Sustainable chemicals should be a UK growth industry  – Inside track

Chemicals are everywhere, from food to healthcare, technology to energy, over 90 per cent of all manufactured goods rely on the chemical industry. Many of its products, like battery components and building insulation, are needed for the transition to a green economy. But the industry itself needs to do a lot more to green its operations. The high environmental price tag of chemicals is the extent to which they are fuelling the climate crisis and wreaking havoc on our ecosystems. 

Horror stories, such as that of forever chemicals, toxic substances that remain in the environment for centuries, are becoming increasingly hard to ignore. Excess nutrients from chemical fertilisers wash into waterways and disrupt natural systems. Chemical pollution of the environment is pushing us past critical planetary boundaries and the chemical industry is a major contributor to climate change. As the UKâ€s steel industry transitions away from the old coal fired blast furnaces, our chemical sector now vies for the top spot for industrial greenhouse gas emissions alongside the cement industry. A lot of those emissions come from the energy intensive processes used to make chemicals, but much also comes from the use of fossil fuels as a manufacturing ingredient.  

The chemical industry is a major contributor to the UK economy. The sectorâ€s total 2022 revenue was over £50 billion and represents about 17 per cent of the UKâ€s total export value. Chemical manufacturing employs some 140,000 people, with salaries 27 per cent higher than average. The chemicals industries of Teesside, Merseyside, Humberside and Grangemouth have a long history and still play a crucial role in their local economies. However, the industry is in slow decline with operations moving to other countries, especially where energy costs are lower and policy support for the net zero transition is stronger. Greening the chemical industry presents the UK with opportunities for revival and growth. 

Diversifying away from fossil fuels is a resilience strategy
The cheap carbon byproducts the industry relies on will become less available as the fossil fuel industry shrinks. The embedded carbon in chemical products, and its contribution to climate change, can no longer be ignored. The fossil fuel industry might see rising demand for chemicals as its ‘escape hatch†for future growth but the chemical industry will be more resilient if it is less tied to fossil fuels and seeks alternative feedstocks.  

Many chemicals require carbon as an ingredient and there is huge potential to substitute fossil fuel inputs for more circular, domestic sources of carbon, including sustainable biomass, captured carbon or recycled plastics. Itâ€s a huge opportunity for the UK to lead the transition to a more sustainable chemical industry and export its expertise around the world. 

But this wonâ€t happen by accident. Without coherent strategy and policy, the decline will continue, with more companies moving their operations to those regions with long term transition plans for their chemicals sectors, like the EU. Whilst that might reduce the UKâ€s territorial emissions from the industry, it wonâ€t address our global emissions as weâ€ll be more reliant on imports where we have little influence over the emissions generated.  

UK companies are being prevented from investing in greener practices by policy gaps in areas like skills, speeding up industrial electrification, promoting sustainable feedstocks and resource circularity. Above all, positive policy to modernise the industry could help build a market for green chemicals, for instance by introducing a green carbon mandate, as we have proposed, for a rising fraction of carbon in chemicals manufacture to come from non-fossil fuel sources. The government could also lead the way by using its huge buying power to procure greener chemical products for public services.  

The Department for Energy Security and Net Zero and the Department for Business and Trade should co-operate to drive this forward and make the UK a global leader in sustainable chemicals. The appointment of Sarah Jones MP as the joint minister sitting across both departments is an excellent starting point. Planning for a sustainable chemical sector, under the forthcoming industrial strategy, is critical for economic growth outside of London and the south east, and for cutting emissions from one of the UKâ€s most polluting sectors.