Industrial Decarbonisation and Energy Efficiency Roadmaps ... · 1 to provide a Scottish focused summary of the UK Government’s decarbonisation roadmaps for eight Energy Intensive

Industrial Decarbonisation and Energy Efficiency Roadmaps: Scottish Assessment Summary Report

Authors:

Michael Lenaghan & Daniel Mill

(Zero Waste Scotland)

Prepared by: Zero Waste Scotland

Industrial Decarbonisation and Energy Efficiency Roadmaps: Scottish Assessment | 2

Contents Executive Summary 3

Key Findings 4

Introduction 5

What is a Decarbonisation Roadmap? 6

Current Emissions Profile of Scotland’s Energy Intensive Industries (EII) 6

2050 Reference Scenario 7

Alternative Decarbonisation Pathways to 2050 8

5.1 Business as Usual Scenario 9

5.2 Intermediate Scenario 9

5.3 Max Tech Scenario 10

Strategic Recommendations: How do we get to a Decarbonised Future in 2050? 11

Summary and Next Steps 15

Annex A – Industry-Specific Profiles and Pathway Analyses 17

8.1 Scottish Glass Industry 17

8.2 Scottish Chemicals Industry 18

8.3 Scottish Paper & Pulp Industry 19

8.4 Scottish Food & Drink Industry 20

8.5 Scottish Oil Refining Industry 21

8.6 Scottish Cement Industry 22

8.7 Scottish Ceramics Industry 23

8.8 Scottish Iron and Steel Industry 24

Annex B – Description of Key Decarbonisation Technologies and Recommendations 25


Executive Summary This Summary Report presents key findings from the Industrial Decarbonisation and Energy Efficiency Roadmaps: Scotland Assessment (IDEERSA) study (2015). It was commissioned by the Scottish Government and its partners1 to provide a Scottish focused summary of the UK Government’s decarbonisation roadmaps for eight Energy Intensive Industries (EII)2: cement, ceramics, chemicals, food and drink, glass, iron and steel, paper and pulp and oil and gas refining.

In 2012, these industries produced a combined 8.3 million tonnes of CO2 (MtCO2)3, 15% of all annual Scottish greenhouse gas emissions (

Figure 0.1).

If Scotland is to meet its commitment to reduce its emissions by 80% below 1990 levels by 20504, industry must play a leading role. This IDEERSA study is a significant step towards long-term, large scale emissions reductions in these industries. It presents three alternative decarbonisation pathways to 2050, each using a distinct mix of low-carbon technologies and investment to achieve varying degrees of emissions reductions.

The impacts of these three pathways, referred to as “scenarios”, are summarised in this report. They indicate that, using existing low-carbon technologies, Scotland’s EII can reduce their combined annual CO2 emissions by up to 76% below 2012 levels5 by 2050, with a cumulative emissions saving of 80 MtCO2 (see Figure 0.2 and Table 0.1 on the next page).

Figure 0.2 - Annual EII Emissions in 2050 by Scenario with Associated Investment

1 The IDEERSA Steering Group includes representatives from Scottish Government, Zero Waste Scotland, Scottish Enterprise, SEPA, the Energy Savings Trust and Highlands and Islands Enterprise. 2 In 2013, the UK Government committed to working with industry to develop long-term decarbonisation and energy efficiency roadmaps with industrial manufacturing sectors, focusing on those that use the greatest amount of heat and represent the greatest greenhouse gas emissions https://www.gov.uk/government/publications/industrial-decarbonisation-and-energy-efficiency-roadmaps-to-2050 3 Scottish Greenhouse Gas Emissions 2012 - http://www.gov.scot/Resource/0045/00452084.pdf 4 Climate Change (Scotland) Act, 2009 5 While Scotland’s national 2050 emissions targets are based on a 1990 baseline, dynamic changes in the industrial sector since 1990, combined with significant data limitations, make a 1990 EII baseline impractical.

Figure 0.1 - Sources of Scottish

Greenhouse Gas Emissions, 2012. (Mt CO2e)

8.34

6.144.64

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2012 2050 BAU 2050 Intermediate 2050 Max Tech

Annual Emissions Annual Savings vs. 2012

26% Reduction 44%

Reduction 76% Reduction

£350 million £900 million £1,450 million


Table 0.1 - Decarbonisation Scenarios

Scenarios Characteristics

Annual Emissions Reduction by 20506

Cumulative CO2 Abatement 2012-20507

(MtCO2)

Total Capital

Cost

Business as Usual (BAU)

Industry continues incremental transition to established low carbon technologies along current trends

2.2 MtCO2 (27%)

25 £350

million

Intermediate Pathways

Industry makes concerted effort to accelerate decarbonisation through widespread adoption of established low-carbon technologies

3.7 MtCO2 (45%)

40 £900

million

Max Technology (Max Tech)

Industry pursues maximum carbon reductions, adopting established low-carbon technologies and those with longer term financial viability, as well as significant process changes

6.3 MtCO2 (76%)

80 £1,450 million

Key Findings A 76% reduction in annual CO2 emissions from Scotland’s EII by 2050 is both ambitious and achievable, provided immediate and continuous actions are taken to decarbonise. This will require the following conditions:

1. Industry investment in energy efficiency is committed in the short-term and sustained to 2050

2. UK grid decarbonisation targets are achieved without sacrificing electricity supply or competitiveness.

3. CCS/CCU achieves commercial deployment by 2025, followed by rapid expansion to 2050. CCS/CCU technology provides 18.1% of cumulative emissions savings, and 29.7% of annual savings in 2050 (see Figure 0.3). CC technology provides more than 50% of annual savings in cement, oil refining and chemical industries by 2050 under Max Tech.

4. Industry secures affordable and reliable access to biomass energy in light of increasing and competing demands

5. Industry has the skills and expertise required to effectively and efficiently deploy low carbon technologies

6. Sufficient financial and policy support is in place to address slow payback periods and uncertainty inherent in some low carbon technologies

This report aims to understand the opportunities and barriers to decarbonisation of industry, and will inform future work by Scottish Government and its partners. This will be taken forward by engagement with Scotland’s Manufacturing Action Plan.

6 Savings are calculated as the reduction in emissions in 2050 from the 2012 baseline 7 Savings calculated against reference scenario, see section 4

Figure 0.3 - Contribution of CCS/CCU to 2050 Annual Savings (MtCO2) against

Reference Scenario

29.7%


Introduction Climate change is a serious threat to the environment that also endangers economic security and social wellbeing. Recognising this threat, Scotland has committed to reducing its greenhouse gas (GHG) emissions by 80% below a 1990 baseline of 80.8 MtCO2e by 20508. Meeting this ambitious target in less than 35 years will require long-term planning, and a concerted effort to reduce emissions – a process known as ‘decarbonisation’ – across all areas of the Scottish economy, including key industrial sectors.

