The Missing Link: Establishing Strong UK Supply Chains for Low Carbon Industrial Products

Move to net zero emissions creates an opportunity to grow UK industrial supply chains – but a comprehensive plan is needed.

In this report, The Aldersgate Group argues that the decarbonisation of the UK’s heavy industrial and manufacturing sectors could drive the growth of low carbon industrial supply chains in the UK, increase these sectors’ contribution to the economy, and make UK industry more resilient to global economic shocks and supply chain disruptions.

Based on significant engagement with major businesses across heavy industrial and manufacturing sectors, this report calls on Government to build on its Net Zero and Industrial Decarbonisation Strategies and put in place a comprehensive plan to establish stronger low carbon industrial supply chains. It outlines the measures required to accelerate innovation, grow the demand for low carbon industrial products, incentivise greater resource efficiency, provide a level playing field against high carbon imports, and stimulate investment in skills.

UK heavy industrial sectors already employ more than 2.6 million people and contribute £170bn each year to the UK economy. The net zero transition provides an opportunity to grow this contribution even further by increasing investment in domestic supply chains to support these sectors as they decarbonise. For this to materialise, the Government must put in place a comprehensive set of measures that grows the demand for low carbon industrial products, accelerates innovation in key technologies such as CCS and low carbon hydrogen, makes the price of electricity more competitive and provides a level playing field against high carbon imports whilst maximising opportunities to export low carbon industrial products.
Nick Molho, Executive Director of the Aldersgate Group

However, high electricity prices, low public investment, and low retention of key materials for remanufacture have led to an increase in imports of industrial products rather than an increased demand for domestic low carbon products.

Despite welcome commitments in the Industrial Decarbonisation and Net Zero Strategies, a comprehensive plan from government, including targeted and more accessible investment to support fuel switching and large-scale deployment of key technologies is needed to create a business environment conducive to investment in low carbon production.

Backed by extensive engagement with representatives from heavy industry and manufacturing such as the steel, cement, glass, construction and automotive sectors, this publication makes recommendations to establish a robust industrial and manufacturing base in the UK that is able to take advantage of growing demand for low carbon products, and mitigate key dependencies on other countries for critical materials and components vital to the UK’s economy.