Made Smarter Net Zero - v7

MADE SMARTER
Sprint on Net-Zero
Ambition
January, 2020
CHAPTER SUMMARY
1. Executive summary Presenting the case for change and key recommendations Pg. 4
Summarising the findings of the UK Committee on Climate

2. Net-zero ambition Change, including progress on emissions, policy and Pg. 6
investment case for net-zero by 2050
Analysing UK manufacturing emissions and emissions intensity

3. UK manufacturing emissions across 8 key sectors
Pg. 14
Presenting 5 priority action areas that manufacturers could

4. Opportunity areas for net-zero pursue to realise net-zero emissions, and key enabling Pg. 22
manufacturing technologies
Providing a) net-zero context for the 8 manufacturing sectors,

5. Appendix b) methodology and c) summary of Made Smarter benefits Pg. 29
analysis
Copyright © 2020 Accenture All rights reserved. 2

CONTENTS 1. Executive summary
2. Net-zero ambition
3. UK Manufacturing emissions
4. Opportunity areas for net-zero
manufacturing
5. Appendix

EXECUTIVE SUMMARY
Manufacturing is a major contributor to UK greenhouse gas emissions (15%)1; a clear roadmap for the
sector will be critical in meeting the UK government’s net-zero commitment
Setting the Scene (Chapter 2) Findings and Recommendations (Chapters 3-4)
• In spite of widespread awareness of climate change, emissions • To understand implications of net-zero for manufacturing, we first
continue to rise; 50% of total global GHG emissions have been released analysed Scope 1 emissions for 8 sectors (based on ONS data)
since 1990. The UK contributes 1.1% of total annual GHG emissions
• In order of largest emissions these sectors included; Energy, Materials,
• The Paris Agreement aims to cap global warming rise to “well below 2°C Construction, Food & Drink, Transport, Textiles, Pharma and Aerospace
above pre-industrial levels” and pursue efforts to limit the increase to
• Manufacturing is the third-largest direct GHG emitting sector of the
1.5°C, with the expectation that developed countries lead by example
economy at 15%, on par with Transport (after consumer expenditure,
• Since 1990, the UK has cut its GHG emissions by 42%; at the same time 25% and energy supply, 18%)
as the economy has grown by two-thirds; largely due to shift to low-
• Key actions for manufacturing to deliver net-zero:
carbon energy (natural gas and renewable energy)
1. Deliver operational efficiencies (e.g. process efficiency and
• Yet when we consider indirect emissions it’s a different story; the UK is
optimisation, demand management, equipment monitoring; end
the largest net importer of emissions per capita globally
to end visibility of GHG emitted)
• With the Committee on Climate Change recommendations passed into
2. Decarbonise heat and power (e.g. electrification, renewables,
law, the UK became the first major economy to commit to net-zero
heat capture and reuse, hydrogen fuel etc.)
• This commitment will require major structural changes to UK industry
3. Optimise design and materials (e.g. material efficiency and
(inc. policy on imports) as well as household behaviour change
weight reduction, waste reuse and closed loop engineering)
• Whilst net-zero is an important signal, industry has yet to adequately
4. Improve logistics and transport (e.g. fleet electrification)
respond. There is a lack of understanding of what net-zero means, what
the sector pathways look like, and the required policy changes 5. Invest in GHG removal and compensation (e.g. CCUS, offsets)
• This work sought to explore: How can Made Smarter align with the • As a next step, manufacturers could collaborate to define sector-
government’s commitment for net-zero emissions by 2050? specific roadmaps to achieve net-zero, incl. interim targets, required
rate of change, solutions to deliver and viability
Copyright © 2020 Accenture All rights reserved. 1 Data from the Office of National Statistics. Manufacturing is 15% of total UK Scope 1 emissions (2017). See pg. 16 for sectoral breakdown 4
manufacturing
5. Appendix

GLOBAL CLIMATE CHANGE
Action is needed to reduce emissions, to keep warming below 1.5°C and stay in planetary boundaries
Figure 1: IPCC graphic to show trajectory towards 1.5 °C
GHG’s continue to rise despite rising awareness and the Paris Agreement
• 50% of total global GHG emissions have been released since 1990 (Global Carbon Atlas)
• 15 countries contribute a total of 72% of global carbon emissions, led by China with 27.2%, followed by
the USA at 14.6%. The UK contributes 1.1%
• Emissions from all fossil fuels increased in 2018, to a historic high of 33.1 Gt CO2, with coal contributing
10 Gt CO2 for the first time (IEA). Global emissions have risen 1.5% per year for the last decade (UNEP)
• The Paris Agreement implies global net-zero emissions in the second half of this century, with the
emphasis on developed economies to lead by example, setting and achieving ambitious targets
• Policy leadership, alongside private sector support for decarbonisation and growing consumer awareness
is clear; however this is yet to translate into meaningful emissions reduction at a global level.
Figure 2: A view of the 9 Planetary Boundaries (PIK)

We have crossed 4 planetary boundaries, risking the integrity of Earth’s systems
• The Stockholm Resilience Centre identified 9 planetary boundaries that define the limits within which
humanity can continue to live and thrive; 4 planetary boundaries have already been crossed
• Climate Change and Biosphere Integrity are “core boundaries”, meaning that altering either of these
systems has a high potential to drive the Earth’s system into a new state; both have already been crossed
• The defined planetary boundary for climate change is 350ppm CO2 – at the time of the research, CO2
levels were at 396ppm
• Within the IPCC 2°C scenario, by 2100 the UK will suffer from: a 3.3°C temperature increase, most severe
during summer months; 15% less water access; 70cm sea level rise - impacting 2.6 million people (CCC)
Copyright © 2020 Accenture All rights reserved. Figures: IPCC Special Report: Global Warming of 1.5°C; Global Carbon Atlas, 2017; Planetary Boundaries: Guiding human development on a changing planet – Stockholm Resilience Centre; 6
Sources: Net Zero – The UK Contribution to Stopping Global Warming; Visual Capitalist; Potsdam Institute for Climate Research Impact; IEA Emissions; UNEP
UK EMISSIONS PROGRESS
Driven by a shift in the energy mix away from coal, the UK has cut emissions by 42% since 1990
Figure 3: UK greenhouse gas emissions vs GDP The UK has decoupled GDP growth from GHG emissions since 1990
• Since 1990, the UK has cut its GHG emissions by 42%, while during the same time period, the economy
has grown by two thirds. This dynamic is partially explained by the offshoring of manufacturing, as due
to emissions ‘imported’, household emissions have stayed stable for 20 years (see Figure 5, pg. 11)
• Over this 20-year period, the underlying improvement in the carbon intensity of economic output in
the UK, at around 2%/year, has been greater than both the world and the EU as a whole (CCC)
• UK progress has been supported by continually adjusted emissions targets:
• 2003: 60% reduction by 2050;
• 2008: 80% reduction by 2050;
• 2019: 100% reduction – net-zero – by 2050
Figure 4: UK energy use by source The UK energy mix has shifted away from highly-polluting coal
• Emissions from electricity generation have fallen by 50% since 2013 and 64% since 1990
• This has been driven by the shift away from thermal coal, which has reduced by 85% since 1990,
supplying just 5.3% of grid-power in 2017 (Carbon Brief)
• Natural gas generation has increased 47% since 1990, largely replacing coal. The carbon emission
intensity of natural gas is almost half that of coal (Volker and UK Gov Conversion Factors)
• Renewable energy (wind, solar and hydro) supplied 26.5% of UK energy in 2019, its highest ever share
• Bioenergy has grown 21 fold since 1990 and provides 8.3% of UK energy
• Decarbonising electricity generation is a key enabler of net-zero for the UK as a whole, and for UK
manufacturing, the electrification of heat, transport and industrial processes
Figures: Net Zero – The UK Contribution to Stopping Global Warming; Carbon Brief
Copyright © 2020 Accenture All rights reserved. Sources: Net Zero – The UK Contribution to Stopping Global Warming; Total GHG emissions (% change from 1990) Country Ranking (World Bank estimates from original source); 7
Volker; UK Gov Conversion Factors; IEA Emissions; Carbon Brief; ONS The decoupling of economic growth from carbon emissions: UK evidence; BEIS Smart Meter Statistics
BARRIERS TO SUCCESS
The UK’s “imported” emissions have increased, while progress to reduce emissions varies by sector
Figure 5: UK GHG emissions associated with consumption Absolute UK territorial emissions have fallen since 1990; less so consumption emissions
(in green) DEFRA
• UK per-capita emissions (i.e. emissions generated within the UK, per person) are now close to the global
average at 7-8 tCO2e/person (8.8tCO2 e in 2017), having been over 50% above in 2008
• The UK ranks higher than China (7tCO2 per capita), but is 3x the level in India (1.8tCO2)
• However, the true UK carbon footprint is more complex, once it accounts for “imported” consumption
emissions (i.e. goods produced elsewhere) and citizen’s behaviour
• GHG emissions from imports rose 61% from 1997 to 2007, where they peaked. In 2016, UK consumption
emissions were estimated at 355 MtCO₂e, higher than UK production emissions (DEFRA)
• The CCC target is for UK per-household emissions to reduce from 8.8tCO2 e in 2017 to 1.2tCO2 e by 2050
Territorial emission reduction varies hugely by sector, with quick wins largely realised
Figure 6: UK sector emissions 1990 – 2017 (CCC)
• While UK emissions have reduced relative to 1990, evaluating sector by sector emissions or
incorporating imported emissions, reveals a number of emerging challenges
• Some sectors are simply much harder to abate. For example, Transport is now the largest source of UK
GHG emissions (23% of the total) and saw emissions rise from 2013 to 2017
• Agriculture is another example (livestock production releases nitrous oxide, methane and CO2).
Emissions have been broadly flat over the last decade, suggesting stronger policy levers are required
• Industry emissions, according to CCC, have decreased by ~50% since 1990, having been largely driven
by the offshoring of industry that is energy- and emissions-intensive. Note that the CCC (BEIS)
definition of “industry” excludes buildings and transport used by business therefore is a subset, and the
rationale for using ONS data for deeper analysis (see Chapter 3)
Figures: Net Zero – The UK Contribution to Stopping Global Warming; DEFRA

Copyright © 2020 Accenture All rights reserved. Sources: Net Zero – The UK Contribution to Stopping Global Warming; Total GHG emissions (% change from 1990) Country Ranking (World Bank estimates from original source); 8
ONS The decoupling of economic growth from carbon emissions: UK evidence; BBC: UK Carbon Emissions; DEFRA – UK Carbon Footprint; Guardian
NET-ZERO BY LAW
Net-zero is an ambitious target that demonstrates the UK’s commitment to global climate leadership
The UK became the first major economy to commit to net-zero emissions by law
• Net-zero emissions means “that the total of active removals from the atmosphere offsets any
remaining emissions from the rest of the economy” (The Committee on Climate Change ‘CCC’)
• The ambition was recommended by the CCC and was passed into UK law in 2019, making the UK the
first major economy to make this level of commitment. 69 countries have now committed to net-zero
by 2050, including 4 out of the G20, while 2 countries have already achieved net-zero
• Net-zero is the “highest possible ambition” of the Paris Agreement. Key facets of UK net-zero include;
• Ambition is legislated in the Climate Change Act;
• All GHGs accounted for in legislation, not just CO2;
• Must be achieved without International Offsetting;
• Emissions counted must include international aviation and shipping.
Figure 7: CCC future emissions projections (Further Scenario)
towards achieving net-zero The UK CCC suggests net-zero now has same cost as 80% reduction (the “Core Scenario”)
• Net-zero raised the ambition beyond the previous 80% reduction target, influenced by the progress to date,
and lowering cost, availability and efficiency of key disruptive technologies
• The report sets out 3 scenarios that represent varying levels of ambition:
• The Core Scenario – 80% reduction to 193 MtCO2e; the Further Ambition – 95% reduction to 35
MtCO2e; and the Speculative Scenario – 100% reduction and 0 MtCO2e “net zero”
• In the Further Ambition scenario, industry is expected to produce residual emissions by 2050 that
will require additional CO2 abatement from a mix of solutions e.g. CCS and afforestation
• The conclusion from the CCC report is that net-zero is necessary (to respond to evidence of climate change
and meet this Paris Agreement), feasible (with wider understanding and availability of technologies) and
cost effective (based on anticipated fall in cost of key technologies e.g. EV batteries and offshore wind)
Copyright © 2020 Accenture All rights reserved. Figures and sources: Net Zero – The UK Contribution to Stopping Global Warming 9
NET-ZERO INVESTMENT CASE
Net-zero requires high investment and a major shift in industry use of electricity, heat and materials
Figure 8: Changes in cost estimates for emissions goals The UK Committee on Climate Change estimates the cost will be 1-2% GDP to 2050
GHG target Year and Annual cost • To achieve net-zero by 2050, the UK requires a 9.7% annual decarbonisation rate, significantly higher
(relative to report estimated
than the current rate of 3.7%, with annual costs of up to 1.5% of GDP per year (CCC)
1990) for 2050
60% reduction 2003 - Energy 0.5 - 2.0% of
• Some costs will accrue to Government (e.g. subsidies and increases in capital expenditure), while some
in CO₂ (~55% White Paper GDP costs will be passed onto consumers and businesses, particularly to cover large upfront investment
reduction in
GHG) • Innovation and falling technology costs mean that the UK's 80% emissions target could be met at a
lower cost than estimated in 2008 – under 1% of GDP in 2050, rather than 1 – 2% of GDP (see figure 8)
80% reduction 2008 - Building 1 - 2% of GDP
in GHG a low-carbon • Expected benefits include improved air and water quality, biodiversity, and climate change resilience
economy
100% reduction 2019 – UK CCC 1 - 2% of GDP
in GHG report
Industry requires a rapid shift in electricity, heat and efficiency to achieve net-zero
Figure 9: The role for electrification in Further Ambition
• The CCC predicts that industry will be the third most polluting sector in 2050, behind aviation and
agriculture. Industry emissions forecasts for 2050 equate to 45 MtCO2e in the Core Scenario; 10 MtCO2e
in the Further Ambition and 0 MtCO2e in the Speculative (net-zero) scenario
• Net-zero requires a drastic shift in the energy use of industry. This is estimated to cost around
£120/tCO2e, equivalent to an annual cost of £5-10bn per year
• This will pose a risk to some sectors, such as steel, which could become uncompetitive internationally and
dependent on government support; the risk is greater if other countries do not make similar commitments
• As a minimum, decarbonisation requires a combination of using less energy per output, as a result of
improved efficiency and using different, lower-carbon energy, through electrification, hydrogen etc. The
role of electrification in the Further Ambition scenario is shown in figure 9
• Yet meeting net-zero will require interventions to move beyond operational efficiency and low carbon
heat and power to also focus on land use, optimising design and materials, logistics etc.
Copyright © 2020 Accenture All rights reserved. Figures: Net Zero – The UK Contribution to Stopping Global Warming 10
Sources: Energy Live; Net Zero – The UK Contribution to Stopping Global Warming; UK to go further and faster to tackle climate change
CCC: CONDITIONS FOR NET-ZERO SUCCESS 1/2
Decarbonising electricity, heating and transport can lower industry emissions to achieve net-zero
Condition for success Overview Key interventions
REDUCE • Government to support a framework for UK industrial • Sectoral agreements and border tariff adjustments can reduce
INDUSTRY decarbonisation, understanding that offshoring of industry will risk of competitive disadvantage
EMISSIONS, contribute to global emissions
• Creating a low-carbon market can allow the UK to become a
NOT OFFSHORE • High upfront cost expected, likely to be taken on by UK taxpayers leader in low-carbon goods production
SCALE • Electrification is key to reducing emissions, notably across • Strong deployment of cost-competitive solar and wind in early
DECARBONISED transport, buildings and industry 2020s will be beneficial
ELECTRICITY • Increasing the ability of the grid to store energy, alongside • Accelerate the rate of electrification by adding flexible load
SUPPLY renewable capacity, could help to reduce costs and drive scale infrastructure, in the form of EVs and hybrid heat pumps
• Improving the energy efficiency of households is necessary, inc. • A strategy must be developed in 2020 that includes standards on
DECARBONISE smart meters, improved insulation and switching from gas energy efficiency, plans for the phasing out of fossil fuel heating
UK HEATING
SYSTEMS • New build homes must have low-carbon heating and energy • Focus on upskilling the workforce is critical, as is collaboration
efficiency, in line with the Future Homes standard between government, industry, business and households
• Transport is a hard-to-abate industry that is currently the UK’s • Policy that provides the sector with firm, legally binding targets
largest contributor of emissions will give confidence and certainty to manufacturers
ACCELERATE • Lifetime costs of EVs will reach parity, without subsidy, by the • Financial incentives to support EV market growth in the near term
ELECTRIC mid-2020s from a whole life costs perspective must be maintained
VEHICLE ADOPTION • EV sales make 2.5% of annual automotive sales; bringing forward • Charging infrastructure must be scaled and monitored, located
the EV switchover earlier than 2040 will lead to lower GHG strategically to enable consumer ease and speed
emissions in 2025 and be financially beneficial to the UK • Trials of zero-emission HGVs to be planned/scaled in early 2020s
Copyright © 2020 Accenture All rights reserved. Summarised from Net Zero – The UK Contribution to Stopping Global Warming 11
CCC: CONDITIONS FOR NET-ZERO SUCCESS 2/2
Targeted solutions for hard-to-abate sectors, alongside carbon abatement tech, are key to success
Condition for success Overview Key interventions

