Net zero: we have the tools, now we need the ambition
Launching a new sustainability study with Make UK, our CEO Michael Lewis has outlined how the actions of industry will define the UK’s success in reaching net-zero targets by 2050.
The UK has an ambitious – and legally binding – target of net-zero emissions by 2050, the first country in the world to do so. And it is the actions of industry in general, and manufacturing in particular, that will define our success in delivering on this.
That is a significant task for an industry dealing not only with the challenges and the aftermath of the COVID-19 crisis, but also global competition and a drive to improve productivity. And yet during the crisis, UK manufacturers have demonstrated their resilience and adaptability, not least in rising to the challenge of answering the nation’s call for help in making vital medical equipment.
I am in no doubt we will overcome this. But while the response to COVID-19 rightly remains the priority for most in the short term, the UK’s net-zero target remains the key challenge for our future. It is heartening to see from this research, undertaken shortly before the COVID-19 crisis fully emerged, that industry awareness of net-zero is high, that manufacturers are investing in energy efficiency and seeing the commercial benefits. The fact 40% of manufacturers report increased margins, and 30% increased competitiveness, as a result of sustainability initiatives vindicates the case for green investment to spur the sector’s post-COVID recovery and proves that energy must be a strategic decision – for the board room, not just the plant room.
But there is progress to be made, which requires overcoming barriers to further investment as reported by manufacturers, notably cashflow and profit margin impacts, as well as payback periods on investments.
A strategic imperative
These barriers are being more keenly felt more than ever before and if our economy is to recover in a way that supports the UK’s net-zero target, both Government and the energy industry must find a way to remove the barriers and address concerns about the impact on competitiveness. The crisis has demonstrated that collaboration and cooperation across government, industry and society can transform how our economy operates, working together to implement a green recovery which demonstrates that the transition to a low-carbon economy is not only possible but also makes economic sense.
Some solutions may be relatively straightforward: ending increases to business rates caused by investing in decarbonisation technology, for example. Others may be more complex; ensuring industry can create value from the positive impacts they can have on the energy system with new technologies.
The first step is being clear the UK remains on a long-term trajectory to net-zero emissions which is not going to be abandoned or ignored and will provide a competitive edge for those who change and adapt soonest.
With these policies and the public’s consciousness of the climate crisis growing industry leaders must embrace the fact ‘spend to save’ investment will be required and factor this into their capital, or operational expenditure, plans.
Our industries, together, have a pivotal role
It is positive to note so many manufacturers continue to secure better deals by renegotiating energy contracts, but it remains the case that focusing on unit rates is only half the issue. The bigger emphasis still needs to be on managing overall costs – that means the volume of energy you consume rather than the simpler pence-per-unit.
This report also underlines a greater role for the energy industry in tackling a lack of expertise among customers on what is possible through energy efficiency. This remains one of the key barriers preventing businesses from making progress in this area and will become more important in the future energy world of smart and personalised solutions.
Whatever the size of your business, and your progress in becoming more sustainable, there is much that can be done. We now offer 100% renewables-backed electricity to business customers of all sizes, which for some might be a vital first step towards that more sustainable and personalised energy system.
From there solutions scale rapidly; from high-efficiency LED lighting, HVAC upgrades and building management systems through to solar panels and battery storage, electric vehicles, and heat pumps.
By working with energy providers, manufacturers can improve sustainability, and minimise operational expenditure. On-site generation can mean greater flexibility, not only greater security of supply but also an extra income stream through supporting the grid at times of high demand.
We must hold our gaze firmly on the net-zero target and deliver a green recovery. Manufacturers will need to play their part as end customers and supply chain partners look to improve and decarbonise. Now is not time to down tools, but to advance the effort to reach net zero by 2050.
Written by Michael Lewis
Michael joined E.ON UK as CEO in 2017, having worked in the energy industry for over 25 years. He joined Powergen in 1993, originally working in technical and environmental roles, before moving into corporate strategy and development. Following E.ON’s acquisition of Powergen in 2002, he moved to E.ON’s headquarters in Düsseldorf as Vice President Corporate Development. In 2007, Michael was appointed Managing Director for Europe on the Board of E.ON Climate and Renewables, before becoming Chief Operating Officer in 2012 and then CEO of E.ON Climate and Renewables in 2015. Michael is a Chartered Engineer (CEng) and a Fellow of the Institution of Mechanical Engineers (FIMechE).
Posted May 2020
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