Figure 1.1 - Scottish GHG Emissions (MtCO2e): 1990 to 2050 Target9

Figure 1.1 above shows that there has already been a significant 32% reduction in Scottish emissions between the 1990 baseline year and 2012, however to meet Scotland’s 2050 target, further and significant emissions reductions will be required across all areas of the Scottish economy, including industry. Recognising this, the Scottish Government and its partners commissioned the Industrial Decarbonisation and Energy Efficiency Roadmaps: Scotland Assessment (IDEERSA) study to assess the potential for decarbonising industrial energy consumption, a key source of Scottish GHGs, as well as the associated challenges and opportunities. The study summarises and builds upon the eight Industrial Decarbonisation and Energy Efficiency Roadmaps to 205010 (with which the Scottish Government and its partners were also involved) by focussing on the decarbonisation opportunities and challenges unique to Scotland’s industrial sector.

Key to this was understanding the specific implications of the UK roadmaps for Scotland, and the range of actions needed to deliver these through complementary Scottish activity, alongside forthcoming UK action plans.

This Summary Report provides an overview of the IDEERSA study, its purpose, findings, and recommendations. It presents a sector-specific profile and pathway analyses for each of Scotland’s eight most energy intensive industrial sectors, and an overview of decarbonisation technologies that feature prominently throughout the analysis. Individual industry profiles and pathways are presented in Annex A, with a description of each of the key technologies considered contained in Annex B. The report concludes by discussing strategic steps for implementing the decarbonisation roadmap.

8 Climate Change (Scotland) Act 2009 9 Scottish Greenhouse Gas Emissions 2012 - http://www.gov.scot/Resource/0045/00452084.pdf 10 https://www.gov.uk/government/publications/industrial-decarbonisation-and-energy-efficiency-roadmaps-to-2050


What is a Decarbonisation Roadmap? In essence, a “roadmap” is a tool that helps us understand how to get from where we are today, to where we want to be in the future. A decarbonisation roadmap is designed specifically to help governments, industries and organisations reach a low-carbon future. The decarbonisation roadmap in this study focusses on eight of Scotland’s most energy intensive industries11 and was created to answer the following five questions:

Current Emissions Profile of Scotland’s Energy Intensive Industries (EII) In 2012, Scotland’s EII’s generated a combined 8.3 MtCO2 (15%) of all GHG emissions (54.9 MtCO2) generated in Scotland that year, Figure 3.1. The largest single contributor to these industry emissions was the Scottish chemicals industry (42%), followed by oil refining (21%), and the food and drink industries (20%).

Figure 3.1 - Scotland's 2012 Carbon Emissions (MtCO2e)

11 Consistent with the UK IDEER, this study only considers CO2 emissions (no other GHGs) and excludes embedded carbon in materials and waste.

1. What are the current emissions profiles of Scotland’s Energy Intensive Industries?

2. What will these emissions profiles look like in 2050 if Scotland’s Energy Intensive Industries take no direct action (Reference Scenario)?

3. How much can Scotland’s Energy Intensive Industries reduce their current emissions by 2050 using existing low-carbon technologies?

4. How should these technologies be deployed over time to achieve these reductions?

5. What are the necessary conditions required at EU, UK and Scottish levels to support these outcomes (financial, regulatory, programme of support etc.)?


2050 Reference Scenario The 2050 Reference Scenario represents a “do nothing approach” in which the EII take no direct action between now and 2050 to reduce their emissions. However, Scotland’s EII emissions do change over time as a result of two key parameters (Table 4.1).

Table 4.1 Parameters Affecting Reference Scenario

Parameters Description Industrial Output Future economic growth (estimated 0-1.25% p.a.

depending on the industry) increases industrial output and, all else being equal, results in increased net emissions.

UK Grid Decarbonisation UK continues to decarbonise the electricity grid along current trends, lowering Scotland’s EII indirect emissions from electricity use.

Under the Reference Scenario, Scotland’s EII emissions experience a general decline between 2012 and 2035, followed by a gradual increase until 2050 (Figure 4.1). The result of these changes is a net 13.3% (1.1 MtCO2) reduction in annual emissions, from 8.3 MtCO2 in 2012 to 7.2 MtCO2 in 2050. This reduction is entirely the result of UK grid decarbonisation policy, since EII themselves take no direct action to decarbonise. The rise in emissions beginning in 2035 occurs because emissions increases associated with projected economic growth exceed the emissions reductions resulting from grid decarbonisation. This highlights the need to take action, as the emissions reduction achieved under the Reference Scenario will not be sufficient to meet Scotland’s 2050 targets, and that sustainable economic growth will require reductions that make allowance for increased activity while also reducing carbon emissions.

Figure 4.1 – Reference Scenario Emissions by Sector

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O2

Ceramics

Iron and Steel

Glass

Pulp and Paper

Cement

Food and Drink

Oil Refining

Chemicals


Alternative Decarbonisation Pathways to 2050 Three alternative decarbonisation scenarios were created and compared against the 2012 baseline year, and the 2050 Reference Scenario, in order to determine the range of additional decarbonisation possible with varying levels of investment in low-carbon technologies. Each of these scenarios includes the same industrial output and grid decarbonisation parameters described in the Reference Scenario, as well as a particular low-carbon technology mix and deployment timeline, resulting in varying investment costs and degrees of decarbonisation.

Two emissions reductions figures for each scenario are shown in Table 5.1 below. The “Annual Emissions Reduction by 2050” is the absolute change in annual emissions in 2050 from the 2012 baseline. The figures in the “Cumulative CO2 Abatement” column are the total savings between 2012 and 2050, against the “Reference Scenario”. A general description of these three scenarios is provided in Table 5.1

Table 5.1 Decarbonisation Scenarios

Decarbonisation Scenarios Characteristics

Annual Emissions Reduction by 2050

Cumulative CO2 Abatement 2012-2050

(MtCO2)

Total Capital

Cost

Business as Usual (BAU)

Industry continues incremental transition to established low carbon technologies along current trends

2.2 MtCO2 (27%)

25 £350

million

Intermediate Pathways

Industry makes concerted effort to accelerate decarbonisation through widespread adoption of established low-carbon technologies

3.7 MtCO2 (45%)

40 £900

million

Max Technology (Max Tech)

Industry pursues maximum carbon reductions, adopting established low-carbon technologies and those with longer term financial viability, as well as significant process changes

6.3 MtCO2 (76%)

80 £1,450 million

It is important to note that the figures in the “Total Capital Cost” column in Table 5.1, represent the total cost to industry and do not include investment associated with decarbonisation of the grid and Carbon Capture infrastructure (transport and storage).

While Scotland’s national 2050 emissions targets are based on a 1990 baseline, dynamic changes in the industrial sector since 1990, combined with significant data limitations, make comparison with the 1990 EII baseline impractical.

The following sections describe the individual scenarios, and present a graphical representation of the mix and timing of technology deployment used in each model. Two graphs are given for each scenario to show the emissions reduction potential of the technology groups:

Area Graph - The upper line shows the projected reference scenario, in which no action is taken and economic activity and output continues to grow. The bottom line is the pathway that could be achieved in the given scenario.

Pie chart - This is the percentage contribution of each reduction technology group in 2050 against the top line reference baseline scenario.


