Nov 28, 2016

Energy tech investment in UK manufacturing could boost economy by £2.56bn in a decade

Admin
4 min
UK manufacturers could inject an additional £2.56bn into the UK economy, cut energy consumption by nearly a third (31.6%) and boost their energ...

UK manufacturers could inject an additional £2.56bn into the UK economy, cut energy consumption by nearly a third (31.6%) and boost their energy resilience by increasing investment in energy technology over the course of the next decade, finds a new report by Barclays.

The Barclays Corporate Banking report, Powering On: Energy Resilience in UK Manufacturing, examines current attitudes of UK manufacturers towards energy supply and management, and models how manufacturers could reduce their energy demand.

The research shows a growing concern about the availability, reliability and cost of energy with more than a quarter of UK manufacturers surveyed (27%) saying that energy supply is more of a concern to their business now than at the start of 2016. These concerns have come to the fore as manufacturers feel squeezed by increases in the price of other raw materials, greater competitive pressure in the sector, and 28% of those who said their business is more concerned said this is because they are worried about the eventual impact of the UK leaving the European Union.

Mike Rigby, Head of Manufacturing, Transport and Logistics at Barclays, said:  “Energy resilience and costs are vital considerations for UK manufacturers and are a critical element of our manufacturing sector’s ability to compete internationally.

“In recent months, attention has focused on the future of energy supply but we need to look at all aspects of energy.  By considering energy management on the demand side in intensive sectors such as manufacturing, we can ensure the UK remains competitive.”

Chief among manufacturers’ concerns today are energy prices, with 75% of respondents citing this as a worry. Almost half (46%) of manufacturers also believe that they are vulnerable to the effects of significant energy price increases.

Reliability and availability of energy is also a worry with 58% and 45% of manufacturers citing these as concerns respectively.

Longer term, manufacturers are concerned that energy shortages will occur, with more than half expecting these in the next ten years. Most of the sector (63%) believes that they are vulnerable to energy shortages, arguing that current preparations are likely to be insufficient. In addition, a majority (60%) also believe that the risk of cost increases and supply disruption will increase if the amount of energy the UK imports increases.

Investing in energy technology as a solution

Manufacturers are already investing time and money in a variety of energy management technologies and approaches, or are planning to in the next 12 months, with energy efficiency measures (35%), negotiating lengthier energy supplier contracts (22%) material efficiency (21%) and self-generation (13%) measures topping the list.

The Barclays research reveals that if all manufacturers became as energy efficient as the leaders in the sector, this could create an industry worth £160bn to the wider economy by 2025. This represents an increase of 5.1% in value terms compared to 2015.

This extra economic output will be achieved by the sector cutting costs and improving its international competitive position, but only if the sector can develop the leadership commitment and resources required.

Furthermore, as a single year comparison - in 2025 alone, this improvement in energy efficiency would result in a manufacturing sector using 7.9% less energy than expected. This is the equivalent of successfully cutting the electricity consumption of every house in the UK by 15% compared to today.

The research also shows that at a regional level, the North West (£1.06bn), South East (0.96bn) and West Midlands (0.78bn) are the three regions within the UK that could benefit most from accelerated investment in energy technology and efficiency.

Rigby continued: “We know manufacturers are already taking steps to improve their energy resilience, from investing in energy efficiency to self-generation and partnering with resource recovery parks.

“However, our research shows that increasing this investment will not only protect the sector from future fluctuations in energy supply, but will also benefit the wider economy by making the sector more internationally competitive through reduced costs and increased productivity.”

Government policy and incentivising investment

Manufacturers suggest that increasing access to external funding (36%), providing greater certainty on ROI (30%) and sharing best practice within the sector (17%) would be the most effective ways of driving further investment in energy technologies within the sector.

More widely, when asked for their views on priorities for UK energy policy, manufacturers are keen that efforts be focused on improving grid efficiency and stability (54%), cutting the cost of energy (47%) and decarbonisation (41%). Interestingly despite high profile potential investments such as Hinkley Point C, manufacturers were nearly as interested in efforts by the UK Government to focus on demand management and energy storage (32%) as they were in increases in the total amount of energy available (40%).

This research goes to show that energy topics are a concern for manufacturers in the UK but this kind of investment could mean the industry becomes more self-suficient and einvironmentally friendly by utilising the latest technology.

