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 Energy Strategy and Climate Change Plan.

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

Our industrial sector is to be incentivised to improve energy efficiency or decarbonise its processes to move to a low carbon way of working whilst maintaining competitiveness.

The Industrial Energy Transformation Fund (IETF) will support Scotland’s ambition to achieve net-zero emissions by 2045. Scotland’s fund will be tailored to the particular needs of our manufacturing base and will consider how to support strategic economic recovery following the COVID-19 outbreak.

More details on the design and timing of the fund are expected to be published later in 2020 after seeking further views from Scottish industry stakeholders.

This fund will become part of a package of measures to incentivise Scottish industry to invest in reducing greenhouse gas emissions. Details of other support programmes can be found in our energy efficiency advice and support table.

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

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. We published a discussion paper on decarbonisation and energy efficiency in the industrial sector that summarises our engagement.

We will be seeking views from stakeholders again during 2020 on the Industrial Energy Transformation Fund and how it could meet specific needs within the wider investment support landscape.

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.

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 the Industrial Energy Transformation Fund should be sent to IETF@gov.scot 

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