Speaking today at the launch of the government’s Clean Growth Strategy, Secretary of State Greg Clark, was clear that this wasn’t just a climate plan, it was part of the UK’s forthcoming Industrial Strategy.
That will be welcome among manufacturers, most of whom see decarbonisation as bringing extra costs – through higher electricity bills for example, or complicated regulatory frameworks – rather than as a potential source of revenue.
Not surprisingly, this might not mean opportunities for all; the focus is on low-carbon transport, batteries and energy generation. However, that is still progress from a few years ago, when the perception was that the low-carbon economy simply meant renewables. There are also some measures that should support low-carbon innovation in other areas, including the recently launched Industrial Energy Efficiency Accelerator and promise to continue implementing EU energy efficiency standards for products after Brexit. (The latter is a significant announcement in its own right; one most manufacturers will welcome as it stops them having to make multiple products for multiple markets, but will anger the tabloids.)
A more supportive approach
Notable from a manufacturing perspective is a new 20% energy efficiency target for business. The details of how this will be achieved still need to be fleshed out but there’s welcome promise of support via new heat recovery and energy efficiency funds. As EEF has repeatedly pointed out, the power sector has received vastly more public funding for decarbonisation to date than industrial firms, even though energy efficiency can cut greenhouse gas emissions more cheaply.
There was also a revival of support for Carbon Capture and Storage (CCS) and we look forward to hearing more details of the government’s plans in this area. CCS is seen as vital to meeting the UK’s carbon targets at least cost, but strong government support mechanisms are needed if it is to be implemented in a way that still ensures UK firms can compete internationally.
On the negative side, it is disappointing to see no development of the government position on the long-term future of the EU Emissions Trading System and regulation of the sectors it affects after Brexit. Companies in the scheme urgently need more clarity on the approach the government will be taking. There was also limited recognition of the electricity price disparities UK industries face compared to European competitors, some of which is linked to UK decarbonisation policies. Hopefully this will receive greater play in the Industrial Strategy white paper.
Manufacturers should be critical too of the metric used to measure the success of the strategy: charting the volume of emissions produced for each unit of GDP looks good on paper but rewards deindustrialisation not a move to a genuine low-carbon economy.
Is this enough?
Looking at the plan as a whole, there will be NGOs concerned that it only delivers 90% of the emission reductions required for the 2030 carbon target. At this point, and without knowing what technological changes are on the horizon, this is arguably not a bad start. At least there is a framework of policies and actions to work to, set against a timeline. The hard work of implementing that strategy starts now.