The Industrial Strategy roundtable: What impact is it having on manufacturing sustainability?
Sustainability and energy managers from a range of businesses recently gathered in London for an exclusive roundtable hosted by edie and Centrica Business Solutions to discuss the impact the Government's Industrial Strategy is having on manufacturing sustainability.
The UK Government has promised a sector-specific Industrial Strategy which will increase productivity, drive innovation-led growth, and accelerate the transition to a sustainable economy. But, in a future world that is projected to have limited resources and be ‘carbon-constrained’, how will the Strategy translate into longer-term, concrete action?
At an exclusive roundtable event held in London last month, edie and Centrica Business Solutions welcomed senior energy and sustainability leads from a spread of UK manufacturing organisations to explore what impact the Industrial Strategy has had so far on the industry, and what must happen next to ensure the Strategy delivers environmental, social and economic value.
The discussion was taking place 10 months on since the grand unveiling of the much-anticipated Strategy – a hefty 255 page-document which spells out the Government’s bold vision to tackle struggling productivity rates and make Britain the world’s “most innovative nation by 2030”.
The Strategy’s publication came during a very busy time for those directly involved in shaping elements of the UK’s long-term green policy agenda. The sister Clean Growth Strategy, which had landed a month prior in October 2017, was largely well-received by businesses for its level of ambition (if not for its arguable lack of concrete actions), while the finishing touches were still being applied to Defra’s 25-Year Environment Plan.
BEIS Secretary Greg Clark has persistently stressed that sustainability and energy productivity will be at the heart of our Industrial Strategy. And indeed, at the time of publication, members of the green business community were largely pleased with the decidedly green focus of the Strategy, with many quick to reserve praise for the decision to set out ‘Clean Growth’ as one of the four ‘Grand Challenges’ within it.
Looking back on those eventful few months towards the backend of last year, roundtable participants began the discussion with a broadly welcome recognition of the coherence and unity shown by the different parts of Government in using to intertwine wide-ranging strands of green policy.
“Having the Industrial Strategy and 25-Year Environment Plan coming out around the same time and referencing each other smacked of joined-up Government,” said Dan Green, head of sustainability & innovation at Wessex Water Services.
“That was extremely welcoming to see. As an environmentalist, I wouldn’t want the ideals of the Environment Plan playing second-fiddle to a growth agenda. If we are in it for the long-term it is all about economic viability as well as the environmental wellbeing.
“So, it was good to see them come out at the same time, and the explicit acknowledgement in the Industrial Strategy that there are some really macro-level challenges that need to be addressed through our manufacturing base and the businesses that will have a competitive edge.”
Money, money, money
The Industrial Strategy’s publication came after a Green Paper earlier in 2017 which consulted businesses and other key stakeholders on what a low-carbon, resource-efficient Industrial Strategy should look like in practice, and how policymakers could play an integral role to ensure that businesses are best-placed to deliver a “stronger and fairer economy for years to come”.
Ask any energy or sustainability or energy manager at a major UK industrial firm for their opinion on the most effective ways the Government can support sustainable, energy-efficient manufacturing, and invariably the word ‘investment’ will be close to the top of any wish-list – as it was around the table.
“At the end of the day, it comes down to capital,” said multinational agribusiness Syngenta’s global category manager Philip Southern. “How can we put the mechanisms in place to help companies fund these projects more effectively? Where the Government can help is by making sure these funds are visible and available to individuals and organisations.”
Fortunately for Southern and others in a similar position across the UK, the Government’s Industrial Strategy appears to have heeded the manufacturing sector’s investment calls and responded with large swathes of funding across all areas of industrial development.
The Strategy has earmarked £20bn of support for innovative and high-potential businesses, with £2.5bn going towards investment in low-carbon technologies. Meanwhile, a separate Industrial Strategy Challenge Fund has set £725m set aside over the next three years to strengthen business innovation and take on the biggest challenges that industries face today.
Most of the roundtable delegates agreed that these investments have brought precision to the Government’s Industrial Strategy and provided exciting opportunities for organisations seeking to deliver a sustainable future. “The best businesses are the ones that solve problems and the Industrial Strategy has outlined the problem of productivity and the four Grand Challenges that we as businesses in partnership with Government are supposed to mobilise to solve,” said Stephanie Palmer, sustainability manager at ceramics manufacturer Wienerberger.
“It is positive that we have seen some outputs from it very early on. It hasn’t just been a policy paper that has been published and sat on. The funding calls and other elements are really being seen.”
As part of its investment in UK PLC, the Industrial Strategy outlines the creation of sector deals – long-term partnerships between the Government and industry to boost industry productivity. The first sector deals focus on life sciences, construction, AI and transport sectors, with later deals expected for low-carbon technologies such as offshore wind.