5.1 Business as Usual Scenario Under the Business as Usual (BAU) Scenario, Scotland’s absolute annual EII emissions fall 27% by 2050 to 6.1 MtCO2 from the 2012 baseline, at a cost to industry of £350 million. As shown in Figure 5.1, this is primarily the result of progressive grid decarbonisation to 2050 (68%) and continuing incremental investment in energy efficiency and heat recovery measures (20%). Biomass energy increases slowly to 2035, then more rapidly to 2050, contributing 8% to cumulative savings. Other low-carbon technologies contribute less than 4% of total emissions savings.

Figure 5.1 Business as Usual Scenario

5.2 Intermediate Scenario Under the Intermediate Scenario, Scotland’s annual EII emissions drop 45% by 2050 to 4.6 MtCO2 at a cost to industry of £900 million. Figure 5.2 shows that while grid decarbonisation remains the largest single contributor the relative contribution are lower than under the BAU scenario, as alternative low-carbon technologies come to play a larger role. Energy efficiency actually increases due to increased uptake of technology measures. The use of biomass energy is widespread, contributing 11.5% of total carbon savings, while the remaining low-carbon technologies, most notably carbon capture and storage (CCS), provide nearly one fifth of all savings.

Figure 5.2 - Intermediate - current trends

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O2)

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Energy Efficiency

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CCS

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Electrification of Heat

Fuel Switching

Material Efficiency

Others

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Energy Efficiency

Biomass

CCS

Clustering


Fuel Switching

Material Efficiency

Others


5.3 Max Tech Scenario In a Max Tech Scenario, Scotland’s annual EII emissions decline 76% by 2050 to 2.0 MtCO2

at a cost to industry of £1,450 million; the largest reduction of any scenario. As shown in Figure 5.3, savings are much more evenly distributed across low-carbon technology groups than in other scenarios. Grid decarbonisation continues to have the largest impact, however its relative contribution is much lower than in other scenarios. In contrast, CCS emerges as the second largest source of carbon savings thanks to significant and sustained investment beginning in 2025. Energy efficiency, and biomass remain significant, together providing more than one quarter of cumulative emissions savings, while the remaining technology groups provide a combined 12%.

Figure 5.3 - Max Tech with carbon capture / electrifying heat - current trends

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O2)

Grid decarbonisation

Energy Efficiency

Biomass

CCS

Clustering


Fuel Switching

Material Efficiency

Others


Strategic Recommendations: How do we get to a Decarbonised Future in 2050? With an understanding of the technologies, measures and their potential for decarbonising Scotland’s EII by 2050, it is important to consider what other challenges must be considered and overcome. The roadmap analysis makes a wide range of strategic, industry-specific, and technology-specific recommendations to support the decarbonisation roadmap.

An overview of strategic recommendations is provided below, divided into eight key themes shown in Figure 6.1;

Figure 6.1 - Strategic Recommendations – Key Themes

Recommendations for specific industries can be found on their respective profile pages in Annex A, and technology recommendations in Annex B.

1. Strategy, Leadership and Organisation

Energy intensive industries are an important part of the Scottish Economy. Recognising this, it is critical that the Scottish and Local Governments work with these industries to develop comprehensive decarbonisation delivery plans, with a particular focus on those technologies likely to require incentives or other forms of intervention (e.g. heat networks and Carbon Capture networks). The Scottish Government and its partners understand that individual sector activities could be best placed at a UK or Scottish level, and will therefore support activities in collaboration with the UK Government where necessary, whilst also considering specific Scottish opportunities.

Key Recommendations

• Establish a Scottish working group between government, and partners, and industry to determine strategic priorities

• Support the UK development of sector specific five year decarbonisation action plans, and focus on Scotland specific opportunities, that fit into long term goals

• Support implementation of corporate sustainability targets

Strategy, leadership and organisation Business case barriers

Future energy costs, energy supply security, market structure and

competition

Policy and regulation Life-cycle accounting Value chain collaboration

Research, development and demonstration People and skills


2. Business Case Barriers

Businesses are driven by financial and commercial imperatives. The most effective way to accelerate decarbonisation among the EII is to ensure the process supports these economic aims. This will likely require activity and support across global, EU, UK and Scottish levels.

Interviews with industry stakeholders revealed three key barriers to decarbonisation under this theme:

1. Payback periods that are longer than company defined thresholds 2. Competition with other projects for corporate funding 3. Shortage of technical or managerial resource

3. Future Energy Costs, Energy Supply Security, Market Structure and Competition

All industries operate within evolving markets, which can present opportunities and challenges to decarbonisation and energy efficiency. The ongoing competitiveness of Scotland’s EII is dependent on a range of factors including energy costs and energy security. While many decarbonisation technologies increase energy efficiency, others will lead to higher energy consumption and increased operating costs and some, such as CCS, will require significant capital investment and currently return no direct financial business benefits. These issues must be addressed in order to achieve significant decarbonisation among Scotland’s EII.

Key Recommendations

• Financial innovation to take loans for projects off balance sheet

• Investigate a waste heat recovery incentive

• Establish an industrial fund that incentivises energy efficiency and heat recovery in the context of the overall policy landscape

• Investigate the use of third-party funds, for example investment funds and Energy Performance Contracting

Key Recommendations

•Increase Scottish Industry knowledge and awareness of UK and Scotland's longterm energy policy.

•Improve industry understanding and support, designed to deliver competitive benefits and security of energy supply

• Encourage industry to fully participate in the electricity market in order to reduce overall cost of generation, transmission and distribution, such as Demand Side Response (DSR), carbon pricing and development of CCS industry.


4. Policy and Regulation

This theme covers Scottish policy and regulation as well as UK, EU and global policies and agreements. Uncertainty around the long-term direction of energy and climate change policies and regulations, such as unexpected changes to existing policies and incentive schemes, weakens investor confidence and undermines the business case for major investments in decarbonisation projects. Several interviewees mentioned changes to the renewable energy subsidy (FiT - Feed in Tariff) and the lack of long-term guarantees on the Renewable Heat Incentive (RHI) as examples. In contrast, rigidity in certain process regulations (e.g. Scotch whisky production) inhibits energy efficiency and decarbonisation.

5. Life-Cycle Accounting

All industries are part of complex material and product supply chains that spread the carbon impacts of production. Life-cycle accounting provides a standardised means of aggregating these whole “lifecycle” emissions at the product level. When this information is provided to consumers and integrated into purchasing decisions, it encourages companies to adopt a holistic approach to decarbonisation, seeking opportunities throughout their supply chains.

6. Value Chain Collaboration

All industries are part of value chains that link raw materials through production to customers and consumers. Supply chain analysis in individual systems of industries can highlight “carbon hotspots” where major energy efficiency and decarbonisation opportunities can be realised. For example, material efficiency gains can deliver the same quality of services or product with fewer material inputs and costs, but require collaboration across the value chain. The same is true for closed loop recycling. Value chain collaboration is a challenge in Scotland and the UK and becomes even more challenging for Scotland’s EII reliant on export markets due to varying regulatory, economic and consumer conditions.

Key Recommendations

• Simplify the energy and industrial policy landscape, taking into account interactions between different regulations across UK, EU and global policies

• Continue to work to strengthen global climate change agreement and multilateral commitment to CO2 pricing

• Review incentives – Can they be made available at project financial close?