• Large scale changes in land-use, for example afforestation from
• A future land strategy must deliver UK climate goals 13 to 19%, restoring peatlands and agriculture diversification are
REDUCE expected to drive large emissions reductions
AGRICULTURE • Low-carbon practices within current land-use patterns can drive
small GHG reductions; more significant reductions will be • Incentivising healthier and more sustainable eating habits among
AND LAND households can support this change
achieved by land-use changes. The challenge will be to maintain
EMISSIONS
per-capita production using less land • Low-carbon farming practices are key; land managers will need
supporting to transition to alternative land use
• Long term targets for international aviation emissions in line with
• The growth in demand of air travel – assumed to grow 60% by the Paris Agreement
SET LONG TERM 2050 vs 2005 levels – will further challenge net-zero. Lack of
GOALS FOR consensus on need to disincentivise air travel to meet target • A package of measures will be required, including carbon pricing
AVIATION AND and the funding of removals by aviation. Taxes are currently being
• The largest emissions reductions are expected to come from new debated (e.g. on jet fuel, frequent flier tax etc.)
SHIPPING
technology and improved aircraft design
• Alternative energy (e.g. biofuels, battery/hydrogen in shipping)
EXPLORE • Setting a broadly applicable carbon price can reward less carbon
• The hard-to-abate industries need to reduce emissions and intensive behaviour
FUNDING
simultaneously fund removals, providing a financial incentive
OPTIONS FOR for emissions to be as low as possible • Revenues generated from carbon price fees could be used to fund
CO2 REMOVAL GHG removal initiatives/subsidies
• CCS is identified as a necessity for achieving net-zero – with the • CCS requires the deployment of capital intensive CO2 storage and
ambitious CCC scenario requiring 175MtCO2 capture transfer infrastructure that enablers the sharing of capacity
SCALE CARBON between users e.g. with a focus on building CCS around key
CAPTURE AND • For CCS to scale there needs to be a reduction in technology cost industrial clusters like Humberside
STORAGE (CCS) • The lack of CCS at scale in the UK and the importance of its role in • CCS and the scaling of hydrogen production notably for industry,
net-zero, mean that investment in the early 2020s is a priority are linked and should scale in tandem
Copyright © 2020 Accenture All rights reserved. Summarised from Net Zero – The UK Contribution to Stopping Global Warming 12
manufacturing
5. Appendix

SECTOR EMISSIONS: ANALYSIS OVERVIEW
We have analysed eight manufacturing sectors to understand current domestic emissions
Purpose Limitations
Analysis was conducted to determine the relative emissions profiles of It is important to acknowledge three limitations of the source data, and
hence analysis whilst reviewing the results:
key manufacturing sectors in order to derive actionable, sector-
specific insights for manufacturers to reach net-zero
Value chain interconnection
Source data Direct manufacturing process emissions only account for a
• Given that the CCC and Office of National Statistics (ONS) industry small amount of embodied emissions vs. materials
definitions and emissions scopes are inconsistent, they cannot be used production, but have great influence on materials
in combination consumption and downstream use emissions, so should be
considered in the context of the wider value chain (not in
• To fulfil requirements for sub-sector level disaggregation (to enable
isolation)
actionable insights) and alignment with previous Made Smarter
research, ONS data was selected as the basis of this analysis
Neglected offshore emissions
Scope
ONS data accounts solely for domestic emissions, but to
• Sectors: In-scope manufacturing emissions are divided into 8 key reach net-zero we need to reduce the full scope of UK
sectors, defined by the Accenture team and aligned with the Made consumption emissions incl. imports. Offshoring impacts
Smarter vision, with some manufacturing sub-sectors left out of scope need to be considered when reviewing GHG/emission
e.g. tobacco, industrial equipment intensity trends
• Sector mappings: The Standard of Industrial Classification (SIC)
hierarchy was used to align ONS data sub-groups to the 8 sectors in ONS sector definitions
scope Research is dependent on ONS sector definitions, which
• Emissions: The focus of this analysis is on Scope 1 emissions; indirect give a good indication of overall scale, but can
emissions from the generation of purchased energy (Scope 2) and simplify/draw artificial lines in order to group
value chain emissions (Scope 3) will be critical, but is not considered in
this analysis

VALUE CHAIN INTERCONNECTION
Emissions intensity of the eight sectors explored should be understood with consideration of the
sector’s position in the overall materials/energy value chain
Primary sector Secondary sector Tertiary sector &
Manufacturing end-use markets
Upstream Oil and Gas
Raw materials production End-product manufacturing
Energy Products Aerospace 8,795 ktCO2e

25,010 ktCO2e Consumer Expenditure
Agriculture, Forestry
and Fishing Transport 2,164 ktCO2e
Materials
21,967 ktCO2e Pharmaceuticals 1,415 ktCO2e
Transport and Storage
Mining and Quarrying Textile 830 ktCO2e
Construction* 13,198 ktCO2e
Food & Drink 667 ktCO2e Wholesale and retail
trade; repair of motor
Other Manufacturing vehicles and
Key
motorcycles
In scope sector
(2017 emissions intensity) Other
Material/energy Electricity, gas, steam + air con. supply Services & Other
flows
Out of scope sector based on Water supply & waste management
ONS SIC
Construction
High emissions footprints in raw material Footprints based on secondary end-

production due to physically/ chemically product manufacturing are lower
energy intensive processes => focus on due to reduced physical/chemical
Emission intensity = GHG / GVA energy sourcing & efficiencies intensity*
Copyright © 2020 Accenture All rights reserved. *with exception of construction, which includes further cement/concrete extraction 15
MANUFACTURING EMISSIONS BY SECTOR
Manufacturing was 15% of total UK GHG emissions in 2017, with the 8 in-scope sectors accounting for
86% of total emissions within this segment
Key takeaways – Total UK emissions 2017 (ONS Data)
• GHG emissions by ONS SIC section shows that manufacturing contributed 15% of emissions in 2017, a total of 86,268 ktCO2e
• Consumer Expenditure, Electricity Supply, Transport and Agriculture are other high emitting sectors that will be important areas of focus for net-zero
Mining and
Consumer expenditure Electricity, gas, steam and air conditioning supply Transport and storage Agriculture, forestry and fishing Other * Construction
quarrying
UK 2017
GHG 25% 18% 15% 15% 9% 5% 4% 4% 3% 2%
Emissions
(%)
Wholesale and
Figure 1: UK GHG emissions breakdown by ONS SIC Section
Manufacturing Water supply;
sewerage, waste retail trade; repair
management and of motor vehicles
remediation activities and motorcycles
Key takeaways – In-scope UK emissions for Manufacturing
• Primary analysis is focused on manufacturing emissions, across the 8 in-scope sectors, accounting for 86% of total manufacturing emissions
• Energy, Materials, Construction (materials) and Food & Drink contributed the most GHG emissions of in-scope manufacturing sectors in 2017
• ONS data shows low UK manufacturing emissions for both Transport and Aerospace – not accounting for high GHGs during the use phase for these sectors
Textile Pharma Aerospace
UK 2017
2% 1%
GHG 29% 25% 15% 10% 3% 14%
Emissions 1%
(%)
Energy Materials Construction Food Transport Out of scope –
and other manufacturing*
Figure 2: UK GHG emissions by in-scope manufacturing sector Drink
Copyright © 2020 Accenture All rights reserved. All data from the UK Office of National Statistics * Out of scope – other manufacturing: manufacturing emissions deemed out of scope for analysis e.g. tobacco, furniture 16
* Other: other is a sum of all ONS SIC Sections that contribute ~5% of GHG emissions in 2017
KEY MANUFACTURING SECTOR INSIGHTS (1/2)
Energy Products and Materials are the two largest GHG polluters of the manufacturing sectors
explored, despite both having significantly reduced their emissions since 2007
Scope 1
Total GHG GHG GVA % Emissions Emissions
Manufacturing emissions Emission % GVA £m change intensity intensity %
Description ktCO2e 2017 vs (2017) ³ 2017 vs ktCO2e per 2017 vs
Sector
(2017) ¹ 2007 2007 £m (2017) 2007
Emissions associated with the manufacturing

Energy
of crude oil and natural gas to manufacture
(refined
petroleum products, gases and chemicals. 25,010 -24% 6,565 -18% 3.81 -7%
hydrocarbon)
Upstream oil and gas exploration, production
products
and power generation not included.
of physical materials which have multiple
Materials end-use functions. This sector includes 21,967 -44% 19,960 -22% 1.10 -29%
plastic, rubber, steel, wood, electronics,
paper and steel.
Construction of materials to be used for construction.
13,198 -24% 5,689 -7% 2.32 -19%
(materials) These include abrasive products, cement,
clay, concrete, glass, lime, plaster and stone.
Food and and processing of food products, including
8,795 -1% 24,706 7% 0.36 -7%
Drink oils, meat, fish, diary, and drinks, both
alcoholic and non-alcoholic.
All data from the UK Office of National Statistics
Copyright © 2020 Accenture All rights reserved. Note that GVA and GHG datasets are available at different levels of granularity. ¹ GHG emissions represented in thousand tonnes of CO2 equivalent 17
² Total value produced by a sector in £m
As such, minor assumptions have been made to enable comparison ³ Emission intensity = GHG / GVA
KEY MANUFACTURING SECTOR INSIGHTS (2/2)
Transport and Aerospace manufacturing emissions have increased since 2007, in line with increasing
GVA, whilst Textile and Pharma emissions have declined
Scope 1
Total GHG GHG GVA % Emissions Emissions
Manufacturing emissions Emission % GVA £m change intensity intensity %
Description ktCO2e 2017 vs (2017) ³ 2017 vs ktCO2e per 2017 vs
Sector
(2017) ¹ 2007 2007 £m (2017) 2007
Emissions associated with the manufacturing,

Transport building and repairs of motor vehicles, boats 2,164 10% 18,552 28% 0.12 -14%
and other transport equipment.

Textile of textiles, apparel, leather and related 1,415 -31% 5,562 -20% 0.25 -13%
products and furniture.

