UK manufacturing needs urgent financing to reach net zero

MANUFACTURERS must be prepared to take “urgent” action if they are to unprotected to 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 changed what is required in terms of the extent and speed of change in manufacturing”, the report notes.

It adds that making the UK an attractive place for low-carbon manufacturing will require “rapid and close collaboration” between Government, British business and financial sets 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 meaningful structural change to hit net-zero targets.

Rohit Moudgil, manufacturing sector head at HSBC UK, said: “A net-zero UK will nevertheless require steel, cement and chemicals, but it’s clear that there is an increasing need and need 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 change 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 unprotected to 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 in other places 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 rule 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 basic undertaking”, UCL’s Dr Winning, the rule author of the study, said: “Manufacturing will play a basic role in the UK’s net-zero change.

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

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