In policy, the UK has positioned itself as a leader in industrial decarbonisation through a broad set of enabling policies and regulations. This has included a dedicated Industrial Decarbonisation Strategy (2021) and particularly strong support for the deployment of carbon capture, utilisation and storage (CCUS) and hydrogen. Challenges in regulatory uncertainties, delays in business model development and a potential over-reliance on CCUS and hydrogen over other decarbonisation strategies risk hindering progress towards decarbonisation.

IDRIC’s research has emphasised the importance of policy certainty in enabling long-term planning for industrial decarbonisation and bioenergy with carbon capture and storage (BECCS) projects.

For example, the findings of University of Manchester research, which focused on the implementation of BECCS in the UK, highlighted the North West Cluster’s potential to achieve substantial negative emissions, contingent on governmental support for business models and regulatory frameworks.

However, for BECCS, challenges within the environmental planning and permitting process emerged, where capacity limitations could lead to significant delays. This regulatory bottleneck, coupled with the prioritisation of large-scale BECCS initiatives over smaller, dispatchable projects, poses potential risks to a holistic decarbonisation approach. Strategic allocation of biomass resources is required to support a variety of BECCS supply chains, including those that other renewable alternatives may not be available for, accounting for current and potential new uses of biomass across the economy.

Within that project, verification and monitoring processes were also highlighted as being crucial for the credibility of carbon offset markets, with stakeholder and public trust hinging on consistent, transparent data. The research underscores the necessity of a multi-dimensional approach to meet emissions targets, with joint government and industry initiatives welcomed but dependent on transparency and clear evidence of alignment with climate goals.

A study carried out by a University of Southampton team, which analysed the life cycle costs of different CO₂ shipping scenarios for carbon capture and storage (CCS), found that policy mechanisms like the Emission Trading System (ETS) proved highly impactful, with potential cost reductions of up to 69.3% for larger vessels, emphasising the value of policy support in facilitating cost-effective CCS operations.

Politics 
The political landscape of industrial decarbonisation is shaped by complex tensions between industry, government and public stakeholders. Key challenges include balancing financial support across clusters and industries, while addressing regional disparities and ensuring a fair allocation of resources to prevent unintended consequences, such as the relocation of high-carbon industries. Fiscal austerity versus the need for significant net zero investments remain a major tension in government. Public trust is crucial and concerns over job opportunities can influence support for decarbonisation initiatives.

The politics of UK industrial decarbonisation policy is about the distribution of benefits and costs, with wide-ranging consequences for delivery and sustainability, not least through its role in establishing support from the public for the required technologies and associated infrastructure. Two IDRIC-sponsored University of Sussex projects (led by Matthew Lockwood and Benjamin Sovacool) have confirmed that there are four interrelated dimensions, each of which carries risk for policy.

The first dimension concerns the overall level of policy resources allocated to industries (companies and workers) that have to be paid for by taxpayers and consumers. Tensions between industry, taxpayer and consumer interests mean there is always a risk of policy instability, but strong concern about regional inequality and a now ascendant industrial policy paradigm mean that significant and fairly stable support is now likely. However, Treasury requirements for value for money have imposed competitions, such as the CCS Cluster Sequencing process, which have implications for allocation between regions.

A second dimension is the allocation of policy resources between decarbonising technologies and practices. Uncertainty about solutions and differences in the strength of technology lobbies have meant that the main focus of policy has been CCS and hydrogen, while other approaches such as electrification and energy and material efficiency have received less attention, which brings delivery and specialisation risks.

A third dimension is the allocation of policy resources between the different clusters and high carbon industries. Focusing resources on a few clusters through competitions may increase efficiency, but creates risks of demotivating other clusters and the more dispersed industries, and could ultimately lead to an unintended relocation of high carbon industries.

The fourth dimension is the allocation of costs and benefits at the local level, including impacts in the local built environment and/or pollution, and job opportunities. As policy enters the implementation stage, research carried out in the University of Manchester project mentioned earlier and other work show that these impacts can sometimes create distrust among both industry stakeholders and local communities, potentially undermining local support for decarbonisation efforts. Industrial decarbonisation is a political phenomenon as well as a policy-relevant issue. The latter project found that residents living near clusters are very aware and supportive of the need to invest and act on climate change but also hit hard by cost-of-living increases.  

Expert interviews conducted as part of University of Sussex work cited earlier reveal that, at its core, there is a tension between the politics of fiscal austerity (that is, the Treasury wanting to minimise government expenditure in a post-COVID world) and the need to invest billions in net zero infrastructure. Another expert spoke about tension and competition within clusters to secure funding for individual projects at the level of facilities versus shared projects that cut across facilities, and between clusters to attract the necessary financing and skills to implement plans and deploy technologies, especially with scarce contracting skills currently available as of 2021. Each of these objectives – innovation, credible delivery, emissions reductions, job creation and value for money – can conflict. What is most innovative technically, for example BECCS or direct air capture (DAC), may not be credible or sound value for money. What provides the most emissions reductions, for example energy or resource efficiency measures, may lower job creation.

Governance 
Successful industrial decarbonisation requires coordinated governance across national, regional and industrial levels. International experience suggests that the most successful industrial clusters act as policy actors themselves, rather than being passive recipients of policy. Clusters across the globe collectively highlighted the need for faster permitting, viable business models, private investment incentives and shared standards for carbon accounting, underscoring the value of cross-border knowledge sharing.

University of Leeds research carried out a rapid evidence assessment which explored international approaches to developing low-carbon industrial clusters, focusing on five main areas: policies and business models, technologies, governance, locational factors, and general policy recommendations. Key findings indicate that most information is on specific types of clusters: coastal, highly carbon intensive, longstanding and close to offshore CCS opportunities, such as those found in the UK and the Netherlands. This model may not be applicable globally, especially in non-market economies where industries may not operate under the same financial or policy logics. Across all regions, research shows long-term climate policy frameworks are critical to success.

In Europe, it appears that the most successful clusters are policy actors rather than passive recipients of policy. At the time of the study (2022) CCS received the most academic focus, especially in hydrocarbon-producing countries, where existing infrastructures and tax incentives could be used. Hydrogen development, while discussed in the literature, was less advanced.

An international workshop held by IDRIC with cluster representatives from 14 countries highlighted the need for faster permitting, viable business models, private investment incentives and shared standards for carbon accounting, underscoring the value of cross-border knowledge sharing. A briefing paper summarises the key finding from the workshop.

This article is an edited and abridged version of the full report.

• Further reading: ‘Decarbonising UK industry: IDRIC’s transformative impact’. Since its launch in 2021, IDRIC has developed an influential network of over 700 industries, trade associations, governmental/public bodies and research institutions, to accelerate the pace and scale of industrial decarbonisation. As the organisation nears the end of its current phase of work, its Director, Professor Mercedes Maroto-Valer, also Robert Buchan Chair in Sustainable Energy Engineering at Heriot-Watt University, looks back over four busy years.
• ‘Research update on... carbon dioxide removal technologies’. Technologies such as bioenergy with carbon capture and storage, decarbonised steelmaking techniques and direct air capture are investigated in this review article written by Lindsay-Marie Armstrong, Professor of Decarbonised Systems and Deputy Director of the Sustainability and Resilience Institute at the University of Southampton.