Pharma of pharmaceutical products and 830 -35% 13,123 -21% 0.06 -18%
preparations.
A combination of emissions related to the
manufacturing, repair and maintenance of
Aerospace 667 22% 10,064 47% 0.07 -17%
aircraft (including spacecraft) and related
machinery.
¹ GHG emissions represented in thousand tonnes of CO2 equivalent

All data from the UK Office of National Statistics ² CO2 emissions in thousand tonnes of CO2
Copyright © 2020 Accenture All rights reserved. Note that GVA and GHG datasets are available at different levels of granularity. 18
³ Total value produced by an sector in £m
As such, minor assumptions have been made to enable comparison
UK MANUFACTURING GHG EMISSIONS
Manufacturing emissions from the eight key sectors have decreased 29% since 2007, driven by
offshoring, a changing energy mix and improved efficiencies
40,000 Key Takeaways
• Manufacturing emissions from in scope

35,000 sectors have decreased 29% on average since
2007, at an average annual reduction of -
3.4%
• Materials has seen the biggest reduction,
GHG Emissions (ktCO2e)
30,000
down 44% , -5.6% per year, since 2007,
driven by major plant closures (e.g. Redcar
steelworks in 2015 etc.) and offshoring
25,000 Energy
• Energy (products) manufacturing remains
Materials the largest contributor of CO2e – over the
past 10 years emissions reductions have
Construction slowed following the rapid decline driven by
15,000
initial reduction of coal power
Food and Drink • Transport (1% per year) and Aerospace (2%
Transport per year) emissions have increased since
10,000
Textile 2007. Manufacturing emissions in these
Pharma sectors are low relative to value chain impact
Aerospace • Construction (materials) manufacturing
0
0 emissions have decreased overall, but
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
increased slightly since the 2008 recession
Copyright © 2020 Accenture All rights reserved. Sources: 1. The Guardian; 2. Civitas ¹ CAGR: this represents the compound annual rate of change in GHG emissions from 2007 – 2017 per sector
19
UK MANUFACTURING EMISSION INTENSITY
Manufacturing emission intensity¹ has reduced by an average 15% across sectors, at a rate of -1.6% per
year, since 2007. However the pace of change is too slow and has been largely driven by quick wins
5
Key Takeaways
• Emission intensity has improved across all
sectors, however the pace of change is too
slow to meet net-zero ambition
4
• Initial materials processing sectors are more
Energy
emissions intensive than later production
Emissions Intensity
• Following a large reduction between 1990 and

2007, during which quick wins were realised,
3 the improvement of emission intensity of
Energy has slowed between 2007 to 2017
• Emission intensity of all industries has
Construction improved since 2007. This is led by
manufacturing in Materials (29%), Construction
(materias) (19%) and Pharma (18%), with Food
1
Materials and Drink notably lagging with just a 7%
improvement
Food and Drink
Textile • Aerospace GVA has grown 47% whilst
Transport improving emission intensity by 17%, reflecting
Aerospace a shift if the type of manufacturing done in the
0 UK (e.g. more focus on assembly), with high
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Pharma emitting upstream activities largely overseas
¹We calculate the emissions intensity of a certain sector by dividing it’s GHG emissions by its GVA to get a ratio of
Copyright © 2020 Accenture All rights reserved. kgCO2e/£ value generated (to account for sector growth/contraction bias 20
²CAGR: this represents the compound annual rate of change in Emission Intensity from 2007 – 2017 per sector
manufacturing
5. Appendix

REACHING NET-ZERO
Manufacturers have two key responsibilities in reaching net-zero; reducing their direct operational
footprint and influencing the reduction of their indirect emissions
Key net-zero responsibilities for UK manufacturers:
Reach ‘net-zero’ operations Reach a ‘net-zero’ supply chain
Reduce direct emissions (Scope 1) and emissions Exert influence to reduce indirect upstream and
associated with the generation of purchased energy downstream value chain emissions to zero
consumption (Scope 2) to zero
Scope 1
Key focus for our research in this section
Scope 3
Critical area, but a secondary focus in this research
Scope 2 (needs further consideration of indirect levers e.g. offshoring, policy, etc.)
Primarily addressed by the power sector

OPPORTUNITIES FOR NET-ZERO MANUFACTURING (1/2)
There are 5 priority action areas that manufacturers can pursue to realise net-zero emissions
Direct operations “Scope 1” GHG emissions
1. DELIVER 4. IMPROVE 5. INVEST IN GHG

2. DECARBONISE 3. OPTIMISE DESIGN
OPERATIONAL LOGISTICS AND REMOVAL AND
HEAT AND POWER AND MATERIALS
EFFICIENCIES TRANSPORT COMPENSATION
Indirect operations “Scope 2/3” GHG emissions
EXPLORE ECOSYSTEM OPPORTUNITIES INFLUENCE POLICY & REGULATION
ENCOURAGE CONSUMER BEHAVIOUR CHANGE DEVELOP NEW BUSINESS MODELS

OPPORTUNITIES FOR NET-ZERO MANUFACTURING (2/2)
Manufacturers should focus efforts in their direct operations to achieve net-zero (“Scope 1”), as well
as support wider sustainability initiatives in their indirect operations (“Scope 2 or 3”)
Direct operations “Scope 1” GHG emissions
1. DELIVER 4. IMPROVE 5. INVEST IN GHG

2. DECARBONISE 3. OPTIMISE DESIGN
OPERATIONAL LOGISTICS AND REMOVAL AND
HEAT AND POWER AND MATERIALS
EFFICIENCIES TRANSPORT COMPENSATION
• Process efficiency • Renewable energy • Material efficiency & • Fleet electrification using • Carbon capture, utilisation
• Process monitoring, generation & sourcing e.g. weight reduction battery-electric vehicles & storage
predictive analytics & wind, solar, bioenergy • Waste reuse i.e. symbiosis and hydrogen fuel-cell • Afforestation
optimisation • Electrification of buildings & use of by-products electric vehicles • Offsetting schemes
• Simple equipment retrofit & manufacturing • Closed loop engineering • Improved logistics
e.g. for LED lighting • Energy/heat capture & • New material innovations planning
• Building and plant reuse, storage e.g. biological/smart • Demand forecasting
upgrade (capex) for best • Hydrogen fuel materials
available technology
• Demand side response
Indirect operations “Scope 2/3” GHG emissions
• Explore ecosystem opportunities e.g. support suppliers to decarbonise, new processes/infrastructure to boost recycling, full lifecycle design (cross-value
stream), circular economy etc.
• Encourage consumer behaviour change e.g. reduce plastic packaging and promote/simplify recycling, phase out carbon-intensive products etc.
• Influence policy & regulation e.g. support energy efficiency targets, carbon market rules; influence carbon pricing, EV market stimulus, domestic offsetting etc.
• Develop new business models e.g. product life-extension, product substitution, remanufacturing etc.
Copyright © 2020 Accenture All rights reserved. Opportunities not exhaustive 24

KEY SECTOR INSIGHTS (1/2)
Initial action areas based on secondary research and input from Accenture industry experts
Sector Key sector GHG drivers Suggested action areas

1. Optimise energy efficiency of processes
1. Energy demands of high temperature processes
2. Decarbonise energy mix with a combination of
2. Reliance upon high-carbon energy sources
Energy 3. Low proportion of renewable feedstocks
renewables, hydrogen and effective heat capture
(products) 3. Use low or carbon neutral feedstocks
4. GHGs produced as by-products from production
4. Capture and offset GHG emissions from high-
processes
polluting activities
1. GHG emissions from intensive processes 1. Improve energy efficiency and heat recovery
2. Heat and mechanical processes powered by fossil 2. Electrify bulk materials production and explore
fuels lower carbon methods for steel production
Materials 3. Materials over-consumption due to over- 3. Enable product redesign for material efficiency
specification 4. Leverage recycled steel
4. Virgin material production 5. Invest in GHG removal and compensation
1. Cement production hard to abate 1. Optimise on-site space/water heating

Construction 2. Energy intensive virgin materials production 2. Explore lower carbon substitutes for cement
(materials) (furnace temperatures) manufacturing
3. Materials inefficiency due to overspecification 3. Invest in research and lead in development of CCS
1. Demands for energy intensive processes and

1. Optimise energy efficiency and reduce refrigerant
inefficient technology
losses
Food and 2. Demands for temperature specific processes and
2. Shift energy mix, focused on electrifying heat for
Drink inherent carbon
mid-temp activities
3. Global supply chain and emission intensity of air-
3. Source locally; optimise logistics for low-carbon
freight and inefficient food storage

KEY SECTOR INSIGHTS (2/2)
Initial action areas based on secondary research and input from Accenture industry experts
Sector Key sector GHG drivers Suggested action areas

1. High energy demands per vehicle; scope to
1. Focus on optimising energy efficiency
improve energy efficiency
2. On-site renewable energy generation to power
2. Non-renewable energy supply (i.e. insufficient on-
activities
Transport site generation)
3. Focus on design to reduce resource demands
3. Product design that increases downstream
4. Improve and optimise supply chain logistics within
emissions
transport manufacturing
4. Emissions from inefficient supply chain logistics
1. Labour and energy intensive processes 1. Optimise energy efficiency of key high-energy
2. High energy requirements for manufacturing processes
processes e.g. spinning, dyeing 2. Change energy mix to low carbon options, exploring
Textiles 3. High embedded emissions in materials (esp. on-site production
cotton and polyester) 3. Adjust raw material inputs to low carbon alternatives
4. High volumes of waste from over-supply at 4. Optimise demand management to drive GHG and
manufacturing and imprecise demand forecasting cost savings
1. Leverage digital technology to optimise machine
1. Energy inefficient manufacturing (e.g. temperature
efficiency and product quality
and humidity controls)
Pharma 2. High energy use and lack of heat recovery
2. Decarbonise electricity and heating of plants
3. Create smart supply chains that reduce waste and
3. Poor demand management and high product waste
enable on-demand manufacturing
1. Hot/heavy industrial production processes e.g. 1. Optimise intensive production processes
forging, hot-pressing etc. 2. Improve design and testing to optimise in-use fuel
Aerospace 2. High aircraft mass / design decisions resulting in efficiency
in-use fuel inefficiencies 3. Simplify supply chains and improve part forecasting
3. Extended complex supply chains; high footprint 4. Invest in GHG removal and compensation

ENABLING 4IR TECHNOLOGIES FOR NET-ZERO (1/2)
Accenture developed a framework of enabling technologies, across Digital, Physical and Biological
categories, that can be applied by manufacturers across in scope sectors to achieve net-zero
DIGITAL PHYSICAL BIOLOGICAL

Technologies based on computer, Technologies based on basic properties of Technologies based on biological aspects,
electronics and communication sciences, materials, energy, forces of nature and their including, biological systems and living
harnessing data and connectedness interactions organisms
Energy harvesting (heat): capture heat / energy

from high temperature processes
M2M comm.: connected data and analytics to
Carbon Capture and Storage: direct carbon Bio-energy: on-site bio-energy to replace
Energy enable optimised machine efficiency and
capture from high GHG processes heating
energy use
Hydrogen technologies: on-site hydrogen power
for high temperature processes
Internet of Things: embedded sensors to Hydrogen technologies: hydrogen substitution for

Bio-based materials: manufacturing of new,
drive machinery energy savings coke in steel production
Materials low carbon materials to replace current inputs
Machine vision: enable more efficient Electric furnaces: solution for scrap steel reuse and
or final product
recycling to displace virgin material inputs clean blast furnace alternative
3D printing: new construction manufacturing

Building Information Modelling (BIM): digital
techniques with new materials
representation of buildings to test new, low Bio-based materials: alternative, low-carbon
Construction Heat pumps: more efficient alternatives that
carbon designs material inputs to reduce manufacturing
(materials) combustion for high-temp activities
Big data analytics: retrofit existing emissions e.g. clinker alternatives
Carbon Capture and Storage: direct carbon
manufacturing and buildings for efficiency
capture from high emission activities e.g. cement
Hydroponics and aeroponics: local and year-

Internet of Things: connected devices to Heat pumps: reduce emissions from heat
round food production using indoor farming
Food and measure efficiency e.g. in refrigeration demanding processes (e.g. baking)
Genetic engineering: bio-tech in
Drink Blockchain: improved product information on Energy harvesting: recover heat from industrial
manufacturing can reduce emissions and
emissions in supply chain and shelf life processes
enable behaviour change (e.g. stem cell meat)

ENABLING 4IR TECHNOLOGIES FOR NET-ZERO (2/2)
These enabling technologies will significantly support organisations, across all five of the key
opportunity areas, from operational efficiency to GHG removal to achieve net-zero
DIGITAL PHYSICAL BIOLOGICAL

Technologies based on computer, Technologies based on basic properties of Technologies based on biological aspects,
electronics and communication sciences, materials, energy, forces of nature and their including, biological systems and living
harnessing data and connectedness interactions organisms
Energy storage (batteries): on site energy

Bio-energy and CHP: on-site bioenergy,
Internet of Things: ensure connected machines storage of electricity, coupled with
alongside other renewable sources (e.g. solar)
Transport to enable better maintenance and long term manufacturing focus on battery tech
and combined heat and power to drive
efficiency EVs and hydrogen transport: innovate to shift
decarbonisation
manufacturing from combustion cars
AI: predictive analytics to better understand Robotics: target labour intensive process and
demand and improve efficiency replace with automated solutions that can meet Bio-based materials: innovative new material
Textile Digital Twin: use digital connectors e.g. thread on-demand manufacturing needs inputs can reduce life-cycle emissions and
to drive transparency and improve supply chain Chemical recycling: advance technology to impact in fashion
logistics increased recycled content in fashion
AI: identify inconsistencies in processes and

Nano-technology: innovate and develop new
enable high quality, adaptable manufacturing Genetic engineering: develop new products
product ingredients that are low carbon
Pharma for personal dosage that meet consumer demand and reduce
Material science: further innovation to improve
Internet of Things: connected machines to emissions
product shelf life, reduce waste
increase productivity, reduce downtime
Carbon Capture and Storage: deploy CCS

Internet of Things: retrofit heavy capital infrastructure at scale to reduce downstream
Bio-energy: on-site energy production, as well
equipment with sensors to measure key factors impact
Aerospace as opportunities for bio-fuels to reduce use
Digital PLM: real time visibility and insights to Energy storage: efficient heating and heat
phase impact
improve manufacturing capture for hot processes; innovative battery
technology solutions

APPENDIX
1. NET-ZERO CONTEXT FOR MANUFACTURING SECTORS
2. ANALYSIS METHODOLOGY
3. MADE SMARTER BENEFITS ANALYSIS

SECTOR CONTEXT: ENERGY
Despite the contraction of the UK refining sector, it is still the most emissions intensive
Sector profile & emissions footprint Sector characteristics & insights
GVA £6,565m • The sector still produces most CO2: emissions have increased since 2014
• GVA has increased: While GVA has increased vs 1990 levels, it has decreased
Emissions intensity 3.81
since its peak in 2007. The sector has a high emission intensity that has
GHG emissions 25,010 (thousand tonnes of CO2 eq.) improved over time, down from 12 in 1990 to 3.81 in 2017. Improvements
have largely stalled since 2007, with just a 7% decrease
Breakdown of Energy (products) sector emissions by sub-sector (ONS, 2017) • Yet UK energy manufacturing is declining: e.g. petroleum refining
25,010
contracting by -4.2% YoY 2014-2019, while wider economic uncertainty limits
growth. This near-term risk is limiting investment in future technologies
Sector net-zero challenges

• High energy intensity of industrial processes: driven by high-temperature
demands over long time periods. These requirements mean that solutions
14,333
require longer lead times, higher costs, more extensive R&D and testing
• Lack of sufficient incentive for private investment: particularly in the
petroleum refining sector. Due to questions over commercial readiness of
ktCO2e
decarbonisation technologies, high costs and limited motivation for

innovation due to depreciated asset base
• Adaptation barriers: High temperature processes not suited to electrification
due to cost; hard to retrofit existing infrastructure to capture by-products
6,631
Key sector GHG drivers (indirect italicised)
2,277 Energy demands of high temperature processes

