541. Industrial emissions, which include manufacturing and refining, are a major source of greenhouse gas emissions, producing 17% (MtCO2e) of the UK's total greenhouse gas emissions. The Industrial Decarbonisation Strategy set out ambitions for the industry to reduce carbon emissions by at least 67% in 2035 and by at least 90% by 2050.
542. The abatement opportunities in manufacturing are driven through greater energy and resource efficiency, fuel switching to low carbon fuels and via the adoption in deep decarbonisation technologies such as hydrogen and CCUS.
543. There are economic opportunities to demonstrate and deploy new green technologies which the UK can manufacture and export, such as electrolysers for green hydrogen.
"[...] two in five (42%) manufacturers agree that they have already identified opportunities and are already taking advantage of them. Some have gone even further and changed their research and development strategies to take full advantage of the net zero economy." - Make UK389
544. Additionally, there is also an opportunity to support the growth of a market for low carbon products. As set out in the Industrial Decarbonisation Strategy, the Government set out plans to develop proposals for 'demand-side policies' including product standards (both voluntary and mandatory), product labelling and procurement (both public and private).
545. These policies are intended to address the lack of information about the climate impact of industrial products, enabling consumers to identify low carbon products and empowering them to make green choices. This may enable manufacturers to attract green premiums for low carbon products, increasing the profitability of decarbonisation further.
546. However, there are broad sectoral challenges for manufacturers to grow and decarbonise. Firstly, both clustered and dispersed sites need access to CCUS, hydrogen and electricity networks in order to decarbonise, but access to developing or upgraded networks is uncertain beyond those clusters included in phase 1 (of cluster sequencing) for CCUS deployment, particularly for transport of carbon dioxide. for CCUS deployment, particularly for transport of carbon dioxide.
"Other technologies e.g., CCUS are still in their infancy e.g., CCUS and there are concerns on how this would work in dispersed sites (especially for cement) as locations in natural beauty and the distance from clusters makes deployment challenging." - Make UK390
547. When the Review visited the West Midlands for an industry focused roundtable it learned of further barriers, such as how some sites also have multiple technological options and are unclear on which technology they should invest in.
548. Finally, there are knowledge and capacity barriers for firms. This is a particular challenge for small sites, as they can lack the expertise or capacity to act.
"Manufacturers are still facing the barriers to digital adoption, such as access to finance, lack of digital skills and knowledge of where to start and how to apply different and very often expensive and complex technologies." - Make UK391
549. For smaller dispersed sites there are more specific challenges, due to the high costs of decarbonisation, the lack of tailored policy given the heterogeneity of sites and the lack of specific funding for these sites. There are high costs of decarbonising dispersed sites due to the need to expand networks and high operational costs of technology, particularly electrification. The sites are highly diverse in terms of location, sectors, and industrial processes, which means there is no single technical or policy solution. Finally, other than the Industrial Energy Transformation Fund (IETF), there is a lack of dedicated policy towards these sites.