We will consult on a ‘preferred’ business model in 2021 and look to finalise the model by 2022 Create demand for low carbon industrial products To support the development of a market for low carbon industrial products by 2022 we • outline our strategic approach to a range of policy objectives, including supporting the development of a market for low carbon products within the Industrial

• consult on defining low carbon products in 2021/2 with a view to being able to set these definitions in the mid-2020s • develop a proposal for introducing voluntary product standards across key intermediary industrial products by 2025 • develop a proposal for a new labelling system for intermediary industrial products reflecting their impact on the environment in the mid-2020s Skills and supply chain capability As the UK industrial sector transitions to net-zero, there will need to be a corresponding transition in the skills of the workforce, and a supply chain to match. We need to ensure that existing workers transition to the industry of the future, and that new workers are being trained with suitable skills. The requirement of trained technical and managerial personnel in industrial decarbonisation could be a barrier to its long-term success if not Delivering our goals will require clusters, the supply chain, and other local stakeholders to work together to deliver industrial decarbonisation projects. Achieving this capability is a considerable delivery and coordination challenge that will require collaboration between Support the development of the supply chain capability requirements for a net zero To support the development of a UK based supply chain for industrial decarbonisation • by 2022 we will set out the role for government in ensuring that the supply chain can meet the goals of decarbonisation while providing maximum growth opportunities for • develop jobs and skills pathways in low carbon industrial technologies To support the transition to clean jobs we • map the skills requirement for a net-zero industrial sector by the end of 2021 • work together with industry, local government and the education sector to invest in the skills needed to support good, green jobs in the clusters

Action/Deliverable Timeframes Activity in 2021/22 Invest £132 million by 2024 to demonstrate and validate at-scale decarbonisation through the UKRI-led Industrial Invest £8 million for clusters to develop comprehensive blueprints to achieve net Support the deployment of infrastructure at two carbon capture clusters by the mid 2020s through the CCS Infrastructure Fund. A further two clusters will be supported to deployment by 2030. Deploy a £240 million Net Zero Hydrogen Fund for capital co-investment in new low Where possible, seek to optimise the re- use of existing oil and gas infrastructure to reduce the overall costs of CCUS projects. Bring forward details in of a revenue mechanism to bring through private sector investment into industrial carbon capture and hydrogen projects via our new business models to support these projects. Ongoing Bring forward details in As part of Project Speed, determine how the efficiency of the planning system can be improved to deploy low carbon

Action/Deliverable Timeframes Activity in 2021/22 Engage clusters to determine whether there are non-physical infrastructure requirements to enable the deployment of shared infrastructure and the potential role of government to support this. Deploy £315 million of funding for energy efficiency and decarbonisation projects. 2024 IETF second phase. Deploy the £66 million Transforming Foundation Industries Challenge to reduce energy and resource in the UK’s foundation Develop a policy framework to facilitate greater resource efficiency in industry. 2025 Seek to incentivise industry to practice Develop and deploy industrial innovation funding competitions in areas like industrial fuel switching, green distilleries, CCUS innovation, and industrial energy efficiency. Support research and innovation through the Industrial Decarbonisation Research Finalise the commercial framework to incentivise deployment of industry carbon

Action/Deliverable Timeframes Activity in 2021/22 Seek to stimulate private sector investment in low carbon hydrogen deployment by development of a low carbon Hydrogen business model progressing work to assess potentially viable business models. Outline our strategic approach to a range of policy objectives, including supporting the development of a market for low carbon goods within the Industrial We will develop our evidence base on defining low carbon products in 2021/2 with a view to being able to set these We will develop a proposal for the introduction of voluntary product standards across key intermediary industrial products We will develop a proposal for a new labelling system for intermediary industrial products reflecting their impact on the By 2022 we will consider the role of the Department in ensuring that the supply chain can meet the goals of decarbonisation while providing maximum growth opportunities for the UK. Map the skills requirement for a net-zero