1,767 2 Reliance upon high-carbon energy sources
Energy Total Refined Petrochemicals Industrial Coke oven Processing of Low proportion of renewable feedstocks
petroleum gases and non- products nuclear fuel
products nitrogen-based GHGs produced as by-products from production processes
inorganic
chemicals
Downstream demand for high GHG products

SECTOR ACTION AREAS: ENERGY
Main actions are to improve energy efficiency, capture waste heat and use renewable feedstocks
Key sector # Sector recommendations Rationale and detailed recommendations Enabling
CO2 drivers to reach net-zero technologies
Direct operations (core actions)
Energy 1 Optimise and • EU Research has found that energy efficiency technologies, e.g. for petrochemicals, • Optimised
DELIVER
demands of OPERATIONAL increase energy could reduce GHG emissions by 14.7% in absolute terms by 2050 (vs 2013) 1 efficiency
high EFFICIENCIES
efficiency of • Efforts to redesign processes to reduce energy demand, improve efficiency and tools: M2M
temperature processes reduce costs are critical. An example here could be adopting hybrid schemes for connectivity,
processes
distillation (i.e. where distillation and membrane modules are combined) that are digital twin,
integrated into wider plant operations2 IoT, AI
• Change motive power from steam to electricity to reduce combustion needs (both • Energy
for heat exchangers and also for turbines and pumps on the refinery) management
• Make process/catalyst improvements e.g. WHPE (Welded Plate Heat Exchangers) tools
can extract more of the heat available in process heat integration schemes
• Explore ISO 50001 certification for more efficient refinery energy management
Reliance 2 Decarbonise • Decarbonise on-site electricity and heat generation, to enable low-carbon heating • Improved end-
upon high- DECARBONISE
energy mix with a for high-temperature processes (in the longer term explore on-site hydrogen power) use tech via
HEAT & POWER
carbon combination of • Waste heat recovery from high-temperature processes, using heat recovery units, IoT
energy renewables, can capture 20-50% of industrial energy usage that is eventually released as heat3 • Process
sources
hydrogen and • Recovered heat and energy can be electrified for low-temperature activities, electrification,
effective heat displacing high-carbon grid energy or as a substitute for on-site gas heating heat pumps
capture • Export waste heat/low grade steam to provide district heating, or re-gas energy for • Hydrogen
LNG for example technology
• Extract hydrogen and methane from refinery fuel and flare gas • Heat recovery
• Utilise off-peak wind power for hydrogen generation and storage
Low 3 Use low or carbon • Create carbon neutral fuel stocks, by utilising stover/biomass through pyrolysis and • Biofuel
proportion of DECARBONISE neutral feedstocks Fischer-Tropsch conversation
renewable HEAT & POWER
• Utilise hydrogen in conjunction with CO2 to create RFNBO (Renewable Fuel From • Hydrogen
feedstocks Non-Biological Origin) technology
• Process municipal waste to create biofuels (whilst waste value still economical)
• Process vegetable oil and animal fats to produce Fatty Acid Methyl Ethers
Copyright © 2020 Accenture All rights reserved. Sources: 1. European Commission: Prospective scenarios for the chemical and petrochemical industry; 2. Science Direct: Sustainable process design & analysis of hybrid separations; 31
3. Technavio; 4. IEA
SECTOR ACTION AREAS: ENERGY
In addition, it will be necessary for this sector to capture and offset GHG emissions
CO2 drivers to reach net-zero technologies
GHGs 4 Capture and offset • Focus on clustering solutions and technologies geographically, particularly for the • Direct carbon
INVEST IN GHG
produced as REMOVAL AND GHG emissions scaling of hydrogen and CCS, as part of the UK Industrial Clusters Mission1 capture,
by-products COMPENSATION from high- • Identify high-emitting industrial process and research, then scale technologies to utilisation and
from polluting activities effectively capture and store GHG by-products storage
production
• Finance R&D of innovative solutions for carbon capture, utilisation and storage technology2
processes
(CCUS/BECS) and heat capture technologies. Short-medium term CO2 capture for • Battery
EOR (Enhanced Oil Recovery) programs may be feasible storage
• Explore value-adding offset schemes, ensuring additional carbon removal
Indirect operations (additional actions)
Downstream 5 EXPLORE
Shape • Shaping new energy propositions by selling GHG reduction or by meeting new • Chemical
demand for ECOSYSTEM downstream downstream demands, for example moving to supply of power (e.g. for electrified recycling
high GHG OPPORTUNITIES
demand for direct transport) instead of refined products, or shifting into chemical recycling to supply • EV batteries
products customers and end recycled refined products, can help shift wider industrial changes and
consumers • Further opportunities to combine services with pure power offering to consumers components
• Explore opportunities for greater industry integration, particularly LNG terminals
and any site requiring refrigeration duty
Copyright © 2020 Accenture All rights reserved. Sources: 1. Industrial Clusters Mission; 2. IEA 32
SECTOR CASE STUDIES: ENERGY
Technology innovations include high-temperature heat re-use and efficiency saving systems
Case Studies
Dryficiency: Re-using heat waste at temperatures of Manufacture 2030: Tech platform enabling energy
up to 160°1 efficiency savings of 6% per annum
▪ Whilst an essential technology in residential buildings, ▪ Software enabling best-in-class resource

industrial applications for heat pumps are in their efficiency for factories, through waste
infancy identification and acceleration of existing
▪ This EU-funded project is exploring technically and programmes
economically viable solutions for turning waste heat ▪ Simple to use, with manufacturers as a key
into useable heat up to high temperature levels, customer group, the platform facilitates dialogue
crucial for use in industry across supply chain channels, provides data
▪ The focus of the project is industrial drying analytics and visualisation, and coalesces insight
applications, which typically account for 12-25% total within best practice sharing ‘hubs’
energy demand in industrial processes; but further ▪ Aim is to halve overall resource use in global
applications are likely and many industries stand to manufacturing by 2030
benefit
Copyright © 2020 Accenture All rights reserved. Sources: 1. European Commission, 2019; 2. Manufacture 2030 33
SECTOR CONTEXT: MATERIALS
Basic steel and iron production still dominates materials emissions despite Redcar steelworks closure
GVA £19,960m • GVA has decreased: GVA has decreased by 18% from 2007 to 2017, while
emission intensity has improved by ~30%. Underpinned by ~50% reduction
of UK GHG emissions from iron and steel, aluminium and paper since 20071
GHG emissions 21,967 (thousand tonnes of CO2e) • Emissions intensity neglects significant import footprint: Materials sector
imports are substantial (~50% of our materials consumption)2 with 34.6%
Breakdown of Materials sector emissions by sub-sector (ONS, 2017)
value growth in iron/steel imports from 2017-2018 (up to $12.1bn)3
21,967
• Majority of GHG emissions due to steel/iron, plastics, paper and wood
despite GHG reductions and major plant closures in the last decade

11,537 • Sector uncertainty, impacted by offshoring: Challenges for UK materials
sector to remain competitive may deprioritise net-zero target
ktCO2e
• Hard-to-abate, high intensity processes: e.g. 30 integrated steel plants in

EU are amongst largest single-point emitters in region4
• Limited investment: Challenges for companies on upfront investment,
2,919 payback and cost of new vs. existing depreciated assets; expensive
retrofit/impact of downtime for commoditised production
2,317 • Increased low-carbon materials production costs: Demand uncertainty for
higher-priced, low-carbon materials e.g. ‘green’ steel at 20% higher cost5
2,098 934
646 Key sector GHG drivers (indirect italicised)
590
486 441 GHG emissions from intensive processes
Materials Basic Iron Plastics Paper and Wood and Other Aluminium Other Rubber Printing
Total & Steel paper products basic chemicals and Heat and mechanical processes powered by fossil fuels
of wood metals & man- recording
made services Materials over-consumption due to over-specification
fibres
Products/process scrap
Copyright © 2020 Accenture All rights reserved. Sources: 1. ONS data + Accenture primary research, 2. UK FIRES Absolute Zero report – University of Cambridge; 3. UK Top 10 imports - Worlds Top Exports; 4. Science Direct; 5. Mission 34
Possible: Sectoral focus: steel
SECTOR ACTION AREAS: MATERIALS
Electrifying bulk production and energy and heat efficiencies will be critical in achieving net-zero
Key sector # Sector actions Rationale & recommendations Enabling
GHG drivers to reach net-zero technologies
GHG 1 Improve energy • Heat capture, combined with heat networks to allow for effective distribution, • IoT
emissions DELIVER
efficiency and heat could further support sector cluster decarbonisation1 • Digital twin
OPERATIONAL
from EFFICIENCIES recovery in • Still significant opportunity to increase energy efficiency in low temperature • Cloud
intensive production processes, space heating and motors with existing technologies - motor drive,
processes
pump/compressed air efficiency measures, heat pumps etc2. An example is that
efficient compressed air systems in plastic and rubber manufacturing could
enable energy savings of up to 30%3
Heat and 2 Electrify bulk • ~1/3rd of UK’s current materials production is electrified today, with only • Electric
mechanical DECARBONISE materials production paper/aluminium production using electricity as the primary energy source1 furnaces
processes HEAT & POWER
and explore lower • For low temperature processes (e.g. pressing, drying) that use roughly 30%2 of all • Heat pumps
powered by carbon methods for industrial energy consumption, heat pumps are key • IoT
fossil fuels
steel production • For high-temperature processes, bioenergy is well suited within the existing grid • Hydrogen
infrastructure3 technologies
• For blast furnaces, hydrogen substitution for coke (via on-site electrolysis) holds
promise for primary production, but is yet to scale (estimated 10-50% proliferation
by 2050, dependent on carbon pricing)4; see HYBRIT case pg. 38
• Continue to scale electric arc furnace (EAF) technology for scrap steel reuse,
which offers a clean alternative to emissive blast furnaces (currently 95% of
production5); although lack of scrap may pose challenging
Materials 3 Enable product • Majority of products are overengineered and could be used for twice as long • IoT
OPTIMISE
over- DESIGN AND redesign for material and be made with half as much material, reducing demand to 25% of current
consumption MATERIALS efficiency levels e.g. steel buildings 2x over-specified; car weights doubled since 19702 (nb.
due to over- partly through larger cars as opposed to more/heavier parts)
specification
Copyright © 2020 Accenture All rights reserved. Sources: 1. UK FIRES Absolute Zero report – University of Cambridge, 2. Carbon Trust: Energy saving opportunities; 3. Clean Growth: Transforming Heat; 4. Clean Technica;, 5. Mission 35
Possible: Sectoral focus: steel; 6. Science Direct
SECTOR ACTION AREAS: MATERIALS
Expansion of recycling and reuse still have further potential, to minimise virgin material used
Key sector # Sector actions Rationale & recommendations Enabling
Direct operations (core actions) ctd..
Virgin 4 OPTIMISE Leverage recycled • Recycled steel supply to triple by 2050 (to approx. 1,500 Mt/yr)1 • Machine Vision
material DESIGN AND steel • Scaling recycling infrastructure and overcoming copper contamination are key • IoT
production MATERIALS
prerequisites to increasing recycled content in high grade applications
GHG 5 INVEST IN GHG Invest in GHG – Invest in both immediate (afforestation) and longer term removal and offsetting • CCS
emissions REMOVAL AND removal and solutions (CCS) to enable the sector to reach net-zero
from COMPENSATION
compensation
intensive
processes
Products/ 6 Explore circular • Adopt a full life cycle and systemic approach, in which manufacturing is engaged • Bio based
EXPLORE
process ECOSYSTEM economy with the end customer on novel materials, product design, and new business materials
scrap OPPORTUNITIES
opportunities models (e.g. sharing economy) to improve resource efficiency. For example, • Connected
through its innovation award, Covestro is building partnerships with companies products
that can use CO2 as feedstock for fuel, concrete, chemicals etc.2 • IoT
• Increase supply network collaboration to exploit symbiosis (e.g. sharing of • Cloud
feedstocks, for example between steelmaking and bioenergy sectors)3, reduce • Digital PLM
intermediary product scrap and improve designs for repair and reuse
• Reduce plastic packaging (40% of UK plastics footprint1)
Virgin 7 Expand recycling/ • Enable new processes/infrastructure to boost recycling across bulk materials, e.g.: • Digital waste
EXPLORE
material ECOSYSTEM reuse of other bulk – Primary plastics production reduction through mechanical and novel chemical separation
production OPPORTUNITIES materials recycling techniques to manage plastics variety e.g. pyrolysis/gasification (at an • Pyrolysis
economic cost) • Gasification
– Recycling of e-waste
Copyright © 2020 Accenture All rights reserved. Sources: 1. Carbon Trust: Energy saving opportunities; 2. Covestro: CO2 as a raw material; 3. Science Direct 36
SECTOR CASE STUDIES: MATERIALS
Hydrogen could serve as a net-zero coke substitute with significant potential savings from end-
product light-weighting
Case Studies
HYBRIT1 ArcelorMittal: Lightweight, recycled structural
steels
HYBRIT (founded in 2016)
aims to replace coking ArcelorMittal, a leading steel producer, has
coal with hydrogen. The developed a range of advanced high-strength
result will be the world’s lightweight steels that allows a reduction of steel use
first fossil-free steel- by up to 50%, with a strength to cost increase: +30%
making technology, with stronger, cost premium + ~10%3
virtually no carbon
footprint. Specific product ranges have been launched for both
Automotive and Construction end user markets.
A pilot plant is underway Substituting ‘HISTAR’ for common construction steel
in Luleå, Sweden (on the achieves CO2 reductions of ~30% in steel columns &
predication that 50% of ~20% in beams2, with material savings by weight vs
steel will still be from ore conventional products ~ 30% on average3.
in 2050). The goal is to
have a solution for fossil- The product has been described as “truly circular” as
free steel by 2035. If it is produced 100% from locally sourced steel scrap
successful, HYBRIT will and has a recovery rate of 99%.
reduce Sweden’s CO2 Overall, it is anticipated that lightweight structural
emissions by 10% and steel design could reduce global steel demand by
Finland’s by 7%. ~3% by 20404.
Copyright © 2020 Accenture All rights reserved. Sources: 1. HYBRIT; 2. New high strength steels allow light and sustainable structures. World Steel, 2017; Super structures: an update on high-strength steel design, 2017; 3. 37
HISTAR Products, Arcelor Mittal 2019 (proportion of sales attributable to high-rise construction type is assumed based on case studies provided); 4. Accenture primary research
SECTOR CONTEXT: CONSTRUCTION (MATERIALS)
Cement is the major emitter in the construction category and is challenging to abate
GVA £5,689m
• GHG emissions from UK construction have decreased by 24% 2007-20171
• However, emissions intensity has plateaued since 2011 – absolute GHG
GHG emissions 13,198 (thousand tonnes of CO2e) reductions have primarily been driven by a -7% contraction in GVA, whilst
emissions intensity has levelled from 2011 (2.34) to 2017 (2.32)1
Breakdown of Construction sector emissions by sub-sector (ONS, 2017)
• Cement accounts for 57%1 of sector emissions and is challenging to abate
(at $110-$130pt)2 driven by inherent process emissions
• Construction sector is well established and slow to change - long building

