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Industrial strategy: greening industry

By Dave Elliott

Following on from an earlier Green paper and its Clean Growth Strategy, the UK government has now produced a White Paper on Industrial Strategy. Although examples are provided of specific infrastructure projects and opportunities, it’s mostly couched in very general policy terms, identifying four ‘Grand Challenges’. It says we must put the UK at the forefront of the artificial intelligence and data revolution; maximise the advantages for UK industry from the global shift to clean growth; become a world leader in shaping the future of mobility; and harness the power of innovation to help meet the needs of an ageing society’. 

For each Grand Challenge, ‘leading figures from industry and academia’ will be recruited to act as expert advisors, with mission teams ‘tackling specific problems, such as reducing carbon emissions by a given percentage over a specific year period, using well defined and concrete goals to allow progress to be monitored and assessed, and the option to change course when appropriate’.

Some of this will involve specific sector deals, plans and programmes. For the energy sector (my focus here) they say: ‘We will continue to work closely with the nuclear and offshore wind industries to further drive down the costs of clean power, while building UK supply chains. We will also continue to explore the long-term options for clean heating and the many potential uses of low carbon hydrogen’. Not a lot new there then: they are all existing commitments. Note that there is only mention of offshore wind- not onshore wind or solar. Or tidal. And lest there be any doubt, the Strategy says Nuclear is a vital part of our energy mix, providing low-carbon power now and into the future,’ with the nuclear sector being ‘integral to increasing productivity and driving growth’. So there’s a sector deal on that.

Other energy-related sector deals, plans and programmes include a new ‘Prospering from the energy revolution’ programme to develop ‘world-leading local smart energy systems that deliver cheaper and cleaner energy across power, heating & transport, while creating high value jobs and export capabilities. Our world-leading Smart Systems and Flexibility Plan will build on the rollout of smart meters to grow the markets for these systems and technologies in the UK’: www.gov.uk/government/publications/upgrading-our-energy-system-smart-systems-and-flexibility-plan

There is also a ‘Transforming Construction’ programme, which will ‘take full advantage of new technologies to provide safer, healthier and more affordable places to live and work that use dramatically less energy to build and run’. The government also says they ‘will make our energy-intensive industries competitive in the clean economy’. They say ‘global markets for clean and efficient industrial fuels, processes and materials are growing rapidly. We are investing £162 million in innovation for low carbon industry, and developing a new strategy for the bio-economy. We will work with industry to stimulate further market investment in clean & efficient technologies and processes, including through all manufacturing Sector Deals, and through developing a new scheme to support investment in industrial energy efficiency. This scheme will help large businesses install measures that will cut their energy use and bills, as well as improve their productivity. This will build on the 2050 Decarbonisation Action Plans that we have agreed with 7 of the most energy-intensive sectors’. And finally: ‘Our new ‘Transforming food production: from farm to fork’ programme will put the UK at the forefront of advanced sustainable agriculture,’ as, ‘over the coming years’, the EU Common Agricultural Policy is replaced!

There is a lot of rhetoric and hopefulness here, with the underlying assertion being that growth and environmental protection can go hand in hand, and indeed can sustain each other- with the UK showing the way! So the government says ‘We will maximise the advantages for UK industry from the global shift to clean growth – through leading the world in the development, manufacture and use of low carbon technologies, systems and services that cost less than high carbon alternatives. The move to cleaner economic growth- through low carbon technologies and the efficient use of resources – is one of the greatest industrial opportunities of our time. By one estimate, the UK’s clean economy could grow at four times the rate of GDP. Whole new industries will be created and existing industries transformed as we move towards a low carbon, more resource-efficient economy. The Paris Agreement of 2015 commits countries to revolutionizing power, transport, heating and cooling, industrial processes and agriculture. The effect of these changes will be felt by businesses throughout the economy, and will involve the reallocation of trillions of pounds of public and private finance towards the pursuit of cleaner growth’.

There is no doubting that the effect of these policies and plans could be widespread, and investing in green technology can certainly help reduce emissions, if it is done right. But will it be done right? Why sideline onshore wind and PV solar? Why push nuclear so hard? Electric vehicles also feature strongly in the governments plans, along with nuclear power: they may need each other (see my next post)! But it’s not clear if either are the way ahead- for example, nuclear is proving to be increasing expensive and EVs won’t resolve congestion problems.  More generally, if a short-term cost-avoidance approach dominates, as it has so far in the energy sector, then potentially good longer-term ideas may not get taken up. That has already been found to be a problem in terms of the adoption of energy efficiency measures in industry. Companies tend to be risk averse. They focus on short-term economic benefits and opt for incremental changes that don’t interfere with production. www.gov.uk/government/publications/investing-in-energy-efficiency-investigating-the-total-costs-to-business  And in terms of the governments priorities, it is far from clear that its rival policies e.g. the support still offered to oil exploration and (shale) gas, will not undermine the green energy gains it is seeking.

It is good to see industrial manufacturing productivity being linked to green innovation, and renewables can clearly be used to power product manufacturing. Some interesting ideas have also come forward for repowering the key primary material production sector directly with renewables. For example, the GFG Alliance has a ‘Greensteel strategy’ which aims to use electric arc furnaces part-powered by renewable energy to melt scrap steel so it can be reused, a process which is more environmentally friendly than primary steel-making in a blast furnace powered by coal: www.telegraph.co.uk/business/2017/11/27/gfg-alliance-reveals-strategy-increase-uk-steel-production-5m/ In addition, a forge in Sheffield aims to use biogas, supplied from an anaerobic digester fed with food and other waste from a nearby waste recycling centre: www.renewableenergymagazine.com/biomass/sheffield-forge-could-be-the-first-in-20171117 And the Lochaber aluminium smelter near Fort William is to get power from a wind farm at nearby Glenshero, which may also supply Liberty’s Dalzell steel mill in Motherwell. That could make some of the steel for the wind turbines: www.independent.co.uk/news/business/news/wind-turbines-scotland-smelter-steel-plants-mills-highlands-gfc-alliance-motherwell-a7932946.html

Bold ideas like this are welcome, but they may not be sufficient to ensure that growth in production output and consumption will not still lead to growth in emissions. That may be the real test of whether the link between growth in GNP and growth of emissions can be broken.  Many greens would no doubt argue that sustainable production is not enough: to reduce eco-impacts we also have to move to sustainable consumption.  Not an idea that appears in this plan- it’s all about global growth.. led by a renewed enterprising UK! www.gov.uk/government/uploads/system/uploads/attachment_data/file/662541/industrial-strategy-white-paper-print-version.pdf

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