Research conducted in April by Make UK (formerly the Engineering Employers’ Federation) and in partnership with Siemens, questioned key decision makers at 134 manufacturing businesses around the UK, to understand the challenges and opportunities with decarbonising the sector.
The study reveals that despite unprecedented economic challenges and supply chain pressures, around 80% of manufacturers believe decarbonisation of their businesses is a priority. And almost half of the businesses said they are already working on their net-zero plans, with another 25% planning to do so within the next year.
When asked for the main reasons to decarbonise, 54% of companies stated the increasing cost of energy. With around 50% of total electricity costs coming from manufacturing processes, it should be no surprise that over 46% of companies reported that their focus has been on better monitoring and control of energy consumption. Additionally, 21% have been focused on generating renewable electricity or heat on-site, and 30% said they had been introducing more resource efficient systems such as collecting and reusing packaging, raw materials and waste.
Measure it, manage it
Measuring key data points across a businesses operations is essential to make functional change; therefore it’s no surprise that 41% of companies said they are already measuring outright their Scope 1 and 2 carbon emissions. However, scope 3 emission tracking still needs more progress.
Three in five (59%) manufacturers said they are already measuring sub-metered electricity consumption, a sizeable increase from two years ago, and 51% said they measure their fossil fuel consumption.
To help with this data tracking, companies are introducing Industrial Digital Technologies (IDT’s). These technologies are useful for all aspects of business, allowing companies to track metrics for productivity, efficiency, and much more. The report states that in previous research, those who have adopted IDTs have seen the following benefits: lower costs, better-quality products, better customer engagement and service, improved raw materials, waste and energy efficiencies, and process improvements contributing to the reduction of carbon emissions.
Further stating, “the role of digitalisation cannot be emphasised enough as a powerful enabler of data collection for the monitoring and understanding of complex data patterns, and for taking control.”
The main barriers for decarbonisation
Overall, the vast majority (96%) of manufacturers plan to decarbonise their operations either now, or in the near future. But, there are obstacles to taking further action.
43% of respondents cited concerns with the capital costs of upgrading/replacing equipment with modern versions. This was followed up by 31% reporting fears about remaining cost competitive, and another 31% afraid about the rising costs of energy if fuel switching.
Approximately a quarter (26%) are challenged by a lack of funding, either internally or externally. The reasons for this vary, but, include problems such as the low priority usually given to sustainability objectives, or the inflated cost of energy cutting into the available budget.
Additionally, looking at areas outside the businesses control, 24% cited challenges with decarbonising transport/logistics, with 23% concerned about dealing with the supply chain. This isn’t unsurprising, as investment in this area requires a lot more effort in terms of engagement and collaboration with the value chain.
Government support
As part of the Government’s strategies to transition to a net-zero economy, the most relevant for the manufacturing sector is the Industrial Decarbonisation Strategy. The scheme has ambitions for the industry to carbon emissions by at least 67% in 2035 and by at least 90% by 2050.
Grants and initiatives are available to help businesses reduce their green house gas emissions; however, the survey points out that the take-up of this support is mixed, specifically citing low levels of awareness among small and medium-sized businesses.
When looking at energy tax reliefs, there are two available; relief for all energy users, and relief for energy-intensive industries. When asked about the relief for all energy users, only 18% were using the tax relief, 33% were aware and considering using it, 9% had attempted to access the scheme but failed, and 22% weren’t even aware it existed.
The numbers weren’t much better for the energy-intensive tax relief, with 16% using the relief, 11% who attempted to apply but failed, 22% again aware but not using, and a staggering 38% completely unaware.
When it comes to grants and funds, such as the Industrial Energy Transformation Fund (IEFT), there is even less take-up, with just 10% of companies aware of and using it.
According to the report, the main government grant, there are concerns that the entry criteria for the Industrial Energy Transformation Fund may be too complex, deterring SMEs from even trying to apply.
The report calls for more Government assistance, including a review of the pricing structure of electricity, more support with Energy Management Systems and digitalisation, and increased funding for and extending the (IEFT).
Those who aren’t planning to decarbonise
Almost 96% of manufacturers plan to decarbonise their operations either now, or in the near future. However, what about the 4% who don’t? When queried, their main reasons for their decision included difficulty in decarbonising the supply chain, a lack of internal resources, remaining competitive, and the capital costs of upgrading or replacing equipment.
Additionally, a tiny number of companies (~2%) from specific sectors such as paper and glass said they can only run on fuels that produce extremely high combustion temperatures, something only fossil fuels can do at this time. However, do intend to continue research & development to find ways to continue with producing using more sustainable means.