We have used a model of the UK industrial sector to generate plausible pathways that will help us to understand when, where and how to act to achieve a net zero industry by 2050. The model was developed by Element Energy for BEIS and the Climate Change Committee (CCC) and was used to underpin the manufacturing and construction sector analysis in the CCC’s Sixth Carbon Budget report (CCC, Sixth Carbon Budget, 2020). Each pathway presented in this Technical Annex shows a possible route to net zero for a given set of assumptions. These are not intended to represent a predicted or forecasted pathway but instead consider a set of plausible pathways that industry might follow to reach net zero. The different pathway options allow exploration of different questions; consideration of the choices we face and improved understanding of the actions we need to take now to reach the 2050 target. We have supplemented the pathways analysis with other sources of evidence to build a full picture of the challenges faced by industry.
We recognise this picture of how industry could decarbonise will evolve over time as our understanding of these technologies and The analysis presented in this Technical Annex uses a pathway model (Net Zero Industrial Pathways, NZIP) that uses a least cost approach to test the social economic value of different measures to decarbonise industrial processes across UK Industrial sites. The industries in scope were categorised into 14 sectors, each with defined process archetypes and assumptions made regarding suitability for decarbonisation technologies.
The pathway modelling is built on the same assumptions as those used in the analysis by the CCC. Where there are differences these are set out Fuel prices HMG Green Book LRVC electricity for Industry (central) (BEIS, Green Book supplementary guidance, 2012) Supply chain constraints BEIS UK Times (UCL & BEIS, UK TIMES) model

• Sites are grouped by geography and represented by their current and • The model is spatially aware, allowing it to calculate infrastructure costs specific for each site. The further a site is from infrastructure such as a hydrogen network or CO2 injection point the more expensive it is to transport CO2 process (e.g. direct high temperature) decarbonisation technologies, based on this categorisation. The model then calculates, for each process, which of the suitable technologies is most cost- effective to deploy and in which year it There are many different paths that industry can take to reduce its emissions, each has a different technology mix and different sequencing of events. The pathway that industry will follow will ultimately be determined by the choices that each individual industrial site makes. A site’s choice can be influenced by several factors, including its location, its business model and the choices made by surrounding sites. Industry itself is constantly evolving. Over the period covered by this strategy, it is highly likely that new sectors will emerge while others may decline. The pathways formed for 14 Reproduced with permission from Element Energy. this strategy assume that industry broadly follows15 the projections set out in the BEIS Energy and Emissions Projections, 2019. The analysis that underpins this strategy relies on several assumptions and simplifications which are also subject to uncertainty. For example, the model assumes that each industrial site maximises its net present value (NPV), with perfect information available to it. The NPV can be affected by the price of fuel and the assumed societal cost of emitting carbon dioxide, among other factors. To manage this uncertainty, a range of pathways have been used to develop this strategy. Limited UnlimitedFuel switching options Cluster Networks restrict the availability of carbon capture, utilisation and storage (CCUS) and hydrogen fuel switching to industrial sites that sit within the following geographic 15 Adjustments were made to Emissions projections for Chemicals and Refineries sectors to account for market intelligence

These industrial clusters are reflective of the six major industrial sites across the UK plus other sites that could utilise hydrogen/CCS infrastructure (see page vi of Deep- Decarbonisation Pathways for UK Industry (Element Energy) for further information). The Cluster Networks scenario assumes industrial sites within a 25 km radius of these locations have access to dedicated pipe networks for CO2 and hydrogen transport and storage. Sites that sit outside of these clusters are not able to decarbonise with CCUS, hydrogen or bioenergy with carbon capture and storage (BECCS). This means the extent to which CCUS and hydrogen can be utilised to decarbonise Industry is distinctly lower than under the National Networks scenario set out below. Sites beyond the reach of deep decarbonisation infrastructure must rely on electrification, resource efficiency, energy efficiency and materials substitution to reduce their emissions. Consequently, some dispersed sites with significant process emissions are unlikely to reach a net zero compliant end state by 2050 under this scenario. National Networks assume full UK supply, distribution, and storage of hydrogen and CO2 enabling Industry to choose any appropriate decarbonisation technology irrespective of where they are located geographically. This pathway considers all technically viable options to decarbonise industrial processes. The only geographic consideration is the cost of building or transporting16 hydrogen or carbon dioxide to relevant sites. Resource and energy efficiency and materials Resource and energy efficiency and materials substitution are taken as an assumed proportion of industry emissions and subtracted from projected emissions before the pathway model considers how to decarbonise remaining emissions through deep decarbonisation processes (i.e. fuel switching and CCUS). Resource efficiency is achieved by using raw materials more efficiently in production and from end-users consuming new products more efficiently. This may involve keeping 16 Transporting CO2 is done by road or shipping to the nearest cluster site. products and materials in use for longer through reuse, repair and recycling, and also reducing the level of material used in the products that we produce. Resource efficiency can also involve new approaches such as industrial symbiosis, which connects material and waste flows between sites, using the waste products from one process as inputs in Energy efficiency is achieved by using inputs more efficiently to reduce energy consumption and consequent emissions. Measures include process and equipment upgrades, installing/improving heat recovery systems, and clustering/networking with other sites and businesses to efficiently utilise waste heat and other by-products. The underpinning evidence stems from the BEIS roadmaps (BEIS; DECC, Industrial Decarbonisation and Energy Efficiency Roadmaps to 2050, 2015) with interpretation by the CCC. The CCC estimate savings from materials substitution in manufacturing and construction. This is most relevant for cement manufacturing and construction sectors. savings under the balanced pathway scenario for manufacturing and construction (CCC, Sixth Carbon Budget, 2020). Resource efficiency and materials substitution17 9 The following results present the differences between the National Networks and Cluster Networks scenarios. The baseline emissions and assumed level of resource and energy efficiency determine the extent to which residual emissions require deep decarbonisation options to reach net zero. The scenarios attempt to reach net zero through fuel switching, CCUS and resource and energy efficiency. 17 The figures were derived by the CCC based on research from 2018 (Scott, et al., 2018). This research acknowledges that there are a range of possible scenarios that differ greatly in resource efficiency savings. The CCC’s balanced pathway assume savings consistent with the high scenario. Empirical evidence on the likelihood of these scenarios is limited. 18 Energy Efficiency is derived after resource efficiency has been deducted from baseline emissions. This means the reported savings from Energy Efficiency could be higher if they were calculated before resource efficiency deductions.
The National Networks scenario allows the possibility of hydrogen and CCUS decarbonisation options to all industrial sites across the UK for industrial processes that are suitable for these technologies. Other fuel switching options are also made available with the one exception that hydrogen and electric arc furnace are specifically chosen and deployed to large iron and steel sites. 0 20 40 60 80 100-100 -80 -60 -40 -20 National Networks – UK industry 2020 2025 2030 2035 2040 2045 2050

