Manufacturing and the journey towards net zero
The UK manufacturing sector has faced significant change over the couple of decades but perhaps the biggest will be how it faces up to the challenge of net zero.
Described by the University of Oxford as ‘a state in which the greenhouse gases going into the atmosphere are balanced by removal out of the atmosphere,’ net zero is no easy task with manufacturing being one of the largest producers of greenhouse gases (GHG) in the UK.
According to recent research by South West Manufacturing Advisory Service (SWMAS), over 70% of the firms questioned reported that the transition to net zero is not a current priority for their business. Other research points to very little progress in reducing GHG across the sector since 2012.
This article will explore what is meant by net zero and what the government is planning in strategy. It will also look at some of the barriers manufacturers face - together with the opportunities that can exist.
Size of the problem
In 2020, the manufacturing sector produced nearly an eighth of the UK’s GHG and is currently the joint third highest producer of GHGs in the UK.
Disappointingly, CO2 emissions from the sector have seen very little reduction, falling only 16% from 93.7m metric tonnes to 78.4m metric tonnes in 2020. It has also been revealed that out of the 2,000 companies that have set and registered science-based net zero targets in the UK, only 75 are manufacturers as of late 2022.
There is an argument that this lack of action is because the sector is so hugely diverse and the issues in relation to carbon emissions are different. In cement manufacture, for example, 30% of carbon emissions are from heat generation and 60% is from chemical calcination processes. In chemical manufacturing around 85% of emissions are from energy use, and 15% are process emissions. In food & drink manufacturing nearly a third of GHG emissions are agricultural, nearly a tenth is in deforestation overseas, and only 6% of GHG are produced in the manufacturing process.
According to Lloyds Bank, which surveyed over a hundred SME manufacturers, 87% said they knew what net zero meant for their business, however nearly 4/5 said that energy costs crisis has had a negative impact on their net zero plans.
This lack of action was also highlighted by Drax Energy which revealed a third of manufacturers didn’t yet have a formal plan for carbon reduction. When asked why not, many responded by saying they didn’t have time; that they didn’t see the need to plan too far in advance; and they didn’t want to make a formal commitment they might not be able to uphold.
In addition to SWMAS revealing that over three quarters of small and medium sized manufacturers did not see the transition to net zero as a priority, they also found that only two fifths felt cutting carbon emissions would benefit their business.
Only a third of respondents have pledged to become net zero and SWMAS identified seven key barriers for SME manufacturers for starting their net zero journey. The biggest one was cost versus benefit, with a lack of resources, knowledge, and motivation from internal teams also ranking highly.
Launched over a year ago, the government’s Industrial Decarbonisation Strategy
sets out how businesses can decarbonise in line with net zero, while remaining competitive and without pushing emissions abroad.
Many large, global manufacturers have claims on their websites in relation to net zero. Volvo aims to “become a climate-neutral company by 2040” and GlaxoSmithKline wants to be using 100% renewable electricity by 2025 and have net zero emissions across its full value chain by 2045.
The move towards net zero is not just about how the sector can decarbonise - although there are some exciting developments relating to renewable energy such as Liquid Air Energy Storage, Green Hydrogen and Biomass, that could be extremely helpful to supporting this.
Make UK, for example, has framed the manufacturing sector as a key part of the wider push towards the UK’s pivot to net zero, and has identified four ways manufacturing contributes to UK net zero. These are:
- Development of low-carbon hydrogen infrastructure and equipment for construction and transport
- Development of electric vehicles
- Manufacturing carbon capture, utilisation and storage tech
- Manufacture of green energy equipment
Manufacturing clearly has a huge role to play in the move towards the UK achieving net zero and although the sector appears in some areas to be moving in the right direction, more certainly needs to be done, not just in terms of compliance, but in terms of maximising new opportunities. In other words, there needs to be a shift in the narrative towards the benefits.
The journey towards net zero is, and will continue to be, a huge challenge but it is one that businesses across the sector must grasp. Tackling the barriers head on is vital, as is also the need to collaborate and look for growth opportunities in what is a huge shift in how all businesses will need to operate in the not-so-distant future.
How we can help
Claire Petricca-Riding is a partner at Irwin Mitchell. She is head of Head of the firm’s manufacturing sector as a specialist environmental lawyer, her team is ideally placed to advise and support manufacturing businesses on their journeys towards net zero. For more information, please do get in touch.
Further information about our a comprehensive ESG consultancy service is available here.