The European Commission this week published its Industrial Accelerator Act (IAA), a set of new measures intended to increase demand for low-carbon, ‘European-made’ technologies and products. The measures aim to boost manufacturing, support business growth, and create jobs in the EU, while accelerating industry’s shift to cleaner, future-ready technologies. The proposals will be subject to negotiations by the European Parliament and Council before adoption and implementation.
The UK chemicals sector commends the EU’s ambitious action to accelerate industrial decarbonisation while maintaining globally competitive manufacturing. To ensure the UK remains an attractive destination for investment in clean manufacturing, opposite its nearest neighbours, our upcoming Industrial Decarbonisation Strategy refresh must provide a clear, pro-growth framework that supports decarbonisation and safeguards our manufacturing supply chains. Below we pick out some of the IAA’s key proposals on industrial decarbonisation, that the CIA would like to see in the UK.
1. Accelerating planning and permitting for industrial decarbonisation. The UK Government must act to ensure that planning and permitting for industrial decarbonisation projects and net-zero infrastructure is streamlined and competitive, when compared with other industrial nations competing for investment. Long and complex processes remain a barrier to timely investment for new low-carbon production capacity as well as hydrogen and carbon capture networks.
2. Establishing credible embodied emissions reporting. The introduction of carbon intensity labels for chemical products could help markets better value lower-carbon production, but complementary policies to assist UK manufacturers with the deployment of low carbon technologies would also be needed. The UK should work with our international partners to develop robust, consistent and science-based methodologies for measuring product carbon intensity. Alignment with international frameworks will be essential to avoid duplicative reporting and additional costs for manufacturers.
3. Supporting industrial clusters. The UK should exploit the strengths of our clusters, through targeted support for infrastructure, skills and innovation. Our cluster sequencing programme provides a foundation for action but more is needed. Following recent announcements, only one of our two Track 1 clusters – HyNet and the East Coast Cluster - can expect funding for its hydrogen network whilst Track 2 clusters, like Acorn, are still awaiting a final investment decision. When it comes to innovation, Grangemouth’s Project Willow provides a template for exploring clean and circular chemical investment opportunities in UK clusters, but high energy prices mean greater public support is required to crowd in private finance. Innovate UK, the British Business Bank and the National Wealth Fund must work together to ensure creative ideas can take root in the UK.
4. Providing long-term policy certainty. The EU’s proposed evaluation and review mechanism highlights the importance of predictable but adaptive policy frameworks. The UK must ensure that its revised Industrial Decarbonisation Strategy – due early this year - is supported by stable, long-term policy signals that give companies confidence to invest in major capital projects. Crucially, the Strategy must address the high cost of industrial energy and offer competitive grant support to unlock inward investment. As in the EU, regular review should focus on the dual aims of accelerating decarbonisation and improving competitiveness.
The race to attract clean industrial investment is intensifying. By streamlining planning and permitting, supporting demand for low-carbon products, strengthening industrial clusters and tackling high energy cost, the UK can ensure that its chemicals sector continues to play a central role in delivering economic growth and the transition to net zero.