Key Recommendations

• Support the development and understanding of Life-cycle Accounting standards

• Require low-carbon footprint products and services in public procurement processes

• Continue to influence public opinion and behaviours about the importance of low-carbon products and services

Key Recommendations

• Further development of circular economy opportunities in Scotland’s industrial sectors, building on the ongoing activities

• Scottish Government and its agencies could play a role as facilatator between different sectors organisations, or within the same industry, such as support on clustering

•Consider offering extra support for projects that involve collaboration across the supply chain to increase participation


7. Research, Development and Demonstration

Achieving the carbon savings under Intermediate and Max Tech Scenarios will depend upon the successful deployment of technologies that require further research and development to reach viability at a commercial scale (e.g. Carbon Capture and Storage (CCS)/Carbon Capture and Use (CCU), renewables, electrification of high temperature heat, gasification and pyrolysis of biomass and heat recovery). It is not sufficient to prove a technology works at the laboratory scale; pilot-scale and demonstration projects are required to prove their real-world utility. There are many opportunities for academia to play a direct role within industries, however some technologies will require a level of Research and Development (R&D) that exceeds the capacity of most companies and even countries, making international collaboration critical.

8. People and Skills

Industry needs a highly educated and carbon-literate workforce to tackle the challenges of implementing advanced decarbonisation and energy efficiency technologies. Scotland’s ageing workforce, a shortage of engineers, and a general lack of workforce knowledge around decarbonisation were identified as key obstacles by several of Scotland’s EII stakeholders; a finding echoed at the UK level. Commitment to decarbonisation and energy efficiency also requires a supportive company culture. One way of doing this is by implementing an energy management system such as ISO 50001.

Key Recommendations

• Companies and Government to emphasis need for international R&D initiatives to help bring full scale pilots and demonstration projects to the market

• The Scottish Government should continue to develop a platform for R&D coordination and collaboration (including assistance with accessing international and wider EU programmes) that would reduce risks for companies associated with intellectual property rights, pilot scale testing and deployment of new technologies. For example Energy Technology Partnership and Scotland Europa.

• Further investigate and analyse the cost impact of the technologies required to meet carbon reduction pathways that have not yet been commercialised

Key Recommendations

•Scottish Government should consider ways to further support, attract and develop skilled sector workforce. This could be achieved through building on the existing industry focused Skills Development Scotland (SDS) programme, or developing new offers following the SDS example.

• Provide incentives to implement energy management systems such as ISO 50001


Summary and Next Steps The IDEERSA study is a significant step towards understanding the challenge of decarbonising Scotland’s EII, as part of achieving the nation’s climate change goals. It shows that Scotland’s EII contribute 15% of all Scottish emissions, and that through the use of proven technologies, they can reduce these emissions by up to 76%12 by 2050, resulting in a cumulative savings of 80MtCO2.

Figure 7.1 - Annual EII Emissions in 2050 by Scenario with Associated Investment

This outcome is ambitious, and achievable, and will require immediate and sustained activity and collaboration between Scottish Industry, Scottish Government and its partners, Non-Departmental Public Bodies and regulators from now until 2050.

This will require the following conditions:

1. Industry investment in energy efficiency is committed in the short-term and sustained to 2050

2. UK grid decarbonisation targets are achieved without sacrificing electricity supply or competitiveness.

3. CCS/CCU achieves commercial deployment by 2025, followed by rapid expansion to 2050. CCS/CCU technology provides 18.1% of cumulative emissions savings, and 29.7% of annual savings in 2050.

4. Industry secures affordable and reliable access to biomass energy in light of increasing and competing global demand

5. Industry has the skills and expertise required to effectively and efficiently deploy low carbon technologies

6. Sufficient financial and policy support is in place to address slow payback periods and uncertainty inherent in some low carbon technologies

12 Reduction compared to 2012 baseline. While Scotland’s national 2050 emissions targets are based on a 1990 baseline, dynamic changes in the industrial sector since 1990, combined with significant data limitations, make comparison against the 1990 EII baseline impractical.

Scotland’s EII contribute 15% of all Scottish emissions, and that through the use of existing technologies, they can reduce these emissions by up to 76% by 2050, resulting in a cumulative savings of 80MtCO2. This outcome is both ambitious, and achievable.

8.34

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2012 2050 BAU 2050 Intermediate 2050 Max Tech

Annual Emissions Annual Savings vs. 2012

26% Reduction 44%

Reduction 76% Reduction

£350 million £900 million £1,450 million


Already, significant progress has been made towards these objectives through a range of Scottish Government policies and programs including:

• National Planning Framework 3 (NPF3) and Scottish Planning Policy (SPP) - both published in June 2014, provide the national planning policy context for delivering heat networks.

• Heat Policy Statement (HPS) – published June 2015, the HPS sets out a framework to deliver a resilient, low carbon heat system for Scotland.

• Scotland’s Energy Efficiency Programme (SEEP) – due for launch in 2018, SEEP will support energy efficiency improvements in both domestic and non-domestic buildings sectors across Scotland based on the National Infrastructure Priority system.

• Low Carbon Infrastructure Transition Programme (LCITP) – launched in March 2015 with a 3 year budget of £76 million, the LCITP provides tailored project support for low carbon infrastructure projects across the private, public and community sectors.

• Scotland Heat Map – first published in June 2014 and updated regularly, the Scotland Heat Map provides Scotland’s local authorities with a powerful tool for identifying and utilising low carbon heat opportunities, including via district heating.

• Heat Network Partnership (HNP) – established 2013 to support and accelerate district heating development across Scotland.

There are also positive examples of how industry are responding to the challenges of Climate Change, carbon emissions reductions and energy supply. For example the glass and cement industry roadmaps to 2050;

• A Clear Future: UK Glass Manufacturing Sector Decarbonisation Roadmap to 205013

• Cement Technology Roadmap 2009: Carbon emissions reductions up to 205014

From the work carried out by DECC/BIS the UK Government has opened discussions with the eight EII, to develop industry specific action plans. The Scottish Government and business support partners in Scottish Enterprise (SE), Resource Efficient Scotland (RES), Highlands and Islands Enterprise (HIE), Scottish Manufacturing Advisory Service (SMAS), and Scottish Environment Protection Agency (SEPA) are following this process and will support any action plans agreed with industry. As this Scottish work builds on the UK roadmaps, it is important to recognise that individual sectors may choose to work at a UK level or jointly with Scottish Government. Scotland fully supports the UK activities, and we also seek to work with industry where there are unique local challenges and opportunities.

This report aims to understand the opportunities and barriers to decarbonisation of industry, and will inform future work by Scottish Government and its partners. This will be taken forward by engagement with Scotland’s Manufacturing Action Plan.

13 http://www.britglass.org.uk/decarbonisation-roadmap 14 https://www.iea.org/publications/freepublications/publication/Cement.pdf


Annex A – Industry-Specific Profiles and Pathway Analyses

8.1 Scottish Glass Industry Profile The Scottish Glass Industry (SGI) considered in the study is limited to Scotland’s two large container glass (bottles and jars) plants located at Alloa and Irvine. Emissions from other glass sector product manufacturers, such as glass beads and insulation, have been excluded, however key roadmap recommendations may still be relevant.

