CCC Mitigation Monitoring Framework

4. Industry

Key messages

• Government ambition. The Carbon Budget Delivery Plan set out the Government’s ambition to reduce emissions in industry by 69% by 2035, compared to 2022 levels. The CCC will track progress on delivering this abatement.
• Tracking progress in industry. We have focused on identifying relevant indicators of progress and generating metrics against which to report. For the indicators where historical data were available, we have sought to create future pathways where possible. Some indicators have been collated to build our understanding on wider enablers of the transition, but without a pathway.
• Challenges in tracking progress. There are several challenges for monitoring decarbonisation progress in industry, including the diversity of the sector, the large number of different abatement measures and the current absence of high-quality data, across a range of indicators, needed to make an assessment.
• Data availability. There is a lack of available data in this sector, critically limiting monitoring, evaluation and policy implementation. The Government should review, invest in and reform industrial decarbonisation data collection and reporting.

How we monitor industry

The monitoring map for industry (Figure 4.1) shows how the Government’s policies, supported by relevant contextual enablers, can put in place the conditions for success required to realise the outcomes that deliver the transition. It is dependent on technological improvements that reduce the energy- and carbon-intensity of sectors, a reduction in process emissions and actions that reduce the use of materials and products.

• Our monitoring map for achieving these emissions reductions is based on a combination of the Government’s plans (e.g. Carbon Budget Delivery Plan, Net Zero Strategy, Industrial Decarbonisation Strategy and the Resources and Waste Strategy) and CCC analysis. Both the CCC’s pathways and the Government’s plans require outcomes across a mix of fuel switching, carbon capture and storage (CCS), energy efficiency, resource efficiency and material substitution to enable the emissions reductions required.
• The first strand of the monitoring map reflects indicators which will affect territorial emissions. The second strand focuses on consumption emissions – emissions from imported manufactured products – an area in which we are looking to develop our evidence base. Tracking imported materials, alongside the carbon-intensity of materials is the starting point for this analysis.

 

Figure 4.1 Monitoring map for industry Source: CCC analysis Notes: Numbers are from the Government’s Carbon Budget Delivery Plan unless stated otherwise.

Indicators

This section sets out the indicators we will use in our progress monitoring for the sector. For each indicator we assign an ID number and identify a current data source. We explain why each indicator is important and what we are looking to see in our monitoring. The historical data and, where available and relevant, the benchmark trajectories against which we compare them are presented in the supporting data alongside our Progress Reports. We follow the order laid out in the monitoring map (Figure 4.1), taking each main branch in turn to lay out required outcomes and enablers. We discuss policy needs (flagged as ‘Policy’) alongside the most relevant outcomes and enablers. Specific recommendations are made in our annual progress reports to Parliament.

a) Headline indicators

The headline indicators allow us to see the impact of the outcomes achieved within the abatement measures at a high level, where a shift in the trend can be observed.

Indicator: Energy consumption per unit of GVA in industry

ID: IN9
Source: UK National Atmospheric Emissions Inventory (NAEI); DESNZ Energy Emissions Projections; ONS GDP output approach – low-level aggregates
Unit: TWh/GVA

• Energy consumption per unit of GVA for the entire manufacturing sector can be tracked with existing data. However, falling energy-intensity does not necessarily reflect implementation of energy efficiency measures, as changes in energy-intensity can reflect shifts in output from more to less energy-intensive sectors.
• To understand what drives change in this indicator, both quantitative metrics and qualitative insights at a sector level are required.

Indicator: Carbon-intensity of energy used

ID: IN12
Source: UK National Atmospheric Emissions Inventory (NAEI); DESNZ Energy Emissions Projections
Unit: TWh/MtCO₂e

• This reflects the level of greenhouse gases emitted per unit of energy used. It is a useful indicator to track as it brings together the impact of emissions reductions from abatement measures such as fuel switching and CCS.

(Non-combustion) Process Emissions

ID: IN3
Source: DESNZ UK territorial greenhouse gas emissions national statistics
Unit: MtCO₂e

• Process emissions arise from a range of chemical reactions, such as from the calcination of limestone for cement. These historically represent a small proportion of total emissions in manufacturing and construction (15% in 2020).
• The changes in production processes within the sectors and the future impact of CCS will be reflected in this indicator.