7,500 kt
lead times and contracts limit flexibility
• Sector focused on quality and tied to regulation - need for sector
supporting regulation/certification to stimulate innovation
ktCO2e
13,198 kt • Status quo materials are low cost and given tight margins this leads to low
appetite to pay more/for innovation
• Capital intensity and depreciated assets – limited impetus to change
3,264 kt

1,500 kt Cement production is 8% of global CO2; approx. 0.9t CO2 per 1t of cement2
924 kt 11 kt Energy intensive virgin materials production (furnace temperatures)
Construction Cement Glass, Lime Articles of Plaster Materials inefficiency due to building overspecification
Total porcelain, concrete,
ceramic, cement Use-phase emissions dominated by gas-powered space/water heating
stone & and plaster Inefficient old buildings and slow turnover of UK building stock
abrasives
Copyright © 2020 Accenture All rights reserved. Sources: 1. Accenture primary research; 2. Reaching Net Zero Carbon Emissions from harder-to-abate sectors by mid-century: Mission Possible – Sectoral focus cement 38
SECTOR ACTION AREAS: CONSTRUCTION (MATERIALS)
Optimise manufacturing space/water heating and explore lower-carbon cement substitutes
Key sector # Sector recommendations Rationale & recommendations Enabling
Intensity of 1 DELIVER
Optimise on-site • Use of heat pumps is 4x more efficient than combustion options 1 and presents a • IoT
process, OPERATIONAL space/water heating viable option for high-heat manufacturing activities • Digital asset
space and EFFICIENCIES
• Explore energy efficiency measures for concrete production e.g. switching to management
water dry kilns/kiln electrification, multi-stage cyclone heaters etc. 2
heating
High GHG 2 OPTIMISE

Explore lower carbon Pursue lower carbon substitutes/alternatives to cement to overcome 60% of • Building
emissions DESIGN AND substitutes for cement emissions due to inherent limestone => clinker calcination chemistry: Information
released MATERIALS
cement • Substitution of kaolinite–rich clays for up to 65% of limestone (for same strength) Modelling
during manufacturing at half the energy intensity (BIM)
cement
• Zero emissions pre-cast products (slabs/bricks/blocks via micro-organisms/new • AI-enabled
production
chemistries) feasible for up to 14% of UK cement consumption design
• Alternatives (considering full lifecycle sustainability): e.g. timber/bamboo, optimisation
rammed earth, straw-bale etc.1
3 Invest in research • Invest in carbon capture technology, given that it is likely to be the only route to • CCUS
INVEST IN GHG
REMOVAL AND and lead in achieve total decarbonisation of cement production and sector net-zero
COMPENSATION development of CCS • CCS is a nascent technology, with high investment costs and low tech maturity,
and should be pursued alongside other recommendations ²
• Given the high emissions attributed to cement production, meaningful offsets
can reduce impact in the near term and will be critical for net-zero
Demand for 4 EXPLORE

Scale building • Concrete demolition waste can be used as a substitute for up to ~30% of • Portable/mini
virgin ECOSYSTEM material reuse & limestone in concrete production (based on current yield of separation) 1 crushers for
materials in OPPORTUNITIES
recycling • Glass recycling can save 315kg CO2 per tonne in reducing carbonates demand 3 concrete
production
Copyright © 2020 Accenture All rights reserved. Sources: 1. UK FIRES Absolute Zero report – University of Cambridge, 2, Reaching Net Zero Carbon Emissions from harder-to-abate sectors by mid-century: Mission Possible – Sectoral focus 39
cement, 3. carbonfootprint.com
SECTOR ACTION AREAS: CONSTRUCTION (MATERIALS)
Whilst cement innovations are in development, efficiencies in design/use of buildings are key
High cement 5 Embed efficiency Buildings design for efficiency could reduce total cement demand by 34% and steel • BIM
demand due EXPLORE
ECOSYSTEM into design practices, demand by 15%1, through e.g.: • Generative
to OPPORTUNITIES focused on building • Grid spacing minimisation (between columns) can enable up to 50% CO2 design
downstream materials & energy reduction; grid regularity can enable ~20% more efficiency1 • AI-enabled
building
• Innovative new materials for building, leveraging new tech and design e.g. optimisation
design
modular
• ‘Passive’ building designs at 8-10% more cost – adopted widely in Sweden today1
Energy 6 EXPLORE
Retrofit existing • Retrofit existing buildings with efficient insulation & lighting (-23% compound • IoT + mobility
inefficient ECOSYSTEM buildings with energy reduction over last 9 years of innovation) 1 • Digital asset
legacy OPPORTUNITIES
efficiency measures • Enable demand-side reduction through retrofitted smart energy management management
buildings
Copyright © 2020 Accenture All rights reserved. Sources: 1. UK FIRES Absolute Zero report – University of Cambridge, 40
SECTOR CASE STUDIES: CONSTRUCTION (MATERIALS)
Innovators are starting to explore the ‘green cement’ market opportunity
Case Studies
Solidia Technologies: Low-carbon cement tech1 CarbonCure: Sequestering CO2 in concrete2
Solidia Technologies is a US, UK and Hungary based CarbonCure Technologies manufactures a
cement tech company that can reduce emissions from technology for concrete producers that introduces
cement manufacturing by ~70%. Their solution includes: recycled CO2 into fresh concrete. Their solution
drives a number of benefits:
• Adjusting the material mix: Solidia makes cement
with a 50-50 ratio (limestone to sand), enabling the • CO2 mineralisation: CarbonCure turns CO2 into a
necessary chemical reaction to take place at ~1200 mineral, through a process known as
degrees – lower than the ~1450 degrees needed in CO2 mineralisation, that is then locked into the
normal kilns. This results in 40% less CO2, 30% less concrete, and becomes permanently captured
energy, while improving efficiency by making more
cement with less raw material • Enhanced strength properties: CarbonCure
concrete has been measured to be stronger than
• Sequestering CO2 in concrete: To make concrete, traditional concrete, plus the process requires less
Solidia uses CO2, as opposed to water – in the process cement and therefore further reduces GHGs
trapping CO2 in the concrete. This leads to total GHG
savings up to 70%, as well as water savings • Effective carbon capture: Either for carbon
This solution drives cost savings for their clients, based transferred from other manufacturing sites or on-
on reduced energy consumption. Further savings would site, and is suitable for a range of downstream
be seen with a carbon tax fee. Solidia have partnered customers
with Lafarge Holcim, while BP have invested in them. A CarbonCure building can sequester equivalent CO2
to 800 acres of forest for a year.
Copyright © 2020 Accenture All rights reserved. Sources: 1. Solidia Technologies; 2. Carbon Cure Technologies 41
SECTOR CONTEXT: FOOD AND DRINK
Sector characterised by large trade deficit, future uncertainty around labour and changing diets
GVA £24,706m • High contribution to UK GVA: In 2017, the agri-food sector contributed £121
billion to the economy, around 6.6% of GVA. There has been limited
progress on emissions intensity, which flatlined between 2007-2017
GHG emissions 8,795 (thousand tonnes of CO2e) • Yet there’s a huge trade deficit: Despite a big increase in exports in the last
decade, the UK has a large trade gap, with imports currently worth more
Breakdown of Food and Drink sector emissions by sub-sector (ONS, 2017)
than double (£46.8 billion) UK food exports (£22.5 billion)1
• Low cost labour model is challenged: Due to a restriction on supply (as a
result of Brexit), rapid rises in cost (driven by the National Living Wage); and
1,567 decreases in the cost of robotics. The sector may see a reduction in number
employed, which is approx. 4m people today1
1,456
• Emissions primarily driven by agriculture: Manufacturing is significantly
lower in emissions than agriculture and consumer behaviour (e.g. waste)
1,315
• Dependency on changing diets: The CCC report scenarios rely on lower
ktCO2e
8,795 consumption of meat and dairy, posing a challenge to the sector

1,155 • Competing priorities for land usage: Opportunities such as bio-energy will
1,052
face trade-offs from other large demands of land (e.g. afforestation, CCS)
907 Key sector GHG drivers (indirect italicised)
669
Demands for energy intensive processes and inefficient technology
386 Demands for temperature specific processes and inherent carbon

181 106 Global supply chain and emission intensity of air-freight and inefficient food
Food and Other food Alcoholic Bakery and Processing Processing Dairy Grain mill Prepared Soft drinks Vegetable storage
Drink Total products beverages farinaceous of meat of fish, products products animal & animal
products fruit and e.g. starch feeds oils and
veg fats
Embedded emissions in food waste and decomposing by-product
Consumer demand for high carbon food products e.g. beef, lamb
Waste and the underutilisation of by-products e.g. pet food, beer
Copyright © 2020 Accenture All rights reserved. Sources: 1. Agriculture in the UK, 2018 DEFRA 42
SECTOR ACTION AREAS: FOOD AND DRINK
Manufacturers should focus on production efficiency, shifting the energy mix and sourcing locally
Demands for 1 DELIVER
Optimise energy • Direct emissions from heat demand for processes (e.g. drying, baking etc.) and • IoT, M2M,
energy OPERATIONAL efficiency and indirect emissions from electricity used to power equipment (e.g. mixing, Smart meters
intensive EFFICIENCIES
reduce refrigerant refrigeration etc.) could be reduced through efficiency optimisation ¹
processes losses • Consider energy efficiency scheme to incentivise improvements e.g. ensuring
and
closed fridges during storage
inefficient
technology • Improve access to finance for SMEs, particularly for energy efficiency and/or heat
recovery projects, alongside investment in green building design and operation
Demands for 2 Shift energy mix, • Electrify heat (i.e. renewable energy, use of heat pumps) to decarbonise • Production
specific DECARBONISE
focused on • Improve energy mix away from natural gas efficiency (e.g.
HEAT & POWER
temperature electrifying heat for • Recover heat waste and refrigeration leakage (e.g. optimising load, LVS tech) robotics and
processes mid-temp activities • Review potential use of bioenergy across sector, to assess where its benefits can automation)
and inherent
be maximised and avoid trade-offs (e.g. use of land, impact on biodiversity) • LVS
carbon
Global supply 3 Source locally, while • The UK currently imports 50% of its food, much of which is air-freighted2 • Just-in-time
chain and IMPROVE
LOGISTICS AND optimising logistics • Switch to import distribution via train and source more food locally. Explore distribution
energy TRANSPORT for low-carbon options to produce traditionally imported food locally using new tech (e.g. planning
inefficient indoor vertical farming) • Indoor farming
transport-
• Ensure transportation and logistics is low carbon (EVs), and install efficient • Precision agri
ation
refrigeration systems for in transit goods
Embedded 4 Leverage tech, • In 2015 there was 2.4 million tonnes of food surplus and waste, the equivalent of • Traceability
emissions in EXPLORE
packaging and 4.2% of UK production³, wasting embedded CO2 (e.g.
ECOSYSTEM
food waste OPPORTUNITIES innovation to • Food waste produces methane as it decomposes, further increasing sector blockchain)
and decomp- minimise waste along emissions. Tackling waste is critical to reduce GHG emissions
osing by
value chain • Industrial digital technologies could help process waste more effectively (i.e.
products
sorting into more waste fractions) and improve traceability (increasing shelf life)
Copyright © 2020 Accenture All rights reserved. Sources: 1. Garnett, T., Smith, P., Nicholson, W., & Finch, J. (2016). Food systems and greenhouse gas emissions, University of Oxford 2. Absolute Zero, UK FIRES; 43
3. WRAP: Food surplus and waste at manufacture and retail;
SECTOR ACTION AREAS: FOOD AND DRINK
Minimising waste and use of by-product will support decarbonisation of the wider supply chain
Consumer 5 ENCOURAGE Invest in and provide • Shifting consumer choices away from categories with most emission-intensive • POS data
demand for CONSUMER lower carbon production methods (e.g. lamb and beef) by providing comparable, price analytics
BEHAVIOUR
high carbon CHANGE products to support competitive, low carbon alternatives e.g. lab meat • Automatic re-
food behaviour change • Low carbon storage methods (e.g. frozen ready meals) could reduce electricity ordering
products
demands for food processing and storage by 50%¹ • Bio-tech e.g.
• Improved consumer trend monitoring and feedback loops with retailers, stem cell meat
consumers and food service can optimise new product development
Waste and 6 Explore circular • Consider circular economy opportunities for packaging (e.g. paper, pulp, • Bio-based
EXPLORE
the under- ECOSYSTEM economy plastics) materials;
utilisation of OPPORTUNITIES
opportunities • Embrace industrial symbiosis to find uses for surpluses and residues (e.g. by- recycling tech
by-products products that can be turned into animal feed, fertilisers, bio-plastics etc.)² • Biogas
technology
Copyright © 2020 Accenture All rights reserved. Sources: 1. Absolute Zero, UK FIRES; 2. A Time to Act, Food Drink Europe *LVS: Low Volume System refrigeration technology 44
SECTOR CASE STUDIES: FOOD AND DRINK
Cases illustrate how process efficiency optimisation and biogas production can contribute to net-zero
Case Studies
Arla Aylesbury: The Net-Zero Carbon Dairy 1 Blue Yonder: Automating Store Replenishment 2
In 2017, the Arla Aylesbury Dairy became the first large Blue Yonder’s Replenishment Optimisation is a
liquid milk dairy in the world of its size to be net-zero. machine learning tool that automates replenishment
This was achieved by: • Reduction of out-of-stock rates: By up to 80%,
• Challenging energy-intensive processes: The need without increasing waste or inventory
for pumping was minimised, and equipment usually • Demand forecasting: The tool takes external
requiring amounts of compressed air was changed to inputs (such as weather forecasts, holidays etc.)
electrical motor-driven actuation into account to create an accurate model of future
• Combined heat and power (CHP): Powered in part by demand for different products
anaerobic digestion of site effluent, the dairy • Restocking planning: The tool helps companies
produces 4MW of electricity, used to power the with restocking plans, increasing product
factory and to fulfil some of the heat requirement availability tenfold with 50x fewer manual
• Food waste biogas plant: Biogas produces the interventions – it has been used by UK food retailer
balance of the energy required by the dairy and Morrisons
reduces waste disposal costs
Copyright © 2020 Accenture All rights reserved. Sources: 1. The UK Dairy Roadmap, 2018 2. Blue Yonder, as cited in Made Smarter (pg. 39) 45
SECTOR CONTEXT: TRANSPORT
Trends towards EVs have potential to transform industry by generating onshore opportunities
GVA £18,552m • Sector overview: The transport manufacturing sector in the UK is largely
assembly focused, with relatively low GHG emissions
• GVA has increased: The sector has increased its GVA 28% since 2007,
GHG emissions 2,164 (thousand tonnes of CO2e) however total output, in terms of car production, has declined since 2017
• Emissions have increased: Emissions from transport manufacturing have
Breakdown of Transport sector emissions by sub-sector (ONS, 2017) increased 10% since 2007, while emission intensity has improved to 0.12
• Increasing uncertainty: UK car production fell 4% in October, with UK
demand falling ~11%, due to disruption from car sharing and low ownership
rates. Higher costs from net-zero investments could reduce
competitiveness in an export-led market
• Demand reduction impacts emission intensity: The 2018 decrease in
production volumes led to a 4.2% increase in energy consumed per vehicle.
1,738 This arises as most associated energy sources remain operational regardless
ktCO2e
of production, meaning fewer vehicles produced for the same energy used
2,164
• EVs shift carbon impact of sector: Battery production increases footprint,
although life-cycle emissions debt is quickly paid off
• Integrating recycled content: The quality and aesthetic of recycled content
parts can differ to those of virgin material, limiting circular opportunities
295
High energy demands per vehicle; scope to improve energy efficiency
123 9
Non-renewable energy supply (i.e. insufficient on-site generation)
Transport: Total Motor vehicles, Building of Other transport Repair &
Product design that increases downstream emissions
trailers and ships and boats equipment maintenance
semi-trailers of ships Emissions from inefficient supply chain logistics
Continued manufacture of combustion-engine vehicles
Copyright © 2020 Accenture All rights reserved. Sources: SSMT Sustainability Report, International Council on Clean Transportation, ICCT 46
SECTOR ACTION AREAS: TRANSPORT
Electrifying and optimising product design can generate notable energy efficiency savings
High energy 1 Focus on optimising • Improve energy efficiency to better deal with changes in production demand • Connected
demands per DELIVER
energy efficiency • Move to real-time control of production systems to reduce breakdowns and equipment
OPERATIONAL
vehicle EFFICIENCIES optimise machine start-up/idle time1 (e.g. HVAC)
produced • Continually optimise and monitor equipment (e.g. replacing nozzles on air hoses • Sensors, IoT
regularly, switching off back-up systems if the primary system rarely fails)2
High carbon 2 On-site renewable • Generating both electricity and heat capture for wider operations through on-site • On-site low-
(grid) energy DECARBONISE energy generation to combined heat and power (CHP), could improve efficiency from 30% to 90% carbon energy
HEAT & POWER
supply power activities • Shifting to on-site renewable energy production to improve efficiency of (Solar, CHP)
electricity distribution and decarbonise energy use
Product 3 Focus on design to • Lightweighting in design by reducing average weight of cars (e.g. to ~1000kg) • Material and
design that OPTIMISE
DESIGN AND reduce resource through reducing car parts/door weight and using alternative materials (such as component
increases MATERIALS demands at aluminium, or recycled plastics for vehicle interiors) innovation
downstream manufacturing • Regenerative braking, to save energy used in accelerating in vehicles, could save • AI
emissions
15% of energy usage, and 5-25% in trains2
• Reducing drag and rolling resistance through improved tyres, could reduce
energy usage in cars by 5%, freight and rail by 4%2
Emissions 4 Improve and • Logistical improvement technology could save up to 30% of current energy • 3D printing
from IMPROVE
LOGISTICS AND
optimise supply demand for freight transport in the UK3
inefficient TRANSPORT chain logistics within • Explore 3D printing of complex parts to reduce costs and produce locally/on-site
supply chain transport • Switch to train transport to limit air resistance and energy consumption, as trains
logistics
manufacturing are long, thin and more energy efficient2
• Shift transportation fleet to electric, focused on innovation with HGVs
• Air resistance over long-distance travel can be limited by reducing top speeds2
Copyright © 2020 Accenture All rights reserved. Sources: 1. Production and Manufacturing Research journal, 2017; 2. BBC Business, July 2019 2. Absolute Zero, UK FIRES, 2019 47
SECTOR ACTION AREAS: TRANSPORT
Manufacturers should build EVs into their portfolio, to address emissions in the use phase
Downstream 5 Shift to EV • Consumer demand change, policy shifts and wider environmental and air quality • EV batteries
EXPLORE
use phase ECOSYSTEM manufacturing and considerations have lowered demand for petrol and diesel cars and
emissions, OPPORTUNITIES
other zero-carbon • UK manufacturers could become leaders in EV manufacturing, reducing overall components
from the transport vehicle lifecycle emissions by ~30%1 (nb. appropriate recovery/recycling of
production
batteries at end of life will be critical)
of
combustion- • Opportunity for the UK to onshore upstream supply chain activities, through
engine manufacture of EV component parts e.g. inverters and high voltage chargers
vehicles • Explore electric and hydrogen options as alternatives to diesel for HGVs
(infrastructure the main consideration i.e. charge points/refuelling stations)
• Electrification in shipping offers a significant opportunity though in its infancy,
due to technical challenge of scaling battery power
Copyright © 2020 Accenture All rights reserved. Sources: 1. ICCT 48