The SGI (as defined above) has a total estimated annual production of 0.4 Mt of product, and a combined annual carbon footprint in 2012 of 0.27 MtCO2 (0.22 Mt direct emissions and 0.6 Mt indirect emissions). Both plants use natural gas as their fuel source.

Pathways As shown in the table below, under its current trajectory (BAU), the SGI will reduce annual emissions by 40% by 2050 thanks largely to ongoing energy and material efficiency gains. Pursuing a Max Tech pathway that includes CCS and Electrification of Heat (EoH) however, will reduce annual emissions by up to 96% by 2050, a savings of 0.26 MtCO2 per year.

Pathway 2012

Emissions (MtCO2)

2050 Emissions Reduction (relative to

2012)

Technology Groups Deployed (in descending order of relative

contribution) % MtCO2

BAU

0.27

40% 0.11 Energy Efficiency; Material Efficiency; Fuel

Switching; Others

Max Tech 93-96% 0.25-0.26 (Carbon capture); Energy Efficiency;

Electrification of Heat; Material Efficiency; Fuel Switching; Others

Barriers and Enablers Clear glass is predominantly produced in Scotland, being the preferred colour for the food and drink sector, however much of this is exported (e.g. Scotch whisky). At the same time, the majority of domestic consumption is brown and green glass. This incompatibility between supply and demand, along with low glass recycling rates, hampers the industry’s ability to increase use of recycled glass cullet15 and consequent decarbonisation benefits. Light-weight container products also generates carbon savings, however it cannot compromise product quality and safety.

The Glass sector has indicated a preference for EoH over CCS, which provide similar reductions, but these technologies are mutually exclusive. Electric furnaces have been tested, but further development is required at scale.

15 Glass that is crushed and ready to be re-melted is called cullet


8.2 Scottish Chemicals Industry Profile The Scottish Chemicals Industry (SCI) considered in this study, encompasses both chemical and pharmaceutical manufacturing and includes 13 large-scale production sites and many smaller ones. Annual emissions for the industry are estimated at 3.49 MtCO2, of which 1.6 MtCO2 originates from two olefins plants - at Grangemouth and Mossmorran. The next largest contributor is the pharmaceuticals plant at Irvine, estimated 54,000 tCO2 per annum. Much of the SCI is concentrated in the Grangemouth area, 25% of the CHP emissions were included for the Grangemouth chemical plant.

Pathways All SCI pathways assume an average annual industry growth rate of 1% to 2050. Under BAU, annual emissions in 2050 are 1 MtCO2 (28%) lower than in 2012 thanks largely to increased use of biomass and energy efficiency gains. Under Max Tech, annual emissions savings are as high as 85% or 2.98 MtCO2, with nearly a third of savings coming from CCU/CCS technologies. Other measures, which include ‘batch to continuous conversion’ in pharmaceutical and fine chemical processes, contribute just over 9% of annual savings.

Pathway 2012

Emissions (MtCO2)


2012)



BAU

3.49

28% 0.99 Biomass; Energy Efficiency; Fuel Switching;

Clustering; Others

Max Tech 83-85% 2.91-2.98 CCU/CCS; Biomass; Energy Efficiency;

Others; Clustering

Barriers and Enablers Pharmaceutical manufacturing processes are guided by strict regulations based on various international regulations such as the Good Manufacturing Practice (GMP). Emissions reduction goals must be integrated into this regulatory framework to avoid hampering process changes and technological innovations that support decarbonisation.

The concentration of the SCI in the Grangemouth area presents many clustering opportunities, some of which have already been realised. The Ineos Grangemouth plant for example, is currently supplied with heat from the neighbouring Grangemouth CHP, and further opportunities for biomass are being explored. The SCI is also working closely with Chemical Sciences Scotland, Scottish Enterprise and other partner organisations to develop bio-refining opportunities linked to waste, chemicals and food & drink sectors.


8.3 Scottish Paper & Pulp Industry Profile As late as 2000, there were 16 paper and pulp mills in the Scottish Paper & Pulp Industry (SPPI), however, at the time of writing, only 4 remain. These mills manufacture a wide range of speciality (for food and drink applications), tissue, and printing and writing products, with an estimated combined annual production capacity of 360,000 tonnes.

The remaining Scottish mills have made serious strides over the last 25 years to improve energy efficiency, reducing energy consumption by almost 40%. In addition, biomass cogeneration has recently been installed in one of the operating mills. Total annual emissions for the industry in 2012 (currently operation plants only) are estimated at 0.44 MtCO2, with direct emission from gas and biomass use accounting for roughly one quarter (0.11 MtCO2).

Pathways All SPPI pathways assume an average annual industry growth rate of 1% to 2050. Under the BAU pathway, annual SPPI emissions in 2050 are 30% lower than in 2012 despite higher outputs, owing largely to continued advances in energy efficiency and heat capture, as well as clustering options and the electrification of heat. On the Max Tech Pathway, greater use of biomass adds significantly to decarbonisation, helping reduce annual emissions by 98% by 2050.

Pathway 2012

Emissions (MtCO2)


2012)



BAU

0.44

30% 0.13 Energy Efficiency; Clustering; Electrification

of Heat

Max Tech 98% 0.43 Energy Efficiency; Biomass; Electrification of

Heat

Barriers and Enablers The SPPI enjoys a number of advantages in relation to future decarbonisation. Its decades of success improving energy efficiency provides valuable experience and expertise which can be drawn and built upon going forward. Similarly, the industry is well positioned to benefit from expanded CHP generation and grid decarbonisation; even with maximum industry action under Max Tech, grid decarbonisation accounts for one fifth of net annual savings by 2050. Finally, the SPPI can reduce emissions by increasing use of recyclate feedstocks.


8.4 Scottish Food & Drink Industry Profile The Scottish Food & Drink Industry (SFDI) is very diverse, with over 800 companies, only 4% of which are defined as ‘large enterprise’. It has many significant subsectors including Scotch whisky and other spirits, seafood, bakeries, meat processing, breweries, bottled water and soft drinks. It is an important part of Scotland’s economy, employing over 360k people in 2012 and contributing an estimated £4.8 billion to Gross Value Add (GVA). It is also the third largest emitter among Scotland’s EII, generating an estimated 1.67 MtCO2 in 2012. The Scotch whisky industry, which in 2012 comprised 66 malt and 4 grain distilleries, accounts for 59% of all SFDI energy consumption, and 53% of emissions.

Pathways All pathways for the SFDI assume an average annual industry growth rate of 1% to 2050. Under the BAU pathway, annual industry emissions in 2050 are 39% lower than in 2012 despite higher outputs, owing to a wide range of measures including improved energy efficiency, increased use of biomass, and the electrification of heat. On the Max Tech Pathway, electrification of low temperature heat demand becomes the single largest emissions saving measure, helping reduce annual emissions by up to 1.24M tCO2 (74%) by 2050.

