Manufacturers will struggle to adapt to UK’s green energy transition, study finds

A study led by the University of Leeds suggests that governments should strengthen international carbon reporting standards for energy-intensive industries in order to ensure that firms using more expensive and less carbon-intensive options aren’t outcompeted by those relying on older, more polluting, but typically cheaper technologies.

It suggests that total levels of CO2 production during the manufacture and lifetime of materials should be measured more transparently as part of assessment looking at the progress towards national net zero targets. The carbon price also needs to rise to make it economically viable to introduce new manufacturing technologies with low CO2 emissions.

Lead author of the study Dr Alan Grainger calls on the UK Government to set out a revised Industrial Decarbonisation Strategy that will show how it will work with industry to ensure manufacturers have the technologies and support needed to use new forms of energy.

“It is all very well for Chancellor Rishi Sunak to announce in Glasgow that big UK firms will have to report by 2023 how they will move to net zero operations,” he said. “In reality, many manufacturers cannot easily switch from processes dependent on fossil fuels to those which use electricity. The Government admitted in its Industrial Decarbonisation Strategy, published in March, that some new technologies will take time to develop.

“The UK Net Zero Strategy, published last month, lacks detail on how industry can reach net zero, and on how this can be profitable without a sufficiently high global carbon price to avoid “carbon leakage” to other countries. Ministers, officials and industry need to talk to each other to ensure the net zero proposals can actually be implemented by manufacturers.”

Ensuring that no electricity is produced from fossil fuels by 2050 is essential for achieving net zero. However, its effect will be limited if industry cannot use this electricity. Steel manufacturing alone accounts for a tenth of all carbon dioxide (CO2) emissions in industrialised countries, but latest estimates suggest new technologies to manufacture steel using electricity will not become fully operational until at least 2040.

The new processes are still in the very early stages, Volvo unveiled the world’s first vehicle made of fossil-free steel only last month, while another recent study has warned that the steel industry risks becoming a carbon pariah without greater investment in low-carbon technologies for its production.

The next leading metal, aluminium, which provides significant weight and energy savings compared to steel when used in transport systems, is produced using electricity, and its manufacture currently accounts for 3 per cent of all CO2 emissions. Yet since 2000 two thirds of world production of aluminium has switched from countries such as the UK – which used nuclear power – to China and Persian Gulf countries, which mainly generate electricity from fossil fuels.

Dr Grainger said: “Delays in replacing existing steel and aluminium manufacturing capacity represent a crucial ‘lock in’ constraint on achieving net zero.

“Humanity’s overwhelming dependence on steel, which accounts for 94 per cent of all metal production, and the size of new aluminium manufacturing capacity in China and the Persian Gulf, are a huge blockage that cannot be ignored.”

He added: “The 2030 target announced at COP26 in Glasgow yesterday is welcome, but targets have been announced before, so far more detail is needed on how this new target will be met.”