UK could be at forefront of green Industrial Revolution with carbon cluster plans – and here’s why
If you crack open a bottle of something – be it wine, water or soft drinks – over the festive season, there’s a good chance the glass came from the Encirc factory in Cheshire.
Here, on the banks of the River Mersey, you will find one of the world’s largest glass factories. They take sand from Norfolk, soda ash created from the salt sitting beneath the Cheshire countryside and a lot of recycled glass and throw it into two of the biggest glass furnaces in the world.
There, in the furnace, at temperatures of around 1,600 degrees centigrade, the sand melts and becomes a liquid river of molten glass. It is a chemical reaction humans learnt thousands of years ago, but here at Encirc it’s carried out on a gargantuan scale.
This factory alone produces two billion bottles and containers a year, a number which is hard to process, until you note that it includes around 40% of all the wine bottles consumed in the UK.
That includes a significant proportion of all the New World wines we consume here, by the way. Mostly, the wine from Australia, California and Chile arrives not pre-bottled, but in large bags inside shipping containers, which are then emptied into metal vats at Encirc, from where they are pumped into bottles made here in the UK.
It’s an extraordinary site – a place which says a lot both about our appetite for liquids (both alcoholic and not) and our ability to turn raw materials into sophisticated products.
The struggle to get to net zero
But turning sand into glass is an enormously energy intensive process. Some of the heat in the furnace can be created by electric elements which heat the bottom of this enormous oven. But glassmakers like Encirc say it’s impossible to do what they do – making glass on a vast scale – without blasting that furnace with a very hot flame.
At the moment that flame is produced using methane – natural gas – with the upshot that this glassmaking facility produces rather a lot of carbon dioxide. And even if you could find a way of running their furnace without a naked flame it would still be producing a sizeable amount of CO2, since some of it derives from the chemical reaction as sand turns into glass.
In short, this glass factory is a pretty good illustration of how tricky it is to get to net zero. Much of the energy use in this country can be shifted from fossil fuels to green electricity – whether that’s vehicles or home heating. Sometimes the cost will be high; sometimes in the long run, going green will be cheaper than the status quo.
But for a handful of important industries it’s far, far harder. Glassmaking is one of those industries. You can run small furnaces on electric power but not the big ones you need to feed a massive glass container factory like this one.
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All of which is why they are seeking another alternative. The most obvious route to allow this plant to decarbonise is to replace those methane flames with hydrogen ones, and then to collect all the CO2 coming out of the chimney and sequester it below the ground.
And, as it happens, the technology is pretty much there. We know how to make hydrogen both from natural gas and from electricity (the former still involves some carbon emissions; the latter is extremely expensive, so these options are not without their issues). We know how to capture carbon dioxide.
But there’s a couple of problems which have always deterred businesses like this from taking the leap. The first is that it hasn’t made any economic sense. Capturing carbon is expensive, so why do it when it’s cheaper to pay for carbon credits and carry on burning gas?
Location, location, location
The second is that the infrastructure isn’t yet there. Right now if you collected carbon dioxide from your chimney, there’s nowhere to put it. Someone needs to lay the pipes out to the depleted gas reservoirs under the sea where we might be able to store it. That’s also expensive.
All of which brings us to one of the least discussed, but arguably most important topics in the green energy transition: clusters. In short, if businesses like this glassmaker are going to green it is far more likely to happen if they can do so alongside other heavy industry players.
Look at the geography of the UK’s industries and the idea makes quite a lot of sense. Many of the country’s biggest polluters happen to be clustered relatively near each other on the coast. Alongside Encirc you’ll find one of the country’s biggest oil refineries, as well as the Inovyn (part of Ineos) chemicals plant, not to mention a major gas power station and, some miles further away in North Wales, a cement manufacturer.
All of these businesses have big energy demands. They would all benefit either from carbon capture or hydrogen. Squint a little bit into the future and you can envisage a world where they share pipes both taking the carbon away and delivering the hydrogen.
How to make it happen?
But how to create these clusters? How to finance them? How to coordinate the businesses that all want to make profits while fulfilling their commitments to reduce or eliminate their carbon emissions?
It’s a question no one has yet been able satisfactorily to answer, but whoever does will have that most precious of things: a blueprint about how to decarbonise the trickiest bit of the world’s carbon budget.
And guess what: it so happens the UK is further ahead of most other countries around the world in planning its blueprint for clusters. It now has detailed plans for how to fund, construct and run a series of major clusters: one around the Encirc factory (the Net Zero North West Cluster Plan), another in the Tees Valley (Tees Valley Net Zero), as well as plans for Scotland, for the Humber, for the Black Country and South Wales.