While it was broadly agreed by roundtable participants that these deals would bring growth and prosperity to those in receipt of the support, there was a frustration that other, less prominent, industries were being overlooked. “The first sector deals targeted four sectors which are already doing well and are potentially winners in the future,” Palmer noted.
In this regard, the Government is said to be considering a new funding model that replaces the current sector deals with a new ‘pot’ format that creates a more level-playing field for all businesses, a move that was encouraged by the majority of roundtable members.
Palmer continued: “It has been suggested that, in the future, pots of money will be given for different things like skills and people, so that different sectors can bid from those pots, rather than the Government saying, ‘here is a load of money going to this sector’. The move seems fairer, as it gives smaller industries to get innovation funding.”
Smarter energy, smarter future
One of the key areas that roundtable participants agreed the Industrial Strategy needed to address is Britain’s smarter energy future – and specifically the removal of assisted barriers. It was acknowledged that, with an increasing use of distributed generation caused by a surge of renewable sources coming online, the UK is now faced with unprecedented challenges in managing energy across the grid.
The Government has stated its commitment to deliver a smarter, flexible energy system in light of figures which claim that technologies such as demand response and energy storage could save the UK as much as £40bn across the electricity system by 2050. At the heart of the Industrial Strategy is a promise to take a “whole-systems approach” to the decarbonisation of energy infrastructure. This involves making the UK a “world-leader” in clean and efficient power, transport and heat, by enabling the electricity system to work more flexibly.
The smart energy revolution is seen as a major opportunity by Liam Roe, EMEA energy project leader at power generation manufacturer Cummins, a company which is seeking to find additional financial revenues for its excess energy generated by heat and energy recovery.
Roe explained: “We are able to produce large amounts of power on certain sites and consume what we can there and then. We face the issue of not being able to export the excess due to the grid being too weak in places so are looking at what options we have to capture that energy.”
Through its smart energy and flexibility plan, the Government has pledged to support the growth of markets for technologies such as energy storage, smart meters, vehicle-to-grid (V2G) charging and heat networks. Battery storage will take up £246m of the Industrial Strategy Challenge Fund investment, with a £45m competition in place to establish a battery research centre.
Many participants said they were edging into the market through demand response measures, which were described as a good entry point for firms seeking to provide grid flexibility services. “Being paid for flexibility is the very easiest way before doing anything with infrastructure to control the shape of supply and demand, said Centrica Business Solutions’ sales director Ian Hopkins.
With today’s diversified and decentralised energy requirements, and many consumers actively generating and storing energy locally, it is widely thought the UK will eventually shift away from a centralised power system. Hopkins pointed towards the potential of localising energy supply through microgrid systems, which provide a more efficient, reliable, and sustainable approach to generating power by constantly balancing generation with load demands.
“It is probably the area where technology is going to help the most,” Hopkins added. “To not need to invest in infrastructure because we are managing loading in a really clever way is one of the huge savings that we can make. The Government has committed to develop smart energy systems affordably across power, heating, and transport sectors. We see the direction of travel being the break-up of the transmission line towards microgrids to keep the value much more local and not having to support infrastructure upgrades.”
Embracing Industry 4.0
A smarter energy future is just one element of a broader Government ambition to make the UK a front-runner in Fourth Industrial Revolution (4IR) and connected technologies. Industry 4.0, as it’s called, is already having a profound impact on the manufacturing energy landscape. Technologies and innovations such as Artificial Intelligence (AI) and the Internet of Things (IoT) are being used to monitor industrial processes in real-time, helping manufacturers run production processes more intelligently to manage energy and operational costs.
Wessex Water is among a number of utilities looking at the potential of a full suite of disruptive technologies that could facilitate the next industrial shifts. “We are looking at the materiality assessment for a range of technologies – starting with AI,” Green explained. “We are looking at the possible applications and delivering benefits to environment and communities we serve.”
At this point in the discussion, roundtable participants were asked how the Government could help to ensure businesses can embrace new technologies and innovations to boost productivity, reduce waste and costs, and enhance sustainability? It was agreed that backing could be provided through public procurement, innovation support and research and development, although some members admitted that there was only so much help that could be given by policymakers.
“They don’t have an influence on where it is going,” Southern said. “That is with the clever people researching into the next stage of things. All Government can do is put the enablers in place to allow you to do that.”
It was agreed that the Industrial Strategy could harness the potential of Industry 4.0 by ensuring the next generation of manufacturing business leaders hold the skills and mindsets required to thrive in a modern, sustainable economy.
The UK is currently in the midst of an acute technical skills deficit – a situation that the document has sought to rectify: the shortage of science, technology, engineering and maths (STEM) skills is being addressed through a new £406m fund. “It is great that the Government is looking to invest in skills and people,” Palmer concluded. “Developing the knowledge is OK, but it is the knowhow that will really make the difference.”
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