UK Manufacturer's Energy Efficiency Could Return £2.65bn
UK manufacturers could improve the UK economy by an additional £2.56 billion by investing more in energy efficiency technologies, claims a new report by Barclays.
The Barclays Corporate Banking “Powering On; Energy Resilience in UK Manufacturing” report examines current attitudes of UK manufacturers towards energy supply and management and models how manufacturers could reduce their energy demand.
The research shows a growing concern about the availability, reliability and cost of energy with over a quarter of UK manufacturers surveyed (27%) saying that energy supply is more of a concern to their business now than at the start of 2016. These concerns have come to the fore as manufacturers feel squeezed by increases in the price of other raw materials, greater competitive pressure in the sector, and 28% of those who said their business is more concerned said this is because they are worried about the eventual impact of the UK leaving the European Union.
“Energy resilience and costs are vital considerations for UK manufacturers and are a critical element of our manufacturing sector’s ability to compete internationally,” said Mike Rigby, Barclays’ Head of Manufacturing, Transport and Logistics in the banking groups press release.
Rigby added, “In recent months, attention has focused on the future of energy supply but we need to look at all aspects of energy. By considering energy management on the demand side in intensive sectors such as manufacturing, we can ensure the UK remains competitive.
“We know manufacturers are already taking steps to improve their energy resilience, from investing in energy efficiency to self-generation and partnering with resource recovery parks.
“However, our research shows that increasing this investment will not only protect the sector from future fluctuations in energy supply, but will also benefit the wider economy by making the sector more internationally competitive through reduced costs and increased productivity.”
Manufacturers are already investing time and money in a variety of energy management technologies and approaches, or planning to in the next 12 months, with energy efficiency measures (35%), negotiating lengthier energy supplier contracts (22%) material efficiency (21%) and self-generation (13%) measures topping the list.
The Barclays research reveals that if all manufacturers became as energy efficient as the leaders in the sector, this could create an industry worth £160bn to the wider economy by 2025. This represents an increase of 5.1% in value terms compared to 2015, and a £306m increase on the projected value of the manufacturing sector if it were to remain on its current trajectory, without improvement in energy efficiency.
This extra economic output will be achieved by the sector cutting costs and improving its international competitive position, but only if the sector can develop the leadership commitment and resources required.
Furthermore, as a single year comparison - in 2025 alone, this improvement in energy efficiency would result in a manufacturing sector using 7.9% less energy than expected. This is the equivalent of successfully cutting the electricity consumption of every house in the UK by 15% compared to today.
Friday 2nd December 2016