Pathway 2012

Emissions (MtCO2)


2012)



BAU

1.67

39% 0.66 Energy Efficiency; Biomass; Electrification of

Heat; Material Efficiency; carbon capture; Others; Fuel Switching

Max Tech 61%-74% 1.02-1.24 Electrification of Heat; Energy Efficiency;

Biomass; Others; Material Efficiency; carbon capture; Fuel Switching

Barriers and Enablers The heterogeneous nature of the SFDI provides competition and a strong innovation drive (e.g. product development innovation in response to changing consumer tastes and demand), but also makes it challenging to achieve economies of scale required for large-scale decarbonisation. Furthermore, each of the industry’s subsectors uses very specific processing technologies, limiting the ease with which successful decarbonisation measures can be replicated.

At the same time, the SFDI’s high demand for low temperature heat, can readily be supplied through electrification, providing rebound benefits as grid decarbonisation progresses. Similarly, the widely dispersed Scotch whisky industry is well-positioned to make greater use of rural biomass feedstocks via combustion and anaerobic digestion. Fuel-switching to replace the industry’s latent reliance on fuel oil will also generate significant carbon savings, and plans to extend the gas grid are already underway.


8.5 Scottish Oil Refining Industry Profile The Scottish Oil Refining Industry (SORI) is exclusively made up of the operation at Grangemouth. This facility relies entirely on energy from on-site use of natural gas, as well as heat supplied from the Grangemouth combined heat and power plant. For the purpose of this study, 25% of the CHP emissions (152,000 tCO2 per annum) have been assigned to the oil refinery based on assumption that 50% of the emissions from the CHP plant are associated with electricity production, and heat is evenly split between the refinery and olefin chemicals plant. Based on these figures, the SORI generated an estimated 1.76 MtCO2 in 2012, making it the second largest emitter among Scotland’s EII.

Pathways All SORI pathways assume stable production to 2050. Based on current industry trajectory (BAU), annual SORI emissions will achieve a 14% reduction from 2012 levels by 2050, eliminating 0.24 MtCO2. This is primarily achieved through improved energy efficiency, as well as fuel switching. Following the Max Tech Pathway, annual emissions savings by 2050 increase to 0.94 MtCO2, a savings of 53% from 2012 levels achieved primarily through large-scale deployment of CCS. Since the SORI uses virtually no grid electricity, the benefits of grid decarbonisation are negligible.

Pathway 2012

Emissions (MtCO2)


2012)



BAU 1.76

14% 0.24 Energy Efficiency; Fuel Switching

Max Tech 53% 0.94 CCS; Energy Efficiency; Fuel Switching

Barriers and Enablers Compared with other EII, the SORI has limited options with which to pursue decarbonisation, with 99.6% of all emissions savings under Max Tech coming from just two technology groups: CCS and energy efficiency. Currently, CCS remains economically unviable, however if a robust carbon pricing scheme is developed in future, this could provide a new revenue stream to the industry, allowing the SORI to sell CCS as a service to other industries in order to cover operational and capital costs.

Industries are unlikely to adopt CC without financial and policy incentives, it is therefore critical that industry and government work in partnership to develop and create a viable strategy to implementation.

Another opportunity for SORI to reduce its emissions is by re-distributing its own low grade waste heat to neighbouring industries such as the food and drink sector, thereby reducing waste and offsetting some of the associated carbon impacts.


8.6 Scottish Cement Industry Profile The Scottish Cement Industry (SCeI) consists of a single manufacturing site – the Tarmac plant in Dunbar, East Lothian – with an estimated annual production output of 0.72 Mt cement. In 2012, the site produced an estimated 0.54 MtCO2, of which 0.49 Mt were direct CO2 emissions from on-site fuel combustion. The primary fuel used at the Dunbar site is coal, with waste-derived fuels (including tyres and recycled liquid fuels) supplying up to 40% of net energy demand. Roughly 18% of net energy demand is supplied by the electricity grid, and 5% from biomass.

Pathways All decarbonisation pathways for the SCeI are premised on stable production output to 2050. Under the BAU Pathway, annual emissions savings are relatively modest at 9%, and result from a range of process improvements and general energy efficiency gains. Under Max Tech, emissions savings are considerably higher, with annual reductions ranging from 32%-62% below 2012 levels in 2050, depending on whether or not oxy-combustion capture (a form of CCS specific to cement production) is deployed. Displacing the use of coal with biomass and waste derived fuel, as well as BAU measures, also contribute to Max Tech savings.

Pathway 2012

Emissions (MtCO2)


2012)



BAU

0.54 9% 0.05 Others; Energy Efficiency

Max Tech 32-62% 0.17-0.33 (Carbon capture); Biomass; Others; Energy

Efficiency; Fuel Switching Barriers and Enablers CCS will be a critical factor in any significant decarbonisation of the SCeI, as evidence by the additional 30% emissions savings it offers under Max Tech. While CCS has yet to reach a commercially viable scale (see discussion in Annex B), technology options do exist but require substantial support and development across government agencies and industry partners.

The industry’s latent reliance on coal also presents an opportunity for significant decarbonisation. Already, the Dunbar site uses a considerable amount of waste derived fuels, and Tarmac has announced it is investigating opportunities to use solid recovered fuels and processed sewage pellets in future. Competition with other industries for these alternative fuel sources, as well as the technical and engineering skills required to deploy them, is likely to increase overtime.


8.7 Scottish Ceramics Industry Profile The Scottish Ceramics Industry (SCerI) is small compared to the rest of the UK, comprised of 5 companies and 6 operational sites. Production is limited to a few key products. There is one site which produces heavy clay bricks (1 of 68 brick manufacturers in the UK), three refractories and two sites producing technical ceramics. There is currently no production of white wares in Scotland. The high proportion of specialist refractories and technical ceramics manufactures make Scotland’s ceramics industry unusually dependent on grid electricity for extremely high temperature firing.

In 2012, the Scottish Ceramics Industry generated an estimated 0.03 MtCO2. This amounts to 2.5% of annual emissions from the UK ceramics industry as a whole, and makes Scottish Ceramics the smallest emitter among eight sectors.

Pathways Growth rates modelled for the Scottish Ceramics Industry pathways run to 2025 before output stabilises, and vary according to product type (bricks 1.25% pa; refractories and technical ceramics 1% pa). Under the BAU Pathway, annual emissions are more than halved by 2050, owing primarily to energy efficiency gains and fuel switching, as well as greater material efficiency in the production process. Emissions savings are only slightly higher under Max Tech at 61%, with additional savings coming from the electrification of heat and use of carbon capture technologies.

Pathway 2012

Emissions (MtCO2)


2012)



BAU 0.03

55% 0.02 Energy Efficiency; Fuel Switching; Material

Efficiency; Others; Biomass

Max Tech 61% 0.02 Electrification of Heat; Energy Efficiency; carbon capture; Fuel Switching; Biomass;

Others; Material Efficiency Barriers and Enablers The Scottish Ceramics Industry’s unusually high reliance on grid electricity presents both challenges and opportunities for future decarbonisation. On the one hand, the industry will benefit tremendously from UK grid decarbonisation. With extensive electrification of heat under Max Tech, grid decarbonisation is expected to provide nearly 85% of total annual emissions savings for the industry by 2050. At the same time however, the industry’s sensitivity to changing electricity prices, combined with the current relative inefficiency of high temperature heat electrification technologies (e.g. electric kilns) creates an uncertain investment environment. Industry stakeholders also cite a lack of technical and engineering skills required to confidently implement new processes and technologies.


