Study of the Humber Energy Intensive Industries Cluster · Reckitt Benckiser Siemens Gamesa Singleton Birch SSE Gas Storage SSE Keadby Total Lindsey University of Hull Vivergo Fuels

Study of the Humber Energy Intensive

Industries Cluster

Version 3.6 – FINAL

March 2018

Study of the Humber Energy Intensive Industries Cluster

FINAL REPORT Page 2 of 155

Carbon Trust prepared this report based on an impartial analysis of primary and secondary sources. Carbon Trust is an organisation of independent experts with the mission to accelerate the move to a sustainable, low carbon economy. We operate at a worldwide level from London, Edinburgh, Cardiff, Beijing, Johannesburg, Delhi, Sao Paulo, and Mexico City.

V3.6 April 2018

This report was prepared by the Carbon Trust for the Humber Local Enterprise Partnership (LEP).

Paul Huggins Associate Director, Carbon Trust

Paul McKinney

Senior Manager, Carbon Trust

Helen Andrews Tipper Senior Manager, Carbon Trust

Lucy Hunt

Associate, Carbon Trust

Sarah Clifford Associate, Carbon Trust

Flora Davies

Associate, Carbon Trust

www.carbontrust.com

http://www.carbontrust.com/



Acknowledgements

Steering Group members:

Humber Local Enterprise Partnership

CATCH

Green Port Hull

The Carbon Trust would also like to thank the following contributors for their valuable

input:

Air products Associated British Ports

Associated Petroleum Terminals BASF

BOC Immingham BP Chemicals

British Steel Cemex

Centrica Storage Cristal

Croda Drax Group

Greenergy Team Humber Marine Alliance

Ineos Nippon Gohsei

Northern Powergrid Novartis

Ørsted Perenco

Phillips66 PX Group (Saltend)

Reckitt Benckiser Siemens Gamesa

Singleton Birch SSE Gas Storage

SSE Keadby Total Lindsey

University of Hull Vivergo Fuels

VPI Immingham



Table of Contents

1 SUMMARY ....................................................................................................................................... 9

1.1 Introduction ............................................................................................................................ 9

1.2 The national context ............................................................................................................. 10

Opportunities ................................................................................................................................ 10

Threats .......................................................................................................................................... 11

1.3 Profile of the Humber Energy Intensive Industry Cluster ..................................................... 12

Snapshot of energy intensive industry in the Energy Estuary ...................................................... 13

Energy Consumption ..................................................................................................................... 14

Snapshot of energy generation in the Energy Estuary ................................................................. 15

Economy ........................................................................................................................................ 16

1.4 Findings ................................................................................................................................. 18

SWOT and TOWS analysis ............................................................................................................. 20

1.5 Industrial opportunities ........................................................................................................ 23

1.6 Recommendations and next steps ........................................................................................ 23

A strategic platform for industrial leadership ................................................................................... 24

Strengthening strategic sectors ........................................................................................................ 25

Strengthening regional support ........................................................................................................ 25

Unlocking new opportunities ............................................................................................................ 26

Improving efficiency of operations ................................................................................................... 26

Collaboration and coordination ........................................................................................................ 27

1.7 Summary of selected industry support organisations in the Humber .................................. 31

2 Introduction .................................................................................................................................. 33

2.1 Context .................................................................................................................................. 33

Scene setting ................................................................................................................................. 33

Project scope ................................................................................................................................. 34

2.2 Methodology ......................................................................................................................... 35

3 Humber’s Energy Intensive Industries Cluster .............................................................................. 37

3.1 Energy Intensive Industries ................................................................................................... 37

3.2 Clusters.................................................................................................................................. 37

4 National context ............................................................................................................................ 40

4.1 The Climate Change Act and decarbonisation strategies ..................................................... 40

4.2 Northern Powerhouse .......................................................................................................... 41

4.3 Industrial Strategy ................................................................................................................. 42



4.4 Energy Intensive Industries Decarbonisation to 2050 .......................................................... 43

4.5 Clean Growth Strategy .......................................................................................................... 44

4.6 Exiting the EU ........................................................................................................................ 46

4.7 Feedback from stakeholders on national initiatives ............................................................. 47

4.8 Developments within the energy supply market .................................................................. 47

Demand side response .................................................................................................................. 48

Energy Storage .............................................................................................................................. 48

Renewable energy supply ............................................................................................................. 49

Decentralised energy .................................................................................................................... 50

4.9 Global and local trends for key energy intensive sectors ..................................................... 50

Chemicals ...................................................................................................................................... 50

Oil refining ..................................................................................................................................... 52

Renewables ................................................................................................................................... 53

Carbon Capture and Storage (CCS) ............................................................................................... 55

4.10 Industrial Symbiosis .............................................................................................................. 57

Global experience ......................................................................................................................... 57

UK experience ............................................................................................................................... 58