The National Networks scenario enables a broadly net zero compliant pathway by 2050 with UK industrial residual emissions of 3 MtCO2e. Hydrogen is favoured over electrification in most fuel switching cases owing to cost and contributes most to decarbonising emissions (18 MtCO2e) followed by CCUS/BECCS (11 MtCO2e) and The model assumes a carbon price, which is a key determinate affecting the speed of uptake because it affects the social cost effectiveness of each decarbonisation option. In practice, lots of other factors will determine the actual speed of decarbonisation such as market factors, technological innovation, demand changes, supply chain constraints and National networks Carbon abated (MtCO2e) per year by 2050 All Tech CCS BECCS Hydrogen Electricity

This scenario assumes industrial CCUS technology and hydrogen are available in cluster sites only. Industry sites that fall within 25 km of a CO2 injection point (see CCUS Infrastructure map on page 145) can access CCUS technology and hydrogen fuel supply to potentially decarbonise their industrial process. Sites in non-clustered ‘dispersed’ locations are assumed to be isolated from potential CO2 and hydrogen transport infrastructure and therefore do not have CCUS or hydrogen Cluster Networks – UK industry 2020 2025 2030 2035 2040 2045 2050

The Cluster Networks scenario decarbonises industrial emissions to a lesser extent (-7 MtCO2e) than the National Networks scenario which is a consequence of the unavailability of CCUS in dispersed sites. Fuel switching to electrification plays a more significant role (12 MtCO2e) because of the unavailability of hydrogen in dispersed sites. Despite being restricted to clustered sites and Iron and steel, fuel switching to hydrogen contributes savings of 7 MtCO2e compared to 18 MtCO2e in National Networks. Cluster Networks Carbon abated (MtCO2) per year by 2050 All Tech CCS BECCS Hydrogen Electricity Deep decarbonisation technologies The following results show the extent to which different deep decarbonisation technologies help Industry to decarbonise across the different plausible world scenarios. The extent to which Industry uses hydrogen for industrial heat or processes depends on two key considerations within the pathways 1. Availability within and outside of clusters 2. The technology choices made by iron and steel industry The National Networks scenario sees the most hydrogen utilisation of 86 TWh by 2050. In this scenario hydrogen is available to all industrial sites and the Iron and steel sector opts to decarbonise through the DRI and EAF route (see Iron and steel section for further explanation). This compares to 24 TWh under the Cluster Network where hydrogen is restricted, and Iron and steel sector chooses CCUS to abate process emissions. 2020 2025 2030 2035 2040 2045 2050 • 10-16 TWh of hydrogen use in Industry by 2030 • 20-34 TWh is achieved by 2035 • Total hydrogen use in industry ranges between 24 and 86 TWh by 2050 • The sectors that consume the most hydrogen chemicals, iron and steel, refining, paper, other minerals and food and drink. Fuel switching requires industrial processes to switch from fossil fuels such as coal and natural gas to low carbon fuels such as electricity, biomass and hydrogen. The proportion of industrial energy consumption that is projected to switch to low carbon fuels between Fuel Switching to low carbon fuels 2020 2025 2030 2035 2040 2045 2050 • Between 51 to 57% of Industrial energy is decarbonised from fuel switching by 2035 • Fuel Switching increases to 71-84% by 2050

