Industrial energy efficiency

To improve Scotland's overall energy efficiency, it is essential that we engage with the industrial and commercial sector, which accounts for around 40% of total final energy consumption in Scotland. Improving its efficiency will make a significant difference to meeting our national climate change targets.

Improving industrial and commercial energy productivity by at least 30% by 2032, through a combination of fuel diversity, energy efficiency improvements and heat recovery, is a key priority in both our revised draft energy strategy and Just Transition Plan (January 2023) and updated climate change plan 2018 to 2032 (December 2020). 

We are working with Scottish industry, including the eight most energy-intensive industrial (EII) sectors – 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.

Support for industrial decarbonisation

We will incentivise our industrial sector to improve energy efficiency or decarbonise its processes by investing £34 million between 2021 and 2026 through the Scottish Industrial Energy Transformation Fund (SIETF).

The SEITF will support manufacturing industries to fund investment-ready energy efficiency technologies and deeper decarbonisation studies, supporting Scotland’s ambition to achieve net-zero emissions by 2045 whilst maintaining competitiveness.

This fund will become part of a package of measures to incentivise Scottish industry to invest in reducing greenhouse gas emissions. 

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.

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
  • 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 or decarbonisation

During workshops with a range of industrial stakeholders  we gathered evidence on the nature of Scotland’s industrial landscape including the challenges and opportunities for decarbonisation. In 2020 we published a discussion paper on decarbonisation and energy efficiency in the industrial sector that summarises our engagement.

Carbon capture utilisation and storage

Carbon capture, utilisation and storage (CCUS) and the hydrogen economy are other areas relevant for industrial decarbonisation, where there is interest among EII sectors.


Any enquiries regarding the Industrial Energy Transformation Fund should be sent to

Any other enquiries regarding industrial energy efficiency or decarbonisation should be sent to

Back to top