SECTOR CASE STUDIES: TRANSPORT
Toyota and Bentley have both focussed on renewable and in-house energy generation
Case Studies
Toyota: From efficiency to Plant Zero CO21 Bentley: On-site renewable energy3
▪ Toyota have launched the Plant Zero CO2 Emissions ▪ Bentley have installed more than 30,000 solar
Challenge to achieve zero emissions in vehicle panels on their manufacturing site in the UK. As
manufacturing part of this, the largest UK solar car port has been
▪ An initial focus will be on continuing to improve installed at Bentley’s factory in Crewe
energy efficiency, including equipment optimisation ▪ The panels provide up to 40% of on-site
and the use of waste heat electricity, with remaining electricity being
▪ Toyota have reduced total CO2 emissions by 2.9% purchased as certified as green energy
year-on-year ▪ It is expected that the system could reduce CO2 by
▪ The focus is now shifting to on-site renewable energy 3,300 tonnes per year
generation for in-house consumption. This includes ▪ Alongside reducing its manufacturing footprint,
wind and solar, as well as hydrogen, using electrolysis Bentley is also accelerating its EV transformation
and methane – with all models to have either hybrid or electric
▪ Toyota has a wider ambition to support a hydrogen- versions by 2025
based energy system, including fuel cell EVs
▪ Toyota in Europe has also managed to reduce energy
used per car, by about 8% per year for 14 years. In
this way, Toyota have set the benchmark2
Copyright © 2020 Accenture All rights reserved. Sources: 1. Toyota website and Sustainability Data Book 2019; 2. BBC Car parts from weeds 3. Bentley website 49
SECTOR CONTEXT: TEXTILES
Pollutive industry, though with opportunity for waste reduction in production, use and at end of life
GVA £5,562m • Textile manufacturing GVA has decreased until recently: GVA has
reduced 47% since 1990, though it has risen since 2013. Wider trends in
fashion (transparency, ethical sourcing) mean onshoring may increase
GHG emissions 1,415 (thousand tonnes of CO2e) • Waste across the value chain: The UK wastes 300,000 tonnes of clothing
p.a., costing £140m in landfill.1 Manufacturers contribute in two ways: first,
Breakdown of Textiles sector emissions by sub-sector (ONS, 2017) 35% is wasted in production, second overproduction and high wastage at
the retailer before it reaches the consumer2
• Fast fashion is hard to reconcile with net-zero: The surge of UK textile
manufacturing has been linked with short lead time requirements for fast
fashion brands, aimed at reducing time from catwalk to store
1,058
• Fibre production and in-use impacts: Drive GHGs as much as processing
• Fundamental changes in both how we produce and consume fashion: Shift
ktCO2e
1,415
in consumer buying behaviour is required if we are to reach net-zero
• Textiles is a labour-intensive sector: Anticipated automation could impact
jobs, in the UK and globally

Labour and energy intensive processes in manufacturing
317
High energy requirements for manufacturing processes e.g. spinning, dyeing
40 High embedded emissions in materials (esp. cotton and polyester)
Textiles: Total Textiles Wearing apparel Leather & other
High volumes of waste from over-supply at manufacturing and imprecise
demand forecasting
GHGs embedded in textile waste and across the value chain
High GHGs across a complex, global supply chain
Copyright © 2020 Accenture All rights reserved. Sources: 1. WRAP: Valuing our Clothes; 2. Common Objective 50
SECTOR ACTION AREAS: TEXTILES
Optimise energy efficiency of intensive processes, and change to lower-carbon material alternatives
Labour and 1 DELIVER
Optimise energy • Identify high energy processes e.g. steam, heating, lighting and optimise • Heat
energy OPERATIONAL efficiency of key machinery efficiency accordingly 1 exchanges;
intensive EFFICIENCIES
high-energy • Reduce manufacturing time and improve efficiency through automation of steam
processes processes labour-intensive processes where possible accumulator
• Optimise HVAC and maintenance through energy management measures • Sensors, IoT
High energy 2 Change energy mix • Electrify heat (i.e. renewable energy, use of heat pumps) • Energy
requirements DECARBONISE
to low carbon • Focus on low-temperature heating processes such as washing and drying.2 harvesting,
HEAT & POWER
for options, exploring Explore alternatives to gas-based processes (especially for yarn production) solar, CHP
manufacturing on-site production • Shift the energy mix to incorporate renewable sources, with on-site energy • Automation
processes
production an opportunity for carbon neutral manufacturing plants and robotics
High 3 Adjust raw material • Cotton (2.1kg CO2e per t-shirt) and polyester (5.5kg CO2e) have the largest GHG • Bio-based
OPTIMISE
embedded DESIGN AND inputs to low carbon impact and yet make up >70% of materials2 materials
emissions in MATERIALS
alternatives • Shifting material inputs mix to include low-carbon sustainable textiles or recycled • Chemical
materials (esp. alternatives, in line with growing consumer demand, can reduce overall GHGs recycling and
for cotton,
• Leveraging mechanical and chemical tech solutions to reduce manufacturing fibre to fibre
polyester)
waste through recycling (e.g. factory scraps into recycled yarns); experimenting
with alternative fibres and biomaterials (e.g. polyester from PET plastic)
High volumes 4 Optimise demand • In the short term, explore technology solutions to improve demand forecasting • AI forecasting
of waste from OPTIMISE
management to drive (e.g. predictive analytics to anticipate trends) • On-demand
DESIGN AND
over-supply at MATERIALS GHG and cost • In the long term, shifting to on-demand manufacturing (e.g. personalisation from manufacturing
manufacturing savings 3D-printed elements) may reduce material inputs and emissions from • 3D printing
manufacturing. This is an opportunity for UK manufacturers to meet new customer
demands, for personalisation and access, in a low-carbon way
Copyright © 2020 Accenture All rights reserved. Sources: 1. EU Saving Energy in Textiles 2. . Kirchain, R., Olivetti, E., Reed Miller, T. & Greene, S. Sustainable Apparel Materials (Materials Systems Laboratory, Massachusetts 51
Institute of Technology, 2015);
SECTOR ACTION AREAS: TEXTILES
Abundance of circular opportunities and material alternatives provide future low-carbon options
GHGs 5 Reduce waste and • Encouraging consumer repair and re-use behaviours by improving product • Advanced
DEVELOP NEW
embedded in BUSINESS drive circular value quality and design to discourage disposability sorting
textile waste MODELS
• Adapt manufacturing facilities to support circular economy systems, for example robotics
with on-site textile sorting and recycling technology, or embedded with hi-tech • Biological
inventory management to enable high volume rental models recycling
High GHGs 6 Support system • Explore opportunities to be involved with initiatives such as The Fashion Industry • Digital Twin /
EXPLORE
across a ECOSYSTEM change and galvanise Charter for Climate Action, which sets out a vision to achieve net-zero emissions RFID /
complex, OPPORTUNITIES
industry action in the industry by 2050 and 30% GHG reductions by 2030 Blockchain
global supply • Source sustainable fibres (e.g. Better Cotton) and leverage traceability
chain
technologies, to limit environmental impact and build consumer trust

SECTOR CASE STUDIES: TEXTILES
Players are succeeding by minimising waste in product manufacturing and demand fulfilment
Case Studies
UPMADE: Zero-waste manufacturing by design¹ Amazon: On demand manufacturing 2
UPMADE is an innovative start-up that is allowing Amazon is revolutionising the textile industry's retail
manufacturers and brands to reduce waste, pollution model, transforming the business model towards on
and GHG emissions. UPMADE achieved this through: demand solutions that are direct-to-customer, with
• A technology solution that allows any brand to lower GHG emissions:
create value from waste and commercialize • Their patent for on-demand apparel panel cutting
industrial-scale upcycling at the production stage would enable Amazon to manufacture custom-
• The software transparently analyses excess measured clothing on-demand
materials, using specific production data and • The solution would aggregate, store, and manage
UPMADE algorithms, and identifies new garments that data on online apparel orders, allowing hyper
can be designed out of the leftover material personalisation, and optimise the process to group
• UPMADE is working with several brands and orders by “size, shape, fabric type, or delivery
manufacturers, at a global scale, to create location”
industrially upcycled clothing • Amazon has committed to net-zero by 2040
Copyright © 2020 Accenture All rights reserved. Sources: 1. UPMADE 2. CBI Insights on Amazon Patent 53
SECTOR CONTEXT: PHARMA
Pharma is a high value sector with low manufacturing emissions; yet with complex value chain impact
Sector profile & emissions footprint Key Insights
GVA £13,123m • Pharma is a highly valuable sector: Pharma has a large import footprint in the
UK, around 4.5% of total imports¹, as well as a high export value over £20bn²
• GVA has decreased : Pharma manufacturing GVA has decreased 21% since 2007,
GHG emissions 830 (thousand tonnes of CO2e) however GVA per capita is double other manufacturing sectors.³ As a result,
Pharma has the lowest emission intensity of any sector at 0.06. While intensity of
Breakdown of Pharmaceutical sector emissions by sub-sector (ONS, 2017) manufacturing is low, calculating the full carbon impact of a pharma product is
challenging due to complex supply chains and multiple ingredients
• Low manufacturing emissions have decreased: Pharma GHG emissions peaked
in 2003. Since 2007, Pharma manufacturing emissions have decreased by 35%
Sector Opportunities
• Pharma is an advanced digital sector: UK leadership, alongside high R&D
investment, positions the sector well to lead in the adoption of disruptive tech
and intelligent factories to meet with new manufacturing requirements
• High productivity and low emission intensity: Sector productivity is high, while
emission intensity from is low, largely as a result of offshored production
KtCo2e
• Business model transformation: A shift towards outcome-based healthcare,