CCUS is used to abate process emissions from manufacturing such as cement and chemicals. In some cases, Bioenergy with Carbon Capture and Storage (BECCS) is chosen because fuel switching to biomass in conjunction with carbon capture generates negative carbon emissions which are more attractive than CCUS alone from a social economic perspective. Carbon abatement from BECCS and CCUS are presented together to reveal the extent of carbon capture abatement to industry emissions. 2020 2025 2030 2035 2040 2045 2050 • Around 3 MtCO2e of annual industrial carbon emissions is captured by 2030. From this point onwards the extent of CCUS varies significantly between the National Networks and Cluster Networks scenarios. At best 15 MtCO2e of annual industrial emissions are captured by CCUS by 2040 compared to ~ 9 MtCO2e under the Cluster Network scenario in which Iron and Steel chooses EAF and DRI. The sectors where CCUS carbon abatement is highest refineries, chemicals, cement, glass

Deep dive into industry segments Industrial energy use and emissions19 are highly diverse, with significant variation in how and why emissions happen, even within sectors or locations. This section explores decarbonisation challenges and options across five industry segments. 2017 (MtCO2e)20 Common challenges Not likely to be geographically concentrated making it harder to access hydrogen and CO2 networks. Energy costs are a relatively small part of their overall cost base providing less incentive to decarbonise. significant distances away from CO2 transport and storage points. Significant amounts of process emissions requiring Predominately the petro-chemicals sectors (refineries and chemicals Not likely to be geographically concentrated making it harder to access hydrogen and CO2 networks. Iron and steel face particular issues with decarbonising blast furnaces and other highly specialised processes. 19 The definition of industry used in this strategy differs to that used in the Energy White Paper (2020) - this is due to a sectoral approach being followed by this strategy (defined by standard industrial classification codes), as opposed to a process approach applied by the Energy White Paper (defined by IPCC codes).
The difference in methodologies mean that the two definitions of industry are not directly comparable, however, the broad differences are that this strategy includes emissions from F-Gases but excludes emissions from construction and other energy supply. 20 Industry emissions for these segments were derived from the NZIP model which uses NAEI point source as its main data source which differs slightly to official statistics that are based on Standard Industry Classification codes . 21 Numbers may not sum due to rounding. Clusters considered in this analysis are any industrial site (except for iron and steel) that sit within 25 km of potential CO2 injection points located at major ports22 across the UK. For example, industrial sites within 25km of Teesside are considered to be within an The chemical, cement and refinery industries are most prevalent in clusters. Emissions in these sectors typically arise from process emissions that require CCUS as the only technological solution (in the absence of innovations that offer lower carbon material). CCUS can benefit significantly from economies of scale. This means sites clustered near to a CO2 injection point could benefit from access to a large-scale infrastructure project such as CO2 transport and storage. 22 CO2 injection points assumed at Londonderry, Grangemouth, St Fergus, South Wales, Teesside, Humberside, Merseyside, Peak District, Southampton and Medway. Sites that are not ports are considered points at which CO 2 could be shipped or piped to a nearest port or offshore storage site. National Networks – Cluster sites 2020 2025 2030 2035 2040 2045 2050 • The CCUS option is the predominant technology solution to abate process emissions in clusters (~ 6 MtCO2 including BECCS). • BECCS is used in situations that allow for combustion of biomass in place of traditional fossil fuels in glass, lime, cement and paper industries. BECCS is chosen instead of CCUS alone because improvement in carbon cost effectiveness arises from negative emissions. Hydrogen (~ 20TWh) is favoured over electrification for processes requiring heat which is typical in food and drink, automotive, chemicals, Emissions abated (MtCO2e) each year by 2050 All tech CCS BECCS Hydrogen Electricity

Fully decarbonising cement generally requires CCUS for the process emissions and another technology for the heat.23 The critical issue is that most cement plants are far away from CO2 storage sites posing cost, distributional and technical challenges. For example, Rugby cement is 150km from Humberside through central England, Hope is 70 to 100km from either Humber or Merseyside, through the Peak District (some cement sites are closer to clusters). 2020 2025 2030 2035 2040 2045 2050 2020 2025 2030 2035 2040 2045 2050 2020 2025 2030 2035 2040 2045 2050 2020 2025 2030 2035 2040 2045 2050 23 Assuming the location of businesses stays the same or the fundamental cement production process remain the same. Around half of cement emissions are reduced by Resource and Energy Efficiency (REEE). Deep decarbonisation technologies, for example CCUS, will be required to abate process emissions in the cement production industry. BECCS is chosen for fuel switching because biomass is considered suitable in cement heat applications. There are practical considerations for building a CO2 network (or alternative transportation methods) to such geographically dispersed sites. The CCUS/BECCS solutions are not available under the cluster scenario, meaning that advances in REEE will only achieve a 50% reduction in emissions by 2050. In practice the technical options for the cement sector (particularly those that are located away from CO2 injection points) • Building onshore pipelines or other transportation • Focus on innovation and switching to green cement (e.g. using alternatives to Portland cement such as pozzolans). Dispersed cement Carbon abated (MtCO2e) each year by 2050 All Tech CCS BECCS Hydrogen Electricity