Indicator: Material and product use

ID: IN18
Source: Defra England’s Material Footprint
Unit: Megatonnes

• Raw material consumption (RMC) (also known as a material footprint) provides an economy-wide metric of the global primary raw material extraction attributable to final domestic demand for goods and services. Defra publishes the material footprint for England at a sector level which we track in the absence of a UK wide dataset. While we do not currently have a physical material and product use pathway, it is a useful indicator of sector-wide progress in resource efficiency.
• We track changes in the weight of metals and minerals used in manufacturing and construction products consumed England. Reduction in the total demand for raw materials might be due to several factors, including changes to their use, which are in turn affected by cost, and improved efficiency. Whatever the driver, reduction in the total quantity of raw materials used is expected to lead to a reduction in emissions. Data is available for the different materials and sectors. We exclude biomass and fossil fuels and focus on materials.
• Defra publishes the RMC indicator as part of the Resources and Waste Strategy evidence base for England; Zero Waste Scotland report the same indicator using a different methodology for Scotland; the Welsh Government is developing one as part of its Circular Economy Strategy. If combined with a measure of the carbon-intensity of material use, the contribution of material efficiency to meeting Net Zero targets can be better determined.

Indicator: Manufacturing and construction consumption emissions

ID: IN2
Source: Defra UK’s carbon footprint
Unit: MtCO₂e

• Emissions beyond our territorial measure give a better sense of the carbon footprint of the UK and give a broader view on the UK’s contribution to tackling climate change.
• Policy. Government should track over time as the structure of the sector changes and new policy develops on trade and carbon leakage.

b) Drivers of abatement

Required outcome: Energy efficiency

CCC modelling suggests that to meet our climate goals, greater energy efficiency (energy consumption per unit of output) will need to generate up to a third of the emissions reductions required across manufacturing and construction up to 2025 and around 25% up to 2030. This is supported by the Government pathway.

These indicators build a picture across sectors of the progress being made to reduce energy consumption per unit of output.

Indicator: Energy consumption per tonne of steel / paper

ID: IN19, IN20
Source: World Steel Association; Confederation of Paper Industries
Unit: GWh/tonne, indexed 2018=100

• Insight at a sectoral level is gained where data are available. In this case we are looking at energy consumption per tonne of crude steel or paper produced in the UK, as they are two of the most important contributors to energy efficiency savings in our Balanced Pathway. In our progress report this data is supplemented with qualitative insights to build a holistic picture of progress.
• Ideally the energy costs share of total costs of production within a sector would be tracked. However, these data is not easily sourced.

Indicator: Percentage of firms that have their industrial sites covered by an energy management system

ID: IN21
Source: Environment Agency Energy Savings Opportunity Scheme dataset
Unit: %

• In the absence of available data on each firm’s adoption of energy management systems, a proxy indicator tracking the share of firms that have adopted an ISO 50001 system on all their sites or energy supplies is used. Data from the Energy Savings Opportunity Scheme show that the take-up of these systems was low in 2021 reporting, at 5-10% with a further 1% having the system at some of their sites or energy supplies.
• The first limitation of this indicator is the irregularity of the reporting in ESOS, which is every four years. The second is the lack of sectoral data collected by ISO on the certification of enactment of the ISO 50001 system – the uptake of ISO 50001 systems in the UK is increasing but it currently cannot be disaggregated by sector.

Required outcome: Resource efficiency and material substitution

More resource-efficient production and consumption of materials and products reduces emissions from material mining and processing, manufacturing, and construction. This will impact emissions in other sectors including waste, transport, and buildings.

• The CCC pathway for resource efficiency reduces UK demand for a diverse range of materials and products including vehicles, construction products, textiles, electronics, and packaging. The pathway’s strategies involve using less and alternative materials to make products (includes secondary/ recycled material use) and using those products for longer, for example designing more durable and repairable products, reusing products, and using products more intensively through different service/ leasing models.
• Availability of data to measure progress on resource efficiency and material substitution (beyond waste and recycling) are poor, which critically limits monitoring and evaluation. We have focused on proxy indictors where data are available, providing a very partial picture of progress. We outline a tiered approach that would enable better reporting in Box 4.1, developed in consultation with stakeholders.
• In this report we have developed two proxy indicators to track progress in the resource-efficient production and use of cars: light-weighting and car clubs. We aim to expand the scope to other strategies (e.g. product longevity, material substitution and secondary/ recycled content) and products including textiles, furniture, electronics, and appliances in the future as data becomes available.
• We currently track progress against the CCC’s Balanced Pathway, as we do not have sufficient detail on the Government pathway.

Indicator: Average embodied carbon of buildings

ID: IN22
Source: None
Unit: N/A

• While operational emissions from buildings have been reducing gradually, annual emissions embodied in UK construction have remained relatively constant. A useful indicator would track the average emissions embodied in buildings.
• Policy has focused entirely on reducing operational emissions. The embodied carbon of buildings, and more generally construction, is not required to be assessed or controlled, except on a voluntary basis. We recommend mandatory assessment of whole-life carbon and material use of construction projects to enable minimum standards to be set. The Government is considering its approach to measuring and reducing embodied carbon in new buildings.