830 kt 830 kt
with a focus on personalised products and on-demand manufacturing, creates
an opportunity to deliver new technology solutions and onshore full production

Energy inefficient manufacturing (e.g. temperature and humidity controls)
High energy use and lack of heat recovery
Poor demand management and high product waste
Carbon emissions embedded in product ingredients
Pharma Total Basic pharmaceutical products and preparations
Emissions during product use
High volumes of packaging waste
Copyright © 2020 Accenture All rights reserved. ¹ UK Top 10 imports - Worlds Top Exports; ² The Manufacturer ³ Made Smarter ⁴ InnovateUK ⁵ Science Direct 54
SECTOR ACTION AREAS: PHARMA
Optimised machine efficiency and smart supply chains could support Pharma in achieving net-zero
Energy 1 DELIVER
Leverage digital • Many processes (e.g. cleaning, ventilation) critical for accurate temperature and • AI, IoT,
inefficient OPERATIONAL technology to humidity controls in Pharma manufacturing facilities are highly energy intensive 1 Machine
manufacturing EFFICIENCIES
optimise machine • Development of new intelligent factories, which leverage AI to optimise Learning
(e.g. temp and efficiency and production, such as automating flexible dosage inputs and quality checks, can
humidity
product quality drive manufacturing and GHG emissions efficiency while meeting new demands
controls)
• IoT can improve the efficiency of equipment, reducing downtime, reducing costs
and decreasing asset depreciation
• Digital technology in existing factories can improve productivity by 30-35%2
High energy 2 Decarbonise • Decarbonisation of electricity and heating is important and viable, especially • Automation;
use and lack DECARBONISE
electricity and given the relatively low temperatures required for key activities IoT
HEAT & POWER
of heat heating of plants • Cleaning consumes the most energy in Pharma manufacturing, requiring hot
recovery water or steam. Leveraging heat pumps, or improved heat recovery, targeted at
high energy processes, can accelerate decarbonisation ²
Poor demand 3 Create smart supply • Pharma product waste, covering hazardous and non-hazardous, used and unused • RFID, digital
management IMPROVE
LOGISTICS AND chains that reduce products, is a major issue for the industry in terms of its volume and disposal identities
and high TRANSPORT waste and enable on- • New technology and processes such as RFID tagging, two-dimensional barcodes • Digital Twin
product waste demand and new packaging techniques can help to optimize stock control, improve
manufacturing product shelf-life, reduce waste and drive cost savings ³
Carbon 4 Shift collective • Pharma products contain a high number of chemical components i.e. APIs. This • Bio-based
EXPLORE
emissions ECOSYSTEM industry demand for results in a complex supply chain, making traceability of ingredients and of solutions
embedded in OPPORTUNITIES low carbon overall GHG impact a challenge. Emissions intensity of Pharma was calculated to • Sustainable
product ingredients be higher than automotive in one study¹ chemistry
ingredients
• Demand for low carbon chemical inputs can reduce Pharma sector GHG
emissions, improve traceability and accelerate low-carbon supply chains
Copyright © 2020 Accenture All rights reserved. 1. NNE 2. Made Smarter 3. CPI 4. Carbon Trust 55
SECTOR ACTION AREAS: PHARMA
Further value chain solutions will consider end-use of medicines and new delivery models
Emissions 5 Focus on R&D to • Product impact in use phase is an issue. GSK, for example, reported 40% of • Sustainable
EXPLORE
during ECOSYSTEM reduce GHGs from overall footprint is generated during product use. GHGs in the propellant of chemistry
product use OPPORTUNITIES high emission inhalers used by patients in one high-emitting example1 • AI
products • Complex patent and approval processes mean that change is difficult once a
product is on the market
• R&D can consider use-phase emissions within product development. Astra
Zeneca for example worked with Forest Laboratories to improve the processes
involved in producing Avibactam, achieving 92% increase in materials efficiency
and reducing use of organic solvents from 3,229kg to 160kg per kg of API2
• This requires long term, integrated decision making based on the intensive R&D
and long go-to-market lead times within the Pharma industry
High volumes 6 Consider new • In the UK, a limited number of drugs are manufactured with final packaging and • Delivery
DEVELOP NEW
of packaging BUSINESS material inputs and in patient ready form, increasing waste, while losing value to UK pharma sector3 models (i.e.
waste MODELS delivery models • Integrating sustainable packaging thinking at the R&D stage of product using e-
development will be critical commerce)
• Wider availability of high-quality recycled plastic can be explored to replace • Chemical
virgin inputs recycling
• New delivery models focused on reuse could enable circular solutions for some
pharma and consumer health products
Copyright © 2020 Accenture All rights reserved. 1. Carbon Trust 2. Astra Zeneca 3. Innovate UK 56
SECTOR CASE STUDIES: PHARMA
Collaboration between Pharma leaders, government and academia is driving UK competitiveness
through MMIC; at a company level Amgen are using AI to drive manufacturing efficiencies
Case Studies
Medicine Manufacturing Innovation Centre (MMIC) Amgen – AI to drive efficiency and reduce costs
• MMIC is a £56m collaboration between the Centre for • Amgen is piloting a process with the potential to enhance
Process Innovation (CPI), AZ, GSK and universities, to their ability to find patterns and trends in manufacturing
maintain innovation and UK competitiveness inconsistencies and to prevent their recurrence
• In building a link between R&D and manufacturing, MMIC • The AI tool seeks to replace a manual, labour-intensive,
aims to enable leaders to develop new, transformative process with the objective of being able to find
manufacturing technologies correlations between obscure signals and events
• Novel techniques for producing patient-centric • The process produces deviation reports — which Amgen
medicines, real-time release of drugs and integrated calls non-conformance (NC) reports — which are text
process analytics are all being explored documents containing insights from manufacturing
• MMIC aims to accelerate the development of these new • The project team employ NLP to examine the reports and
manufacturing processes and to help companies identify anomalies or trends and review the root cause
integrate these within their existing models • The technology drives benefits in terms of reducing time,
• This is helped by supporting industry, academia, costs and creating a more compliant process
healthcare providers and regulators to work together • Verdict AI found that 70% of Pharma companies identify
on supply chain challenges AI as very important, and that it is being used to identify
• Building of the facility is currently in progress. MMIC are opportunities that would have been missed in manual
aiming for 80 jobs by 2023 and over £80m in R&D processes
investment by 2028
Copyright © 2020 Accenture All rights reserved. Sources: 1. CPI 2. CPI MMIC 3. Amgen using AI 4. Value of AI in manufacturing 57
SECTOR CONTEXT: AEROSPACE
Use phase emissions dwarf those from production/MRO; long-haul net-zero remains challenging
GVA £10,064m • Aircraft use phase emissions (37,000ktCO2e for UK aviation in 20171) dwarf
those from production/repair & maintenance (667ktCO2e2); hence
aerospace players should primarily focus on new product development
GHG emissions 667 (thousand tonnes of CO2e) • Electrification is critical to emissions reduction in the use phase, and also
has the potential to lower costs per flight hour - a small turbo-prop aircraft
Breakdown of Aerospace sector emissions by sub-sector (ONS, 2017) uses $400 on fuel for a 100-mile flight vs. $8-$12 for electricity3
• Emerging electrified products market for regional aircraft: Norway and
667 Sweden are targeting electric short-haul flights by 20404
• Potential ‘CleanSky 3’ investment from the EU: The EU’s detailed 2021-27
budget will be agreed in 2020, and could include significant further
investment in ‘Clean Sky 3’ – Horizon 2020’s largest European research
programme – in order to reach the EC’s Flightpath 2050 goals5
• Huge commercial aerospace market growth anticipated – Global aircraft
fleet is expected to increase from 25,830 to 50,660 units from 2018-20386
ktCO2e
622 • Long haul – 80% of the aviation sector’s emissions come from passenger
flights longer than 1,500km4, where alternative fuel sources, dual fuel and
innovation into battery technology is needed
• Long life expectancy of aircraft, required technologies would have to enter
service in 2030-35 and should be demonstrated in 2025-276
Hot/heavy industrial production processes e.g. forging, hot-pressing etc.
High aircraft mass / design decisions resulting in in-use fuel inefficiencies
45
Aerospace Total Air and spacecraft and Repair & maintenance Extended complex supply chains with high GHG footprint
related machinery of aircraft & spacecraft Downstream emissions in use phase of aircraft
High emissions embedded within parts
Sources: 1. 2. The Guardian ; 2. Accenture primary research; 3. The Alternative; 4. BBC; 5. Aviation Week ; 6. Statista;
SECTOR ACTION AREAS: AEROSPACE
Manufacturers should address intensive production processes and optimise for fuel efficiency in-use
Hot/heavy 1 Optimise intensive Optimise energy/materials footprints by applying digital technologies to • IoT
DELIVER
industrial OPERATIONAL production energy/materially intensive processes e.g. • Machine learning
production EFFICIENCIES
processes • Efficient heating/cooling cycles and heat recapture for hot processes & AI
processes • Retrofit of heavy capital equipment with smart sensors (light, heat, vibration, • Digital asset
pressure etc.) and augment with machine learning/AI process controls management
• Heat recapture from engine test • Cloud
• Maximised material buy-to-fly ratio (i.e. minimise x-value stream scrap)
High aircraft 2 Improve design and • Explore use of new materials in aircraft and engine design, e.g. • Material
OPTIMISE
mass DESIGN AND testing to optimise in- lightweighting1, use of carbon fibre (which is lacking in UK supply chain) 2 innovation
resulting in MATERIALS
use fuel efficiency • Design, build, test and certify the product in the digital world which will • Virtual simulation
in-use fuel eliminate physical test items used, and potentially expensive test processes • Additive
inefficiencies
manufacturing
Extended 3 Simplify supply • Simplify supply chains (e.g. vertical integration, risk-share partnerships) • IoT
IMPROVE
complex LOGISTICS AND chains and improve • Eliminate expensive air-freighting of emergency parts through improved parts • Predictive
supply TRANSPORT part monitoring/ forecasting and live aircraft monitoring and intelligence, like Amazon’s analytics &
chains with forecasting anticipatory shipping model, where pallets are shipped to small, strategic modelling
high GHG
warehouses before demands are placed based on predictive analytics 3 • AI
footprint
Downstream 4 Invest in GHG • Aerospace players should invest extensively in both immediate (afforestation, • CCS
INVEST IN GHG
emissions in REMOVAL AND removal and bioenergy/sustainable aircraft fuels) & longer term offsetting solutions (CCS)
use phase of COMPENSATION compensation • Given that electrified commercial flight is still at least 15 years away (eFanX will
aircraft, pilot 1 of 4 engines as a Hybrid-Electric Propulsion System in 20214), and that
particularly
aerospace has long product lifecycles, aerospace necessitates offsetting
during take-
off/landing • Voluntarily offset to make remainder up to net-zero. UN’s CORSIA scheme will
ensure any rise in international aviation emission above 2020 levels are offset 5
Copyright © 2020 Accenture All rights reserved. Sources: 1. Tech Briefs; 2. BIS UK Aerospace Supply Chain Study; 3. Smart data collective; 4. Airbus 5. Carbon Brief 59
SECTOR ACTION AREAS: AEROSPACE
Manufacturers should invest in R&D for innovation in aircraft electrification and hybrid options
Downstream 5 Optimise in-use • Enforce services to reduce performance degradation of gas turbine engines • IoT
EXPLORE
emissions in ECOSYSTEM efficiencies of (which accounts for 3.6%-6.4% of use emissions1) through optimal maintenance and • AI
use phase of OPPORTUNITIES existing fleet regular on-line water washing and retrofitting innovations e.g. winglets • Digital asset
aircraft, • Optimise flight routes/climb patterns to minimise fuel consumption management
particularly • Emissions free taxiing • Cloud
during take-
off/landing 6 Prioritise and Create a plan to transition in-service aircraft/customers to net-zero: • Digital PLM
EXPLORE
ECOSYSTEM accelerate aircraft • Transition to fully electric aircraft options for regional travel e.g. Eviation’s 9- • Digital twin
OPPORTUNITIES
electrification seater ‘Alice’2 (see case studies) • Digital thread
• Drive forward dual fuel options for short-haul (<1,500km) e.g. EfanX • Additive
• Create offsetting, R&D support and performance enhancement packages for manufacturing
long-haul (>1,500km) • IoT
Huge investment needed in electrification R&D to tackle use phase: • Hybrid/battery
• Ensure majority of the 12% of aeronautic revenues invested in R&D is spent on technologies
electrification/hybrid technologies3 • Cloud
• Participate in large, integrated demonstrator programmes across airframe, • Hybrid/battery
engines & systems technologies (e.g. Clean Sky 3)2 to reinvent the full product technologies
around new electrified propulsion systems (don’t retrofit to gas-turbine designs)
• Collaborate with Shipping/Auto/Space industries to reinvent battery
technologies - kerosene has 30x energy density of current battery technology4
High 7 Closed loop recycling • Parts recycling already at high proportions due to high value parts – Rolls-Royce • IoT
DEVELOP NEW
emissions BUSINESS already recycle ~95% of engine parts – but further potential to reuse parts at the • Blockchain
embedded MODELS
same quality grade5 • Digital
within parts certification
Sources; 1. Science Direct - Carbon dioxide emission during the life cycle of turbofan aircraft 2. ASD’s Clean Sky 3 proposal 3. EC’s Flightpath 2050 Europe’s Vision
Copyright © 2020 Accenture All rights reserved. for Aviation :; 4. BBC 5. Rolls-Royce – Revert programme; 60
SECTOR CASE STUDIES: AEROSPACE
Whilst Rolls-Royce is leading net-zero production, Eviation is pioneering electric regional aircraft
Case Studies
Eviation’s ‘Alice’: The first Rolls-Royce – Net-Zero by 2030

electric regional aircraft1 Rolls-Royce is working towards decarbonising direct (Scope 1) and power (Scope
Israeli Eviation’s launch of 2) emissions to zero by 2030 through various means2:
the first fully electric 9- • Sizeable, ring-fenced budget for low-carbon innovation - designated
seater aircraft aims to between £7m and £11m to R&D annually since 20153
‘change the way people
travel regionally through • Revert programme to maximise recycling, with ~95% of used aero engines
affordable, sustainable now recovered and reused. In terms of impact, the Revert scheme reduces
aviation’. emissions by 80,000 tonnes of CO2e relative to using virgin materials, and
saves 300,000 MWh/yr2
Alice has a fuselage that is
optimised for electric travel, • Large scale solar rooftops in Bristol/Seletar
a fully fly-by-wire system, a • Exceptional investment payback periods for disruptive vs. incremental
flight cruise height of carbon impact investments (5yrs vs. 3yrs)3
10,000’ and a direct
operating cost of $200/hr. Moving forward, Rolls-Royce is now looking for further opportunities to:
Alice is currently targeting 1. Increase closed loop recycling (currently ~50%)2 rather than lower grade alloy
entry into commercial reuse
service in 2022 2. Recover alternative materials, such as composites and other alloys
3. Roll-out ground and air-source heat pumps across its manufacturing estate
Copyright © 2020 Accenture All rights reserved. Sources: 1. Eviation; 2. Rolls-Royce – Revert programme; 3. edie.net – How Rolls-Royce is innovating for zero carbon operations by 2030 61
APPENDIX