Less energy-intensive dispersed sites Less energy-intensive dispersed sites are those that sit outside clusters and are not considered to be energy-intensive because their energy costs comprise a smaller proportion of their output. Sectors in scope include ‘food and drink’ and ‘other industries’ such as the automotive industry. These sites typically require natural gas to run their industrial processes so hydrogen is a natural contender to decarbonise industrial heat. However, the supply of hydrogen is dependent on the ability to supply it to dispersed sites. The NZIP model considers costs of transporting or distributing CO2 and hydrogen A fourth option might be to produce hydrogen locally, but this isn’t explicitly considered in National Networks – Less energy-intensive dispersed sites 2020 2025 2030 2035 2040 2045 2050 Cluster Networks – Less energy-intensive dispersed sites 2020 2025 2030 2035 2040 2045 2050

National Networks – Less energy-intensive dispersed sites 2020 2025 2030 2035 2040 2045 2050 Cluster Networks – Less energy-intensive dispersed sites 2020 2025 2030 2035 2040 2045 2050 • Electrification poses a more expensive fuel switching option leading to widespread adoption of hydrogen in the National Network scenario • However, if hydrogen is unavailable then electrification is the only fuel switching option to dispersed sites under the Cluster Network scenario. Some sites may not fuel switch to electricity if the costs are excessively prohibitive or the process is unsuitable for electrification • Decarbonisation of this segment begins at pace in the late 2030s once the enabling infrastructure has been put in place. Alternative deployment profiles may exist depending on the infrastructure configuration for hydrogen (e.g. extent of local Less energy-intensive dispersed Emissions abated (MtCO2e) each year by 2050 All Tech CCS BECCS Hydrogen Electricity

High energy dispersed sites are those in the chemical, refinery, glass, lime, metal and paper industries. The variety of these heterogenous sectors require a range of technology solutions to decarbonise them.
National Networks – High energy dispersed sites 2020 2025 2030 2035 2040 2045 2050 Cluster Networks – High energy dispersed sites 2020 2025 2030 2035 2040 2045 2050

• Under the National Network scenario all technology options are used to decarbonise • The cluster network scenario reveals the consequence of removing CCUS/BECCS and hydrogen options for these dispersed sites because they no longer fully decarbonise (around 4 MtCO2e of residual emissions remain by 2050): • Hydrogen is substituted for electrification in sectors such as the Paper industry but not in sectors such as non-ferrous metal that require higher grades of • Lime, chemicals and glass manufacturing requiring carbon capture to abate process emissions no longer fully decarbonise High energy dispersed Emissions abated (MtCO2e) each year by 2050 All Tech CCS BECCS Hydrogen Electricity

Emissions from the iron and steel sector are dominated by two industrial sites in Scunthorpe and Port Talbot in South Wales. These two sites alone produced 11 MtCO2e in 2017, 95% of the total emissions from the iron and steel sector and around 15% of total industrial emissions. Other emissions from the sector are from numerous smaller sites. The highly concentrated nature of the iron and steel sector presents both challenges and opportunities in decarbonisation, with both shared and differing challenges existing in the two main sites. Two of the major decarbonisation options considered for both sites • Electric Arc Furnaces with hydrogen replacing conventional feedstocks (i.e. coal) for use in direct reduced iron process. Electric Arc Furnace (EAF) are used instead of traditional blast furnaces which might be considered a process change rather than fuel switching (A switch of fuel takes place but a new EAF is also required to replace Cluster Networks – Iron and steel (EAF and DRI option) 2020 2025 2030 2035 2040 2045 2050 Under the EAF and DRI option Electric Arc Furnace is deployed during the early 2030s alongside hydrogen feedstocks for use in direct reduced iron processes. The speed at which these processes deployed is determined by the carbon price assumed in the model. In practice the timing of such events will be driven by decisions taken by industry. Cluster Networks – Iron and steel (CCUS option) 2020 2025 2030 2035 2040 2045 2050 Under the CCUS option a minimal amount of fuel switching to hydrogen takes place and process emissions are sequestered through carbon capture and storage. The EAF and DRI option face the following • EAF requires relatively high electricity use with impacts on electricity capacity and • The source of hydrogen needs to be low carbon and will depend on the infrastructure built in South Wales and Humberside. The CCUS option faces the following • Both sites face the challenges associated with retrofitting carbon capture units to existing infrastructure which is both costly and will not fully decarbonise • The Scunthorpe site does have the option to use a Humberside carbon transport and storage network. In contrast, the Port Talbot site would not have access to such a network, meaning the predominant transport option being considered at present is shipping CO2 to the North West cluster. Iron and Emissions abated (MtCO2e) each year by 2050 All Tech CCS BECCS Hydrogen Electricity

