Summary of Industry Needs

UK ceramics producers are well-placed to continue to invest in decarbonisation but face a number of key obstacles and challenges:

ENERGY AVAILABILITY

Companies need access to dependable energy supplies for their operations.

 On electricity supplies (for on-site power generation or process electrification) the sector requires:

  • Grid connections - fast-track measures to allow companies to increase the capacity of grid connections, to support both electrification of industrial processes and investment in renewable power generation.

  • On-site infrastructure - As well as facing an inevitable upturn in network costs to support grid infrastructure and connections, ceramic producers will face significant capital costs in upgrading on-site electricity infrastructure (sub-stations, LV distribution panels, cabling, containment etc.) where opportunities/measures to support investments will be needed.

  • Supply security - changes to low-carbon electricity generation across the national grid must ensure that the security of energy supplies are maintained.

  • Grid infrastructure - network infrastructure capacity expansions must match the substantial societal demand requirements in future.

For firing with other alternative fuels, the sector requires:

  • Hydrogen - projected will account for ~60% of fuel-switching emissions reductions (and ~36% of total Scope 1/2 emissions reductions), the distribution to / use of hydrogen at the sector’s dispersed sites is crucial to the future of UK ceramic manufacturing. As a particularly hard-to-abate sector, ceramics should be categorised as a ‘priority use’ application.

  • Bio-energy - there should be access to available feedstock to support site-specific uses, given the anticipated limited uptake by companies in the ceramic sector (including with potential bio-energy with carbon capture applications).

 

COST OF ENERGY:

Internationally competitive energy supplies (throughout the net zero transition) will be crucial to ensuring UK ceramic producers are not disadvantaged. This requires:

  • Electricity - significant steps to reduce electricity costs for UK ceramics producers are urgently needed (both through non-commodity cost support and structural market changes) to address financial barriers for electrification as well as for competitiveness of the sector.

    Low-carbon electricity supplies must be cost-competitive versus overseas competitors. This is a significant issue for the vast majority of UK ceramic producers. Whilst some of this is due to structural differences in the electricity market, fundamentally very limited support is provided to the sector through the Government’s energy-intensive industries support schemes. With rising costs (and redistributive impacts) review of UK eligibility for support on electricity policy costs is essential.

  • Natural gas (transitioning to alternative fuels) - we recognise the need to shift to lower-carbon fuels such as green hydrogen, electrification and bio-energy. In the fuel-switching transition, exemptions from any emerging taxes / levies (on natural gas) will be critical, recognising that until alternative, commercially viable energy sources are available, re-balancing costs towards natural gas would simply significantly increase carbon, investment and jobs leakage risks in the UK ceramics sector.

 

CLIMATE-RELATED COSTS AND DRIVERS

Carbon emission costs are growing in prevalence and risk further widening the cumulative cost disparity versus overseas producers:

  • Carbon costs, predominantly through the UK ETS, must be internationally competitive, with carbon leakage mitigations giving a level playing field with overseas producers, and must be aligned to the industry’s decarbonisation deliverability.

  • Low-carbon products - strong mitigations are needed against carbon leakage risks and a level playing field for UK ceramic manufacturers and their supply chains.

 

RESEARCH & DEVELOPMENT

R&D is needed over many future decarbonisation solutions and particular areas where support is needed are:

  • Process emissions - new ways are needed to address process emissions, either through product adaptation, material substitution or carbon mineralisation/removal.

  • Electrification - of larger-scale production processes.

  • CCUS - support is needed for the development of commercially viable carbon-capture abatement specifically for smaller-scale, dilute emission sources, which otherwise will not be commercially viable.

 

DEPLOYMENT/IMPLEMENTATION SUPPORT

Although energy-intensive, the industry is comprised predominantly of small-/ medium-sized companies (and also small/medium industrial energy consumers) with limited resources or access to private funding.

Funding opportunities are crucial to support ongoing uptake of proven technologies which may not yet be economically- or commercially viable:

  • SME grants / interest-free loans - to support roll-out by small-/ medium-sized companies in the ceramic sector, without complex bureaucratic application or bidding processes.

  • Funding support - particularly for investments with high capital cost, higher risk and longer payback periods/rates of return.

  • Electricity - upgrades to associated on-site electricity infrastructure will require considerable capital investment and major disruptions to site electricity supplies. Network connection cost support will be a key area.

  • Carbon-capture - funding to help support commercial viability/deployment of carbon-capture technologies at specific sites, given high capital investment requirements and operational costs.