Mandate net-zero product standards or risk missing climate goal, businesses tell UK Government

Pictured: Steel works at Port Talbot

In a new report published earlier this week, the influential business collaboration looks at how best to scale the market for low-carbon products in the UK. Produced with input from consultancy Frontier Economics, the report covers industrial products such as steel, concrete and glass, as well as consumer goods that often have a high embodied carbon footprint, such as cars. More than 20 large businesses in these sectors were involved in the report’s production.

The report acknowledges that the market for low-carbon products in both of these categories is growing without mandatory carbon standards. This is largely due to customers specifying that they need lower-carbon materials and goods to meet their own climate targets. Demands are sometimes made by individual businesses and sometimes as part of a collaboration, like the Climate Group’s SteelZero and ConcreteZero initiatives. Investor pressure is also increasing in this respect.

Nonetheless, the report states, businesses are likely not moving rapidly enough, on the whole, to decarbonise their manufacturing processes and materials in line with forthcoming carbon budgets. It outlines how, as producing low-carbon materials and goods often comes with an additional cost, manufacturers risk being undercut by high-carbon imports that may cost less, when their clients are looking for cost savings.

The EU recently set out plans for the world’s first carbon border tax on imports to help address this issue. The so-called carbon border adjustment mechanism (CBAM) will mirror the EU’s own domestic carbon price and will initially apply to imports including iron and steel, cement, aluminium, fertilisers, hydrogen and electricity.

The UK is yet to agree plans for its own post-Brexit CBAM. Government consultations on the mechanism did run this summer, but further progress has not been made amid the two changes in Prime Minister in the latter half of this year.

From voluntary to mandatory

The report argues that manufacturers will need to be confident that there is a strong demand for low-carbon products to justify the investments they will need to make to change technologies and processes.

Without sector-specific targets for decarbonisation, and with mixed financial and policy support for low-carbon technologies, this demand is likely not strong enough, the Aldersgate Group warns.

The set of recommendations presented in the report centre around mandatory product standards limiting related emissions. Such standards, the report recommends, should cover all lifecycle emissions, and should be paired with a CBAM to ensure that British manufacturers are not undercut by high-carbon imports. A CBAM can also motivate industrial decarbonisation abroad.

The Aldersgate Group, whose members include Cemex and Johnson Matthey, wants the Government to set out clear timelines for the introduction of standards, to give manufacturers time to prepare. Beyond their initial introduction, it is in favour of an increase in ambition over time – again, with clear, pre-determined timelines. This ratcheting up would reflect likely changes in the commercial maturity of key technologies and processes.

Underpinning all of these recommendations is a need for better data on lifecycle emissions, reported in a consistent manner by businesses across the value chain. Without this data, it will be challenging to assess whether businesses are meeting the required standards. The Aldersgate Group’s report calls for a new or existing body to be assigned responsibility for developing and implementing standards, plus putting reporting requirements in place. It acknowledges that reporting will be a burden on SMEs and without proper design and calls for measures to minimize complexity.

The Materials Processing Institute’s chief executive Chris McDonald said: “The future of the UK’s heavy industries relies in-part on making the transition to low carbon production; green steel for example, will be needed for the world’s energy, transport and heating solutions of the future.

“But to support the business case for investment in net-zero, industry needs to see a strong demand signal for low-carbon products. This report from the Aldersgate Group shows how product standards are one of the most powerful tools the Government can use to create demand and drive down emissions across the economy.”