The UK manufacturing sector has the potential to be a global leader in sustainability, but it currently lags behind its European counterparts. While the sector has shown capability in incremental improvements, it is falling short in radical innovation.

To thrive in the future, the UK must shift its focus beyond mere efficiency gains and embrace a more comprehensive sustainability agenda. This requires substantial research and development, coupled with government support to translate these innovations into commercial products.

The coming decades will present unprecedented challenges due to climate change, resource scarcity, and population growth. Manufacturers must adapt by developing innovative products and processes to address these issues. While energy and resource efficiency will be crucial in the short term, long-term success demands a radical transformation of the industry.

To achieve this, the UK needs a clear national strategy, significant investment, and collaboration between government, industry, and academia. By capitalising on opportunities in areas including energy efficiency and resource recovery, the UK can build a sustainable and competitive manufacturing sector.

Ultimately, the ability to balance economic growth with environmental responsibility will determine the UK's success in the global marketplace.

Untapped potential of energy efficiency

Energy audits are a key tool for manufacturers to identify areas where they can improve energy efficiency. However, according to a report by the UK government (published in 2021), the survey findings show that a relatively small proportion of manufacturers have had an energy audit in the past five years (around one in twenty). This varies significantly by size, with a much higher proportion of large manufacturers having had an audit compared to micro manufacturers.

The most common method used for energy audits is external consultants, followed by internal specialists and online tools.

Investing in building improvements was the most frequently cited potential improvement for energy efficiency, with over half of manufacturers indicating that this would be feasible. Interestingly, manufacturers who owned their buildings were less likely to say that no further improvements could be made by investing in building improvements, compared to those who rented their buildings. This suggests that building owners may be more willing to invest in upgrades that will save them money on energy bills in the long run.

Implementing behavioural and cultural changes was also seen as a potential improvement for energy efficiency by around two-fifths of manufacturers. However, a similar proportion of manufacturers indicated that no further improvements could be made in this area. This was particularly the case for micro manufacturers.

If all of the potential improvements were made, manufacturers anticipated that this would result in a 25% reduction in energy usage on average. However, nearly six in ten manufacturers were unable to estimate how much the improvements would reduce energy usage. Large manufacturers were more likely to be able to provide an estimate than smaller manufacturers.

These findings suggest that there is significant scope for improvement in energy efficiency in the manufacturing sector. Encouraging more manufacturers to carry out energy audits and implementing measures to address behavioural and cultural barriers to energy efficiency could help to achieve significant reductions in energy consumption.

What’s Holding Manufacturers Back?

Manufacturers face significant hurdles in enhancing their energy efficiency. The most prominent challenge is financial, with over half of manufacturers citing a lack of funds or accessible financing as a barrier. This suggests a need for increased financial support and incentives to encourage energy-saving investments.

Additionally, a lack of prioritisation and knowledge are also hindering progress. Nearly a third of manufacturers indicated that energy efficiency is not a top priority for their business, while a similar proportion reported insufficient information on how to improve it. Addressing these issues requires raising awareness about the benefits of energy efficiency and providing clear guidance on potential measures.

The survey presented manufacturers with a list of reasons suggestive of why energy efficiency might be a low priority for their business. Over three-quarters (79%) reported that they had priorities elsewhere (such as dealing with the impact of Covid-19 and Brexit), or that their industrial equipment does not yet need replacing and therefore energy efficiency is less ‘front of mind’ (75%). Higher priorities elsewhere were a more common factor amongst medium-sized businesses than manufacturers overall (90% vs 79%).

2050 - A Looming Crisis or Opportunity?

Achieving sustainability by 2050 requires a multifaceted approach to address greenhouse gas emissions, water consumption, resource depletion, and population growth. The future will likely be characterised by resource scarcity and a surplus of labour.

Current sustainability targets across various sectors fall short of the necessary ambition to meet these challenges. Historical progress, exemplified by efforts to reduce carbon emissions, is insufficient. Developing the required technologies will demand radical innovation and substantial research and development investment, which is currently underfunded and lacking in supportive policies.

Manufacturers often face challenges when seeking to fund energy efficiency upgrades. When relying on internal funds, the most common obstacle is a lack of budget specifically allocated for energy efficiency improvements. This means that such investments would divert funds from other essential areas of the business. Additionally, the long-term payback period for these investments can deter companies from allocating resources.

Regarding external funding, particularly government grants, manufacturers frequently encounter difficulties. Many are unaware of available support programs or the specific eligibility criteria. This lack of knowledge hinders their ability to access potential financial assistance.

The manufacturing sector will face intensified competition for resources, potentially compromising its ability to meet societal needs. To thrive, manufacturers must innovate in product design, production processes, and overall business models. This could involve transforming factory locations, supply chains, and the sector's role within society to generate both economic value and social benefits.

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