£220 million to help big-emitting industries reduce fossil fuel use

• £220 million government investment to help some of the most polluting industries find new ways to reduce their carbon emissions
• funding will support projects such as carbon capture and the deployment of heat recovery technology to help businesses cut fossil fuel use and energy costs
• new investment part of the government’s plan to support British industry as we transition to a low-carbon economy

Businesses in some of the UK’s most polluting and energy-intensive industries will be able to bid for a share of £220 million in government investment to help cut their carbon emissions and the costs of their energy bills, the government has announced today (Wednesday 22 September). This move comes as the UK works to build a secure, home-grown and clean energy sector to reduce its reliance on fossil fuels and exposure to volatile global wholesale energy prices.

£220 million will support green projects that help businesses across England, Wales and Northern Ireland clean up their industrial processes, improve their energy efficiency and reduce their carbon emissions – benefiting industries including pharmaceuticals, steel, paper, and food and drink. This is on top of around £70 million that has already been available to businesses through the first phase of this Industrial Energy Transformation Fund.

Through grants of up to £30 million, companies may invest into a wide range of actions including installing more efficient boilers, electric motors and heat pumps to replace their natural gas-fired boilers and steam turbines, as well as developing technologies for industrial carbon capture, fuel switching and recycling waste heat into renewable electricity

Industry is expected to be producing 16% of the UK’s emissions today and will need to cut emissions by 2 thirds by 2035 in order to set the UK on the path for ending its contributions to climate change by 2050. The fund plays a crucial role in helping big-emitting industries to clean up as part of the UK’s green industrial revolution, by decarbonising their industrial processes and reducing their reliance on fossil fuels such as gas. This means businesses will not only reduce their environmental impact, but also save on their energy bills, and support thousands of British jobs.

This comes ahead of a major speech from the Prime Minister at the UN General Assembly ahead of the UK-hosted COP26 climate summit, where he’ll set out that climate change and economic growth are not mutually exclusive trade-offs, and urge world leaders to drive forward a sustainable economic transformation.

Prime Minister Boris Johnson said:

With innovation and investment across the economy, we can power the UK’s green industrial revolution. But we know for the most polluting and energy-intensive businesses, this will mean a big shift in the way they operate.

That’s why we’re putting £220 million more into helping them cut their carbon emissions, bring down their energy bills, and support good jobs – creating a sustainable future as we build back greener around the country.

Business & Energy Secretary Kwasi Kwarteng said:

Through this new fund, we’re stepping up efforts to clean-up industry as we transition to a low-carbon economy.

Not only will this major investment support energy-intensive industries to cut pollution, it will help companies save money on energy bills and support jobs as we fight to ensure British industry remains globally competitive.

A total of £289 million has been made available through both phases of the Industrial Energy Transformation Fund, with the time available for businesses to invest these funds extended to 2025.

Companies are already benefiting from the first phase of this fund. A project to deliver a new glass production furnace at Saint Gobain Glass UK’s plant in North Yorkshire, for example, will improve the plant’s efficiency whilst dramatically reducing energy consumption, emissions and on-going maintenance costs. In Silvertown, London, Tate & Lyle Sugars are leading a study of deep decarbonisation of its sugar refinery to reduce its greenhouse gas emissions by 90% there.

Supporting industry to build back greener through the Industrial Energy Transformation Fund will help drive forward the UK’s green industrial revolution, and level up the nation’s industrial heartlands, while also upholding the UK’s world-leading status in tackling climate change.

Notes to editors

• The IETF Phase 2 Autumn window opens for applications on Monday 27 September and closes on Monday 6 December 2021
• find out more about applying for funding for Phase 2 of the Industrial Energy Transformation Fund (IETF)
• the first competition window formally opens on 27 September, worth up to £60 million of the £220 million total for Phase 2 of this Fund, with engagement with businesses to follow over the coming weeks to prepare them for the window. Further competition windows will follow next year
• Phase 1 of the IETF had 2 competition windows – the first in Summer 2020 which ran from 20 July to 28 October 2020, and the second in Spring 2021 which ran from 8 March to 14 July 2021
• see the list of previously announced winners from the first Phase 1 window. The remaining applications from Phase 1 are currently being assessed and details of successful applicants will be announced in due course
• the Scottish Government is administering £34 million (£26 million from the IETF) for investment in Scotland and launched the Scottish IETF in December 2020.