Advanced Nuclear Includes Small Modular and Advanced Modular Reactors. Reactors which use novel cooling systems or fuels and may offer new functionalities (such as industrial process heat). Refers to bioenergy processes (such as burning it for electricity) during which carbon is captured and stored. If carefully managed, using sustainable biomass, BECCS can generate ‘negative emissions’ because while providing energy it also it also captures and stores the atmospheric CO2 that is absorbed by plants as they grow. Bioenergy Refers to heat or electricity produced using biomass or gaseous and liquid fuels with a biological origin such as biomethane produced from biomass. Biomass Refers to any material of biological origin used as a feedstock for products (e.g. wood in construction to make chemicals and materials, like bio-based plastics), or as a fuel for bioenergy (heat, electricity and gaseous fuels such as biomethane and hydrogen) or biofuels (transport fuels). Biomethane Methane gas that is produced by processing biomass. It can be used for the same purposes as natural gas, like producing electricity or heat, and can use the same infrastructure for transmission and end-user equipment. Carbon intensity The amount of CO2 emitted per unit of product manufactured or unit of When a plant is designed or modified so that it can be easily retrofitted with carbon capture technology at a later stage. Factors that can impact carbon capture readiness technology choice, equipment sizing, physical space and the layout of a plant. The process of capturing carbon dioxide from industrial processes, power generation, certain hydrogen production methods and greenhouse gas removal technologies such as bioenergy with carbon capture and storage and direct air capture. The captured carbon dioxide is then either used, for example in chemical processes, or stored permanently in disused oil and gas fields or naturally occurring geological storage sites. Carbon leakage Refers to the situation where policies achieve their goal of lowering emissions in one jurisdiction but drive some companies to move production or reallocate investment to other countries with less ambitious greenhouse gas emissions reduction policies. This could lead to an increase in overall global emissions, and a worse Carbon price A cost applied to carbon pollution to encourage polluters to reduce the amount of greenhouse gases they emit into the atmosphere. Clean electricity Types of electricity generating technologies that emit little or no fossil fuel derived greenhouse gas from generation. Multilateral forum to promote policies and programs that advance clean CCC is an independent, statutory body established to advise the UK and devolved governments on emission targets and to report to Parliament on progress made in reducing greenhouse gas emissions and preparing for and adapting to the impacts of climate change. COP refers to the decision-making body of the United Nations Framework Convention on Climate Change (UNFCCC).
In November 2021, the UK will be hosting the 26th annual session of the Conference of the Parties to the Convention, or “COP26”, in Glasgow. A product which, once purchased, is consumed or used directly by the purchaser and is not sold on or used in the manufacture of another The main support mechanism for large scale low-carbon electricity generation projects. Successful projects are awarded a long-term contract which secures a price to which they will either be topped up if electricity prices are low or pay back to if electricity prices are high. Decarbonisation A process of reducing the amount of carbon dioxide we release into the Policies that aim to increase overall demand for a product or service. Is when consumers adjust their energy usage in response to an external signal. Examples include either reducing it, delaying it, or using on-site generation or storage. DSR was historically provided by large industrial and commercial consumers, but technology development is making it easier for smaller consumers to provide these services for example by charging their electric car with a smart charger. Digitalisation Is the integration of digital technologies into a process, organisation, or system. For example, smart meters which automatically send meter readings to energy suppliers, meaning more accurate bills for customers. Use of engineered processes to capture carbon dioxide (CO2) directly from the atmosphere, for storage or use. Dispersed sites Industrial sites located outside of industrial clusters. Regional networks that transport gas or electricity into homes and businesses and import electricity from small-scale generation. Electrification Switching from using fuels such as gas or petroleum, to using electricity. For example, switching from a gas boiler to an electric boiler for raising The sum of all the emissions produced in the manufacture of a product. This includes emissions from the extraction and transportation of raw materials, and the manufacturing processes used to create the final Provides a long-term carbon price signal for UK heavy industry, aviation and power sectors to incentivise sector decarbonisation and support the UK to meet its legally binding carbon reduction targets. Energy data Historical, current, and future information covering things such as how, where and when energy is generated, transported, used, and stored. Energy efficiency When something performs better using the same amount of energy, or delivers the same performance for less. The principle of energy efficiency can be applied to many buildings, products, appliances, manufacturing processes, to name a few. An approach designed to assist public sector organisations retrofit their buildings by installing energy conservation measures to reduce carbon emissions and achieve substantial guaranteed annual cost savings

