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

Kick-starting clean growth in the UK’s industrial clusters

2025-10-31T16:11:00+00:00

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.

Position Statement
How the UK’s Carbon Price Support keeps electricity prices high
The UK’s Industrial Strategy recognises high energy cost as a key barrier to investment in the UK yet our Carbon Price Support mechanism continues to inflate electricity costs for business, long after achieving its stated aim of ending coal generation. The UK Government must act to remove this unnecessary, additional carbon cost from GB electricity bills to improve the competitive position of British manufacturers.
Position Statement
The risk of carbon leakage in the UK’s key export markets
As the UK introduces its CBAM in 2027, the Government is minded to reduce free allocations to CBAM sectors. This could have a detrimental impact on the UK’s ability to compete in overseas markets. The EU has already announced plans to support EU producers facing a mirror issue. The UK Government must act now, to put in place an effective, predictable and long-term carbon leakage mitigation regime to unlock investment in the UK.
Position Statement
Waste and the UK Emissions Trading Scheme: The impact on the chemical industry
Emissions from waste incineration comprise around 8 MtCO2 emissions each year. Action is required to mitigate these emissions yet Government proposals raise concerns for our sector: The current approach risks ineffectual application of the carbon price and increased cost to the chemical sector; Hazardous waste incineration must be exempted from inclusion in 2028, and; More needs to be done to help nascent circular technologies like chemical recycling.

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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