Decarbonising is a significant challenge for any business. But for energy-intensive industries whose energy expenditure represents a significant proportion of production costs, improving energy-efficiency and reducing carbon emissions is a substantial undertaking that impacts every area of operations.
That’s why the UK government has introduced the Industrial Energy Transformation Fund (IETF) to support the development and deployment of technologies that enable businesses with high energy use to transition to low-carbon operations. The ultimate target is for the UK to achieve net zero carbon emissions by 2050. That will require unprecedented levels of investment in green and low-carbon technologies across all areas of the economy.
Funding for large-scale carbon reduction
The IETF makes available £289m of funding up until 2024, to help energy-intensive businesses cut their energy bills and carbon emissions through investments in energy-efficiency projects and decarbonisation technologies. The funding is available to those carbon-intensive industries that face the greatest challenges in achieving net zero, including iron and steel production, pharmaceuticals, food and drink manufacturing, refining, mining, cement production and paper and pulp processing.
Energy-intensive manufacturers can now apply for grants in Phase 1 of the IETF programme. Applications closed for the first part of Phase 1 in summer 2020, with 39 schemes approved for funding. The second part of Phase 1 is now open to applications and closes on 14 July 2021. This phase offers £40m-worth of government grants for suitable energy-efficiency and decarbonisation projects.
Accelerate progress to net-zero
Grant funding can be instrumental in bringing forward planned projects, as well as enabling projects to be implemented that would never otherwise have been affordable. By bringing forward and enabling these schemes, the grants enable manufacturers to accelerate their energy and carbon savings, increase their competitiveness in a challenging market, and move more quickly towards net zero.
IETF funding could support a whole range of decarbonisation projects for different industries. For iron and steel producers, these could include waste heat recovery and process optimisation projects, such as exhaust emissions feedback systems. In the refining sector, they could include replacing heat exchangers with higher efficiency equipment or introducing electricity generation plant to produce energy from steam let-down. Food and drink manufacturers could improve compressed air systems, refrigeration and storage technologies. Many advanced systems and technologies are now being developed to minimise energy wastage and recover heat and energy in efficient ways for reuse within processes or for electricity generation.
Any large-scale investments made in energy-efficiency programmes or decarbonisation technology need to be part of a coordinated roadmap leading towards net zero. To ensure grant-supported investments have the greatest possible impact on carbon emissions, they need to be considered as part of an integrated and sustained net zero strategy. Any new systems or processes are likely to demand changes to manufacturing or production operations, so they require buy-in from the entire business.
Feasibility and engineering design studies
Before committing to any such changes, businesses need to evaluate the feasibility of new technologies and the potential impact of process efficiencies. This is when investing up-front in feasibility studies pays dividends – ensuring you accurately assess risks, costs and benefits before committing to investment decisions.
That’s why the government has decided to offer a proportion of IETF grant funding to support companies in conducting feasibility and Front End Engineering Design (FEED) studies. By providing grant funding for these studies, the scheme enables businesses to undertake the thorough preliminary technical and financial analyses that are essential to the long-term success of decarbonisation projects.
Access to expertise
Many businesses lack the resources to develop an effective net zero roadmap and face financial barriers in raising internal capital to fund effective feasibility and engineering studies. IETF funding could therefore be a game changer, providing the finance businesses need to access this specialist support.
Working with a delivery partner with the right expertise, businesses can properly assess and quantify energy consumption and carbon emissions across their operations and conduct a full assessment of the long-term possibilities for energy efficiency, carbon reduction and green energy sourcing. The right specialists can also identify suitable technology and engineering investments and develop the investment-grade proposals and engineering plans required to apply successfully for IETF funding to deliver those projects.
The combination of grant funding and specialist support could be the catalyst energy-intensive industries need to launch meaningful and sustainable carbon-reduction programmes that will help achieve the net zero goal.