EPOS .............................................................................................................................................. 59

LOCIMAP ....................................................................................................................................... 59

Further opportunities ................................................................................................................... 59

Integration in practice ................................................................................................................... 60

4.11 Climate change risk and adaptation ..................................................................................... 61

5 Regional context ........................................................................................................................... 63

5.1 Area profile ........................................................................................................................... 63

5.2 Economy of the Humber region ............................................................................................ 67

Regional landscape ....................................................................................................................... 67

Economic comparators ................................................................................................................. 67

Humber long-term GVA performance .......................................................................................... 68

Humber GVA ................................................................................................................................. 68

Humber GVA per head of population ........................................................................................... 69

Humber Sectorial GVA analysis ..................................................................................................... 71

Regional employment ................................................................................................................... 72

GVA per employee ........................................................................................................................ 73

Manufacturing .............................................................................................................................. 74

Diversified manufacturing base .................................................................................................... 74

Manufacturing chemical and chemicals products ........................................................................ 75



Manufacturing of basic pharmaceutical products and preparations ........................................... 76

Manufacturing of refined petroleum products ............................................................................ 76

Humber Ports ................................................................................................................................ 77

Grimsby & Immingham Port Complex .......................................................................................... 77

Comparison of key ports ............................................................................................................... 78

Source of trade .............................................................................................................................. 79

Trade in vehicles ........................................................................................................................... 79

GVA Forecast to 2020 ................................................................................................................... 80

5.3 Industry support structures in the Humber region ............................................................... 81

Stakeholder feedback on local support to industry ...................................................................... 83

5.4 Features of other comparable clusters ................................................................................. 84

Teesside and the North East ......................................................................................................... 84

Grangemouth ................................................................................................................................ 85

Port of Rotterdam ......................................................................................................................... 85

Port of Antwerp ............................................................................................................................ 86

Feedback on comparison of the Humber region with other UK regions ...................................... 87

Environmental best practice for ports in Europe.......................................................................... 88

6 Snapshot of energy intensive industry in the Energy Estuary ...................................................... 90

6.1 Energy intensive industry locations ...................................................................................... 90

6.2 Material Flows ....................................................................................................................... 91

6.3 Energy consumption in the EII cluster .................................................................................. 93

6.4 Process emissions ................................................................................................................. 96

6.5 Feedback from energy intensive industries .......................................................................... 97

Investment .................................................................................................................................... 97

Energy efficiency and carbon saving ............................................................................................. 99

7 Snapshot of energy generation in the Energy Estuary ............................................................... 101

7.1 Electricity infrastructure and connection potential ............................................................ 103

7.2 Non-renewable power generation ..................................................................................... 105

Decarbonisation of the electricity supply ................................................................................... 106

7.3 Renewable energy supply ................................................................................................... 106

Bioenergy .................................................................................................................................... 106

Offshore wind energy ................................................................................................................. 108

Waste heat .................................................................................................................................. 111

8 Stakeholder views of strengths and weaknesses ....................................................................... 113

8.1 Perceived Strengths ............................................................................................................ 113

8.2 Perceived Weaknesses ........................................................................................................ 115



9 Drivers and barriers to growth and decarbonisation.................................................................. 117

9.1 Drivers ................................................................................................................................. 117

9.2 Barriers ................................................................................................................................ 118

10 SWOT analysis of the Humber ................................................................................................ 119

10.1 How can decarbonisation in energy-using industry be accelerated? ................................. 120

10.2 How can decarbonisation in energy supply be taken forward? ......................................... 122

10.3 How can Humber estuary become a/the renewables hub/centre of excellence for the UK?

125

10.4 How can Humber estuary ensure the EIIs grow and add capacity in a decarbonisation

sensitive way? ................................................................................................................................. 127

10.5 Is there an opportunity for more decentralised decarbonised heat provision? ................ 129

10.6 What is the scope for wider industrial symbiosis, integration and other inter-organisational

synergies? ....................................................................................................................................... 131

11 Opportunities for the Humber Energy Intensive Industries Cluster ....................................... 133

12 Opportunities for support organisations or wider partnerships to stimulate growth ........... 139

12.1 Messaging ........................................................................................................................... 139

12.2 Maintain and grow existing industry .................................................................................. 140

12.3 Generating inward investment ........................................................................................... 140

13 Recommendations .................................................................................................................. 142

A strategic platform for industrial leadership ................................................................................. 142

Strengthening strategic sectors ...................................................................................................... 143

Strengthening regional support ...................................................................................................... 143

Unlocking new opportunities .......................................................................................................... 144

Improving efficiency of operations ................................................................................................. 145

Collaboration and coordination ...................................................................................................... 145

13.1 Making it happen ................................................................................................................ 145

A strategic platform for industrial leadership ................................................................................. 145

Strengthening strategic sectors ...................................................................................................... 147

Strengthening regional support ...................................................................................................... 148