Indicator: Weight of passenger cars

ID: IN23
Source: The International Council on clean transportation European Vehicle Market Statistics Pocketbook 2021/22
Unit: Kilograms

• This indicator tracks the average weight of new passenger cars in running order sold in the UK as a proxy for light-weighting cars. It has not been updated in 2023 as the source data is for EU countries and no longer includes the UK. We will aim to find an alternative data source in 2024.
• The overarching strategy we are trying to measure is light-weighting, where products are made with fewer material inputs. While EVs are heavier than their petrol equivalent, there has been a consistent shift towards larger vehicles. Battery electric vehicles currently remain a low percentage (12% in 2021) of new car registrations (see Chapter 3).
• Lighter-weight cars reduce material inputs, embodied emissions, and fuel consumption.

 

Box 4.1 Monitoring resource efficiency in industry

Resource efficiency is key to reducing emissions in this sector. Resource efficiency provides most of the immediate abatement in manufacturing and construction and 21% of the cumulative abatement in the sector to 2050. The contribution of resource efficiency measures depends on the carbon-intensity of materials used, the volume of material used to make products and the demand for products (Defra Resource Efficiency Metrics). Monitoring abatement from resource efficiency requires data on carbon, material use and product demand. We set out a tiered approach for data collection to enable better monitoring of progress of embodied carbon and material use of the entire sector, by sub-sector or product and by specific strategy. Data are required on the supply and demand for products. Strategy-based indicators are intended to identify the underlying measures driving progress in resource efficient production and consumption. They are intended to be flexible and can adapt as policy and data becomes more available/ established. Table B4.1 Data availability for resource efficiency indicators Notes: RMC = Raw material consumption; t = tonnes Indicators Carbon-intensity of materials and products Material-intensity of products Demand for materials products Data availability Economy-wide tCO2e/ t RMC by material RMC/ product or RMC/ £ GVA by material RMC by material Material and carbon footprints are published annually by Defra. Linking the two sets of accounts would improve understanding of the contribution of resource efficiency towards Net Zero emissions. Sector/ product-level Emissions embodied by function examples: CO2e/m2 construction type, CO2e/car purchased. Materials embodied by function examples: t/m2 construction type, t/car purchased. Physical demand for new products examples: floor area (m2), car ownership. There is no requirement on manufacturers and most construction projects to provide this data but there are examples of it being collected in industry (for examples see list below). Strategy-based Material substitution examples: Timber frame as a market share of new housing. Lightweight design examples: average car weight, weight of material inputs to buildings.     Product longevity examples: average product lifetime, repurpose rate of buildings.   Goods to services/ sharing examples: share of products leased, car ownership offset by car clubs. Data is limited, dispersed and partial. Reuse and recycling examples: secondary material content. The resource efficiency component of our Balanced Pathway contains more than 40 measures across six product groups and a range of materials. These were informed by case studies and data to track them is limited, variable and collected across a wide range of stakeholders. In general, national statistics report on sector-wide material inputs and waste generation and treatment. But this is limiting, as there is little that tracks resource efficiency measures in terms of how long products last, the percentage of secondary materials that make up a product, and the material or carbon composition of products. The reporting and monitoring of emissions and materials over the lifecycle of products is not mandated. Data on existing material and product stocks, and on the quality and availability of materials and products for reuse and repurposing are limited and rarely publicly available. Examples of existing data surveys and schemes which could provide a basis for scaling up data monitoring and reporting include: •      Part Z is an industry-proposed amendment to building regulations to include embodied emissions reporting which covers material choice and use of secondary materials. •      The Greater London Authority requires whole life-carbon assessments and a circularity statement for developments which track embodied carbon and material (re)use. •      CoMoUK is developing metrics to provide evidence on impacts of car clubs. •      WRAP provides detailed analysis on textiles and will work with Defra to develop this area. •      The NICER programme is mapping material stocks and flows with the intention to report on secondary data quality and availability across global value chains. Environmental Product Declarations provide a voluntary disclosure of a product’s environmental impacts based on a Life Cycle Assessment.

 

Required outcome: Carbon capture and storage (CCS) deployment

This set of indicators covers development and deployment of CCS within the manufacturing and construction sector. This will change over time as progress moves from development to deployment. Initially, we will track the planned pipeline of industrial CCS projects, then contracts signed, and finally actual carbon captured. Other indicators covering the broader development of the UK’s CCS capacity are considered in the enablers section.

