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Theme 3: Materials & Products

26 September, 2018

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The objective of the theme is to identify and analyse the opportunities for reducing energy demand in UK industry by bringing together novel energy and economy modelling approaches with a co-created programme of research with industry and government. The desired outcome of the research is a clear pathway for UK industry to reduce energy and emissions while recognising its role in the wider UK economy.

The objective of the theme is to identify and analyse the opportunities for reducing energy demand in UK industry by bringing together novel energy and economy modelling approaches with a co-created programme of research with industry and government. The desired outcome of the research is a clear pathway for UK industry to reduce energy and emissions while recognising its role in the wider UK economy.

Industrial energy demand accounts for 20% of the UK’s total energy consumption. In addition to this, the equivalent amount of energy is required from industry outside the UK to satisfy our consumption. While industrial energy demand has reduced significantly over the past 40 years, due to energy efficiency improvements and changes in our industrial structure, these reductions have slowed. While not all energy efficiency options have been adopted, a considerable proportion of the “Quick Wins” have been taken-up increasing the challenge for further reductions. To understand the potential of future options for energy demand reduction requires a detailed understanding of the outputs of industry (i.e. materials and products) and how these can be produced and consumed more efficiently.

This theme represents a co-created of research programme with UK industry and other stakeholders that aims to understand, explain and analyse the possibilities for accelerated energy demand reduction in UK industry while maintaining the crucial role of employment and economic growth. To facilitate this an “Industry Panel” has been assembled to inform the theme. The industry panel represents companies involved in energy intensive processes, trade organisations, government representatives and consultancies and think tanks with a history of engaging with industry. The theme will engage extensively with policy makers in the UK Government across all the work packages.

The theme relies on a number of innovative methodological and modelling techniques developed during the first phase of the RCUK Energy Programme’s investment in energy demand centres. It is formed around three work packages; these being:

  • WP 1 – Industrial energy demand and energy efficiency – working with BEIS and industry to identify remaining energy efficiency opportunities, quantify marginal abatement costs, challenge barriers to implementation and provide strong narratives of low energy futures;
  • WP 2 – Resource productivity and circular economy – considering changing our use of materials and products throughout the supply chain from production to consumption to deliver a reduction in industry energy demand;
  • WP3 – Industrial Strategy and Energy Productivity – The WP brings together the key findings from WP1 and 2 and an improved MARCO-UK energy-economy model, to create policy relevant scenarios of the relationship between industrial strategy and future industrial energy demand in an effort to demonstrate how industry can be a contributor to economic growth while also playing its part in meeting carbon budgets.

The theme is determined to ensure that it develops the capacity to undertaken research on industrial energy demand beyond the partners included within the centre. This will be achieved by ensuring that all advances in data and modelling will be made publicly available. There is a willingness to engage with the academic community through dissemination events and development of joint research initiatives.

WP 1 – Industrial energy demand and energy efficiency

This work package provides a comprehensive overview and assessment of energy reduction options in UK industry and make significant advances in examining future energy and emissions under a number of scenarios. The outcome will be major improvements in data and methods employed by the UK Government in measuring the energy demand of industry and advances in multiple methods. At present, the understanding of future industrial energy and the demand for materials and products is very limited. Most of our future projections are based on overly simplified descriptions of industry typically defined by simple variables such as future GDP growth. This lacks insights into the dynamics of different industry sectors, their future mitigation options and their role in employment, economic growth and trade balances. This work package provides a strong foundation for WP3 and brings together academic advances in data and energy efficiency measures with industry and government insight.

WP 1.1 – Systematic review

The review will establish a detailed appreciation of current and future energy projections, technology options and energy efficiency measures, and include government publications (Roadmaps and Action Plans), models and research. The Industry Panel will act as reviewers and provide expert advice on data and mitigation options. The project will combine the current knowledge on industry energy from BEIS and the International Energy Agency with our more detailed description of industry energy demand and trade flows. This will provide the most comprehensive picture to date on the future of industrial energy demand and an assessment of mitigation options. Liaising with UK industry will ensure that the analysis has a robust understanding of reduction options and the barriers faced by UK industry in their adoption.

WP 1.2 – Improvements in industry energy demand projections

Working with BEIS’ modelling team, the work package will improve the current econometric estimations, exergy estimates and inter-relationships between industry sectors. With strong links to BEIS, the analysis will feed directly into the objectives established within the Clean Growth Plan, the Industrial Strategy and the Industrial Roadmaps. An equally strong relationship exists with the IEA who have agreed to co-operation around data and analysis, starting with the iron and steel sector.

WP 1.3 – Establishing of industry benchmarks

Combining knowledge from the IEA, UK Government and industry for energy productivity and energy demand reduction. A specific request has been made by BEIS to provide benchmarking on UK industrial sectors and develop clear indicators. Working with our established contacts at the IEA (Building on the report from the IEA, pdf, 5.1 MB), we will provide these benchmarks. We will feed directly into an existing cross-departmental working group established to provide indicators on energy and resource productivity. This includes BEIS, Defra, ONS and the Treasury.