Unlocking new opportunities .......................................................................................................... 149

Improving efficiency of operations ................................................................................................. 150

Collaboration and coordination ...................................................................................................... 151

13.2 Classification and prioritisation of recommendations ........................................................ 152

14 Appendices .............................................................................................................................. 155

Appendix 1 List of industry stakeholders interviews undertaken .............................................. 155





1 SUMMARY

1.1 Introduction

The Humber has a long-standing reputation as one of the UK’s leading industrial regions, one of the

top chemicals clusters, as the capital of seafood processing, and as a leader of other industries

facilitated by its east coast deep-water ports. Its industries are a significant user of energy, and the

Humber and neighbouring authorities are major contributors to the UK’s generation capacity. In

2015 the energy intensive industries are estimated to have consumed over 8GWh energy, at a cost

of over £300m. The total of all industrial and commercial energy use in the region is 23GWh, costing

nearly £1bn. There is over 4.4 GW of installed electrical capacity in the region – the majority

powered by fossil fuel.

The past decade has seen significant investment in the Humber region. The development of offshore

wind in the North Sea has led to some revival in the region’s fortunes and new facilities have taken

root in Hull and Grimsby to build and maintain offshore installations. This has stimulated a wider

adoption of renewable and clean energy developments, including bioenergy and energy from waste.

Existing industries are also investing in expansion, as the Humber holds significant positional

strengths that provide global advantages, including several ports, transport connections, energy

infrastructure, land availability and low costs. In total the Gross Value Added (GVA) in the Humber

was over £18bn in 2016, with over ¼ related to manufacturing.

There is a real opportunity for the Humber region to expand its strategic ambitions to:

Become the UK Hub for Renewables Excellence with an extensive renewables supply chain of

global reach, grown by new ideas cultivated and championed by regional institutions. In doing

so become the UK’s leading exemplar of green, low cost power and heat.

Set an energy intensive industries decarbonisation vision to overcome key barriers holding

back widespread decarbonisation and industrial symbiosis across energy intensive industries.

Such a vision might include:

o Creation of a Process Industry Testing Hub to de-risk processes before live

deployment

o A Novel Business Models Accelerator to give solutions to known but unresolved

commercial barriers

o Pathways to decarbonisation of the energy intensive industries, including

decarbonisation of energy supply

Through executing such a vision, the Humber could become a world leading exemplar of a

low carbon manufacturing region

Identify markets with reducing commercial longevity (gas production, gas storage,

conventional power generation, oil refineries) and work with these markets to develop

diversification strategies.

Maintain, reinforce and grow traditional industries to increase UK competitive advantage in

expanding globally competitive markets (e.g. steel, oil refining, commodity chemicals,

speciality chemicals, food).

Utilise the region’s leading industrial university and industrial training capabilities to take a

leadership position in applied STEM skills and industrial process training. Establish national

capabilities in the training of engineers and technologists for process, renewables and digital

industries.



Encourage growth in digital & AI, and transport sectors, to align with Industrial Strategy

priorities

In order to begin to realise these ambitions, the Humber LEP commissioned the Carbon Trust to

conduct a cluster study to increase understanding of the energy intensive industries (EII) cluster, and

to make recommendations to ensure that it plays a significant and strategic role in UK value

creation, amid increasing environmental challenges and requirements. The businesses that make up

the Humber Energy Intensive Industries Cluster are defined as the highest users of energy, including

chemicals, other energy intensive manufacturing (e.g. food, steel, minerals), renewables

manufacturing, ports and logistics, along with energy generation businesses and supporting

businesses to these sectors.

This study was built upon a strong base of existing secondary research covering the regional

economy, industry and energy system, and was informed by primary research comprising 33 in-

depth semi-structured stakeholder interviews across the Humber’s EII Cluster. The outputs provide a

detailed snapshot of the Cluster, and a baseline against which to measure improvements. They

identify a series of opportunities and recommendations for the Humber LEP, which will support

organisations and local industry to accelerate the Humber’s industrial decarbonisation and growth.

1.2 The national context

Opportunities

The UK’s strategic trading, industrial and regional narratives are changing. The recent release of the

Industrial Strategy, the Clean Growth Strategy and the Industrial Decarbonisation and Energy

Efficiency Action Plans to 2050, and greater interest by central government in regional industrial and

decarbonisation opportunities set the stage for a renewed strategic engagement leading to growth

and increased wealth for the region. The strengths of Humber in manufacturing and energy bring a

great opportunity to capitalise on the industrial growth plans for the Northern Powerhouse.

