Industry directly accounts for around a quarter of UK greenhouse gas emissions.
Industry direct (non-electricity) emissions have fallen by 25% since 2007. The recent recession had a disproportional impact on carbon-intensive industrial sectors. This structural movement towards a less carbon-intensive mix of industrial output was the largest contributor to falling direct emissions, with some improvement in energy intensity and changes in fuel mix also reducing emissions.
There is significant potential for emissions reductions through conventional energy efficiency, low-carbon heat uptake, further options in energy-intensive industries and industrial Carbon Capture and Storage (CCS).
We therefore recommend that the Government should build on its ongoing work to:
- Develop joint work with industry into action plans: publish plans setting out specific actions and clear milestones to move abatement efforts forward along the paths developed with industry in the “Roadmaps”.
- Complete roll-out of “Roadmaps” to other industrial sectors: taking account of lessons learned, roll-out roadmaps to industrial sectors not covered in first wave.
- Join-up industrial CCS with power sector projects: set an approach to commercialisation of industrial CCS alongside the approach adopted for the power sector, including ensuring industry can link into planned infrastructure.
- Evaluate effectiveness of compensation to at-risk industries for low-carbon policies: independent evaluation of industries that are at-risk and effectiveness of the compensation framework.
Industry direct (non-electricity) emissions outturn and indicator trajectory
Progress against indicators and milestones
Outturn non-electricity energy intensity has fallen 21% since 2007, further than our indicator. The majority of this fall in energy intensity can be explained through a shift in production towards less energy-intensive sectors.
|Significant barriers remain in industry; confidence in a long term industrial abatement plan is required with stronger incentives, particularly for investment in more expensive measures.|
|Renewable heat||Good progress, ahead of indicator trajectory with 1.7% uptake in 2014 compared to 1.3% in trajectory. Over the next few years our indicator sets out an acceleration in low-carbon heat uptake which may be difficult to meet.||Uncertainty about RHI funding beyond 2016 needs to be resolved as soon as possible in order to achieve supply-chain growth to deliver the increased uptake consistent with meeting carbon budgets.|
|There has been limited progress apart from funding for one feasibility project and there has been a lack of|
|An approach to demonstration and commercialisation needs to be set out alongside the approach adopted for the power sector,|
compatible with deployment in the 2020s.
|Other milestones||No strategy to meet the carbon budgets. However, the recently published industry ‘2050 roadmaps’ have set out abatement potential, barriers and enabling actions.||The Government needs to work with industry to set out specific actions and clear milestones to move abatement efforts forward along the paths developed with industry in the ‘2050 roadmaps’.|