The specifications to which the energy system is designed and operated. A transparent, objective, comparable report, which is independently verified, that communicates what a product is made of and how it impacts the environment across its entire life cycle. Policy proposed by the EU as part of the Green New Deal to put a carbon price on imports of certain goods from outside the EU to mitigate the risk Freeports A Freeport is usually defined as a place to carry out business inside a country’s land border but where different customs rules apply. Flexibility The ability to change generation and/or demand in response to an external signal (e.g. price or contract terms). Flexibility enabling technologies include batteries, demand side response, interconnectors and fossil fuel Fossil fuels Oil (and fuels derived from oil), coal and natural gas. Addition to the atmosphere of gases that are a cause of global warming, including carbon dioxide, methane and others. Methods that actively remove greenhouse gases from the atmosphere, ranging from engineered to nature-based solutions. Gross value added is the value generated by any unit engaged in the production of goods and services. Heat network A heat network, sometimes called district heating, is a system of insulated pipes that takes heat or cooling generated from a central source and distributes it to a number of domestic and non-domestic buildings. Heat pump A device that extracts heat from the air, ground or water and concentrates it to a higher temperature and delivers it elsewhere, for example to a central heating system. It can replace traditional fossil fuel heating, such as a gas or oil boiler. Heat pump systems are designed to extract a greater amount of heat energy from the surrounding environment than the energy they consume in doing so, therefore they can act as a more efficient source of heat than a conventional electric heater, producing two to three times (or more for very efficient systems) as much heat output as they

High Potential Opportunities (HPOs) are one of several investment support programmes designed to promote foreign investment into innovative areas Hydrogen for heat The combustion of hydrogen produces no long-lived greenhouse gas emissions at point of use, making it a possible low-carbon replacement for natural gas as a fuel source for heating homes and other buildings. Hydrogen that is produced with significantly lower greenhouse gas emissions compared to current methods of production – methods include reacting methane with steam to form hydrogen and then capturing the carbon dioxide by-product (steam methane reformation with CCUS) or using renewable electricity to split water into hydrogen and oxygen Industrial cluster Places where related industries have co-located. Clustered industrial sectors tend to be those that required energy-intensive manufacturing processes, chemicals, glass, oil refining, paper and pulp, and Industry Businesses and organisations involved in manufacturing, refining, coke Industrial symbiosis The process by which energy, resource and waste flows are shared between neighbouring industrial facilities, allowing for certain by-products of an industry or industrial process to become the raw materials for another. Application of this concept allows materials to be used in a more sustainable way and contributes to the creation of a circular economy. A product manufactured from raw materials which goes on to be used in the manufacture of a final product. Examples include steel, cement and glass.
(Some products can be both an intermediary product and a final Multilateral group aiming to foster public-private collaboration supported by technical expertise sharing to accelerate the decarbonisation of Types of electricity generating technologies that emit little or no carbon, which include renewables, nuclear, CCUS power generation. A product manufactured producing fewer, or even zero, emissions. (This is a working definition for the purpose of this Strategy and will need to be expanded upon, per the discussion in Chapter 3.) Industrial products range from intermediary materials such as steel, cement and glass, to consumer products such as vehicles and appliances. MtCO2 A unit of carbon megatonnes of carbon dioxide equivalent. Market failure Market failure is where the market mechanism alone cannot achieve Economic efficiency is achieved when nobody can be made better off without someone else being made worse off. Economic efficiency enhances social welfare by ensuring resources are allocated and used in the most productive manner possible. One potential cause of inefficiency is when the private returns to an individual or firm from carrying out a particular action or activity differs from the returns to society as a whole, meaning there are external costs or benefits. Mission Innovation Mission Innovation is a global initiative to accelerate public and private clean energy innovation to address climate change, make clean energy affordable to consumers, and create green jobs and commercial A coalition of public and private partners working on the industry transition to set heavy industry on the pathway towards net-zero emissions by mid- Negative emission Achieved by removing greenhouse gases from the atmosphere, for example, through direct air capture or bio-energy production with carbon Net zero Refers to a point at which the amount of greenhouse gas being put into the atmosphere by human activity in the UK equals the amount of greenhouse gas that is being taken out of the atmosphere. An intergovernmental economic organisation with 37 member countries, which aims to stimulate economic progress and world trade. Paris Agreement A legally binding international treaty on climate change. It sets out a global framework to avoid dangerous climate change by limiting global warming to well below 2°C and pursuing efforts to limit it to 1.5°C. It also aims to strengthen countries’ ability to deal with the impacts of climate change and support them in their efforts. Policy costs Cost on energy bills of programmes to save energy, reduce emissions, and provide financial support to the fuel poor. Product labelling A mark or label on a product’s packaging which conveys information to the consumer about the product’s unique value. For example, a label might signal that a product has been certified as meeting a particular standard. Renewable energy Energy that is collected from resources which are naturally replaced in human timescales such as sunlight, wind, rain, tides and waves. R&D Research and thinking up new ideas and applying them. SMRs are usually based on proven water-cooled reactors similar to current Nuclear Power station reactors, but on a smaller scale. They use nuclear fission to generate low-carbon electricity. SMRs are called modular reactors as their components can be manufactured in factories using innovative techniques and then transported to site to be assembled. T Levels T Levels are technical study programmes for 16 to 19-year-olds which combine classroom learning with a substantive industry placement. National networks that transport gas and electricity long distances across Great Britain; the motorways of our energy network. TWh A unit of Terawatt hours Responsible for coordinating responses to environmental issues within the International environmental treaty addressing climate change and the parent treaty of the 2015 Paris Agreement, signed in 1992. A specialised agency in the United Nations system that assists countries in economic and industrial development. Two or more organisations combining their purchasing power in order to Voluntary product standards establish a recommended specification for a particular aspect of a product. Manufacturers can choose whether to meet this standard. Those that do receive certification which demonstrates to consumers the unique quality or value the product has, which differs from Wholesale costs The amount energy companies pay to buy gas and electricity. An international organisation for public-private cooperation. It engages political, business, cultural, and other leaders in society to shape global, regional and industry agendas. The global international organisation that deals with the rules of trade

