Industrial Energy Transformation Fund

Published: 27 November 2019

Energy Systems Catapult has responded to a consultation which seeks views to help the government finalise the design of the Industrial Energy Transformation Fund (IETF).

The £315 million fund will support businesses with high energy use to:

  • cut their bills and emissions through increased energy efficiency
  • reduce their emissions by decarbonising industrial processes

Key points

  • To date, emissions reduction from industry has predominately come from offshoring UK firms. Continued offshoring would negatively impact the UK economy; therefore, industrial decarbonisation policy must be designed to mitigate the risk of carbon leakage and protect sector competitiveness, but crucially it must stimulate and reward innovation. If done successfully, the UK can become a world leader in decarbonising the hardest-to-treat sectors.
  • However, there is no ‘silver bullet’, therefore, we welcome the proposed Industrial Energy Transformation Fund. In particular, we welcome the technology neutral approach required for different industrial processes, which themselves are distributed geographically and result in different opportunities and barriers (e.g. local energy infrastructure; access to resources; etc.)
  • ESC has developed Local Area Energy Planning (LAEP), a concept and methodology, which can be used as means of exploring a range of different future local energy scenarios to achieve deep decarbonisation at least cost while promoting clean growth. We believe this approach can be built on and adapted to address the specific challenges of decarbonising industrial clusters and regions.
  • In addition, it can help unlock private investment by providing certainty around likely outcomes and potential revenues for industry. It also reduces the risk of stranded assets, which ultimately leads to a cost-efficient transition to net zero.