8.8 Scottish Iron and Steel Industry Profile The Scottish Iron and Steel Industry (SISI) is mainly limited to downstream processes and forging. There are approximately 15 different companies working in the sector and the different products they produce are either finished end-use products, such as steel vessels, or intermediate products such as galvanised steel. Compared to the UK as a whole, the Scottish industry emits considerably less CO2, as there are no upstream steel making sites in Scotland.

The entire SISI generated an estimated 0.14 MtCO2 in 2012, of which over 70% comes from 2 sites: a rolling mill and a forging operation.

Pathways All SISI pathways to 2050 assume production output remains steady at 2012 levels. Decarbonisation impacts under BAU and Max Tech pathways are very similar, generating 73% and 75% savings from 2012 levels by 2050 respectively. The vast majority of these savings (93% under Max Tech) come not from industry action, but from UK grid decarbonisation. This is supplemented by relatively minor savings from energy and material efficiency gains, as well as clustering in the case of Max Tech.

Pathway 2012

Emissions (MtCO2)


2012)



BAU

0.14

73% 0.10 Energy Efficiency; Material Efficiency

Max Tech 75% 0.10 Energy Efficiency; Clustering; Material

Efficiency

Barriers and Enablers The SISI is well-placed to take full advantage of UK grid decarbonisation to reduce its overall emissions. Additionally, there is a considerable potential to save energy and reduce carbon emissions in many areas of the industry since few investments have been made in the last decade. Upgrading steam/power production systems, improving on-site energy management and process optimisation are all promising avenues for decarbonisation.

As evidenced by the lack of investment to date however, financing these measures may prove a challenge, as many companies involved in the SISI have larger upstream operations elsewhere in the UK where far greater cost and energy savings can be made.


Annex B – Description of Key Decarbonisation Technologies and Recommendations Carbon Capture & Storage/Utilisation (CCS/CCU)

Technology Overview – Carbon Capture (CC) technologies extract CO2 emissions from industrial processes and either use them as manufacturing feedstock (CCU), or store them in geological formations to remove them from the atmosphere (CCS). Although CC technologies have been demonstrated at a large scale within the energy sector, they have yet to reach commercial viability.

Decarbonisation Impacts – CC technologies, particularly CCS, feature heavily in the Max Tech Scenario, becoming the single largest contributor to annual CO2 savings by 2050, at 2.3 MtCO2 (29.7% of total reduction) against the reference scenario. CC technology provides more than 50% of annual savings in cement, oil and gas and chemical industries by 2050 under Max Tech.

Barriers and Enablers – CC technologies remain prohibitively expensive owing to their high capital investment requirements and operation costs, as well as the absence of return on investment opportunities. Another important factor is the energy penalty associated with their operation. Industries are unlikely to adopt CC without financial and policy incentives. Ongoing uncertainty about UK Government funding for CCS in the power sector is having a knock-on effect in undermining confidence for CCS in industry.

Possible Next Step Who Should Be Involved? Indicative

Timing

Study potential for carbon capture network hub in Grangemouth, and key requirements.

EIIs, Scottish Government, Local Authorities, Power Sector, carbon capture community

2015 – 2020

Investigate the policy and funding requirements for a Scottish CO2 network, drawing on international experience, and linking to other schemes and enhanced oil recovery potential.

EIIs, Scottish Government, Local Authorities, Power Sector, carbon capture community, funders, EU, selected EU countries

2015 – 2020

Deliver industrial carbon capture demonstration project.

EIIs, Scottish Government, carbon capture community, EU ETS Innovation Fund

2020 - 2025

Research, investigate and encourage CCU in light of rapid advancements in this area.

EIIs, Scottish Government, Carbon capture community, academic community

2015 – 2020

Industry feedback…

“There is very little appetite for carbon capture and storage at present in industry. Scotland needs leadership to confront the challenges of technology demonstration and lack of a current commercial business model.” “Scottish Government and academia could establish a Scottish-specific research programme to support storage, maybe just Scottish or linking with UK and Europe.”


Electricity Grid Decarbonisation (EGD)

Technology Overview - EGD is the reduction of marginal CO2 emissions from electricity generation via low-carbon generation technologies, particularly renewables both on and off site. This is a UK policy objective that lies outside industry control, thus its impacts are constant across all scenarios in this study. Grid decarbonisation projections in the study are based on the UK target (50 gCO2/kWh by 2040) and not the more ambitious Scottish target (50 gCO2/kWh by 2030). As a result, emissions savings from grid decarbonisation in Scotland could be even greater than models in this study indicate.

Decarbonisation Impacts – EGD is the largest contributor to cumulative emissions savings across all four scenarios. It has significant carbon savings impacts for all Scotland’s EII except oil refining, which relies heavily on parasitic energy supply, and for industries where substantial process electrification is possible (food and drink, paper and pulp, glass and ceramics), the potential benefits are even greater. Under Max Tech, EGD contributes 2.3MtCO2 in annual savings by 2050, 32.3% of the total reduction against the reference scenario, greater than CCS.

Barriers and Enablers – Scotland’s EII remain uncertain as to whether government can reach its ambitious decarbonisation target while keeping energy prices affordable and a secure supply.


Timing

Build industry confidence in Government targets and delivery plan, highlighting potential EII benefits and contributions.

UK and Scottish Government to lead. 2016 – 2017

Develop strategy to reduce Scotland’s EII electricity grid demand, focussing on:

• Demand side response • Energy storage and smart grids • Energy efficiency • On-site renewables • Increased participation in frequency

response.

UK and Scottish Government / Regulators / Utilities

2016 – 2017

Industry feedback… “A number of interviewees expressed concern relating to the current approach to energy policy in Scotland. These concerns ranged from a perceived lack of a clear policy to a lack of confidence that the grid decarbonisation targets can be delivered at ‘competitive’ costs.”

“Some of the companies interviewed in Scotland have successfully installed on-site electricity generation projects. Others have cited barriers:

• “Incentives are only available at the start of operation of new projects and not at the investment decision stage.

• “The rates associated with on-site renewable energy generation are inconsistent with energy generators.

• “Policy should be developed to deliver genuine incentives and not activity designed to avoid other costs.”


Energy Efficiency and Heat Recovery (EEHR)

Technology Overview – Energy efficiency gains are typically made incrementally when old equipment is replaced with new, more efficient alternatives, however they can also result through energy management to improve automation, process control, monitoring, planning and maintenance. Heat Recovery is the capture of waste heat for use in industrial processes or distributed heat networks (e.g. district heating).

Decarbonisation Impacts – Under Max Tech, EEHR provides potential annual savings of 1.0 MtCO2 by 2050, 14% of total reduction in 2050 against the reference scenario, and significant decarbonisation opportunities across all of Scotland’s EII, including 60%16 of annual savings for iron and steel, and 50% for paper and pulp industries by 2050.