Indicator: Industrial CCS project pipeline

ID: IN7
Source: CCSA CCUS delivery plan 2035
Unit: MtCO₂e

• The project pipeline refers to ‘ready and known’ industrial CCS projects that are in the planning pipeline for industrial clusters. Data on this are taken from the CCSA’s CCUS Delivery Plan to 2035.
• This indicator tracks the development of industrial carbon capture projects. As the industrial clusters are likely to be among the first projects to deploy CCS within industry, this provides an indication of early progress and planning.
• The project pipeline will not necessarily translate into actual projects unless the necessary policy support is in place.

• There are limitations in that data on the project pipeline are not currently collected annually, as this data is a snapshot from the CCSA’s CCUS Delivery Plan to 2035. Equally, the clusters are at distinct stages and operate in different ways, so it is not straightforward to collect equivalent data from all of them.

Indicator: Industrial Carbon Capture (ICC) contracts signed

ID: IN24
Source: None
Unit: Number

• The ICC business model is not yet finalised so there are no data to be collected on this yet. Three ICC projects are currently negotiating with the UK Government and contracts could be signed in 2023. It is expected that the Low Carbon Contracts Company will be the counter-contracting party for the ICC contracts, and that they should provide data on this on their website as they do with offshore wind agreements. The extent of the data publicly available will determine how usefully this metric can be tracked.

Indicator: Industrial CO₂ stored

ID: IN25
Source: None
Unit: MtCO₂e

• This indicator will track the deployment and operation of CCS in the manufacturing and construction sector, against the ambition set out by the Government’s Carbon Budget Delivery Plan.
• As deployment of CCS is not expected until the mid-2020s, there is currently no data, but it will be an important indicator in the future.
• It is expected that CCS deployment will be metered, and data will be collected. As we get closer to initial deployment, DESNZ should ensure these necessary data collection systems are in place.

Required outcome: Low-carbon fuel switching

This indicator covers deployment of fuel switching away from fossil-based fuels to low-carbon hydrogen (blue and green), electricity, and bioenergy.

Indicators: Hydrogen, electricity, bioenergy, and bioenergy with CCS use as a share of total manufacturing and construction energy use

ID: IN4, IN5, IN6
Source: DESNZ Digest of UK Energy Statistics (DUKES) Aggregate Energy Balance; NAEI UK Greenhouse Gas Inventory: Energy background data
Unit: %

• This set of measures will track the use of hydrogen, electricity, bioenergy and bioenergy with CCS in the industry sector. This set of measures will be tracked individually while combined use of hydrogen, electricity and bioenergy will also be tracked.
• Hydrogen and bioenergy with CCS use are not currently tracked (noting that the deployment of both technologies is currently minimal), although they could in future be captured by the Digest of UK Energy Statistics (DUKES) and/or parallel publications. DESNZ should ensure that data collection is ready in time to collect data on hydrogen and bioenergy with CCS use within industry as they begin to be.
• Our pathways for each of these technologies are indicative. The actual technology split is less important than the fact that progress is being made on aggregate. It also should be noted that higher electricity use within industry needs to be accompanied by the decarbonisation of the electricity system, otherwise emissions savings will be less than necessary.

Indicator: Industrial hydrogen project pipeline

ID: IN8
Source: None
Unit: N/A

• Data are lacking on the pipeline of planned industrial hydrogen projects. These data would give an indication of industry’s plans and readiness to adopt hydrogen, in a similar way to the data collected by the CCSA on the pipeline of planned industrial CCS projects. Some clusters hold these data, but it is not collected centrally.

Required outcome: Low-carbon fuel switching in off-road mobile machinery

Our Balanced Pathway for off-road mobile machinery is primarily based on fuel switching, as seen in the monitoring map.

The data available to track progress in decarbonising the off-road mobile machinery fleet are limited to estimates or projections, with no real-world data published in the UK. We expect real-world data will become available on fuel consumption and the composition of the fleet in the future.

Indicator: Low-carbon fuel use as a percentage of total fuel use in off-road mobile machinery in construction

ID: IN28
Source: None
Unit: %

• The fuel consumption of the off-road mobile machinery fleet in construction within our Balanced Pathway anticipates the potential use of biodiesel as a transition fuel with either low-carbon fuels such as hydrogen or electrification increasing their role over time. Understanding the low-carbon fuel use within the fleet, as a percentage of total fuel use is a useful measure over time to track progress. Less use of biodiesel could be consistent with equivalent decarbonisation, if bioenergy resources are instead used elsewhere in the energy system (e.g. the biodiesel is used instead in transport).

