Significant gaps in UK policy are making it harder for the chemical industry to remove fossil fuels from its supply chain and modernise for a green economy. The UK’s emissions trading scheme and climate change levy provide impetus, and some companies have signed up to science based targets. Some downstream customers are also applying upward pressure on the supply chain to ‘defossilise’, but chemical manufacturers are not often in the public eye, meaning there is less incentive to cut emissions voluntarily than in other sectors.

Our analysis is informed by interviews with diverse sector stakeholders and our own research, including our previous study into the chemical industry and climate change. We have formed a clearer picture of the status quo and the policy challenges. As we illustrate below, we have looked at six areas relevant to reducing the climate impact of the UK’s chemical industry.

Overall, the outlook is worrying. Carbon capture and storage (CCS) and fuel switching from natural gas to hydrogen receive high levels of government support. However, we believe there is overreliance on too narrow a strategy and that a more diverse set of solutions is needed to match the sector’s needs. These should include electrification, resource efficiency and the development of alternative feedstocks. Skills development and innovation also require attention as the necessary backdrop for these changes to take place.

Although we are critical of current policy, there are a wealth of opportunities for the government to make tangible changes to help this industry, alongside other industrial sectors, to accelerate emissions reductions and remain competitive.

For more information, contact:
William Carr, policy analyst: wcarr@green-alliance.org.uk