Aim is to save £1bn a year on industrial energy bills and cut emissions equivalent to taking 200,000 cars off the road

This article is more than 10 months old

This article is more than 10 months old

The British government has launched a £315m hunt to find new technologies that can shrink the carbon footprint of the most polluting factories to help meet the UK’s climate targets.

The scheme will offer funds over the next five years to energy-intensive firms, such as manufacturers, to invest in new technology which can reduce their energy use.

Ministers hope the scheme will help save £1bn a year on industrial energy bills, and cut carbon emissions by 2m tonnes or the equivalent of taking nearly 200,000 cars off the road each year.

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The government finalised the design of the Industrial Energy Transformation Fund – which opens for bids next summer – just before the start of the general election campaign.

Energy minister Kwasi Kwarteng said the fund will bolster investment in clean growth as it works towards its climate targets.

Legislation was passed over the summer to cut government carbon emissions to net zero by 2050 to ensure the UK ends its contribution to global heating.

The fund builds on a scheme to help clean up climate emissions from the UK’s steel manufacturing sector. The government proposed the £250m Clean Steel Fund in late August.

Kwarteng said equipping energy intensive businesses with the latest low-emission technologies will not only help the UK meet its climate targets but could also help companies remain competitive, and create skilled, well-paid jobs.

Heavy industry, which makes up a quarter of the UK’s carbon footprint, is expected to be one of the most difficult areas to decarbonise without a step-change in technology.

For example, Ibstock Bricks has invested in robots to help make repetitive manufacturing processes more efficient, which has halved the emissions output for every brick produced.

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Other factories are trialling new software which uses algorithms to shut down non-essential machines when renewable energy is low and demand from the national energy grid is high. This helps to reduce bills by only using electricity at cheaper times when renewable energy output is higher.

“The UK is already cutting emissions faster than any other major economy and we’re the first to legislate to end our contribution to climate change entirely. Eliminating emissions from industry is key to achieving this,” Kwarteng said.

Companies will be able to compete for a share of up to £30m of funding from the Industrial Energy Transformation Fund next summer. The second funding round will be held in 2021.