve the fifth carbon budget (2028 – 2032), which was to be addressed in the Government’s Emissions Reduction Plan (now often referred to as the Clean Growth Plan (CGP)).
Frustratingly, the CGP has been delayed by political events over the past year, but new Minster of State Claire Perry has committed to publishing it after the parliamentary summer recess. It will be interesting to see what the CCC makes of that long awaited plan in a few months’ time.
We at EEF have certainly been keen to see the government’s approach to delivering a thriving UK manufacturing base, whilst decarbonising and ensuring international competitiveness. Over the past few years, energy-intensive industrial sectors have been proactively engaging with Government to develop decarbonisation roadmaps and action plans to 2050. The sector as a whole has also been involved in on-going discussions around the opportunities involved in the move to low-carbon economy, and supporting UK manufacturers to be part of delivering this.
There wasn’t a lot that was new in this year’s mitigation report, but here are some points worth reiterating:
- The industrial sector has steadily decreased emissions from being the largest source of carbon emissions in 1990 to the second largest in 2016. The sector has reduced CO2 emissions by 46% between 1990 and 2016 in a steady decrease over the years, unlike other emission sources such as buildings and transport which have remained flat. We see this decrease in industrial emission as the result of a combination of factors, including improved energy and carbon efficiency measures invested in by firms, fuel switching, and unfortunately also industrial plant shutting down, such as the loss of much of the aluminium manufacturing sector
- Whilst, the UK is not on track to meet the fourth carbon budget, the UK is committed to the Paris agreement and the CCC is encouraging Government to deliver proposals and policies to meet the fifth carbon budget. (The fifth carbon budget requires a reduction in UK emissions of 57% by 2030 compared to 1990 levels.) With the uncertainty caused by Brexit - such as whether the UK will continue to be involved with the EU ETS - a clear, supportive plan is needed to decarbonise through the 2020s. We at EEF and sector trade associations have worked with Government for several years now to understand and progress how we can work together to decarbonise whilst remaining internationally competitive, and we support the CCC’s call to have an overall approach to long-term industrial decarbonisation. The priority for these internationally competitive manufacturing industries is to do so in the most affordable way possible.
- A stronger UK Industrial Strategy is needed, which outlines affordable energy and clean growth as one of the 10 key pillars. The EEF has long called for a modern, comprehensive and robust industrial strategy to support Britain’s future economic growth and were pleased to see the release of the government’s Industrial Strategy Green Paper earlier this year, and requires government and industry working together to make it a success.
- The CCC notes that the low-carbon economy has grown to about 2-3% of GDP, a comparable size to energy-intensive manufacturing. UK Manufacturers are keen to realize the opportunities presented by decarbonisation, and the low carbon supply chains that support the transition to the low carbon economy, such as the steel and cement required to build renewable generation assets.
- The CCC sees the abandonment of previous plans for carbon capture and storage as leaving industry without a long-term strategy for reducing emissions. A new plan is needed to re-start CCS projects in the UK to support power sector and industrial emission reduction, as well as potentially delivering low carbon hydrogen for heating. For industrial applications, the key will be deploying this technology affordably, in a way that allows UK firms to continue to be internationally competitive whilst decarbonising.
- The CCC notes that energy-intensive sectors are now largely exempt from the costs of low-carbon energy. However, it is worth noting that in the CCC’s earlier energy prices and bills report, the CCC recognised that the cost of low carbon measures for a number of industries, such as cement, glass, ceramics and industrial gas sectors, are close to the highest costs faced internationally, at around 15% of the electricity bill. The UK has also been slow to support companies affected by climate-related policies in comparison to European competitors, such as Germany. Around 15% of manufacturing electricity consumption is eligible to receive relief for up to 80% of specific policy costs, so the relief is certainly not for everyone or from all policies.
- The CCC sees a need for a stronger policy framework for industrial energy efficiency. We totally agree. Whilst the manufacturing base has supported the decarbonisation of the electricity sector through levies on its energy bills, it hasn’t seen equivalent support from Government to decarbonise. Internal competition for funds and other commercial realities also make it hard for companies to invest in projects that have long-pay back periods or involve risky new technologies. For this reason, we are keen to see the Industrial Energy Efficiency scheme that was proposed in the 2017 Conservative manifesto brought forward, to help UK firms unlock opportunities beyond what international competitors are doing, and play their part in a lower carbon UK society.