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Government injects £6m into decarbonising industrial areas

Author: ICAEW Insights

Published: 13 Feb 2024

Grant funding from the Local Industrial Decarbonisation Plans (LIDP) competition will support collaboration between closely located industrial businesses to reduce emissions.

Twelve industrial areas are the latest to benefit from the Local Industrial Decarbonisation Plans (LIDP), receiving a share of up to £6m to decarbonise businesses in areas that account for high emissions.

Recipients of this latest round of grant funding are projects situated outside the UK’s major industrial areas and include a Yorkshire pet food manufacturer and a Poole ferry operator. Companies in dispersed locations away from industrial heartlands account for 55% of the country’s industrial emissions, the government says.

Minister for Energy Efficiency and Green Finance Lord Callanan said in January that the funding would give those businesses and partners “the chance to work together on plans to cut their emissions, learning from each other while also having access to technical advisors to prepare for adopting measures, such as using hydrogen or carbon capture”.

Winning projects include Bradford Manufacturing Futures, which received up to £726,729 of LIDP grant funding. This project works with five local clusters of manufacturing companies within the Bradford district, totalling 52% of the district’s CO2 emissions – including some of the highest emitting sectors. DECODE-CORBY also received up to £453,590 to explore innovative ways for industry clusters to access shared waste heat and optimise grid capacity costs.

Callanan has also invited companies to apply for a new phase of the Industrial Energy Transformation Fund (IETF), which aims to help companies replace inefficient equipment, install electric furnaces and switch to hydrogen. 

The three-phase IETF launched in 2020 with £500m of funding available up until 2028 to support businesses in the development and use of technologies that help companies with high energy use switch to lower carbon emissions. It has already awarded funds to more than 150 projects to help companies go green.

Eligible sectors including manufacturing and recycling and, for the first time, controlled environment horticulture, industrial laundries and textile renting facilities are among those urged to apply for this round of funding, which opened in January 2024 offering up to £185m in funding. Applications close on 19 April 2024, but there will be a second competition opportunity later in 2024. 

Although experts say there is no hard and fast rule for implementing a sustainability programme, the starting point is for businesses to identify which environmental, social and governance issues are critical to their company because of their impact, risk or opportunity. Energy consumption is usually a good starting place.

Richard Spencer, Director of Sustainability at ICAEW, says: “The road to net zero is a challenging one and we regularly hear from members that access to capital is a major barrier to them decarbonising. Any funding the government can provide to help businesses make progress is welcome.”

Matt Tormollen, CEO of sustainable energy solutions provider POWWR, says: “We are currently in the midst of one of the most consequential energy transitions since records began, but anything to accelerate this has to be applauded. 

“The increasing availability of clean electrons has already motivated businesses in the UK and beyond to think green. And for good reason. Being environmentally conscious attracts customers, appeases regulators, retains staff and can even gain handouts from government.”

Although the UK succeeded in decarbonising large sections of its electricity grid, outpacing many G7 countries, in recent years it has slipped in its net-zero progress. Last year, the independent Climate Change Committee (CCC), which oversees the UK’s net zero progress, said there had been “a significant delivery gap” to the UK’s Nationally Determined Contribution (NDC) of reducing emissions by 68% by 2030. 

“The agreements made at COP28 require a sharper domestic response and time is now short for the gap to be bridged,” the CCC says. To achieve the 2030 NDC, the CCC says the UK would have to quadruple the rate of emission cuts outside of the electricity sector. 

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