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

Barriers to electrification for manufacturers in the UK Emissions Trading Scheme

2026-04-24T16:01:00+01:00

As it stands, the UK ETS is failing to promote industrial electrification. By following the EU’s swift and sensible actions on expanding relief from the indirect cost of carbon, revenue recycling, and amendments to the fuel-exchangeability rules, the UK can help to unlock investment in the electrification of UK ETS sites. But amendments to the CCA scheme are also required to ensure UK ETS participants are not penalised by that scheme, as and when they electrify.

Position Statement
Low carbon hydrogen for the UK chemical industry
The UK is well positioned to realise the potential of low carbon hydrogen. We have a headstart on policy support and we have an innovative industrial base that would welcome access to clean fuel and feedstock. But clear, timely, and substantive signals are needed from the Government concerning low carbon hydrogen’s role in the UK’s energy transition. Implementing our recommendations would unlock private investment in clean fuels and circular chemicals, helping to preserve and enhance our energy and material security.
Position Statement
Exempt industry from the Energy Savings Opportunity Scheme (ESOS)
The Government has a goal of reducing business administrative burden by 25% yet it continues to load new energy use reporting requirements on manufacturers, without clear benefits for energy reduction or decarbonisation. High energy cost in the UK means that energy intensive chemical manufacturers are already pulling every lever to preserve their competitiveness through investment in energy efficiency. Moreover, they already comply with existing commitments under multiple regulatory schemes. The Government must act to streamline existing energy reporting requirements, targeting a single route to compliance and a coherent policy framework that enables industrial decarbonisation. In the meantime, energy intensive industry should be exempted from the Energy Savings Opportunity Scheme (ESOS).
Position Statement
How should the UK respond to the EU Industrial Accelerator Act?
The European Commission’s new Industrial Accelerator Act (IAA) marks a significant escalation in Europe’s efforts to drive low‑carbon industrial growth and strengthen its manufacturing base. By creating demand for cleaner, European‑made technologies and streamlining deployment, the IAA aims to accelerate decarbonisation while supporting competitiveness, investment and jobs across the EU. As these proposals move into negotiations, they signal a clear shift in the global race for clean industrial investment and set an important benchmark for the UK’s own approach to industrial decarbonisation.

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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