An area where the UK is genuinely leading
Thanks in part to government funding, which began in 2019, Britain’s clusters expertise is admired far and wide. While the US is widely seen as having taken the lead on industrial decarbonisation, thanks to its enormous Inflation Reduction Act set of subsidies, Americans – and many from Europe – have been regularly visiting the UK to understand how to do clusters.
There are many areas where UK politicians claim (without much basis) to be world leaders, but here is an area where it does actually have a world-beating proficiency. However, the government funding for clusters is coming to an end in March, and those working here are nervous that this could be another area where the country squanders an early lead and soon becomes a laggard.
While the cluster in Cheshire looks likely to become a physical reality, with companies soon laying the pipes that will connect plans to hydrogen and carbon dioxide pipes, those in the Black Country and elsewhere are much less advanced.
It’s something to ponder as you have a drink over the festive season. It’s tempting to assume that Britain no longer makes much of anything any more. However, visit plants like the Encirc one, and you realise that that is very far off the mark.
And there’s a prospect that this country, which brought the world the Industrial Revolution, could be at the forefront of managing the green Industrial Revolution. In a few years’ time that glass could be truly low carbon – maybe in due course it could be zero carbon. But it will take a lot more work – especially on clusters – to make it a reality.
It’s a debate that has raged since the end of the COVID pandemic but, despite regulatory scrutiny, it’s fair to say there’s been no clear answer to accusations that UK drivers pay over the odds for fuel.
What was once a promotional loss leader for supermarkets desperate for drivers to fill their car boots with groceries, unleaded and diesel costs have been unusually high for years.
Fuel retailers say there is a simple explanation: rising costs being passed on to motorists.
But critics argue there is a reason why the Competition and Markets Authority (CMA) has consistently found that we’re paying more than we should be – and that the disparity between wholesale costs and pump prices has got worse in recent months.
So: who’s right?
What the oil data tells us
Oil prices are well down on levels seen in January (between $75 and $82 a barrel) but fuel prices are clearly not.
In recent weeks, Brent crude has traded in the range of $62 to $64 per barrel and yet drivers are currently, on average, paying £1.37 a litre for petrol and £1.46 for diesel.
The average pumps costs in January stood at £1.39 and £1.45 – despite the significantly higher oil costs seen at the time.
Prices can be affected by all sorts of factors including the value of the pound versus the oil-priced dollar, but that disparity is notable.
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There is another, emerging, factor to consider
It might surprise you to learn that the UK now has only four operational refineries to produce petrol and diesel after two major sites shut this year.
The decline has sparked an industry warning of a crisis due to high UK carbon charges, imposed by the government, that have made domestic fuel producers uncompetitive versus imports.
The loss of the refinery at Grangemouth this spring has been particularly acute as it left Scotland without domestic production and at the mercy of a more complicated and expensive delivery structure.
Fuel retailers say the impact has been minimal so far, mainly due to remaining UK refineries raising production.
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‘Drill baby drill’
The case for the prosecution
Quite simply, fuel price campaigners and motoring groups have long accused the industry of raising its profit margins.
Supermarkets focused price investment elsewhere as the cost of living crisis took hold but the days of Asda (before it was bought by the fuel-focused Issa brothers and private equity) leading a sector-wide fuel price war are long gone.
Reports by both the AA and RAC this week highlight price spikes despite a 5p slump in wholesale costs a fortnight ago.
The AA said: “At the height of the spike, it matched what had been seen in mid June. Then, the petrol pump average reached a maximum of 135.8p by late July.
It said that government data had since shown pump prices at levels not seen since March.
The body questioned the reasons behind that disparity and also pointed towards, what it called, a postcode lottery for pump costs with gaps of up to 9p a litre between towns only 10 miles apart.
The RAC declared on Thursday that pump prices rose at their fastest pace in 18 months during November, with diesel at a 15-month high.
The critics have also included regulators as monitoring of fuel retailers by the CMA since its original market study has consistently found that drivers have been excessively charged.
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‘It’s either keep warm or eat’
What’s the fuel industry’s position?
It pleads “not guilty”.
The bodies representing retailers make the point that the CMA and its wider critics fail to take into account huge rises in costs they have faced over the past four years – costs which are being/have been passed on across the economy.
These include those for energy, business rates, minimum wage, employer national insurance costs and record sums arising from forecourt crime.