Business in the Community, 2020. Advancing Circular Case Studies from the building and infrastructure sectors. [Online] Available study/building-a-circular-economy-in-construction/ Carbon Trust, 2012. Steam and high temperature hot water boilers. [Online] Available Cavaliere, P., 2019. Electrolysis of Iron Most Efficient Technologies for Greenhouse Emissions Abatement. Clean Ironmaking and Steelmaking Processes. New York Climate Change Committee, 2017. UK business opportunities of moving to a low carbon economy. [Online] Available Climate Change Committee, 2019. Net The UK’s contribution to stopping global warming. [Online] Available contribution-to-stopping-global-warming/ Climate Change Committee, 2020. Sixth Carbon Budget. [Online] Available Chowdhury, J. I. et al., 2018. Reducing Industrial Energy Demand in the A review of energy efficiency technologies and energy saving potential in selected sectors, Renewable and Sustainable Energy Reviews, Volume 94, pp. 1153-1179 Department for Business, Energy and Industrial Strategy; Department of Energy and Climate Change, 2015. Industrial Decarbonisation and Energy Efficiency Roadmaps to 2050. [Online] Available decarbonisation-and-energy-efficiency-roadmaps-to-2050 Department for Business, Energy and Industrial Strategy, 2019. Green Book supplementary valuation of energy use and greenhouse gas emissions for appraisal. [Online] Available energy-use-and-greenhouse-gas-emissions-for-appraisal Department for Business, Energy and Industrial Strategy, 2017. Industrial Clusters in England. [Online] Available Department for Business, Energy and Industrial Strategy, 2018. Clean Growth - Department for Business, Energy and Industrial Strategy, 2019. Creating a clean steel call for evidence. [Online] Available consultations/creating-a-clean-steel-fund-call-for-evidence

UKRI, 2020. ISCF Transforming Foundation Industries Research and Innovation Hub Call- Full proposals. [Online] Available Vivid Economics, 2019. Energy Innovation Needs Industry. [Online] Available Vivid Economics, 2019. Energy Innovations Needs Assessment. Sub-theme Hydrogen & fuel cells. [Online] Available energy-innovation-needs-assessments Vivid Economics, 2020. BEIS ICF Mitigation Investment Opportunity Assessment Vivid Economics, 2020. Capturing Carbon at Delivering Jobs, Clean Growth and Levelling up the Humber.
[Online] Available casestudy/capturing-carbon-at-drax-delivering-jobs-clean-growth-and-levelling-up-the- Worldsteel, 2020. Steel Statistical Yearbook. [Online] Available org/media-centre/press-releases/2020/2020-Steel-Statistical-Yearbook-published.html