Industrial Energy Transformation Fund

How the IETF is helping fund the energy transition for 26 Businesses in the UK

The UK government is providing £24.3m in funding from the Industrial Energy Transformation Fund (IETF) to several British manufacturers, including Heineken, Kellogg's, Toyota, and Britvic. The aim of the funding is to assist companies with high energy usage to become more energy efficient and reduce their carbon emissions, thereby reducing their reliance on fossil fuels.

The funding will help these companies to save on their energy costs, protect jobs, and contribute to the sustainable growth of the economy. Energy-intensive industries account for 11% of the UK's total emissions and over 70% of UK industrial emissions, according to the latest data.

The Minister for Energy Efficiency, Lord Callanan, emphasised the significance of transforming industrial sectors. He stated that these sectors are crucial to the economy but also have the highest emissions. The government is supporting industries with funding to reduce their reliance on fossil fuels and cut emissions by employing the latest technologies.

The IETF

The industrial sector is responsible for a significant portion of global greenhouse gas emissions, accounting for around one-third of the total emissions. Therefore, decarbonising this sector is critical to achieving the net-zero emissions target by 2050. However, the transition to cleaner energy sources and technologies requires significant investment, and many businesses may not have the resources to make the necessary changes. To address this challenge, governments worldwide have initiated various programs, including the Industrial Energy Transformation Fund (IETF). In this article, we will discuss the IETF, its objectives, and how it is accelerating the energy transition in the industrial sector.

The IETF was launched in the UK in July 2020 as part of the government's ten-point plan for a green industrial revolution. The fund has a budget of £289 million and aims to support the development of innovative technologies and processes that can reduce greenhouse gas emissions from industrial processes. The IETF is part of a broader strategy to achieve the UK's net-zero emissions target by 2050 and is an important component of the country's efforts to tackle climate change.

What is the Industrial Energy Transformation Fund?

The IETF is a government-funded program that provides financial support to businesses in the UK to invest in energy-efficient and low-carbon technologies. The fund is managed by UK Research and Innovation (UKRI) and is part of the government's Clean Growth Strategy. The IETF aims to accelerate the deployment of technologies and processes that can reduce emissions from energy-intensive industries, such as steel, cement, and chemicals. The fund provides grants and loans to eligible businesses, which can be used to support a wide range of projects, including the deployment of renewable energy sources, energy-efficient equipment, and carbon capture and storage technologies.

Objectives of the IETF

• The primary objective of the IETF is to accelerate the transition to a low-carbon industrial sector. The fund aims to support projects that can reduce emissions from energy-intensive industries and promote the development of innovative low-carbon technologies. The IETF has the following specific objectives:
• Support the development and deployment of innovative technologies and processes that can reduce emissions from energy-intensive industries.
• Encourage businesses to invest in energy-efficient and low-carbon technologies that can improve their competitiveness and reduce their energy costs.
• Promote the UK's leadership in developing and deploying low-carbon industrial technologies, which can help to create new markets and export opportunities.
• Support the government's Clean Growth Strategy and its target to achieve net-zero emissions by 2050.

Types of Projects Supported by IETF

The IETF supports a wide range of projects that can reduce greenhouse gas emissions from energy-intensive industries. The fund supports projects in the following areas:

• Energy efficiency: Projects that improve energy efficiency in industrial processes, such as the use of more efficient equipment or the optimization of production processes.
• Renewable energy: Projects that deploy renewable energy technologies, such as solar, wind, or biomass, to power industrial processes.
• Carbon capture and storage (CCS): Projects that capture carbon dioxide emissions from industrial processes and store them underground or use them for industrial purposes.
• Industrial fuel switching: Projects that switch from fossil fuels to low-carbon alternatives, such as hydrogen or biofuels.
• Process innovation: Projects that develop new and innovative processes that can reduce greenhouse gas emissions from industrial processes.

Examples of IETF-Funded Projects

The IETF has already funded several projects across a range of industries. For example:

1. A project by Tata Steel to replace the coal-fired blast furnace with an electric arc furnace, reducing carbon emissions by up to two million tonnes per year.
2. A project by Johnson Matthey to develop a new catalyst for the production of hydrogen from natural gas, which could reduce greenhouse gas emissions by up to 20% compared to conventional processes.
3. A project by BASF to develop a new process for the production of nylon that could reduce greenhouse gas emissions by up to 60%compared to conventional processes.
4. These projects demonstrate the potential of the IETF to support the development and deployment of innovative low-carbon technologies in the industrial sector.

Benefits of IETF for Businesses

The IETF provides several benefits for businesses in the industrial sector. These include:

• Access to funding: The IETF provides businesses with financial support to invest in energy-efficient and low-carbon technologies that may otherwise be too expensive.
• Improved competitiveness: By investing in energy-efficient and low-carbon technologies, businesses can reduce their energy costs and improve their competitiveness.
• Reduced carbon footprint: The IETF supports projects that can significantly reduce greenhouse gas emissions from industrial processes, helping businesses to meet their sustainability targets.
• Increased innovation: The IETF encourages businesses to develop and deploy innovative technologies and processes, which can create new markets and export opportunities.

Challenges and Criticisms of IETF

While the IETF has the potential to accelerate the energy transition in the industrial sector, there are also some challenges and criticisms associated with the program. These include:

• Limited funding: The IETF has a limited budget, which may not be sufficient to support all eligible projects.
• Competition for funding: The IETF is a competitive program, and not all applications will be successful, which may discourage some businesses from applying.
• Administrative burden: The application process for IETF funding can be complex and time-consuming, which may deter some businesses from applying.
• Limited impact: Some critics argue that the IETF's impact may be limited, given the scale of the challenge of decarbonising the industrial sector.

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The Industrial Energy Transformation Fund is an important program that is accelerating the energy transition in the industrial sector. The fund provides financial support to businesses in the UK to invest in energy-efficient and low-carbon technologies that can reduce greenhouse gas emissions from industrial processes. While the IETF has the potential to support the development and deployment of innovative low-carbon technologies, there are also some challenges and criticisms associated with the program. Nevertheless, the IETF is an important component of the UK's efforts to tackle climate change and achieve net zero.