Our Energy Director Peter Houghton features in the recently published Economist Intelligence Unit report ‘Ready for change: pathways to a low- emissions future’ that focuses on the UK’s 2050 net-zero target.
In June 2019 the UK government announced a target of eliminating net emissions of greenhouse gases by 2050. Britain’s success in achieving “net-zero” will require businesses across all sectors to make fundamental change.
The Economist report includes feedback from a 2019 survey of 205 senior executives from energy-intensive UK businesses with annual revenue of £100m+ that meet at least some of their electricity needs through self-generation.
The Economist’s survey results are accompanied by in-depth interviews with executives and industry experts, including Tata Chemicals Europe’s (TCE’s) Peter Houghton.
In line with TCE’s example, many firms have already made progress in pursuing low-emissions strategies, influenced by existing regulation; consumer pressure; business benefits such as cost savings and their corporate social responsibility policies. The Economist report examines the various pathways that businesses are taking in pursuit of a low emissions future.
The report goes on to explore self-generation as a pathway to achieving lower emissions and climate-related goals.
The TCE Case Study
TCE features prominently in the report as a case study company.
With TCE being cited as ‘something of an outlier’ when it comes to self-generation, the case study sets the scene by outlining how our company meets 100% of its energy needs through on-site generation, whilst supplying other businesses and also selling electricity back to the grid.
It tells how in 2000 a new, large-scale CHP was built to serve our sites, and this was operated by an energy utility (E.ON) until 2013.
Peter Houghton takes over the TCE energy story from 2013 onwards when the company took ownership of the CHP and set up its own energy team supported by E.ON who continues to provide operation and maintenance services.
As Peter outlined:
“Results so far have been exceptional. We supply our own sites and some third parties, along with [meeting] all of our heat requirements—which are extensive, because we are more heat-intensive than electro-intensive.”
Key Driver: Affordable Heat & Electricity
Peter explains how the original motivation for self-generation was the shortcomings of the local distribution system explaining that the driver now is affordable heat and electricity.
“Grid electricity is very expensive, as it includes all the subsidies for nuclear and renewables, as well as the rapidly escalating cost of the UK’s transmission system. This is a major burden for energy users who take a grid supply.”
Peter also highlights how self-generation underpins our ability to compete in our markets, but keeping up with energy policy and its potential impact on this model is a headache.
The company is concerned by proposals put forward by Ofgem, the UK electricity and downstream gas regulator, to force self-generators like TCE to pay for the UK’s transmission system, despite not using it.
As Peter explains:
“We don’t think that’s right, and we don’t think it’s in line with government strategy. We’re active in supporting the UK government to shape the future energy policy, as it’s a prerequisite for a thriving UK industrial sector.”
Peter continues to explain how the absence of clarity and coherence holds businesses like Tata back from making certain investments. And, although TCE has recently announced plans to build Britain’s largest carbon capture plan, which is set to reduce the firm’s overall carbon footprint by 10%, it still finds itself constrained in other areas, such as energy storage, that could also make a substantial difference.
Status Update & Conclusion
The Economist report continues to examine how companies are mapping the journey to net zero and concludes with a status report at time of publication:
It highlights how new policies have already emerged as a result of the UK’s net-zero target and is clear that many business-driven decarbonisation initiatives are already in action and there has been a definite step change in energy efficiency. However, it’s apparent that business leaders are not complacent about the scale of the challenge that lies ahead. While they may be confident about their own company’s abilities to reach the net-zero target by 2050, they are less confident about their industry as a whole.
The Economist cites that the signs are positive that cheaper renewables, more accessible battery power, newer technologies such as carbon capture, and a drive to tackle direct and indirect emissions will put more ambitious low-carbon and low emissions targets within reach.
It is crystal clear that low-emissions strategies are now a vital part of business planning and target setting will have the potential to stimulate new thinking about how operations, products, services and supply chains must evolve in the years to come.
To read the full report, please see here.