Image credit: Artfoliophoto

Share article

Jul 29, 2021

Carbon dioxide removal revenues worth £2bn a year by 2030

Energy
technology
CCUS
Netzero
Dominic Ellis
4 min
Engineered greenhouse gas removals will become "a major new infrastructure sector" in the coming decades says the UK's National Infrastructure Commission

Carbon dioxide removal revenues could reach £2bn a year by 2030 in the UK with costs per megatonne totalling up to £400 million, according to the National Infrastructure Commission

Engineered greenhouse gas removals will become "a major new infrastructure sector" in the coming decades - although costs are uncertain given removal technologies are in their infancy - and revenues could match that of the UK’s water sector by 2050. The Commission’s analysis suggests engineered removals technologies need to have capacity to remove five to ten megatonnes of carbon dioxide no later than 2030, and between 40 and 100 megatonnes by 2050.

The Commission states technologies fit into two categories: extracting carbon dioxide directly out of the air; and bioenergy with carbon capture technology – processing biomass to recapture carbon dioxide absorbed as the fuel grew. In both cases, the captured CO2 is then stored permanently out of the atmosphere, typically under the seabed.

The report sets out how the engineered removal and storage of carbon dioxide offers the most realistic way to mitigate the final slice of emissions expected to remain by the 2040s from sources that don’t currently have a decarbonisation solution, like aviation and agriculture. 

It stresses that the potential of these technologies is “not an excuse to delay necessary action elsewhere” and cannot replace efforts to reduce emissions from sectors like road transport or power, where removals would be a more expensive alternative.  

The critical role these technologies will play in meeting climate targets means government must rapidly kick start the sector so that it becomes viable by the 2030s, according to the report, which was commissioned by government in November 2020. 

Early movement by the UK to develop the expertise and capacity in greenhouse gas removal technologies could create a comparative advantage, with the prospect of other countries needing to procure the knowledge and skills the UK develops.

The Commission recommends that government should support the development of this new sector in the short term with policies that drive delivery of these technologies and create demand through obligations on polluting industries, which will over time enable a competitive market to develop. Robust independent regulation must also be put in place from the start to help build public and investor confidence.

While the burden of these costs could be shared by different parts of industries required to pay for removals or in part shared with government, the report acknowledges that, over the longer term, the aim should be to have polluting sectors pay for removals they need to reach carbon targets.

Polluting industries are likely to pass a proportion of the costs onto consumers. While those with bigger household expenditures will pay more than those on lower incomes, the report underlines that government will need to identify ways of protecting vulnerable consumers and to decide where in relevant industry supply chains the costs should fall.

Chair of the National Infrastructure Commission, Sir John Armitt, said taking steps to clean our air is something we’re going to have to get used to, just as we already manage our wastewater and household refuse. 

"While engineered removals will not be everyone’s favourite device in the toolkit, they are there for the hardest jobs. And in the overall project of mitigating our impact on the planet for the sake of generations to come, we need every tool we can find," he said.

“But to get close to having the sector operating where and when we need it to, the government needs to get ahead of the game now. The adaptive approach to market building we recommend will create the best environment for emerging technologies to develop quickly and show their worth, avoiding the need for government to pick winners. We know from the dramatic fall in the cost of renewables that this approach works and we must apply the lessons learned to this novel, but necessary, technology.” 

The Intergovernmental Panel on Climate Change and International Energy Agency estimate a global capacity for engineered removals of 2,000 to 16,000 megatonnes of carbon dioxide each year by 2050 will be needed in order to meet global reduction targets. 

Yesterday Summit Carbon Solutions received "a strategic investment" from John Deere to advance a major CCUS project (click here). The project will accelerate decarbonisation efforts across the agriculture industry by enabling the production of low carbon ethanol, resulting in the production of more sustainable food, feed, and fuel. Summit Carbon Solutions has partnered with 31 biorefineries across the Midwest United States to capture and permanently sequester their CO2 emissions.  

Cory Reed, President, Agriculture & Turf Division of John Deere, said: "Carbon neutral ethanol would have a positive impact on the environment and bolster the long-term sustainability of the agriculture industry. The work Summit Carbon Solutions is doing will be critical in delivering on these goals."

McKinsey highlights a number of CCUS methods which can drive CO2 to net zero:

  • Today’s leader: Enhanced oil recovery Among CO2 uses by industry, enhanced oil recovery leads the field. It accounts for around 90 percent of all CO2 usage today
  • Cementing in CO2 for the ages New processes could lock up CO2 permanently in concrete, “storing” CO2 in buildings, sidewalks, or anywhere else concrete is used
  • Carbon neutral fuel for jets Technically, CO2 could be used to create virtually any type of fuel. Through a chemical reaction, CO2 captured from industry can be combined with hydrogen to create synthetic gasoline, jet fuel, and diesel
  • Capturing CO2 from ambient air - anywhere Direct air capture (DAC) could push CO2 emissions into negative territory in a big way
  • The biomass-energy cycle: CO2 neutral or even negative Bioenergy with carbon capture and storage relies on nature to remove CO2 from the atmosphere for use elsewhere

Share article