The Petrol Retailers’ Association (PRA), which represents the majority of forecourts, told Sky News that average margins across the sector are the same today as they were a year ago at between 3% to 4% after costs.
It suggests no fuel for the fire surrounding those profiteering allegations but that rising costs have been passed on in full.
Pic: iStock
What has the regulator done?
The CMA’s road fuel market study committed to monitor the market and recommended a compulsory fuel finder scheme to help bolster competition. That was two-and-a-half years ago.
Limited data has been widely available via motoring apps ahead of the start of the official scheme, expected in spring next year, which will bring real-time pricing into a driver’s view for the first time.
The CMA hopes that by forcing each retailer to divulge their prices in real time, customers will vote with their feet.
In the regulator’s defence
The CMA could argue that government has dragged its heels in implementing its fuel finder recommendation.
While the Conservatives accepted it, Labour is now pushing it through parliament.
The regulator can only act within the powers it has been given. It would say that it can’t threaten or hand out fines until its recommendations are in play and they have been clearly flouted.
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What next for the UK economy?
So who’s right?
This is a debate all about transparency but we clearly don’t have a full view on the complicated, and shifting, supply chain which can influence pump prices.
The CMA hopes that postcode lotteries for pump costs will ease once more drivers are aware of the ability to compare and shop around.
But the main reason why this issue remains unresolved is that the CMA’s findings have been incomplete to date.
Its determinations that pump costs have been excessive have all been made without taking retailers’ operating costs into full account.
Pic: Reuters
Why we are closer to an answer
The CMA’s next market update is expected within weeks and will, for the first time, take more extensive cost data into account.
A spokesperson told Sky News: “We recommended the Fuel Finder scheme to help drivers avoid paying more than they should at the pump, and the government intends to launch it by spring 2026.
“The scheme will give drivers real-time price information, helping them find the cheapest fuel and putting pressure on retailers to compete.
“We looked closely at operating costs during our review of the market, and they formed a key part of our final report in 2023.
“As we confirmed in June, we’ve been examining claims that these costs have risen and will set out our assessment in our annual report later this month.”
The hope must be that both sides involved can accept the report’s findings for the first time, to bring this bitter debate to an end once and for all.”
The UK has come a “step closer” to having direct, high-speed rail connections to Germany, the Department for Transport has said.
A partnership between international train operator Eurostar and German national rail company Deutsche Bahn (DB) has “set the foundation” for a fast rail connection between Britain and Europe’s largest economy, the businesses announced on Thursday.
It means the companies are exploring options to offer direct services between London and Cologne and Frankfurt.
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Such direct services would mean reaching Cologne in four hours, and Frankfurt in less than five from the capital city.
At present, rail passengers have to change trains in Brussels to reach those cities. It takes at least five-and-a-half hours to reach Frankfurt, and four-and-a-quarter hours to arrive in Cologne.
Cologne Central Station could soon be served by trains from the UK. Pic: AP
The proposed services would use existing lines and infrastructure. Passengers would board a double-decker Eurostar in London, and be spared a change of trains on the continent.
The ambition to create such links had already been announced, as had a plan to allow direct rail travel from London to Geneva, but the partnership between DB and Eurostar had not.
Will it definitely happen?
Details and technicalities are yet to be worked out, with the German train company highlighting that any services are contingent upon “the necessary technical, operational, and legal prerequisites being met”.
“Implementation by individual railway companies is considered extremely difficult,” DB said.
“Joint partnerships are therefore crucial.”
What about Berlin?
Nothing was announced for a direct service to Berlin on Thursday, despite Transport Secretary Heidi Alexander singling out the benefits and prospect of journeys from London to the German capital in July.
“The Brandenburg Gate, the Berlin Wall and Checkpoint Charlie – in just a matter of years, rail passengers in the UK could be able to visit these iconic sights direct from the comfort of a train, thanks to a direct connection linking London and Berlin,” she said at the time.
A high-speed Eurostar train heading towards France. File pic: PA
Shorter journeys, like those to Frankfurt and Cologne, are seen as more commercially viable than the current 10-hour train journey time to Berlin.
Market studies conducted by Eurostar found travellers are comfortable with international rail journeys of up to six hours.
“Our research indicates that many would choose rail over air for trips within this timeframe,” Eurostar told Sky News. “This, combined with strong business and leisure demand on this route, is why we have prioritised London to Frankfurt.”
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The Department for Transport said the focus on the two German cities was a commercial decision by Eurostar and DB, and the UK-Germany rail taskforce, established over the summer, could pave the way for further route announcements.
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