This briefing paper focuses on the manufacturing and supply chain aspects of decarbonisation in the UK. These industrial aspects of energy transition differ from conventional concerns of energy policy with deploying energy technologies and infrastructures for emissions reduction. They involve flows of goods and materials that stretch far beyond UK borders, have objectives and timeframes not limited to net zero, and raise different questions for research and policy. This paper highlights promising intersections between UKERC research and the broader research and policy community. Its recommendations contribute to an evolving discussion about the industrial and supply chain aspects of energy transition and implications for the UK.
Transitioning from a high to low carbon energy system requires expanding and modernising a host of infrastructures and systems – from transport mechanisms and fuel systems to electricity generation, energy storage and heating solutions. Manufacturing and industrial processes are central to the modernisation and replacement of capital stock, so scaling the build-out of renewable and other low-carbon technologies and infrastructures is a manufacturing challenge. Achieving net zero will also require reducing the quantity of materials required to deliver desired levels of consumption. Energy transition requires a whole system approach to resource and energy efficiency, including materials innovation and substitution, materials stewardship and circularity.
The paper reflects on the global resurgence of industrial strategy outside the UK. The US Inflation Reduction Act and the EU’s Green Deal have set a bar for governmental engagement with the manufacturing and material aspects of low-carbon transition. The absence of a similar plan in the UK has made it an outlier on the global stage. Nonetheless, net zero presents significant growth opportunities for UK manufacturing. Moreover, a green industrial strategy has the potential to address headline economic problems, such as stagnant productivity, chronic under-investment and regional inequalities.
The paper recommends a long-term strategic approach to decarbonisation focussed on manufacturing transformation. Strategy should start from the premise that energy transition changes the economic potential and/or strategic value of existing UK assets; and should encourage new arrangements of technology, finance, and materials that create prosperity while decarbonising. Such an industrial strategy will require heft and durability, and must reckon with the openness of the UK economy to cross-border flows of trade and investment.
It must also balance rapid emissions reduction (which in some cases may most efficaciously be achieved with imported technologies and materials) with nurturing innovation and growing a domestic green industrial sector. An industrial strategy focused on manufacturing transformation needs also to recognise the role foundational (i.e. material processing) industries can play in resource efficiency and supporting resilient manufacturing supply chains. An important role for industrial strategy – yet to be achieved in the UK – is to connect the specific goal of industrial decarbonisation to a more comprehensive and expansive objective: transforming manufacturing and materials use in the UK to meet ambitious climate targets and secure a thriving and resilient low carbon economy.
The briefing paper summarises findings from a UKERC Phase 4 Integration Project on UK Industrial Strategy and the Low Carbon Supply Chain Challenge.