Benefits of industrial clusters:

• Improved firm visibility

• Diffusion of knowledge and good practices

• Development of trust

• Sharing of common resources

• They act as a ‘trusted partner’

• They facilitate networking

• They act as a focus for industry expertise

• They are a source for long-term strategic leadership

• They increase the visibility of a region



Other opportunities include developments within the energy supply market, as electricity market

mechanisms such as demand side response, frequency response and other smart energy network

mechanisms work to align supply and demand to compensate for irregular electricity generation

patterns. Similarly, the uptake of alternative technologies such as energy storage, small scale

renewables and decentralised energy are affecting the way we consume and generate energy in the

UK as a whole.

In terms of specific support programmes for industrial symbiosis, the Humber EII Cluster can build

upon previous experience from the National Industrial Symbiosis Programme (NISP), the EU

Enhanced energy and resource Efficiency and Performance in process industry Operations via onsite

and cross-sectorial Symbiosis (EPOS) programme and the EU low carbon industrial manufacturing

parks (LOCIMAP) programme.

Threats

National and global threats exist for the Humber EII Cluster, some with high uncertainty, such as

exiting the EU and climate change. Wider political threats to industry have grown in significance

since the 2016 referendum and a significant lack of clarity remains around the impact that

•The planned contribution of the Northern Powerhouse to achieving the UK’s economic potential brings a great opportunity to the Humber if properly leveraged, particularly given the focus on manufacturing and energy, which are inherent strengths of the Humber region. Humber should position itself as a key player.

Northern Powerhouse

•The Humber LEP has actively engaged with the UK Industrial Strategy with a detailed response to its open consultation and is well-placed to build on the opportunities presented in the national strategy to drive forward the UK’s industrial growth objectives.

Industrial Strategy

•The Industrial Decarbonisation and Energy Efficiency Roadmaps and Action Plans present opportunities that can be exploited by the Humber EII Cluster businesses. The Humber region could set itself the goal of working with BEIS as a leading change agent taking forward actions, particularly from the Chemicals and Oil & Refining Action Plans.

Roadmaps

•The Clean Growth Strategy announced £2.5 billion in national programmes and funding to accelerate clean growth, with a number of programmes that Humber-based industries can benefit from, including the Industrial Heat Recovery Support (IHRS) programme, the Industrial Energy Efficiency Accelerator (IEEA), the Industrial Fuel Switching Market Engagement Study and the Carbon Capture and Usage (CCU) Demonstration Programme.

Clean Growth Strategy



withdrawal from the European Union will have on the UK economy. Issues that have been identified

in the Humber as threats to industry include: being the UKs leading port for European trade, area

uncertainty impacting investor confidence, currency devaluation increasing costs of imported raw

materials (though positive for the export market), immigration regulations restricting EU labour and

trade deals restricting access to markets. Given the high interdependencies and interconnectedness

of the Humber chemicals/petrochemicals industries with the EU (as suppliers, customers, investors

and owners), leaving the EU is considered to bring disproportionate uncertainty, and therefore risk.

Climate change risk and adaptation is also an important issue for the Humber EII Cluster given its

coastal location and dependence on import and export of materials, and a more in depth

assessment will be required to assess the potential risks and adaptation strategies most suited to

minimise the impact on Humber-based industry.

1.3 Profile of the Humber Energy Intensive Industry Cluster

The Humber region incorporates the four local authorities of Hull, East Riding of Yorkshire, North

East Lincolnshire and North Lincolnshire. It is effectively on the dividing line between the Midlands

and the North of England and therefore marks the southern boundary to the Northern Powerhouse.

The Estuary is home to four port towns including: Grimsby a renowned centre for food processing,

which more recently has established leading offshore wind operation and maintenance (O&M)

activities; and Immingham the UK’s largest port by tonnage. Together these two ports handled 54

million tonnes of cargo in 2016. Goole is the UK's most inland port situated around 50 miles from the

North Sea.

Kingston upon Hull (commonly known as Hull) is the only city in the Humber Estuary region, and is

home to Siemens Gamesa, a new offshore wind turbine blade manufacturing facility, with a vision to

establish the region as a world class centre for renewable energy. In 2017 Hull was awarded the UK

City of Culture status, which brought 2,000 events, exhibitions and cultural activities to the city and

attracted millions of visitors.

Energy is at the heart of the region’s economy, and it is described and marketed as the ‘Energy

Estuary’. Around 25% of UK oil refinery and coal import requirements are provided through the

Humber, in addition to over a fifth of national gas demand. Due to its proximity to North Sea

offshore wind farms, the Humber Estuary has also become a hub for offshore wind manufacture and

servicing. The industry in the region is also a significant energy user - 6% of England’s industrial and

commercial energy use is by businesses in the Humber region.

The largest Enterprise Zone in the UK is located across over 40 sites around the Humber Estuary,

principally composed of areas on the north and south bank of the river around Hull, Brough,

Immingham, Grimsby, Cleethorpes and Goole, as well as inland locations around Scunthorpe and

Humberside Airport. These areas offer a variety of benefits to businesses such as access to deep sea

ports, proximity to renewable energy generation and availability of land. The Enterprise Zones offer

incentives such as business rate reductions and Enhanced Capital Allowances and simplified planning

arrangements.

