Decarbonising Scotland's industrial sectors and sites: discussion paper

This paper outlines our engagement with industry to date.

2. Profile

2.1. What are, and where are, Scotland's energy intensive industries?

Energy Intensive Industries (EII) form a core part of Scotland's manufacturing base, and tend to cover sites which consume the highest levels of energy and emit large volumes of GHG. Within the UK Government's Clean Growth Strategy[14], Industrial Decarbonisation and Energy Efficiency Action Plans[15], that focus on promoting the incentivizing of measures to decarbonise industrial processes, refer to EII subsectors:

  • Oil & Gas Refining
  • Cement
  • Pulp & Paper
  • Food & Drink
  • Iron & Steel 
  • Chemicals
  • Glass
  • Ceramics[16]

Map: What are, and where are, Scotland's energy intensive industries?

In 2016, EII were responsible for approximately 15%[17] of all Scottish GHG. Scotland's manufacturing sector accounts for over half of our exports[18] and total business research and development expenditure. The GVA of Scottish manufacturing, of which the EII form the core, totalled £12.7bn in 2016[19] while employment totalled 179,300[20].

Mapping highCO2emitting sites illustrates where Scotland's industrial assets are. 'Clustered' industries, whether from the same sub-sector or not, will share infrastructure already, but there may be a case to consider development that makes more of proximity to improve efficiencies in energy productivity, material supply chains, or the local re-use of by-products such as excess heat. Clusters may act as catalysts for the development of new advanced manufacturing sectors, attracted by the locational advantages of shared low carbon energy supplies, development of alternative fuels, and access to CCUS infrastructure.

2.2. Engagement with energy intensive industry

Representatives from Scottish agencies and EII attended workshops during 2018 and provided feedback on the main barriers to investment and opportunities to decarbonise:

Top cross-sector barriers

  • Unattractive payback periods on measures so investment is diverted to other areas
  • The cost of energy (including rising costs as a result of policies on renewables)
  • Policy uncertainty in some areas such as on bio-energy
  • Limits to growth, change or decarbonisation, often due to constraints on network infrastructure
  • Lack of long-term incentives

Top cross-sector opportunities

  • Many potential resource efficiency projects, especially industrial heat recovery (IHR)[21]
  • Potential to do more with products viewed as waste and use them more in processes
  • Industry to support, and extract efficiency benefits from the distributed storage of energy
  • With financial support, Scottish EII have an appetite for an ambitious low-carbon future

Refining and oil products






The financial environment for investment in proven technology.

Waste heat recovery.


Investment payback periods.

Decline in demand.

Low value of carbon counts against support to developCO2capture technology.

Use devolved powers and coalesce Scottish development of networks to influence distributed energy storage and seek more competitive energy-related costs.

Energy costs vs Europe.

Where is additional reserve generation capacity or storage infrastructure from?

Mineral products including cement

Metals (steel and aluminium)

Waste potential.

Potential for EII to go low-carbon if financially supported.

Reliable supply of waste.

Cost pressures on EII are a barrier to invest.

Many potential projects, but payback too long without government support.

Energy storage.

Energy costs vs Europe.

Isolated thinking on infrastructure.

Food and Drink (in general)

Scotch Whisky (specifically)

Finding use (or alternative uses) for low carbon heat.

Lack of clarity policy.

Increase in the generation, use and supply of renewable energy.

Development of district heating networks.

Complex and changing policy framework.

Infrastructure constraints, e.g. limited rural gas grid.

Energy security & supply.

Paper and Pulp


Finding suitable use for excess low-grade underutilised heat.

Investment payback periods.

Heat recovery.

More recycled glass (cullet) input.

Switch to electric melting.

Investment payback periods.

Cullet availability.

Cost of electricity.

2.3. Programmes of support on industrial decarbonisation

A table summarising existing advice and support to industry is online at and includes:

  • Scottish Government sponsored programmes such as the Low Carbon Infrastructure Transition Programme (LCITP) and the Resource Efficient Scotland programme.
  • Support delivered by enterprise agencies (Scottish Enterprise[22] (SE), including through the Scottish Manufacturing Advisory Service[23] (SMAS), and Highlands and Island Enterprise (HIE)).
  • Support delivered by the Scottish Environment Protection Agency (SEPA) such as Sustainable Growth Agreements[24] (SGA).

Existing support also comprises a workstream linked to Scotland's Manufacturing Action Plan (SMAP) which is focused on co-ordinating activity across agencies to deliver energy efficiency and decarbonisation.

The National Manufacturing Institute Scotland[25] (NMIS) will offer support as an industry-led international centre of expertise. Manufacturers including EII will be able to access cutting edge research or equipment, allowing them to trial and test new processes or technologies whilst de-risking investment. Building on the success of the world-renowned Advanced Forming Research Centre, NMIS will enable companies of all sizes to improve their skills, productivity and innovation potential. The Lightweight Manufacturing Centre, a first phase of NMIS is available to work with now. So too are relevant Innovation Centres[26] such as for Industrial Biotechnology (IBioIC), for Oil and Gas (OGIC), the Construction Scotland Innovation Centre (CsiC) and The Data Lab.

2.4. The Energy Efficient Scotland Programme[27] and Industry

Energy efficiency is a National Infrastructure Priority. Energy Efficient Scotland is a co-ordinated programme to improve the efficiency of homes and buildings in all sectors. During 2018, the Scottish Government consulted on aligning advice and support on energy efficiency of industrial buildings with energy consumed for industrial processes. Key findings:

a substantial majority of respondents said that advice and support to invest in the energy efficiency of industrial or manufacturing buildings should be aligned with wider advice and support on how to reduce energy consumed for productive processes; and

compared to buildings, assessing the cost-effectiveness of process energy efficiency, or emissions reduction, requires highly specialist expertise.

2.5. Support from outwith Scotland

In the UK, the IETF[28] has up to £315 million allocated to support businesses with high energy use to transition to a low carbon future and cut bills through increased efficiency. There is currently an informal consultation on the design on this fund. The Scottish Government is engaged with UK Government on the design of the fund for Scottish interests.

We are engaging with UK Government to support positioning of Scottish industrial operators to access Industrial Strategy Challenge Fund[29] programmes in the areas of Decarbonising Industrial Clusters (£170m) and Transforming Foundation Industry (£66m)

The UK Government's Industrial Heat Recovery Support Programme (IHRSP) has £18 million assigned for match funding feasibility studies or capital projects. However, as heating and cooling is a devolved issue, it does not cover sites in Scotland.

European Union programmes available to Scottish organisations are either co-funded grants awarded on a competitive basis or loans provided through financial intermediaries. For example the EU ETS Innovation Fund which provides up to €11 billion of EU match-funding[30] between 2021-30 to support innovative low‑carbon technology projects across energy-intensive industry.

As a signatory to the Under2 Coalition, the Scottish Government is a participant in the Industry Transition Platform alongside a group of state or regional governments of industrialised regions to identify the principal low carbon challenges and develop strategies to address these. It runs until 2021.



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