The UK government has committed £960 million to support clean energy manufacturing in the UK, as part of its plan to achieve net zero emissions by 2050. The funding will help businesses in energy-intensive sectors, such as steel, cement, glass, paper and chemicals, to reduce their energy costs and carbon emissions by adopting low-carbon technologies and improving their energy efficiency.
The funding is part of the Industrial Energy Transformation Fund (IETF), which has a total budget of £1.3 billion and aims to support around 2,000 businesses across the UK by 2024. The funding will be allocated through two phases: Phase 1, which has already awarded £149 million to 26 projects in 2023, and Phase 2, which will open for applications in early 2024 and will provide up to £811 million for new projects.
The industry has welcomed the funding as a boost for innovation and competitiveness, as well as a step towards meeting the UK’s net zero goal and economic growth. Some of the projects that have received funding from Phase 1 include Heineken’s Manchester Brewery, which will install technology to recover waste heat from the refrigeration systems used to cool their beer, and Toyota’s Derby plant, which will introduce new airless paint sprayers, which use static electricity instead of air, to reduce the amount of energy they need.
The projects funded by Phase 1 are expected to save over 2 million tonnes of carbon dioxide equivalent per year, which is equivalent to taking nearly 200,000 cars off the road, and to create and safeguard over 5,000 jobs across the UK. The projects funded by Phase 2 will focus on four themes: industrial fuel switching, industrial energy efficiency, industrial carbon capture, and industrial hydrogen.
The funding will also support the UK’s net zero goal and economic growth by investing in projects that are deemed strategically important by the energy secretary, Claire Coutinho, who has the power to request that energy network companies speed up connecting electricity-hungry projects to the grid. Some of the big projects that are likely to benefit from the funding are Tata’s new £4bn electric battery factory in Somerset, and the switch to electric arc furnaces at Britain’s biggest steelworks at Port Talbot and Scunthorpe, owned by Tata and Jingye respectively. These projects are expected to create thousands of jobs and reduce the carbon footprint of the automotive and steel sectors, but they also require a large and reliable supply of electricity from the grid.
The UK needs a massive upgrade of its electricity network to better connect with new renewable energy sources and to enable thousands of vehicle charging points. The funding is part of the government’s and Ofgem’s plan to reform the model for connections, which now moves at a pace set by each network operator and can take up to 15 years for some projects. The government and Ofgem have told National Grid’s electricity system operator that they are “minded” to adopt its proposals to increase transmission capacity and reduce delays.
The UK has been successful in cutting carbon emissions from electricity generation by around three-quarters since 1990, due to a declining use of fossil fuels and an increasing use of renewables and nuclear power. The government has pledged that all of the UK’s electricity will come from low carbon sources by 2035 and has plans to expand offshore wind, solar power and nuclear reactors.
However, the UK still relies heavily on fossil fuels for its total energy needs, which include things like petrol cars and gas heating, and that the government is granting 100 oil and gas production licences for the North Sea, despite the advice from the Climate Change Committee to phase out oil and gas extraction as soon as possible.
