Energy efficiency must be a priority for UK industrial strategy

Published:  25 April, 2017

Improving energy efficiency and resource productivity must be a priority in the UK government’s new industrial strategy, according to a recent new report. Engineering an economy that works for all summarises the engineering profession’s response to the UK government’s Industrial Strategy Green Paper.

Drawing on evidence and opinion gathered through a series of workshops and a survey of the profession that received nearly 1,300 responses, it addresses the 38 questions posed in the Green Paper.

The Institution of Chemical Engineers (IChemE) majorly contributed to Pillar 7 of the report, which concentrates on delivering affordable energy and clean growth. It recommends that government, through the Emissions Reduction Plan, should deliver a stable medium-to long-term energy strategy that provides the confidence and certainty required to plan to meet the Climate Change Act and Paris Agreement obligations.

It also argues that energy policy has historically been approached in silos, addressing the environment, security, and cost separately, which has resulted in policies that work against one another. The new report calls on government to take a whole system approach that addresses the needs of businesses as well as the wider public, while reducing emissions and ensuring security and resilience.

Ensuring that the government finds an affordable solution that meets these needs is a particular concern of the engineering profession. 60% of engineers that responded to the survey reported that energy costs were a significant issue for their organisation. Improving energy efficiency was identified as the single most important area for the government to focus on, in order to limit energy costs.

Published today, Engineering an economy that works for all calls on government and policy makers to develop a scheme that identifies opportunities to reduce energy consumption without undermining the competitiveness of businesses. It also recommends introducing an Energy Saving Incentive (ESI) that pays out for demonstrating energy saving. With the right incentives applied at the personal, community and company level, it argues, UK energy demand per person could be significantly reduced by 2050.

Professor Stefaan Simons, IChemE Energy Centre Chair and dean of engineering at Brunel University, said:

"In a time of uncertainty, the one thing that is certain is the need for the UK to move to a low carbon economy. A holistic and long-term view of energy generation and energy use is essential to support a successful UK economy, healthy society and tackle wider global issues including climate change."

Louise Kingham, chief executive of the Energy Institute, also commented:

“Energy and climate change policies are integral to the UK’s future prosperity. They present significant economic opportunities as well as risks that need to be managed.

“The message from the engineering community is clear. If the Government’s industrial strategy is to make the most of the opportunities it should have greater energy efficiency and a system wide approach at its heart. And the policies adopted must be credible over the long term, to provide industry with the confidence needed to sustain investment and jobs in energy technologies and infrastructure.”

The report outlines key features of an integrated energy solution that takes into account system interdependencies and opportunities to integrate electricity, heat and transport systems. The solution builds on all available low carbon technologies including CCS, nuclear power and heat networks, including:

• Better incentives to drive heating efficiency savings in the UK’s existing building stock, and tighter and better enforced building regulations on energy efficiency.

• Government support for the development of new energy products that are fit for market, including large scale energy storage, biomethane plants, district heating and hydrogen trial projects. This should include enabling platforms and new test facilities that allow innovations to be developed at scale in real-world situations.

• Selective support for renewable energy generation, including tidal power and offshore wind. Respondents to the survey highlighted tidal power as the most important renewable power source to be supported, noting its reliability and huge potential in the UK. As an immature technology, selective support should be given to projects that will increase knowledge and reduce costs. The report also highlighted that the UK has the most offshore wind installed capacity in Europe, but that most offshore wind developers are based overseas.

• Support for carbon capture and storage (CCS) technology. The report argues that CCS technology should be put back on the agenda, and warns that the UK’s withdrawal from coal-fired power leaves only a narrow window for harnessing existing expertise before it is lost to retirement and competition. A full-scale demonstration plant should be developed with the associated transportation and storage network, and research should be undertaken to build a greater understanding of a viable business model to deliver future plants that are cost competitive.

• Development support for a UK small modular nuclear reactor (SMR) industry. The report highlights the opportunity for the UK supply chain to play a role in the development of small modular nuclear reactors for a global market, building on its history of reactor development and reputation for safety and quality. It warns that there is a serious risk that the current new-build programme might not deliver in time to replace the existing capacity of nuclear generation in the UK, and SMRs should be developed as a possible alternative. As well as government support, it calls on industry to identify commercially viable reactor solutions that minimise licensing and regulatory requirements outside the factory environment.

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