The government has announced that it will be launching a £315 million scheme, with funds offered over the next five years, to help find new technologies that will assist the country’s most polluting factories in shrinking their carbon footprint and see the UK hit its climate change targets.

The idea is to make investments in new technology that can help manufacturers and other firms reduce their energy use, hopefully saving £1 billion a year on industrial energy bills while slashing carbon emissions by two million tonnes (equal to removing almost 200,000 cars from our roads every year).

The Industrial Energy Transformation Fund (IETF) was finalised just before the start of the general election campaign and it will be open for bids next summer. Earlier this year, legislation was passed to cut carbon emissions to net zero come the year 2050 in a bid to make sure that the country ends its contributions to global warming.

Kwasi Kwarteng, energy minister, explained that the fund would help support investment in clean growth, saying that giving businesses that are energy intensive the latest low-emission technologies will help companies remain competitive, create well-paid jobs and help the country hit its climate change targets.

Mr Kwarteng was quoted by the Guardian as saying: “The UK is already cutting emissions faster than any other major economy and we’re the first to legislate to end our contribution to climate change entirely. Eliminating emissions from industry is key to achieving this.”

According to the news source, heavy industry makes up 25 per cent of the country’s carbon footprint and is predicted to be one of the hardest areas to decarbonise without making use of innovative new technologies. Factories are now apparently trialling new software and algorithms to close non-essential machines when demand from the national energy grid is high and renewable energy is low.

As explained by Mr Kwarteng in the foreword to the consultation, our industrial sector is essential to our economy, employing 2.7 million people across the country and generating exports almost £300 billion in 2018, driving invention, ingenuity and innovation throughout the UK.

One of the key parts of the Industrial Strategy is to drive cleaner economic growth and the country has already shown that it can “break the historical link between economic growth and emissions”. Since 1990, emissions have dropped 42 per cent and the economy in the meantime has grown by over two-thirds.

In order to help industry in the UK reduce its carbon footprint, businesses have to be able to expand while doing all they can to address the issue of global warming. To further this end, industry and the government must develop a strategic partnership, with rapid technological innovation and investment necessary as well.

 

What policies does the government already have in place?

There are numerous government policies that have already been rolled out that support deep decarbonisation and energy efficiency. Here are just some of the existing ones:

 

Climate Change Agreements

These are between the government and companies to encourage improvements in energy efficiency across industrial sectors, with discounts offered on the Climate Change Levy, the tax on non-domestic energy use.

 

The Clean Steel Fund

This is a new £250 million fund that is intended to support the steel sector on its journey towards decarbonisation.

 

The EU Emissions Trading System

This sets a cap on the total amount of some greenhouse gases that can be emitted, with companies receiving or buying allowances that they are then able to trade with each other. At the end of every year, firms have to surrender enough allowances to cover all their emissions, or be hit with a fine.

 

The Industrial Heat Recovery Support Programme

This grant funding programme was set up to encourage investment in heat recovery technologies, helping those in the manufacturing sector to invest in opportunities for the recovery and the reuse of heat that otherwise would go to waste.

 

Where are the policy gaps?

In order to hit our net zero climate change targets, companies will need to take action sooner where energy efficiency and deep decarbonisation is concerned. This acceleration will need new government policy behind it, but it seems that there is a gap at the deployment stage for projects where they are technologically proven but not yet commercially or economically viable.

 

What will the IETF do?

The purpose of the IETF is to address the barriers that are getting in the way of companies reducing their emissions and becoming more energy efficient. The objectives of the scheme are to see energy costs and emissions both fall for industry, especially for the more energy-intensive firms in the near future.

It also intends to drive down the costs and risks of deep decarbonisation technologies by demonstrating them, including in a cluster setting. For example, industrial carbon capture and fuel switching to low carbon hydrogen may not be ready for commercial deployment at this time at scale, but they could benefit from deployment in a cluster setting.

The fund will help industry to save both carbon and energy costs in the near term, while decarbonising fully in the longer term. Grant funding will be offered to successful scheme applicants and it is expected to be competitive.

Energy-efficient technologies that are now ready for deployment will be supported by the fund and it will be open to all companies in industrial manufacturing in accordance with the Standard Industrial Classification codes 10-33.

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