Green power giants ready to spark a new era of British industrial growth
Far from being rejected by the Government, low-carbon sectors look set to drive a manufacturing revolution, says Jillian Ambrose
It was over a year ago that the lights went out at the Department of Energy and Climate Change. The embattled government department was buried in the newly formed Department for Business, Energy and Industrial Strategy, raising fears within the low-carbon economy that green growth would slide off the agenda under the Conservative Government. Instead, the energy industry’s position at the centre of the department neatly reflects its central role in the Government’s plans to boost industrial productivity.
In the coming week, the Government’s clean growth plan will bring together a kaleidoscope of closely inter-related sectors through the prism of economic productivity. And the pattern that emerges will be decidedly green. The plan will have its roots in low-carbon power, but its boughs will extend into the wider economy and the Government’s industrial strategy.
The far-reaching ambitions are immediately necessary to avoid falling short of legally-binding pledges enshrined in the 2008 Climate Change
Act. But they are also strategic in the long term: by keeping green growth at the heart of an industrial strategy, ministers believe the benefit will ripple across the economy and clear the way for a sustainable future.
The aim of the industrial strategy is to rebalance the economy by driving growth in the areas where the UK has potential to become a world-leading exporter of skills and technology.
Claire Perry, the Climate Change Minister, was tight-lipped at the Tory party conference about what to expect when the strategy paper is published in the coming weeks. But unlike the industrial strategy of the Seventies, it’s not about picking winners, she says. Instead it will align industries with the power to boost Britain’s flagging earning power. These areas will need to build on government funding and bring in private investment. They will also need to “outlast the vagaries of the political cycle”.
She none the less hinted at a potential return for carbon capture and storage (CCS) – technology that fell from favour two years ago as the Government scrapped its £1bn competition for developers able to trap and store the carbon emissions from coal-fired power plants.
The Government is reimagining the technology in an industrial context with far broader implications for industry and energy. A clean, green British industry is vital for the UK’S plans to meet its carbon reduction objectives. By clustering CCS projects in areas, such as Teesside in the North
East of England, factories will be able to work together to strip harmful carbon dioxide from their emissions, which can then be piped into permanent storage under the seabed.
CCS also presents one of the more affordable means of tackling another major area of carbon emissions for the UK: its heating. Switching the gas grid to run on hydrogen rather than carbon-rich methane could slash emissions from heating with minimal investment needed to upgrade the country’s existing pipeline network.
It is a process already under way at a scheme in Leeds. But the process of converting natural gas to hydrogen, which releases carbon, will need CCS for a nationwide roll-out.
Those reading the runes of early policy moves believe the Faraday Challenge offers a microcosm of how the Government sees the dynamics of this future economic matrix.
The plan commits £246m over the next four years to fund the development of batteries for the electric vehicle market. It was announced alongside a surprise deadline for the automotive market: sales of traditional combustion engine vehicles must end by 2040. The twin policy moves mean that by 2030
‘The aim of the industrial strategy is to drive growth in areas where the UK could be a world-leading exporter’
around 50pc of new vehicles sold in the UK will be electric. This shift could play a key role in reducing carbon emissions and air pollution from the transport sector, but to relegate it to the canons of environmental policy is to miss the point.
It will also stimulate a new market for the automotive sector and develop a technology that could be used within the energy industry to store clean power and reduce costs, which in turn may boost energy-intensive sectors.
If UK plc rises to the Faraday Challenge it could secure a worldleading advantage in the nascent battery industry, which might power exports for Britain post Brexit.
Deirdre Fox, the strategy boss at Tata Steel, is eager for the steelmaker to avoid missing out. She addressed delegates on the fringe of the Conservative Party conference last week, stressing the importance of steelmaking for the energy industry’s supply chains and its role in the electric vehicle boom.
Tata provides steel for 98pc of all vehicles produced in the UK and intends to stake its claim to a part of the electric vehicle revolution too. Fox says the steelmaker has been working with new technologies, including electric vehicles, to ensure it is able to support emerging supply chains, such as new types of steel for electric cars.
Tata is also playing a role in creating buildings that can produce their own power. This summer the group offered a project in Swansea its perforated steel cladding. It has stored solar thermal energy in a water-based system, delivering a self-powering building on the Swansea University Bay Campus, which could dramatically cut energy costs.
CCS has a role to play here too. Tata is keen to stress that it will be able to help drive down carbon emissions from its steelmaking by 80pc – with carbon capture technology.
A similar synchronicity has emerged in the offshore wind sector, which is hoping for a sector deal to drive its progress further.
Whereas once spinning turbines were a “politically toxic” issue for the Conservatives, the prevailing pragmatism at the heart of the industrial strategy has reframed the technology as a potential British industrial success story, and could help thaw the attitude towards its onshore counterpart.
In recent weeks a subsidy auction revealed the cost of offshore wind power had halved at a faster rate than anticipated by the industry itself. The revelation was roundly welcomed as an important step in lowering energy costs for homes and businesses, including those that also stand to benefit more directly from the boom. In Hull and the Isle of Wight, for
example, Siemens’ new £310m manufacturing plants employ over 1,000 people to help build the 246ft blades, which have helped cut the cost of offshore wind. For a previously forgotten port city with the country’s highest levels of unemployment it is a socioeconomic success story likely to reverberate across the country.
Offshore wind developers source almost 50pc of their component parts from the UK and say this can be increased, bringing greater economic benefit to British manufacturers.
It is already an industry that is proving its mettle internationally. The renewables arm of Scottish Power is building up a portfolio of projects off the east coast of the US and cablemaker JDR Cables is also turning towards the global market. The UK’S export potential is all the greater after the rebalancing of the pound following the Brexit referendum.
In a full-circle choreography of economic benefit, the offshore wind sector is likely to benefit from the battery boom too. The myriad, interconnected economic benefits of the strategy are enough to push aside scepticism over the pursuit of clean power – even within the Conservative Party. Richard Harrington, the Energy Minister, told Conservative conference delegates that he believed a palpable shift in attitude towards renewable power had occurred, as economic opportunity trumped climate change denialism.
“I think that’s more of an American thing now,” he shrugged.
‘The cost of offshore wind power has halved at a faster rate than anticipated by the industry itself’
Focus on sectors where decarbonisation creates ccompetitive businesses and new industries What the UK’S industrial strategy might include