SCOTLAND’s high-polluting petrochemicals industry has warned that investment will move overseas if decarbonisation costs cannot be passed on to consumers.
MSPs are scrutinising the Scottish Government’s updated climate change plan – which sets out how the country will aim to cut 1990 levels of carbon emissions by 75 per cent by 2030 and become carbon neutral by 2045.
As part of the strategy, ministers want heavy industry to cut its emissions by 32% on 2018 levels “while Scottish industry remains globally sustainable and competitive”.
READ MORE: Warning over 'credibility' of SNP's 2030 carbon reduction pledge
Scotland’s industrial emissions have fallen by more than 45% between 1990 and 2018 – helped by the closure of heavy emitting sites, particularly in the steel and paper sectors.
The country’s largest polluter, petrochemical company Ineos, has snubbed MSPs by refusing to turn up to face questions or even submit written evidence.
Chris Stark, the chief executive of independent advisory body, the Committee on Climate Change (CCC), warned a change is needed away from a “feeling there’s a problem to be managed" towards "an opportunity for Scotland”.
He added: “We’re going to have to see Ineos...and other commercial operators in Grangemouth to be interested in decarbonising in a way that I don’t think they are at the moment.
“We will need Ineos and other commercial operators present in the oil and gas sector to see it as an opportunity in that way.”
Despite the no-show from Ineos, Rich Woolley, head of energy and climate change at the Chemical Industries Association, appeared in front of Holyrood’s Economy, Energy and Fair Work Committee.
Mr Woolley said petrochemicals was “fundamentally a net zero industry”, pointing to the sector’s role in the production of wind turbine blades and net zero fuels and chemicals.
READ MORE: Ineos boss snubs MSPs investigating Scotland's zero carbon future
He highlighted comments by the Committee on Climate Change, stressing that “the only way industry can finally move to a complete economically viable decarbonisation model is if they can pass through the cost of decarbonisation to the end consumer”.
Two methods of allowing heavy industry to decarbonise in Scotland have been identified – carbon capture, utilisation and storage (CCUS) and switching operations from fossil fuels to electricity from renewable generation or other sources such as clean hydrogen.
Mr Woolley said: “A lot of our energy emissions can be decarbonised through electrification. But we have some very heavy, high heat processes that require either CCUS or fuel switching to hydrogen.”
He added: “Chemicals is fundamentally an energy intensive industry – you can’t get around it. It doesn’t mean it is energy inefficient. It’s our largest operational cost. Thermodynamics means that we have to use a certain amount of energy to create chemicals – that's just the physics behind it. We’re going to use a lot of energy.
“We can decarbonise that by fuel switching to hydrogen or we could decarbonise it by fuel switching to electricity. Unfortunately, at the moment, there’s no business case for doing so because we compete in an international market on price.
“Any investment in electrification or hydrogen (will have) a significantly higher operational cost which means that it’s just not an attractive investment for any company, let alone multi-national companies that we get in energy intensive industries.”
Mr Woolley suggested that companies like Ineos would “much rather put that money in another country where they could expand operations and make more money”.
READ MORE: Scottish Government has 'no plan B' to hit climate targets
He added: “What we need from government is we need the support to create an attractive business case for these ways of manufacturing these products in a low carbon manner.”
He was asked by Scottish Conservative MSP Graham Simpson why the Government should have to fund highly-polluting industries transitioning to low carbon.
Mr Woolley said: “The private sector invests in where it can make money. There is no business case to have low carbon manufacturing at the moment in the UK – the cost is too high to do if with electricity. The cost of carbon capture is too high to.
“If government is interested in having those assets in the UK and indeed attracting industries of the future like wind turbine manufacturing, for example, or green hydrogen production, these are energy intensive industries and with the high electricity prices we have, we need support to have them here in the UK – otherwise investment goes elsewhere.
“It needs to be able to pass through the higher costs of low carbon manufacturing to the end consumer. We can’t raise our prices to incorporate those cots of low carbon manufacturing because we compete internationally on price.”
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