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This article was originally published by the Energy Demand Research Centre.

Historically, UK industrial decarbonisation policy focused on carbon-intensive sectors such as oil refining, steelmaking and chemicals production, which are largely concentrated in coastal industrial clusters. However, these clusters account for less than half of the UK’s industrial emissions. The remainder come from “dispersed sites” located outside the major clusters, comprising of a diverse mixture of, mostly smaller, energy‑intensive and less energy‑intensive companies.

This diversity has prompted interest in place-based approaches to industrial decarbonisation. Such approaches recognise that firms are embedded in local contexts and that the infrastructure, social networks and capabilities needed to support decarbonisation will vary between places. As a result, decarbonisation plans need to be adapted to local circumstances if they are to be effective across the full range of industrial emitters.

The UK Local Industrial Decarbonisation Plan (LIDP) competition (2023–2025) provides an example of this place-based approach in practice. The programme funded 13 local industrial clusters to develop decarbonisation roadmaps tailored to their local industrial base and circumstances. In a paper recently accepted by Climate Policy, we examine what this programme reveals about the role of place-based approaches in delivering industrial decarbonisation.

The research showed that local industrial clusters are far from uniform. Four distinct forms of local industrial geography emerged, shaped by the uneven legacy of deindustrialisation across the UK in recent decades. Each brought its own opportunities and challenges for industrial decarbonisation planning.

Bounded Clusters

These were relatively compact industrial areas, located within ports or industrial estates. Because participants were geographically concentrated, collaboration was generally easier and could draw on existing relationships. However, bounded clusters also faced limitations. Some encountered area-specific electricity grid constraints, while their smaller scale limited the overall emissions reductions that could be achieved.

Urban Clusters

These projects were located in and around cities, where industry is distributed across a mosaic of locations rather than concentrated in a single place. Here, it was necessary for the project coordinators to identify smaller sub-clusters based on industrial specialisms and geographic proximity. While this allowed for more targeted planning, it also made coordination more complex. In areas where one or two large sites dominated the area’s emissions profile, engaging these organisations was essential to developing a credible plan.

Regional Clusters

These projects benefited from the advantages of scale. They engaged a broader range of businesses, offered greater potential for emissions reductions, and had access to a larger pool of potential participants than bounded or urban clusters. However, this scale also brought new dependencies. Often regional strategies developed plants that relied on future hydrogen and carbon capture and storage infrastructure linked to major coastal industrial clusters, placing key elements of their decarbonisation pathways beyond the direct control of local stakeholders.

Sector-Based Clusters

One project focused on a specific sector rather than a particular geography. In this case, supply-chain relationships mattered more than physical proximity While this provided a clear organising framework, it also made the project reliant on the engagement and influence of a relatively small number of large firms.

Despite their differences in scale and approach, the projects shared several common features. The first centred on access to data. Businesses were often reluctant to share commercially sensitive energy information, while many lacked access to detailed data about their own energy use. Where information was available, it was frequently incomplete or difficult to use. Successful engagement therefore depended heavily on trust and existing relationships. Projects that could draw on established networks between businesses, local authorities and industry organisations found it much easier to gather information and build participation.

The second challenge was infrastructure. Many of the preferred decarbonisation pathways relied on future electricity, hydrogen or carbon capture and storage (CCS) infrastructure that had yet to be delivered, placing key elements of local plans beyond the control of local stakeholders.

The LIDP programme demonstrated both the value and the limitations of place-based industrial decarbonisation. Local actors can play an important role in coordinating businesses, building consensus around shared priorities and identifying opportunities that may be overlooked by national policy. Yet many of the barriers facing industrial decarbonisation lie beyond the influence of local stakeholders. Rather than viewing local and national action as alternatives, we suggest, policymakers should recognise them as complementary forms of governance. The effectiveness of place-based initiatives will ultimately depend on how far they are embedded within a broader national framework that enables implementation.