Barriers and Enablers – Improving energy efficiency lowers marginal production costs, providing direct financial paybacks for companies, however these often occur over long time period. As a result, energy efficiency projects, which must compete with limited company budgets, are often disadvantaged against other investments opportunities, typically focused on growth and output, with no carbon benefits and shorter payback periods.


Timing

• Help EII access financing for EEHR projects (e.g. EU Energy Efficiency Directive, ethical investment funds, Green Bank)

• Develop a dedicated energy efficiency fund for industry projects to mitigate long payback periods and accelerate equipment upgrades.

• Explore existing opportunities for waste heat recovery and heat networks

• Develop policy and financial support for recovery of waste heat projects (similar to those for renewable energy)

All Government, Scotland’s EII and funding sources

2016

16 All values quoted for individual sectors exclude grid decarbonisation

Industry feedback… “Projects are identified with energy or emission reduction benefits but short term payback hurdles need to be overcome. Resources and budget to implement projects compete with process efficiency and HSE compliance projects. “Industry does not usually give favourable treatment for energy efficiency or decarbonisation projects when assessed with other competing priorities.”


Biomass

Technology Overview – Biomass are renewable resources (e.g. wood waste, sewage, slurry, organic household waste, energy crops, etc.) that can be used in combined heat and power, gasification and pyrolysis plants or anaerobic digesters to replace fossil fuel energy - or in bio-refining to replace conventional feedstock in the chemicals (e.g. pharmaceuticals), food and drink, cement, and paper and pulp sectors (See The Biorefinery Roadmap for Scotland, 2015).

Decarbonisation Impacts – Under Max Tech, approximately 1 Mt of biomass is consumed annually by 2050, providing an annual emissions savings of 0.8MtCO2, 12% of total reduction against the reference scenario. Among the individual EII, biomass offers the greatest annual emissions savings for paper and pulp (50%), cement (29%), food and drink (20%) and chemicals (17%).

Barriers and Enablers – Scottish Government firmly supports increased use of biomass, as evidenced by its 11% renewable heat target by 202017 and the recently published Biorefinery Roadmap for Scotland (2015). The use of biomass currently varies greatly among Scotland’s EII, with the Scotch whisky industry leading the way. Greater use of biomass in the future will be challenged by competing demands, resource availability, security of supply, quality consistency, price, and policy support.


Timing

• Establish comprehensive biomass policy framework including availability, distribution, use and emission factors.

• Investigate the Renewable Heat Incentive (RHI) which supports heat only schemes but excludes potentially more efficient heat and power generation in industrial processes

• Continued support for Bio-refinery Roadmap

UK and Scottish Governments / waste regulators / forestry industry

2016

17 2020 Routemap for Renewable Energy in Scotland (2011)

Industry feedback… “A number of companies in the food and drink (especially Scotch whisky), chemicals and cement sectors already use biomass extensively. Companies do see continued and further opportunities for biomass use, especially if a clear and stable policy framework is developed that strikes a balance between low carbon and competitive use of biomass resources.” “Governments should work on making biomass available economically to the [industrial] sector in Scotland so there are no measures brought in that disadvantage them against other sectors such as power generation. RHI maybe could be used to address this balance. Currently power stations have an incentive to use biomass, we do not.”

http://www.scottish-enterprise.com/knowledge-hub/articles/comment/biorefinery-roadmap

http://www.scottish-enterprise.com/knowledge-hub/articles/comment/biorefinery-roadmap

http://www.gov.scot/Resource/Doc/917/0118802.pdf


Electrification of Heat (EoH)

Technology Overview – EoH involves transferring industrial processes from fossil fuel to electric power, provided the latter generates lower net emissions.

Decarbonisation Impacts – The carbon benefits of EoH increase overtime with grid decarbonisation and under Max Tech, provide an annual emissions savings of 0.2 MtCO2 by 2050 (3% of total emissions reduction against the reference scenario). EoH features most heavily in ceramics (77% annual savings in 2050), food and drink (53%) and glass (15%).

Barriers and Enablers – The economic viability of EoH is highly sensitive to relative price changes in grid electricity and fossil fuels. Since EoH involves “locking in” to electrified technology, companies must be confident that future electricity prices will remain competitive, and supply reliable, particularly if widespread adoption of EoH leads to increased electricity demand. Companies can insulate themselves from price and supply uncertainty and guarantee low-carbon electricity by developing on-site renewables.


Timing

• Continue to investigate and demonstrate EoH in tandem with the development of renewable electricity and storage.

• Develop business and operating models to optimise renewable electricity generation while lowering costs for industrial consumers.

UK and Scottish Government, technology developers and industry

2016 - 2025

Industry feedback… “The comments relative to electricity decarbonisation apply here – a number of interviewees expressed concern relating to the current approach to energy policy in Scotland. These concerns ranged from a perceived lack of a clear policy to a lack of confidence that the grid decarbonisation targets can be delivered at “competitive” costs.” “Since electricity costs are currently much higher than those of natural gas, electrification of heat will not happen by using grid electricity, but by using renewables to replace gas.”


Clustering

Technology Overview – Clustering involves geographically concentrating industries to make use of underutilised resources (e.g. waste resources, industrial by-products and waste heat) and deliver energy and emissions savings. Clustering is not about moving businesses and jobs out of their communities; rather it is a long-term, gradual process in which existing plants seek local network opportunities (e.g. district heating), and new or replacement plants are encouraged to locate where clustering benefits can be realised.

Decarbonisation Impacts – The direct emissions savings from clustering are very small, however clustering facilitates update of other low-carbon technology groups (e.g. CCU/CCS, biomass and heat networks) making it an important element in the roadmap analysis.

Barriers and Enablers – Clustering relies on inter-organisational collaboration that can lead to the perceived risk of dependency. Relocating large plants is unlikely due to the scale of operations and size of sites. Instead, smaller, cottage industries could be encouraged to locate themselves around these larger sites.


Timing

Undertake a detailed investigation of clustering opportunities covering: • Energy sharing • Future CCU/CCS networks • Waste and resource sharing (linked to

existing bio-refinery projects) • Supportive regulations and policies • Community heat networks and/or

community scale Combined Heat and Power (CHP)

Industry, regulators 2016

Industry feedback… “Clustering is an interesting and attractive concept. Regulations and how this is applied to clusters could be a constraint – e.g. separate permits of cluster partners need to effectively interact. Waste receiving between cluster partners opens up a whole new layer of regulation. These are examples of how regulation – in addition to mid/long term business strategies can be a barrier to clustering arrangements in practice.” “One of the main barriers to decarbonisation is the geographically diverse nature of the industry. Some food and drink plants are very remote, and the sector counts many SMEs, which are generally not willing to combine into one big plant to benefit from the clustering advantages. Energy efficiency projects are more restricted to large enterprises.”


Industrial Decarbonisation and Energy Efficiency Roadmaps ... · 1 to provide a Scottish focused summary of the UK Government’s decarbonisation roadmaps for eight Energy Intensive

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