WP 2 – Resource productivity and circular economy

Materials and products act as the carrier of industrial energy. While energy efficiency options have been widely exploited the scope for further reductions through resource productivity have been largely ignored. Considering opportunities throughout the product life cycle, from initial supply chains, to the means of distribution, and throughout its use and final disposal presents the broadest range of mitigation options. The identified mitigation opportunities and policy options will inform the modelling undertaken in WP3.

WP 2.1 – Identification of whole life mitigation options

As operational energy performance improves across a range of products, such as buildings, vehicles and electronic appliances, the embodied energy of the product itself represents a significantly higher proportion of whole life energy use. If strategies continue to focus on further incremental gains in operational energy reduction alone and do not adopt a whole life perspective there is a risk that these savings may be offset by increases in embodied energy and less cost effective options adopted. Thus it is important to understand the evolving relationship between embodied and operational energy use and carbon emissions.

The project will work with key industries and Themes 1 (Buildings) and 3 (Transport and Mobility) and the Decarbonisation of Heat Challenge to identify mitigation opportunities that acknowledge this balance and reflect the requisite trade-offs in embodied and operational energy use. The work package will explore, for example, how the adoption of new approaches, such as leasing and service-based approaches, could help to meet the demands of UK households, industry and government with fewer materials and products.

WP 2.2 – Governance and monitoring approaches

Ongoing collaborative work with BEIS and Defra has sought to better understand this link between the UK’s final consumption of products, use of material resources, energy and carbon emissions. This work has highlighted that the economic sectors responsible for the majority of resource use are also responsible for the majority of industrial energy use and carbon emissions. This close link between resource use, energy use and carbon emissions can be used to identify key sectors to focus on specific resource productivity strategies. A recent assessment demonstrated that resource productivity strategies could collectively bridge the gap between currently outlined strategies and the level of ambition for the UK to achieve the 5th Carbon Budget. As part of this work package we will continue to work in partnership with Defra, BEIS and ONS to further develop a suite of national indicators of resource productivity that reflect the full supply chain impacts of UK consumption. The work package will focus upon developing governance approaches (working closely with theme 6) and policy frameworks that support improved resource productivity within key industrial sectors.

WP 2.3 – Developing an energy reduction pathway and strategy for the construction industry

The final project will seek to translate these insights into a strategy for a particular industry. The construction industry is one of the largest users of energy and materials in the UK. When taking a whole supply chain approach, the annual carbon emissions associated with constructing and maintaining the UK built environment are comparable to tailpipe emissions from all the cars on UK roads. Opportunities to mitigate these emissions, such as through the use of modular design and alternative materials, are already being practised but remain niche examples. A broad suite of metrics, standards, guidance and policies are required to support more widespread adoption of these alternatives, and the development of these resources must be informed by a common energy reduction pathway. This work package will work with organisations across the construction industry to outline such a pathway y and devise a common strategy to deliver energy demand reduction.

WP 3 – Industrial Strategy and Energy Productivity

To be effective in mitigating climate change, technical and policy initiatives to reduce energy demand must have significant impacts at the economy-wide level. The final work package brings together all the identified mitigation options from WP1 and 2 and considers the wider implications of different industrial futures for the UK. This involves assessing the extent to which the mitigation option lead to the relative or absolute decoupling of energy consumption from economic output (GDP). With increasing calls to strengthen Greenhouse Gas Emissions targets, energy demand reduction, as opposed to limiting growth in energy demand is becoming increasingly important. Working closely with BEIS, the CCC and theme 5 (Digital Society), this will ensure highly relevant policy outcomes.

WP 3.1 – Improvements and the interaction of industry sectors with the MARCO-UK model

At the University of Leeds we have built an econometric energy-economy model of the UK: our MAcroeconometric Resource COnsumption (MARCO) model, which includes over 50 socio-technical-economic variables. By uniquely including thermodynamic energy (exergy) efficiency and primary, final and useful energy stages, MARCO-UK provides new insight into the role of energy in the UK economy: the contribution of energy as a factor of production and its interrelationship with labour and capital, and the dynamics of energy efficiency-rebound. In so doing, it also addresses many of the energy productivity questions recently posed by the Minister of Climate Change and Industry.

Industry is currently represented in the MARCO-UK model as a single sector. Therefore in WP3.1, we will refine the model to split industry into around 10 sub-sectors. By combining this more detailed description of UK industry with available mitigation options, the more sophisticated energy-economy model, will allow new insights into the effects of different industrial futures on the economy, energy demand and employment.

WP 3.2 – Integration of the mitigation options into the MARCO-UK model

The evidence from WP 1 and 2 will provide a comprehensive assessment of energy and resource productivity options that have the potential to deliver a reduction in industrial energy demand. WP 3.2 considers the broader implications of these strategies through the quantitative lens of the improved MARCO-UK model from WP3.1, by assessing the scale of energy rebound effects, conflicting outcomes between different strategies, and the broader socio-economic implications on employment and trade.

WP 3.3 –Assessment of the Industrial Strategy.

This work package provides this economy-wide framing of energy with a focus on the role of the BEIS Industrial Strategy to drive energy productivity and the need for rapid reductions in Greenhouse Gas emissions. The outcome of the work package will be a detailed understanding of the extent to which the Industrial Strategy is consistent with its stated aims and overall policy targets relating to aspects including low energy futures, energy efficiency, energy productivity and economic.

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