A wide range of organisations provide support to businesses within the Humber region. A selection

of these are listed at the end of this Public Summary document.



Snapshot of energy intensive industry in the Energy Estuary

The Humber hosts a number of energy intensive industries, including: petrochemicals, refineries and

alternative fuels production; chemical manufacture and storage; steel making; cement and lime

manufacture; glass manufacture; food processing and manufacture; and onshore and offshore gas

production and storage.

Although industries are spread across the estuary many businesses are located close to the ports of

Hull, Grimsby and Immingham. The figure below shows the EII interview respondents for this study

from the region, which comprise the majority (but not all) of the largest energy users in the Humber.

The Humber’s ports complex is, with 77m tonnes cargo in 2016 (16% total UK cargo), the UK’s largest

for both import of raw materials and components and export of UK manufactured products. It offers

excellent access to Europe; with ~30m tonnes annual trade it is the UKs largest port complex trading

with the EU.

The region forms one of four major chemicals producing regions in the UK. There are two major

chemicals clusters: the Saltend Chemicals Park, and a cluster spread along the South Humber Bank

between Immingham and Grimsby, which includes two of the UK’s four oil refineries. Manufacture

of renewable fuels and infrastructure represents another key industry in the Humber, notably

offshore wind turbine manufacture and servicing, and large UK players in the biofuels industry.

Further energy intensive industry in the region includes one of the two UK integrated steel works, a

cement works, a lime works and a float glass plant at Goole.

In addition, The Humber is believed to have the largest concentration of food manufacturing

research, storage and distribution facilities in Europe, contributing over £1bn to the UK economy.

Grimsby is referred to as ‘Europe’s Food Town’, with around 500 food related businesses and a full



supply chain of food sector services. Large food manufacturers, are also concentrated around Hull, in

addition to major pharmaceutical and personal care product manufacturers.

Energy Consumption

Total annual energy use in the Humber is around 37,000 GWh, of which nearly two thirds is

accounted by the Industrial and Commercial sectors. The energy intensive industries are estimated

to consume over 8,000GWh/yr at a cost of around £330million/yr. A number of heat maps have

been prepared which show the concentrations of energy use (as well as potential opportunities for

heat recovery). Significant potential remains to reduce energy consumption by energy intensive

industry in the Humber, as well as to decarbonise processes by increasing the proportion of

renewables and alternative fuels, and installing heat networks to distribute lower carbon and waste

heat.

Heat map showing total consumption of Humber Energy Intensive Industry

Most businesses spoken to had made some investments in energy efficiency. Energy is a high and

controllable cost for energy intensive industries and in the current competitive market place, many

companies have programmes in place to reduce operating costs through operational energy efficient

improvements. Several sites claim to be world class exemplars of energy efficiency for their sector –

with further savings requiring increasingly larger investment. Carbon Trust experience of working

with such forward thinking sites has shown these businesses often export their knowledge to their

sister operations located elsewhere in the world. A number of recent, current and planned £multi-

million investments have been identified.

Smith and Nephew, Croda, Indivior and RB have all invested in new research centres or

manufacturing facilities. And Siemens Gamesa / ABP, Greenergy and Vivergo have invested

£hundreds of millions between them into their operations within the renewables sector. A number

of chemicals and other manufacturers are planning investments of £tens of millions in

debottlenecking, increased manufacturing capacity and energy efficiency.

However other sites are at an earlier stage of their energy efficiency and decarbonisation journeys.

Several companies stated that recent ESOS audits have identified a number of new energy saving

opportunities that are still being considered, or that they need more metering equipment to be able

to accurately determine where the best potential for savings occurs.

Despite the high concentration of carbon dioxide emitting plants in the region, there is relatively

little current activity with regards to reuse of CO2 or research or investment in carbon capture and

storage (CCS). The withdrawal of funding for the major “White Rose” project in 2015 is seen as a

significant setback in the enthusiasm to develop CCU/CCS in the region. Several companies retain an



interest and would consider bringing expertise to a CCU/CCS project, possibly in partnership with

other regions.

Snapshot of energy generation in the Energy Estuary

The Humber region has long been the seat of a number of important conventional power generation

businesses and in recent years has established itself as a key region for the distribution of renewable

power, heat and biofuels. The split of electricity generation capacity within the region is shown in

the table below.

Installed electricity generation capacity in the Humber, compared with other regions

The generation of power through conventional means (coal or gas fired power stations) is still an

important industry for the region. A significant proportion of EII company energy needs are

provided by gas-fired CHP plant. Whilst CHP is usually lower carbon than grid electricity, this will

change in the future as the grid decarbonises – potentially as early as 2020. The locations of

proposed and operational renewable energy plants are shown in the diagram overleaf.

