Ashley Phillips, Managing Director, Ørsted Sales UK Ltd
The UK has become the first major economy to enshrine net zero carbon targets in law. This decisive environmental action comes after a report from the Committee on Climate Change recommended that the UK should legislate to end its contribution to global warming within 30 years. It’s a decision that will benefit our communities and our planet. However, new environmental policies can bring extra challenges for businesses, who are often already handling complex processes and regulation.
Energy intensive sectors are also under pressure to control costs and protect profit margins. Reliant on some of the nation’s most energy intensive processes, the chemicals industry is the UK’s largest user of industrial energy. While energy use varies significantly across the sector, it can account for up to 50% of manufacturing costs1.Alongside the fact that the chemical industry represents almost one quarter of all UK greenhouse gas (GHG) emissions2, it’s easy to see why energy management has moved to the top of the agenda within this sector.
Building a sustainable energy strategy
Energy efficiency has been a focus for the chemicals industry for some time: since 1990, the sector has improved efficiency by 35%, and reduced GHG emissions by 70%3. The industry has also made a crucial contribution to the advancement of renewable technologies, enabling the manufacture of larger wind turbine blades and more efficient solar panels.
While progress has been remarkable, the worldwide demand for chemicals could rise by 50% by 20304 – there is much still to do to ensure that carbon reduction continues, to empower businesses that still consider energy to be a static overhead cost, and to ensure that our chemicals industry thrives under the pressure of net-zero legislation. Now is the time to revisit energy strategies and reap the long-term benefits of sustainability.
Expert advice: You know your energy needs better than anyone. However, your energy supplier should work with you as a partner, to solve problems and explore options. Many Ørsted clients are benefitting from our Energy Advisory service, which provides access to a wide range of services and technologies, to build a bespoke energy solution for each individual business. Driving energy efficiency, decarbonisation and energy cost reduction is the aim, so that businesses can achieve their sustainability goals. Your supplier should also help you manage energy costs and mitigate price risks. During our green energy transition, energy remains a volatile commodity. At Ørsted, we provide comprehensive trading services, where our expert team of traders can help build risk management strategies based on a business’ individual needs, risk tolerance and internal policies.
Renewable electricity: Choosing 100% renewable electricity is an easy first step towards carbon reduction. Ideally, your supplier should guarantee power that is fully traceable back to the generating asset, which in turn means that you can report lower or zero carbon emissions in greenhouse gas reporting. As a longer-term option, we also offer Corporate Power Purchase Agreements (Corporate PPAs). A Corporate PPA helps businesses secure long-term fixed prices, protecting them from price risk for the entire duration of their contract. Contracts can begin at four years, but businesses often choose a 10-year contract, to benefit from protection for longer.
Green gas: As with many manufacturers, a reliance on gas for energy is a characteristic of the chemical industry. While the ideal long-term solution would be electrification of more processes, right now this simply isn’t a practical solution for many. Decarbonising gas supply is possible, with biogas as the cleanest option and carbon neutral products also available. Carbon neutral usually means that the carbon associated with a business’ gas consumption is offset through investment in carbon reduction projects such as reforestation, renewable energy and waste-water initiatives.
Smarter energy management: Looking beyond low carbon energy choices, manufacturers have much to gain by getting ‘clued up’ about the latest tools for smarter energy management. Coupled with an increased availability of data, smart tools allow businesses to understand where and how energy is being used across their plants, making efficiency easier.
A more flexible approach to consumption can help avoid peak prices and unlock new revenue streams. With the energy landscape changing so fast, specialist advice is invaluable here. The right expertise can help businesses that have older sites and less flexible assets to find new options and fit together all the pieces of the puzzle.
At Ørsted, we believe in taking an approach that is smart, sustainable and for the duration. We understand that each business has a unique set of needs, and develop products and solutions adapted to those needs. As the world’s most sustainable energy company5, we’ll continue to help more businesses make those better energy choices, to build a resilient, green future for us all.
Find out more about our energy solutions at
1. Chlor-alkali sub-sector energy costs are up to 50% of manufacturing costs: https://www.carbontrust.com/resources/guides/sector-based-advice/chemicals/
2. BEIS Chemical Sector report Oct 2017: https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/651230/chemicals-decarbonisation-action-plan.pdf
3. As above
4. Chemical Industries Association (CIA) report: https://www.cia.org.uk/Portals/0/Documents/Publications/Low%20carbon%20brochure_2015_MR.PDF?ver=2017-01-09-143808-563