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Delivering net zero through digital

  • Parliamentarians, manufacturers and engineers call for the super-deduction tax relief to be extended and made greener, to incentivise low-carbon investment

The government’s Industrial Decarbonisation and Net Zero Strategies set out a roadmap to net zero by 2050, including the commitment to reduce greenhouse gas emissions from heavy industry by 78% in 2035 compared to 1990 levels.

The commitment in law to these decarbonisation goals requires every policy lever to be pulled. Supporting the manufacturing sector as it tackles the net zero challenge is an important lever as it currently counts for 15% of UK’s emissions.

The report "Delivering Net Zero through Digital" says existing tools can be better targeted to help businesses embed net zero practices. The government should use Capital Allowances in their various forms to ensure businesses are investing in green technologies.

The super-deduction, R&D tax credits and other existing incentives offer great opportunities for manufacturers to revitalise their assets and plants, but without the right targeting, the UK will miss a once-in-a-lifetime opportunity to ensure that any new capital investment is low carbon.

The government should:

  1. Extend the existing super deduction tax relief from 2023 to 2030, to give businesses time to use these allowances strategically to meet the potentially higher initial cost of greener technologies.
  2. Introduce a low-carbon eligibility criterion for all tax reliefs and allowances, to create the culture to introduce and exploit low- or zero-carbon technologies.

Plant machinery and assets can have a lifespan of up to 25 years. If the 2035 and 2050 targets are to be met, there is no time to lose to drive investment in low-carbon technologies.

The return on investment will be three-fold: generating income on low-carbon technologies, creating a culture of introducing and exploiting low-carbon technologies and preparing the sector well in advance of the net zero targets.

A good example of targeted investment is the Made Smarter Innovation Challenge. According to the Made Smarter Pilot review, over 80% of SMEs working with Made Smarter have seen a boost in productivity, and more than 25% reduced their carbon emissions – all without a specific net zero target.

The inquiry found that Made Smarter and other networks of expertise could, however, be better focussed on targeting SMEs that are not directly engaged through the Knowledge Transfer Networks. The latest funding round for Made Smarter Innovation is an opportunity to drive targeted reduction in carbon consumption and emissions.

One participant in the roundtables was able to achieve a £12.5 million reduction in energy costs, by harnessing the power of data to significantly improve resource efficiency.

This example shows that digitalisation is a key tool to help businesses understand their energy use and deliver both decarbonisation and cost reduction.

Digital technologies fall under the definition of capital assets, so there is scope for considerable investment to be made here while making use of capital allowances.

Floriane Fidegnon, Head of Industry, Technology and Innovation at Policy Connect and report author says: “Now more than ever, manufacturers need the tools to ensure that their businesses are sustainable in the long term.

Digital technologies can support this; however, business leaders need government’s support to be able to invest and deploy technology at scale. This report highlights the potential alignment between environmental and industrial policy, calling for key action now.”

“Together, digitalisation and sustainability are the two most powerful forces that we are going to see in manufacturing over the next decade,” says Steve Evans, Chair of the IET’s Manufacturing Policy Panel.

“Joint and synergistic action on both is now urgent and vital. We can’t afford to have separate digital and sustainability strategies.

To deliver the ambitious C02 reduction target of 12MT as set out in the Government’s Decarbonisation Strategy, will require a gigantic effort from both digital and sustainability problem-solvers, on an industrial scale.

Politicians and policymakers can help too by ensuring manufacturers have the business and financial support they need.”

--ENDS--

Notes to editors:

Contact information

For more information, please contact Alice Webster: Alice.Webster@policyconnect.org.uk or 07526 936868.

Case studies

IntelliSense.io

IntelliSense.io is a leading industrial AI company enabling the industrial world to make better and more reliable decisions through the use of trusted and open AI solutions.  By measuring, benchmarking, and analysing the current state, the advanced data analytics is able to offer optimisation that creates mining processes that are efficient, sustainable and safe. Rather than competing, digital and green objectives are complementary, with data allowing the mining industry to better understand the metal life cycle.

Graham Cooper

At AGFA, Graham was able to achieve a £12.5 million reduction in energy costs by using digitalisation’ to view efficiency losses. By harnessing onto the power of data, the organisation was able to improve the efficiency of motors - one of the most fundamental manufacturing processes – and build a business case that supported a change in behaviour. His knowledge of the technologies and ability to apply it to the processes were key in helping the organisation make these savings. In his current role, Graham continues to advise SMEs on how they can achieve net zero targets and ‘green’ accreditations.

Both IntelliSense.io and Graham would be happy to speak to the media; please contact Alice in the first instance to arrange an interview.

About the report

Delivering Net Zero through Digital is a report published by the All-Party Parliamentary Manufacturing Group, Policy Connect, and the Institution of Engineering and Technology.

Its recommendations are:

  1. The government should ensure that support packages for manufacturers are promoted and delivered, at scale, across the UK. Such support and training should lead to all businesses working to decarbonise consistently.
  2. The government should use Capital Allowances in their various forms as a means to ensure that businesses are investing in green technologies.
  3. All UK businesses should commit to creating and delivering their net zero plan. Government must ensure that businesses setting key net zero deliverables are supported so that their net zero plans align with the Government’s net zero strategy.

About the APMG

The APMG is at the forefront of the policy debate, parliamentary engagement and research related to manufacturing and industry. By holding regular events and seminars in Parliament the APMG seeks to bring parliamentarians together with industry and the commercial sector to better understand the sector challenges. The APMG publish a monthly newsletter to Parliament and its members, with summaries of manufacturing policy stories, industry news, and other political developments, along with research-based briefing papers on topical legislation. The arms-length Manufacturing Commission produces research reports with evidence-based recommendations for government informed by our members.

Special thanks to Sam Bose IntelliSense.io, Graham Cooper Systems Excellence, Steve Evans Institute for Manufacturing, University of Cambridge, Alan Howard IET and Sarah Olney MP for their key contributions to this report.

About Policy Connect

Policy Connect is a cross-party think tank. We specialise in supporting parliamentary groups, forums and commissions, delivering impactful policy research and event programmes and bringing together parliamentarians and government in collaboration with academia, business and civil society to help shape public policy in Westminster and Whitehall, so as to improve people’s lives.

Our work focusses on five key policy areas which are: Education & Skills; Industry, Technology & Innovation; Sustainability; Health; and Assistive & Accessible Technology.

We are a social enterprise and are funded by a combination of regular annual membership subscriptions and time-limited sponsorships. We are proud to be a Disability Confident and London Living Wage employer, and a member of Social Enterprise UK.

This project was undertaken by the Industry, Technology & Innovation team at Policy Connect. Special thanks to Floriane Fidegnon, Head of Industry, Technology and Innovation who authored this report.

About the IET

The Institution of Engineering and Technology (IET), who kindly sponsored this report, is a professional engineering institution and registered charity. With more than 155,000 engineering and technology professionals in 148 countries, the IET celebrated its 150th anniversary in 2021. As part of the IET Strategy 2030, its Board of Trustees set out five societal challenges which provide focus for the charity, its members and supporters.

These include Sustainability and Climate Change and also Digital Futures. Find out by visiting the IET’s website www.theiet.org