UK manufacturing needs urgent financing to reach net zero

MANUFACTURERS must be prepared to take “urgent” action if they are to achieve net zero by 2050, claims new research undertaken by university UCL.

Supported by HSBC UK, the report, entitled Net Zero Manufacturing in the UK: Options and Challenges for the Biggest Emitting Sectors, examines the importance of reducing the emission of greenhouse gases in the steel, cement and chemicals sectors.

While highlighting the importance of energy-intensive industries to the UK economy, the report, led by Dr Matthew Winning and Dr Catherine Willan from the UCL Institute for Sustainable Resources, points out that manufacturing accounts for 12 per cent of overall greenhouse gas emissions in the UK – with steel, cement and chemicals accounting for half of that figure.

With increased pressure to decarbonise fully, the UK target to bring all greenhouse gas emissions to net zero by 2050 has “fundamentally altered what is required in terms of the scale and pace of change in manufacturing”, the report notes.

It adds that making the UK an attractive place for low-carbon manufacturing will require “swift and close collaboration” between Government, British business and financial services to unlock the innovation and investment needed.

The report further points out that while emissions from UK manufacturing have already declined by 57% since 1990, “building on this progress will require transformational changes to develop a long-term solution”. Steel, cement and chemicals manufacturing, it says, will have to undergo significant structural change to hit net-zero targets.

Rohit Moudgil, manufacturing sector head at HSBC UK, said: “A net-zero UK will still require steel, cement and chemicals, but it’s clear that there is an increasing need and demand for low-carbon products from supply chains, investors, policymakers and consumers alike.

“Manufacturing has a pivotal role to play in both the UK economy and in the delivery of net-zero ambitions and achieving that requires an integrated decarbonisation strategy, research, innovation and infrastructure changes.”

The challenge, Mr Moudgil noted, “is to put in place funding that allows these industries in the UK to invest to make the transition to net zero while remaining competitive on the global stage”. HSBC UK is committed to working with all our clients to help them on their journey to net zero and we have pledged to achieve net zero from our financed portfolio by 2050 or sooner.”

Calling on the UK to “establish a leadership position and become attractive for low-carbon inward investment”, the report warns that the country would find it increasingly difficult to sell its steel, cement and chemicals if decarbonisation proceeds elsewhere more quickly.

A UK industrial roadmap, combined with policy implementation and investment, would make the country a magnet for low-carbon investment and innovation, and could lead to a revival of manufacturing.

Describing moving the production of sectors such as steel, cement and chemicals away from fossil fuels towards low-carbon and more circular processes as “an enormous but important and essential undertaking”, UCL’s Dr Winning, the lead author of the study, said: “Manufacturing will play a fundamental role in the UK’s net-zero transition.

“This report details what approaches may be taken as well as discussing a number of key challenges, and the opportunity to forge ahead, by working in partnership with Government, the manufacturing sector and financial services.”

The Herald Scotland

The Herald Scotland

The Herald is a Scottish broadsheet newspaper founded in 1783. The Herald is the longest running national newspaper in the world and is the eighth oldest daily paper in the world. The title was simplified from The Glasgow Herald in 1992