The renewables sector is growing rapidly in the Humber, with the offshore wind and bioenergy

sectors leading the way. The Humber contributes to the UK’s leading position for offshore wind both

with existing wind farms and planning additional developments in the North Sea; and offshore wind

represents the largest share of renewables production in the region. Humber’s offshore wind

industry spans almost every stage of wind farm development and operation, including turbine

manufacture, assembly, installation and ongoing operation and maintenance through offshore wind

servicing facilities.

UK Humber Yorkshire & the Humber

Wirral North West

Teesside North East

Advanced Conversion Technologies

2,516 51 51

Biomass 2,314 2,092 38

CCGT 29,855 3370 3,476 1,710 1,825

Coal 11,776 3,940 1,961 1,961

Diesel 138

EfW Incineration/Landfill gas/AD 365 21 62 81 89

Gas 2,114 1,280 10 190 84

Gas oil 1,257 25 100 34 34

Hydro/pumped storage 3,756 7

Light oil 17

Meat & bone meal 14

Nuclear 8,918 2,385 1,180 1,180

OCGT 632 600 600

Solar Photovoltaics 444 211 5

Straw 38

Wind Offshore 4,755 219 219 240 1,087 62 281

Wind Onshore 5,467 135 544 50 288 434

TOTAL 74,376 4,421 12,575 4,086 7,859 1,242 2,029



The Humber region is gaining a reputation for operations and maintenance (O&M) expertise with

the largest concentration of offshore wind O&M supply chain businesses in the north of England and

Scotland. Expertise in the region is also set to grow, with the announcement in 2017 of an offshore

wind Operations and Maintenance Centre of Excellence led by the Offshore Renewable Energy (ORE)

Catapult and the University of Hull.

Locations of proposed and operational renewable energy plants

A growing biofuels and biogas market provides a significant opportunity for the Humber region,

which already has strong existing biofuel capability. Anaerobic digestion and energy from waste

facilities continue to grow in the region, further stimulating local biofuels production. Energy Works’

25MW energy from waste plant in Hull will be the newest addition to this, due to become

operational in 2018, producing biomethane to inject directly into the gas grid, as well as powering

turbines to generate electricity.

In terms of solid biofuels, the Drax biomass power station is a major influence locally. Whilst the

power station itself is just outside of the Humber region, two major biomass handling facilities have

been constructed in the Humber ports to transport biomass to be used as fuel.

The Humber region has historically had strong energy grid infrastructure for both gas and electricity,

due to a legacy of energy intensive industry. Whilst there are grid constraints in some areas around

the estuary, there is generally spare capacity for the connection of both demand and generation.

Economy

Humber industries delivered £18.38 billion in Gross Value Added (GVA) in 2016, out of a nominal

GVA for the UK of £1,748 billion. Aside from a short post-recession period between 2009 and 2013,



the Humber region’s year on year growth – as GVA per head of population - has remained broadly

aligned with the UK and its regional neighbours. GVA per headcount is £19,807, compared with a UK

average of £26,584. Growth over 3 years has averaged 2.6%. GVA per employee (as opposed to per

head of population) is only 7% lower than the UK average.

GVA per head growth, Humber LEP Region and neighbouring regions, 1998-2016

Source: ONS GVA Reference Tables2 December 2017, Carbon Trust analysis

Good progress has been made in the Humber in respect to falls in unemployment which fell from

6.4% to 5.0% between September 2016 and September 2017. Compared to similar industrial regions

(Cheshire & Warrington and Tees Valley), the Humber is the only one to have shown consistent

growth in the employment rate over the past four years.

Progress on employment rate is likely tied to the significant progress the region has made in the area

of skills and training, a combined effort from the public sector, academia and local industry. Also,

between 2015 and 2016 the number of businesses in the Humber grew by 3.3%.

An analysis of GVA by sector has been carried out versus serval comparable regions (those including

ports and/or significant chemicals industry and/or renewables industries). This shows that at nearly

25% the Humber has a highest GVA contribution due to manufacturing, closely followed by Cheshire

and Warrington at 24%. The Tees Valley, Solent and New Anglia have much lower GVA contributions

from manufacturing (12%, 11.2%, 13%). However, compared with the comparator regions the

Humber has smaller GVA contributions from ICT, financial service and professional and technical

services.

Manufacturing plays a significant role in the Humber, providing more than 55,000 jobs (15% of

employment). The Humber has a diversified manufacturing base with substantial employment in the

food products (29%), chemicals (23%), and metals including fabrication sectors (19%).

-6.0%

-4.0%

-2.0%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Humber North East North West United Kingdom



Sectorial GVA analysis for Humber, Tees Valley, Solent, New Anglia, and Cheshire & Warrington

Data source: ONS GVA by LEP Reference Tables December 2017, Carbon Trust analysis

In seeking to strengthen the regional economy, the Humber’s focus on developing a strong UK

capability as an offshore renewables hub, and in developing the Energy Intensive Industries cluster is

a valid goal. For businesses to achieve these ambitions they will require well trained and highly

skilled professional, technical and administrative labour which should deliver growth to this sector of

the economy.

