Industry leads the way in decarbonization revolution towards net zero

British manufacturers are leading the charge towards net zero and decarbonisation of their businesses as the sector moves to reduce greenhouse gas emissions, reduce energy use and switch to renewable and sustainable energy sources.

According to new research, published today by Make UK, the manufacturers’ organization and technology company Siemens, manufacturers have moved decarbonising their businesses up the priority ladder despite unprecedented economic challenges, with eight in ten companies saying that it is now of high or medium importance. The research, ‘Decarbonizing Manufacturing: Challenges and Opportunities’, published today, shows that companies are accelerating efforts to decarbonize due to rising energy costs, the need to do the right thing and the rising cost of raw materials. .

Nearly half (46%) of manufacturing companies are already implementing their decarbonization plans, while a further quarter will begin decarbonizing in the next 12 months. An additional 17% aim to start the process in the next 24 months.

Great strides have been made, but barriers remain, with smaller companies still being left behind. A third (31%) of manufacturers said decarbonising their business is a high priority and another half (49%) said it is a medium priority. However, larger companies (with 1,000+ employees) were even more likely to report decarbonization as a high priority, with an additional 28% saying it is a medium priority. While among smaller companies (with 10-249 employees), only 21% said decarbonizing the business was a high priority.

Energy efficiency is seen as key to achieving decarbonisation, with almost half of manufacturers (47%) telling us that they have already adjusted their business practices to reduce energy consumption in response to rising energy prices in the world. 2022. The outbreak of hostilities in Ukraine supercharged activity, with three quarters of manufacturers accelerating energy efficiency and decarbonisation measures. And just over a third of the companies surveyed said they had already saved money by decarbonising, resulting in improved productivity through process optimization.

Two in five companies found that installing renewable electricity or heat on-site had helped mitigate the high cost of grid-supplied energy and helped them achieve decarbonisation goals.

However, manufacturers face barriers to decarbonizing their operations with the cost of upgrading or replacing capital equipment (cited by 42% of manufacturers) topping the list. One in three (31%) said they were concerned about remaining cost competitive and the same number cited rising energy costs for fuel switching as the main barrier to switching. A quarter are held back by the challenge of decarbonizing transport and logistics, with 23% saying decarbonizing their supply chains is a real challenge for them as they don’t have direct control here. The lack of internal resources is a problem for some companies along with the lack of adequate skills.

A third of manufacturers agree that the strategies and initiatives the government has announced around decarbonisation will help them, but to date we found that understanding and acceptance of that support has been mixed. While there have been numerous strategies published by the government, including the Net Zero Strategy and the Industrial Decarbonization Strategy, there has been little to no update or progress against these. Lack of awareness of available help is holding manufacturers back: only one in ten are aware of the government’s Industrial Energy Transformation Fund, identified as the main driver of change.

Therefore, Make UK asks the government to provide regular updates on progress to help businesses understand the government’s overall intentions and make investment decisions accordingly.

Stephen Phipson, CEO of Make UK, the manufacturers organisation, said:

“British manufacturers have long shown that they are at the forefront of innovation globally and have already come a long way in improving their processes and production in the quest to achieve net zero. But for them to continue apace, companies need the government to play its part in driving the process forward. This starts with setting a bold and ambitious vision for our green future. While numerous strategies have been announced, progress has been limited at best. The government should deliver regulatory updates to help companies understand the government’s overall intentions and give them the confidence to make investment decisions.

“To boost investment in decarbonization projects, the government must introduce full spending on green technologies and expand the R&D tax credit to include industrial decarbonization. The Help to Grow program should be expanded to Help to Grow Green, which would support companies on their decarbonisation journey and boost green investment. Businesses should also be incentivized to invest in on-site power generation, where surplus can be added back to the national grid to improve the UK’s energy security.”

Brian Holliday, Managing Director of Siemens Digital Industries, said:

“It is encouraging to see increased awareness and action from manufacturers regarding sustainability. This is an industry-wide challenge that is going nowhere, and the transformation needs to accelerate if we are to meet national carbon targets. Technology adoption, supportive government policy and ambitious decision-making will help create a resilient and productive sector that is ready for the future.”

The companies surveyed have also seen their “green credentials” come more and more under the spotlight of customers. Some 16% of companies said that sales increased thanks to access to new markets as a direct result of decarbonising their business. Another 14% said that decarbonisation had also helped them access specific financing routes for new projects.

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