Energy and Climate Change

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The UK chemical industry faces challenges due to high and rising energy costs, impacting its international competitiveness. Despite success in deploying renewable electricity, the industry now faces higher prices compared to global competitors due to pass-through costs including carbon pricing, renewable power subsidies, and network capacity increases. The sector relies on lower gas prices for competitiveness, but fears rising costs if asked to pay for decarbonising the heat supply like the electricity grid.

The CIA collaborates with members, government, and regulators to insulate the industry from energy transition costs while transitioning to a net-zero energy system. To mitigate emissions, the industry plans fuel-switching to hydrogen or electricity and retrofitting carbon capture equipment. CIA works to ensure supportive policies for these investments and to prevent net-zero transition costs from harming manufacturers.

Position Statements

Free allocation’s role in decarbonisation

2025-11-21T15:21:00+00:00

The CIA recognises that carbon pricing can incentivise decarbonisation, but only where there is also effective carbon leakage mitigation. Because clean manufacturing comes with a ‘green premium’, until there is a global carbon price, or comparable decarbonisation ambition elsewhere, placing a higher carbon cost on UK manufacturers will only increase the risk of carbon leakage. Industry needs carbon leakage mitigation that reflects the UK’s industrial decarbonisation pathway.

Position Statement
Territorial VS consumption emission targets: why does it matter?
The greatest contribution we can make to the reduction of global emissions would be to make the UK a global exporter of competitively priced low-carbon industrial products. But this requires consumption-based targets that consider realities beyond our borders. With the right targets, the UK could become a hub for low carbon industries, underpinning a green growth economy. This would be successful climate change leadership.
Position Statement
Shifting the policy cost off electricity bills
Chemical products are integral to all clean energy technologies but UK producers are struggling to compete with lower energy prices overseas. Moving policy cost off the electricity bill would improve competitiveness and attract investment in growth and electrification. But moving this policy cost onto the gas bills would shutter businesses in the near-term, before they have the market conditions needed to electrify.
Position Statement
Kick-starting clean growth in the UK’s industrial clusters
Carbon capture, usage and storage (CCUS) and hydrogen are vital to the chemical sector’s net zero transition. CCUS can remove emissions from energy-intensive processes, while CCUS-enabled hydrogen provides a low-carbon feedstock and fuel. Together, they can unlock investment in sustainable chemical production, support circular carbon systems, and enhance long-term industrial competitiveness.

Be part of it

Members are invited to get involved with our various energy and climate change strategy groups, networks and issue teams, which include: Energy and Climate Change Policy Network, Industrial Emissions Policy Issue Team, Sustainability Strategy Group , Environment Network.

For further information, or to express an interest in joining, please contact our team Nishma Patel at PatelN@cia.org.uk or Rich Woolley at WoolleyR@cia.org.uk.

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