According to new research published by Make UK and Siemens, manufacturers have made decarbonisation a priority despite economic challenges, with eight in ten companies saying it is now of high or medium importance.
The research - ‘Decarbonising Manufacturing – Challenges and Opportunities - shows that companies are accelerating efforts to decarbonise due to rising energy costs, the need to ‘do the right thing’ and the rising cost of raw materials.
According to the report, 46 per cent of manufacturing companies are implementing their decarbonisation plans while a quarter will start decarbonising within the next 12 months. An additional 17 per cent aim to begin the process in the next 24 months.
In a statement, Stephen Phipson, CEO of Make UK, said: “Britain’s manufacturers have long shown that they are at the forefront of innovation globally and they have already gone a long way to improve their processes and production in the quest to reach net zero. But in order that they continue at speed, business needs government to play its part in driving the process forward. This starts with setting a bold and ambitious vision for our green future. While numerous strategies have been announced, progress has been limited at best.
The report found smaller companies lagging behind with 31 per cent of manufacturers identifying decarbonising as a high priority and 49 per cent declaring it a medium priority. Larger businesses with over 1000 employees were still more likely to report decarbonising as a high priority, with 28 per cent saying it is a medium priority. Among smaller firms (with 10-249 employees), just over s fifth (21 per cent) said decarbonising the business was of high priority.
Energy efficiency is seen as key to achieving decarbonisation with 47 per cent of manufacturers indicating they have adjusted their business practices to cut energy consumption in response to higher energy bills. Just over a third of businesses surveyed said they had saved money by decarbonising, resulting in improved productivity through streamlining processes.
Two in five companies found installing onsite renewable electricity or heat had helped mitigate against the high cost of grid-supplied energy and helped them meet decarbonisation goals.
Manufacturers face barriers to decarbonise their operations with the cost of upgrading or replacing capital equipment topping the list. A third said they were concerned about remaining cost competitive and the same number cited the rising costs of energy for fuel switching as the main barrier to change. A quarter are held back by the challenge of decarbonisation of transport and logistics, with 23 per cent saying decarbonisation of their supply chains is a real challenge. A lack of internal resource is an issue for some companies alongside a lack of appropriate skills.
A third of manufacturers agree that government strategies and initiatives will help them, but Make UK has found that understanding and take up of that support has been mixed. Lack of knowledge of available help is holding manufacturers back, with one in ten aware of the government’s Industrial Energy Transformation Fund, which has been badged as the main driver for change.
Make UK is calling on government to deliver regular updates on progress in order to help business understand the government’s overall intentions and make investment decisions accordingly.
“Government must deliver regular updates to help business understand the government’s overall intentions and give them the confidence to make investment decisions,” said Phipson. “To turbo-charge investment in decarbonisation projects government should introduce full expensing on green technologies and expand the R&D tax credit to include industrial decarbonisation. The Help to Grow programme should be expanded to Help to Grow Green, which would support business in their decarbonisation journey and supercharge green investment. Companies should also be incentivised to invest in on-site energy generation, where surplus can be added back to the national grid to improve the UK’s energy security.”