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International business environment

What the sector needs to help the UK deliver net zero

Fuels Industry UK members are making a positive contribution to both decarbonisation and energy security. The sector is helping to deliver net zero in a way that does not damage our economy. The same processes our members use to produce fossil-derived products today will be needed to make low carbon products in the future.

But the UK has higher industrial costs than most competitor countries, poorer incentives to develop new technologies, and a policy environment that currently offers less certainty for investors.

Without urgent action we risk falling behind and losing our global leadership in large-scale decarbonisation technologies like hydrogen, low carbon fuels, and carbon capture. Investment could go elsewhere and refineries will close – costing jobs, increasing emissions and weakening fuel resilience due to the dependence on imports.

Fuels Industry UK has published a paper called “policies for the fuels sector - attracting investment to deliver net zero and energy security.” Read the report here.

Fixing the Carbon Leak

The Commission for Carbon Competitiveness

Fuels Industry UK welcomes the Commission’s recommendations on ambitious new carbon policies to create a level playing field with importers from countries with less stringent environmental standards. Without these changes, investment in refineries vital to achieve the UK’s net zero targets will go overseas.

A well-designed Carbon Border Adjustment Mechanism (CBAM) as a vital step to ensure importers face equivalent costs for carbon emissions as UK manufacturers.

Government also needs to introduce a package of financial support for decarbonisation projects that matches those offered to projects in the US, EU and other competitor countries. If not, we will see more imports of higher carbon fuels, which will increase overall global emissions. Failure to act would also lead to the loss of UK jobs and risk security of supply.

See the full report here: Fixing the Carbon Leak

Industrial decarbonisation 

Foundation industries such as cement, glass and the downstream sectors continue to be significant producers of CO2 as a by-product in the UK and abroad. The products the downstream sector makes - heating oil, bitumen, plastics and even petroleum coke for electric vehicle batteries - will be needed during the transition and beyond. Only with large investments in carbon abatement technologies will the challenge of CO2 emissions be overcome.

The downstream sector in the UK is involved in a range of low and zero carbon industrial cluster projects, from HyNet Northwest (pictured) to the South Wales Industrial Cluster and the Northern Endurance Partnership – all which will use different forms of hydrogen and carbon capture technology to decarbonise heavy industries.


Sustainable Aviation Fuels

Jet fuels can be made with lower lifecycle GHG emissions, and Sustainable Aviation Fuels (SAFs) are already being deployed in some markets. Their use is expected to rapidly grow as the sector seeks to further decarbonise. SAFs are likely to the be only option for decarbonising flights longer than approximately 2,000 miles and, as such, investment in R&D and considerations of supply chain matters should begin now.

Two SAF production plants are planned, with the UK acting global leader in this space. The Altalto waste-to-fuels plant – a joint venture between British Airways and Velocys – is likely to be built in Immingham, North Lincolnshire, and Fulcrum BioEnergy also have announced new plant planned near the Stanlow refinery in the Northwest, which is expected to open in late 2025.

Transport decarbonisation 

Development of new and deployment of existing technologies can replace fossil fuel use in transport over time. But each technology will have challenges to overcome, with some being better suited to certain uses than others.

The world can continue to build on energy efficiency improvements in engines, motors, fuel cells and batteries. This can be supported with behavioural and routing changes. Such changes that improve the efficient use of energy in transport and, therefore, lower emissions include Mobility as a Service (MaaS), use of blockchain, Micromobility, Platooning, Connected Autonomous Vehicles (CAV), and Hyper-proximity or planned cities.

Ukpia Mobility Graphic Elements11

A just transition

The just transition is crucial to meeting net zero – both in making the best use of today’s workforce, innovation and skills to develop clean industries across the globe and ensuring nobody is left behind by the energy transition.

Science, technology, engineering, and mathematics (STEM) are crucial to the modern economy and will be critical in the energy transition. Not only should emphasis be placed on school-aged students to consider a career in STEM, but the skills of the fossil fuel energy workforce should be tapped for the transition into new technologies such as hydrogen, which the downstream workforce has worked safely with for generations.

The UK can also be a global leader by exporting knowledge gained in the energy transition to the developing world, which is disproportionately affected by the impacts of climate change. This can be done jointly by government and industries, using international development programmes, investment in clean energy projects and support in financing local initiatives.

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