How will we choose to decarbonise UK industry by 2050?

In the Clockwork scenario we see overall industrial growth to 2050 with a continuing but gradual shift away from more energy intensive activities. Combined with a drive towards greater energy efficiency generally, this results in a 12% reduction in total industrial energy demand by 2035.

After this, efficiency gains are less pronounced but manage to counterbalance growth, resulting in a levelling out of total energy demand. In this scenario, Carbon Capture and Storage (CCS) is deployed to capture emissions from industrial activity and by 2040, around 7 MtCO2 of industrial emissions are being captured and stored annually. Meanwhile, an even higher volume of CO2 is captured upstream during production of hydrogen for industrial use.

Natural gas remains a major fuel for industrial energy use in Clockwork, but the emergence of hydrogen as a significant low carbon energy carrier helps to displace the higher carbon fossil fuels. By 2050, this scenario sees hydrogen accounting for 15% of all industrial energy consumption, ahead of liquid fuel (14%) and coal (3%).

Since the production of low carbon hydrogen in Clockwork relies on CCS, this takes some time to scale up. As an interim measure, an increasing volume of biomass is used for combustion in industry. The analysis also shows that through displacement of fossil fuels or direct CO2 capture, emissions from industry fall from around 60 MtCO2 in 2015 to 33 MtCO2 in 2050.

If energy-intensive industries undergo a slow decline as represented here, this may involve some activity simply being moved offshore rather than truly displaced by other UK activity. Clockwork also shows that biomass imports are relied upon to deliver industrial emissions reduction in the medium term, before global competition and associated higher costs limit the amount economically available to the UK. Industries without a viable transition plan towards more indigenous low carbon alternatives may struggle with stranded assets as a result.

Traditional industries decline overall in Patchwork, as economic activity shifts into high value design and manufacturing, and into a thriving services sector. Combined with efficiency improvements, by 2035 overall energy use for industry has declined 23% from current levels, in this scenario. By 2050 this has fallen 30% relative to today.

Patchwork shows natural gas continuing to play an important part in industry, accounting for 33% of all energy use in the sector by 2050, while electrification accounts for another 33%. While these shares are fairly similar to today, the major difference is in the remaining shares, where liquid fuels decline from today’s 25% share to just 13% in 2050, a contribution eventually matched by hydrogen. In this scenario, biomass and coal play a marginal role providing 5% and 3% of energy respectively.

Given the lack of a national strategy on CCS in Patchwork, industry decarbonisation is carried forward more by the shift in industry composition than by technological change. Nevertheless, as a CCS programme eventually emerges and industry applications are rolled out this results in 5MtCO2 being captured annually by 2050. Overall, industry emissions fall from around 60MtCO2 today to 26MtCO2 in 2050.

While Patchwork assumes lower industrial energy demand a priori, the lack of commitment to hydrogen and CCS hubs is likely to contribute to this by reinforcing a view that the UK is unable to support a competitive and heavy industry sector in a low carbon economy. As part of this, some of the more energy-intensive activities may be moved offshore rather than displaced entirely. This may increase embedded emissions in imported goods and services.