Industrial energy efficiency

In our efforts to improve Scotland's overall energy efficiency, it's essential that we engage with the industrial and commercial sector. It accounts for around 40% of total final energy consumption in Scotland, so improving its efficiency will make a significant difference.

We aim to improve industrial and commercial energy productivity by at least 30% by 2032, through a combination of fuel diversity, energy efficiency improvements and heat recovery.

We are working with Scottish industry, including the eight most Energy Intensive Industries (EII) – cement, ceramics, chemicals, food and drink, glass, iron and steel, paper and pulp, and oil and gas refining – to overcome the challenges associated with investing in energy efficiency or decarbonisation measures.

Supporting industrial energy efficiency is a key priority in the Scottish Manufacturing Action Plan, the Energy Strategy and the Climate Change Plan.

Benefits and challenges

Greater energy efficiency can have many benefits for industry, including:

  • reduced operating costs
  • protection against energy price rises
  • an additional income stream, for example through the recovery or use of captured excess heat

However, investing in energy efficiency measures presents challenges. Payback periods for equipment or technology are often considered too long, and business cases for greater efficiency may struggle to gain board approval due to the multinational nature of many companies.

Given that the industrial sector accounts for more than half of Scotland's exports and sustains many high-value jobs, it's crucial that we support rather than force industry to save energy.

We are developing a co-ordinated approach to incentives for Scottish industry to make their processes more energy efficient and to discourage them from relocating to countries with less stringent energy regulations (known as carbon leakage).

Engaging with industry

We are engaging with industry to:

  • build industrial cross-sector working that includes trade associations from the EII sectors and Scottish site representatives
  • raise awareness of existing energy efficiency advice and support for industry
  • gain detailed insight into investment barriers and work together on how to overcome them
  • examine the roles of government, agencies and industry to collectively achieve greater industrial energy efficiency

Scottish Ministers chaired an EII roundtable in November 2017 to build an effective platform for engagement and collaboration with stakeholders in Scotland. Feedback from the roundtable directly influenced the industrial part of Scotland's Energy Strategy, published on 21 December 2017.

Following the roundtable, we held workshops with a range of industrial stakeholders during 2018. These events allowed us to gather evidence on the nature of Scotland’s industrial landscape including the challenges and opportunities for decarbonisation. 

These include:

  • the cost of energy (including as a result of policies on renewables)
  • re-using excess heat so that industrial process become more efficient or emit less carbon
  • unattractive payback periods on measures so investment is diverted to other areas
  • limits to growth, change or decarbonisation due to network infrastructure

We have published a paper on decarbonisation and energy efficiency in the industrial sector that summarises our engagement with industry to date, cites the identified barriers to investment in decarbonisation, references the support currently available and proposes next steps to create an improved Scottish support framework.  We will discuss how to overcome barriers to investment with Scottish energy intensive industry stakeholders during 2019.

Carbon capture utilisation and storage

Carbon Capture Utilisation and Storage (CCUS) and the hydrogen economy is another area relevant for industrial decarbonisation, where there is interest among sectors.

We are working with other teams and agencies on this and will invite industrial stakeholders to be part of discussions as appropriate.

Contact

Any enquiries regarding industrial energy efficiency should be sent to EII@gov.scot