Equally, thought may still need to be dedicated to how to ensure that opportunities in the ICT,

financial service and professional and technical services sectors are not lost to other regions.

Alongside existing ambitions the region should examine its capacity in the cold economy: chemicals,

refrigeration technology, cold storage and more broadly the emerging concept of clean cooling.

1.4 Findings

Over 30 of the largest energy using companies in the region were interviewed for this study. There

was overwhelming support for the Humber as a good location for their operations. Most of their

operations are currently stable, or growing, and some major future expansion opportunities exist.

Stakeholders were asked for their views on the strengths and weaknesses of operating in the

Humber region. Their feedback can be summarised as follows:

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Cheshire and Warrington

Humber

Tees Valley

Solent

New Anglia

Farming, mining, utilites Manufacturing

Construction Wholesale, retail, transport & storage, food

ICT Financial services

Real estate services Profressional, technical, administrative

Public sector, education and health Arts, recreation and other services



.

Stakeholders were also asked to describe the drivers and barriers for investment in energy saving

and decarbonisation projects, as well as inward investment in growth more generally.

Drivers reported by EIIs for investment in growth and energy saving projects are centred around

financial and strategic priorities. Climate change mitigation and adaptation is a secondary driver

once financial and business needs have been met. Barriers surround risk, cost and competing

business priorities. Some EIIs reported these barriers as prohibitive to investment, whilst others

identified them as issues that could be overcome.

A summary of the most commonly quoted factors are shown below:

Drivers

Financial Energy is a significant variable and controllable cost.

Third party developers may provide capital investment for renewables.

Energy saving projects can offer more certain returns than process optimisation projects.

Strategic/ operational

Investment can be driven by demand for new products or increased capacity.

Carbon performance is often published in annual or CSR reports, especially for larger companies. There can be pressure from shareholders. Some multinational EIIs have company-wide emission reduction targets.

There can be supply chain demand, especially from B2C customers. Investment in decarbonisation is more important where the product is sold on its green credentials.

Reducing energy demand and diversifying supply increases security of supply and cost control.

Energy benchmarking can increase need to perform well against other sites.

Physical Climate change poses a threat to business as usual, so adaptation (e.g. protection from flooding) is a long term driver.

Barriers

Financial Renewables and storage projects can require significant upfront capital and may fail to meet corporate payback requirements (often < 2 years).

The cost of environmental compliance can restrict capital for

STRENGTHS - Trading estuary and infrastructure

- Sectoral strengths (manufacturing and engineering, port and logistics, chemicals, agribusiness and food)

- Energy supply

- Support organisations and academia

- The people and skills

WEAKNESSES - Road/Rail transport links

- Business struggle

- Local brand

- Leakage of skilled employees

- Promotion of the region



decarbonisation projects.

Strategic/ operational

EIIs report the need to compete with international subsidiaries for investment capital, which limits the rate of investment.

Projects that are outside of core business are given lower priority.

There is a lack of metering in industrial sites. Lack of data thus restricts the business case for energy efficiency projects

Some EIIs report that markets are not stable enough for investment.

Political Uncertainty around Brexit impact reduces willingness to invest in the UK.

Lack of certainty on policy direction and history of changing subsidies discourages long term investment.

Physical SSSIs and planning consent issues can restrict development.

There is a flood risk and history of flooding in some areas.

Grid capacity constraints limit growth at some sites.

Some common themes emerged from stakeholders regarding the prioritisation of future support to

industry within the region. A key message from interviewees was the need not to limit the focus of

growth to renewable energy developments. They stated that maintaining a strong traditional

manufacturing base is also essential to the long term prosperity of the region, although some

recommended focussing on low carbon credentials for manufacturing.

Stakeholder feedback was split as to whether investment should be focussed on local infrastructure

and improving the image of the area i.e. make the area an attractive place to invest and industry will

come. Or whether to provide more focused and direct support to protect, maintain and grow

existing industry for example through funding mechanisms (tax relief, loans, grants) and consultancy

support (e.g. feasibility studies). Both are likely to be needed as part of a strategic platform to

maintain, grow and decarbonise industry in the cluster.

Some specific representative comments were:

• “Focus on industries that make things with long term demand”

• “Promote Humber as a green or low carbon manufacturing region”

• “Offshore wind industry investment is fantastic. Leverage this. But maintain a broad

focus – energy storage, battery technology, AD, tidal etc.”

• “Try to encourage/influence a longer term view by Government – so they don’t

move the goal posts”

One critical aspect highlighted was the need to ensure that potential inward investors from outside

the region (and the UK) know about the opportunities, the facilities, the incentives (e.g. enterprise

zones), and the regional benefits. This requires a more proactive and targeted marketing approach,

coordinated across stakeholders supporting the EII cluster.