Indicator: Low-carbon fleet as a percentage of the total fleet used in construction

ID: MC27
Source: None
Unit: %

• Tracking the real-world composition of the off-road mobile machinery fleet is a well-known data gap within the Government, academia, and industry. This is challenging to tackle due the heterogeneity of machinery and its uses, as well as the structure of the market. The market is split between those who rent machines, accounting for 60-70% of the market, and those sold directly to firms. The latter adds an extra dimension of complexity in tracking the fleet, as there is a second-, third- or fourth-hand market for sales of machines within the UK.[1]

Required outcome: Consumption emissions

Indicator: Emissions from imported manufactured products

ID: IN16
Source: None
Unit: MtCO₂

• Tracking the emissions from products imported provides an overall view of how the UK’s consumption footprint is split between domestic production and international production.
• Policy. This provides background to policy approaches the Committee suggests with respect to policy on reducing imported emissions.

Indicator: Imported materials

ID: IN15
Source: Defra UK’s Carbon footprint
Unit: Tonnes

• The tonnes of materials imported provides an indication of the potential impact that resource and energy efficiency policy could have in reducing the UK’s consumption footprint by reducing consumption.
• We have not yet collected historical data for this indicator.

Enablers

Indicator: CO₂ storage licences

ID: IN27
Source: North Sea Transition Authority UK carbon dioxide storage
Unit: Number

• To deploy CCS, which is expected from the mid-2020s, the necessary transport and storage infrastructure must first be licenced and built.
• We have recent historical data but no pathway for this indicator.
• In May 2023, the North Sea Transition Authority offered 20 new carbon storage licences for award. If and when these are agreed, the number of licences will increase significantly.

Indicator: CO₂ and hydrogen pipeline capacity

ID: IN26
Source: None
Unit: Mtpa, GW

• To deploy CCS, which is expected from the mid-2020s, the necessary transport and storage infrastructure must first be licenced and built.

Indicator: Percentage of UK territorial manufacturing emissions covered by private sector targets

ID: IN11
Source: EcoAct database and report (CCC commissioned project)
Unit: %

• Companies increasingly disclose emissions reduction targets, often verified through schemes such as the Science Based Targets initiative. In 2023 the CCC has commissioned analysis to model how such corporate targets align with our Balanced Pathway for industrial decarbonisation.
• We have converted this modelling into an indicator which we intend to update for each annual progress report.

 

[1] An estimate from the Construction Equipment Association.

Future improvements

Data gaps

The main obstacles to overcome in effectively tracking progress in this sector are:

• The diversity of industry sub-sectors means it is a challenge to find cross-cutting measures of progress. This creates demand for more data across sub-sectors which is time consuming and challenging, particularly for smaller firms.
• Understanding the emissions impact of abatement measures and policy in areas where the sectoral composition is changing, and new sectors are emerging.
• Understanding real-world activity in new technologies, such as CCS and hydrogen, where the data could be particularly commercially sensitive.

Here we present the data gaps we have identified for industry. We will add these to our framework once credible sources are available.

• Energy efficiency. We are recommending that the UK Government develops this new indicator to track the energy efficiency of industry as a whole, something which is currently not possible. The indicator would be an index based on data the Government already collects through Climate Change Agreements and other schemes. One way to create this index could be to develop a standard basket of common industrial materials produced in UK and track the average energy intensity of their production. This could be made public without revealing commercially-sensitive information about any particular industry or company.

• Carbon-intensity of materials. We recommend Defra publishes data on the carbon-intensity of different material types to enable tracking the contribution of material consumption to Net Zero targets.

• Data on (secondary) material use and associated emissions of products. Improved monitoring and reporting at the sector and/or product level would aid the design of resource efficient products and policies.

• Electrification. There are limited data available to capture the uptake of new electrification technologies required for decarbonisation within industry. Data on final industrial electricity use includes a large amount of ongoing electricity use and makes it difficult to decipher progress. The Government should look to fill this data gap to enable better assessment of progress on industrial electrification.

• Bioenergy. Better data is needed on how industry uses bioenergy in order to assess whether the sector is making best use of this limited resource. In future data will be needed on consumption of bioenergy combined with CCS (industrial BECCS).

• Off-road mobile machinery. Data on the composition of the fleet and its fuel consumption should be developed further. The Government should consider developing tools and encouraging new technologies to track fuel use and the changing make-up of the fleet.

• Industrial hydrogen and CCS readiness. Data on the readiness and expected use of hydrogen by industry should be developed further. This data could take the form of the planned pipeline of industrial hydrogen and CCS projects, in a similar way to the CCS project pipeline developed by the CCSA in 2022. Data on the status and capacity of hydrogen and CCS transport and storage networks should be collected centrally.