ANALYSIS METHODOLOGY
Sector level insights required data sourcing, aggregation and analysis
DEFINING AIMS DATA SOURCING DEFINE IN-SCOPE SECTOR ALIGNMENT DATA ANALYSIS
Define the key data Research, explore and Consolidate the data Use the in-scope data Conduct detailed data
requirements to download relevant based on the ONS categories and align analysis to reveal key
develop new insights datasets from ONS. Standard Industrial them to the relevant insights and trends at the
via primary data Datasets include: Classification (SIC) sector, one of 8 defined manufacturing sub-
analysis. Data • UK GHG emissions codes to enable by Accenture team, sector level. Analysis
requirements, for UK 1990 - 2017 effective data based on Made Smarter including:
national data, include: • GVA at low-level comparison. Key steps: work. Index data to I. GHG emissions over
• GHG emissions for aggregates 1990 – 1. Consolidate data to obtain insights at the time
manufacturing 2018 the same sub-level sector level e.g. Food II. Gross value added
• GHG emissions by • Energy use by for analysis and Drink III. Emission intensity
sub-sector industry 2. Identify SIC codes IV. Sub-level emission
• Gross value add / relevant to trends
revenue by sub- manufacturing and V. Future projections for
sector in scope manufacturing and
• Emission intensity 3. Index data for net-zero
alignment
EMISSIONS DATASET ALIGNMENT (1/2)
For primary analysis we used ONS data, which includes territorial based emissions, as well as air travel,
shipping, burning of biomass (etc), while the CCC uses BEIS data which has less emissions in scope
Net-zero ambition – Secondary research from BEIS data
Emissions data in scope ¹
• The UK government announced a target of net-zero for UK GHG
emissions by 2050 following recommendations made by the UK
ONS BEIS Committee on Climate Change (CCC)
• BEIS data is used by the CCC for their reports on net-zero. The “Net-
Zero Ambition” section of this deliverable is based on secondary
Territory based emissions ✔ ✔
research, including insights from the CCC report, and as a result, is
based on the BEIS dataset.
International air travel emissions ✔ ✔ UK Manufacturing Emissions – Primary analysis using ONS data
Measures of GHG emissions
We used ONS data for primary analysis based on a selection of key criteria:
Emissions from burning of
✔ X 1. Manufacturing emissions : ONS data breaks out emissions at the by
biomass
SIC section to the Manufacturing level, enabling an analysis of UK
Exclusion of emissions removals manufacturing emissions.
✔ X
by land
2. SIC Groups at Sector emission level: Further granularity enables
Crown and overseas territory manufacturing emissions to be broken down by sector. This enabled
X X insights across each of the 8 in-scope sectors. BEIS provides data for
emissions
“Industry”, however what is included in Industry data is unclear.
International shipping emissions ✔ ✔ 3. Comparable datasets: ONS provide datasets across GHG emissions
and GVA, to enable like for like comparison, up to 2017
Adjusting from a territory to a 4. Defined type of emissions: ONS emissions data for manufacturing
✔ X
residency basis includes scope 1 emissions only
5. Alignment to Made Smarter: ONS data was used for the Made Smarter
Net imported emissions X X
work and, as a follow on, this was important for consistency
Copyright © 2020 Accenture All rights reserved. Sources: 1. Breakdown of differences in emissions data (2016) can be found here 64
EMISSIONS DATASET ALIGNMENT (2/2)
ONS and BEIS emissions data varies based on in-scope emissions, the category breakdown of sectors
and the level of data granularity
ONS: 2017 GHG Emissions data 2017 emissions % of 2017 BEIS: 2017 GHG emissions 2017 emissions (ktCO2e) % of 2017 emissions
(ktCO2e) emissions
Consumer expenditure * 143,780 25% Surface transport 116,881 23%
BEIS emission categories

Electricity, gas, steam & air conditioning supply 99,508 18% Industry 104,985 21%
Manufacturing 86,268 15% Buildings 85,031 17%
Transport and storage 82,818 15%
Power 73,187 15%
Agriculture, forestry and fishing 48,617 9%
Water supply; sewerage, waste management Aviation & Shipping 51,851 10%
24,774 4%
and remediation activities Agriculture & LULUCF* 35,702 7%
Mining and quarrying 22,734 4% 20,412 4%
Waste
Wholesale and retail trade; repair of motor
ONS SIC Section categories
16,783 3% F-gases 14,972 3%

vehicles and motorcycles
Construction 13,440 2% Total 503,021 100%
Human health and social work activities 5,896 1%
Key dataset disparities
Public administration & defence; social security 4,915 1%
Accommodation and food services 3,383 1% • In-scope emissions: total emissions in scope vary between ONS and
Administrative and support service activities 3,307 1% BEIS data (see pg. 65 for details). As a result, the total emissions for
Education 2,569 0% 2017 vary from 566,383 ktCO2e (ONS) to 503,021 ktCO2e (BEIS)
Professional, scientific and technical activities 2,280 0% • Manufacturing vs industry: there is a disparity between Manufacturing
Information and communication 1,555 0%
emissions in the ONS data (15%) and industry emissions in the BEIS
Arts, entertainment and recreation 1,442 0%
data (21%). “Industry” is not clearly defined in CCC report
Other service activities 1,348 0%
Real estate activities 736 0% • Consumer expenditure: this accounts for 25% of emissions in ONS
Financial and insurance activities 128 0% data but is not clearly represented within BEIS data. The Accenture
Activities of households as employers; team are requesting further detail here from ONS and BEIS
undifferentiated goods and services-producing 101 0%
activities of households for own use
• Electricity vs Power: Electricity supply accounts for 99,508 ktCO2e in
ONS data, in comparison to 73,187 for Power in BEIS data
Total 566,383 100% *
Copyright © 2020 Accenture All rights reserved. * Sum of total % may not equal 100% due to rounding 65
* LULUCF: Land use, land-use change and forestry
EMISSIONS IN SCOPE
The focus of this analysis is on Scope 1 emissions; addressing upstream energy emissions (Scope 2) and
wider value chain emissions (Scope 3) will be critical, but is not considered in this analysis
Examples of emissions Examples of activities
Emissions scope Addresses… In scope
sources to reduce emissions
• Emissions directly produced
from combustion or by • Switch to alternative
Emissions from products from industrial fuels / energy sources /
Direct GHG emissions industrial activities and activities technologies
fuels consumed by Yes
(Scope 1) • Fuels consumed by (owned / • Increase efficiency of
owned or controlled
controlled) vehicles energy-consuming
assets
• Fuels consumed by boilers assets
and electricity generators
Indirect GHG emissions • Increase efficiency of No – national level data

Upstream emissions • Power plants feeding the grid
energy-consuming treats the power sector
– purchased electricity, from generation or from which power is drawn
assets independently to avoid
heat or steam purchase of energy • Plants feeding district heating
• Displace carbon- double-counting. Energy
carriers systems
(Scope 2) intensive grid electricity decarbonisation is key..
No – however, these are

• Choose logistics important for manufacturers,
Indirect emissions – • Outsourced transport and
partners operating notably in terms of material
logistics
other All other emissions electrified vehicles inputs and output
• Transmission and Distribution transportation. As such,
(Scope 3) • Generate power on-site
(T&D) system losses some recommendations
to avoid T&D losses
incorporate Scope 3
Copyright © 2020 Accenture All rights reserved. Source: The Climate Group and Accenture Strategy: Transforming Energy Consumption 66
MANUFACTURING GROSS VALUE ADD (GVA)
GVA has decreased 3% across all in-scope sectors, however GVA has grown in Aerospace, Transport
and Food and Drink
GVA (£m) Key takeaways
30,000
• GVA has increased in 3/8 sectors in scope since
2007
25,000
• Aerospace GVA has increased 47% during this
timeframe, the highest growth sector. Transport
20,000 has increased 23%
• Food and Drink has the highest GVA, at £24,706m
15,000 in 2017
• 5/8 sectors GVA has decreased, reflecting macro
10,000 trends in offshoring of manufacturing since 1990
5,000
0
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Aerospace Construction Energy Food and Drink
Materials Pharma Textile Transport

APPENDIX

OUR APPROACH ACCENTURE LED THE BENEFITS
ANALYSIS, WITH INPUT FROM WORKING GROUPS
25+
ORGANISATIONS
40+ 45+ 1
EXTERNAL
15+
ACCENTURE
7
STAKEHOLDERS RESEARCH VALUE AT STAKE
ENGAGED INVOLVED PAPERS ACADEMIC INDUSTRY / TECH MODELS
REVIEWED VALIDATION EXPERTS CREATED
• For each industry sector or technology, a model was built bottom-up, creating a
specific set of use cases relevant for the sector or technology in question
• The analysis followed the “value at stake” approach to understanding the value of
digital transformation for industry, society and the environment, developed in
collaboration with the World Economic Forum
• The analysis studied four industries in detail (Construction, Food and Drink, Pharma and
Aerospace) and for these sectors found an estimated £185bn at stake over the next
decade. This figure was then extrapolated to provide an overall estimate for the UK

ACCENTURE ANALYSIS FOUND AN ESTIMATED £455BN
VALUE AT STAKE FOR THE UK MANUFACTURING INDUSTRY
VALUE TO INDUSTRY FROM IDT ADOPTION SCALING UP
Estimated value for

£88.9bn industries not directly
CONSTRUCTION studied:
Highest growth rate
(Aerospace, 21%)
£55.8bn
applied to the 62% of WE FOUND AN ESTIMATED
FOOD AND DRINK UK manufacturing £455BN POSITIVE IMPACT
GVA not studied, FOR UK MANUFACTURING,
giving £270bn extra
£22.4bn
value at stake
FROM FASTER INNOVATION
PHARMACEUTICALS AND ADOPTION OF IDTS
Value at stake for UK OVER 10 YEARS
£17.5bn manufacturing:
AEROSPACE
Four studied
industries total
£185bn (£185bn) + remaining
INDUSTRY TOTAL
(2018-2027)
(across four industries representing industries total
38% of all UK manufacturing GVA) (£270bn) = £455bn

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MADE SMARTER

Summarising the findings of the UK Committee on Climate

Analysing UK manufacturing emissions and emissions intensity

Presenting 5 priority action areas that manufacturers could

Providing a) net-zero context for the 8 manufacturing sectors,

Copyright © 2020 Accenture All rights reserved. 2

Copyright © 2020 Accenture All rights reserved. 3

Copyright © 2020 Accenture All rights reserved. 5

Figure 2: A view of the 9 Planetary Boundaries (PIK)

Figures: Net Zero – The UK Contribution to Stopping Global Warming; DEFRA

Condition for success Overview Key interventions

Condition for success Overview Key interventions

Copyright © 2020 Accenture All rights reserved. 13

Copyright © 2020 Accenture All rights reserved. 14

Energy Products Aerospace 8,795 ktCO2e

High emissions footprints in raw material Footprints based on secondary end-

Emissions associated with the manufacturing

Emissions associated with the manufacturing,

Emissions associated with the manufacturing

Emissions associated with the manufacturing

¹ GHG emissions represented in thousand tonnes of CO2 equivalent

• Manufacturing emissions from in scope

• Following a large reduction between 1990 and

Copyright © 2020 Accenture All rights reserved. 21

Key net-zero responsibilities for UK manufacturers:

Reach ‘net-zero’ operations Reach a ‘net-zero’ supply chain

Copyright © 2020 Accenture All rights reserved. 22

Direct operations “Scope 1” GHG emissions

1. DELIVER 4. IMPROVE 5. INVEST IN GHG

Indirect operations “Scope 2/3” GHG emissions

EXPLORE ECOSYSTEM OPPORTUNITIES INFLUENCE POLICY & REGULATION

ENCOURAGE CONSUMER BEHAVIOUR CHANGE DEVELOP NEW BUSINESS MODELS

Copyright © 2020 Accenture All rights reserved. 23

Direct operations “Scope 1” GHG emissions

1. DELIVER 4. IMPROVE 5. INVEST IN GHG

Indirect operations “Scope 2/3” GHG emissions

Copyright © 2020 Accenture All rights reserved. Opportunities not exhaustive 24

Sector Key sector GHG drivers Suggested action areas

1. Cement production hard to abate 1. Optimise on-site space/water heating

1. Demands for energy intensive processes and

Copyright © 2020 Accenture All rights reserved. 25

Sector Key sector GHG drivers Suggested action areas

Copyright © 2020 Accenture All rights reserved. 26

DIGITAL PHYSICAL BIOLOGICAL

Energy harvesting (heat): capture heat / energy

Internet of Things: embedded sensors to Hydrogen technologies: hydrogen substitution for

3D printing: new construction manufacturing

Hydroponics and aeroponics: local and year-

Copyright © 2020 Accenture All rights reserved. 27

DIGITAL PHYSICAL BIOLOGICAL

Energy storage (batteries): on site energy

AI: identify inconsistencies in processes and

Carbon Capture and Storage: deploy CCS

Copyright © 2020 Accenture All rights reserved. 28

Copyright © 2020 Accenture All rights reserved. 29

Sector net-zero challenges

decarbonisation technologies, high costs and limited motivation for

Key sector GHG drivers (indirect italicised)

2,277 Energy demands of high temperature processes

Copyright © 2020 Accenture All rights reserved. 30

▪ Whilst an essential technology in residential buildings, ▪ Software enabling best-in-class resource

Sector net-zero challenges

• Hard-to-abate, high intensity processes: e.g. 30 integrated steel plants in