SWOT and TOWS analysis



A detailed analysis of strengths, weaknesses, opportunities and threats (SWOT) has been undertaken

for the Energy Intensive Industries Cluster. To understand the different areas of potential six

pertinent questions were selected and an individual SWOT analysis was undertaken for each one:

A combined summary of the SWOT findings is shown overleaf. A TOWS strategic options analysis was

then created for each individual SWOT, to identify a series of options to intensify the strengths and

opportunities and limit the weaknesses and threats. Resulting options were prioritised and themed,

and fed into the report recommendations.

How can decarbonisation in energy supply be taken

forward?

Consider offshore wind, onshore generation and storage, as well as heat and bioenergy

How can decarbonisation in energy-using industry be

accelerated?

Scope for energy efficiency? And for wider decarbonisation (purchasing certificates, PPAs / private wires, on site renewables, CCUS)?

How can Humber be a/the renewables centre of

excellence for the UK?

Research, innovation, manufacture, installation, and servicing renewable energy.

How can the EIIs grow, adding additional capacity

in a lower carbon way.

Maintain and grow process industries and other sectors. Reduced cost base, increased productivity, inward investment

Is there an opportunity for more decentralised low carbon heat provision?

Consider CHP, renewable energy centres (from waste & bioenergy) & heat recovery, along with heat sinks

What is scope for industrial symbiosis, integration or

other synergies?

From sharing power and re-using waste to co-location of chemical process chain players

How can the Humber EII cluster become a global exemplar of a decarbonised, high growth, resource optimised manufacturing region?



Overall summary of SWOT analysis key findings across all six strategic questions examined

STRENGTHS • Local EIIs independently implement decarbonisation projects due to cost reduction and

productivity drivers. They mostly have a pipeline of potential energy efficiency projects • Industries are collaborative, helped by umbrella organisations (e.g. CATCH, Green Port) • Unused waste heat streams from multiple local businesses, including high grade • Increased interest in carbon saving at corporate level – esp. supplying B2C customers. • Energy supply infrastructure is generally good – could enable electrification • The Humber is home to leading offshore wind and biofuels companies and has land and

substation capacity for additional low carbon supply. Enterprise zone provides incentives • Engineering and renewables skillsets in local population and training centre expertise • Good access to bio & waste resources e.g. rapeseed, straw, waste oil, domestic waste,

industrial waste, wood • The Humber is a world UK leader in research, innovation and production of offshore wind

and biofuels • Local infrastructure strengths, e.g. deep-water port, ethylene pipeline

• Existing track record of symbiosis projects among Humber EIIs and ongoing projects.

WEAKNESSES • Other priorities override decarbonisation projects. 2 yr. payback often required. • EIIs have high dependence on fossil fuels and electricity (frequently from gas CHP).

Private wire supplies can eliminate or disincentives decarbonisation • Lack of metering at industrial sites hides cost effective energy efficiencies • Other regions may have more coordinated voice and influence in Government • Grid constraints in some areas and new connections very expensive • Other regions are more advanced in terms of CCS and H2 feasibility and level of interest • Low take-up of renewables aside from offshore wind and biofuels • More work to do for region to be dominant in renewables Innovation/R&D

• Occupation of Able Marine Energy Park not secured, and infrastructure not guaranteed • Reputation of EII cluster within Northern Powerhouse not strong enough. The region is

lacking a single voice for manufacturing

• Transport infrastructure puts off some investors

• Cluster is spread out, making sharing/re-use of waste heat more difficult

• EIIs wary of symbiosis projects as it increases reliance on external players.

OPPORTUNITIES • Position Humber for lead roles in N. Powerhouse, Industrial & clean growth strategies • Financial incentives and support available (e.g. IHRS, IEEA, CCUS, offshore wind) • Support through local programmes, e.g. Humber Growth Hub, Growing the Humber,

South Humber Industrial Investment Programme (SHIIP), Green Port Growth Programme, North Lincolnshire Ambassador Programme, Let’s Grow North & East Yorkshire

• Could lead on 2050 Industrial Decarbonisation and Energy Efficiency Action Plans • Implementation of ESOS energy audit recommendations could be accelerated • Clean cooling movement and decarbonisation of the cold economy can be exploited • Significant potential for more diversity of energy supply in the region, plus smart energy

solutions including storage. Growing trend for green energy purchase in UK • UK and global renewables markets are growing • Further collaboration between universities, Growth Hubs, Innovate UK, Catapults etc. • Offshore wind expansion – Installation plus O&M for consented farms can be provided • Decentralised energy is advocated and supported (incl. funding) by UK Government . •

THREATS • Uncertainty around national policy and incentives limits long term planning and project

implementation. Changes in Government renewables policy restricts long term investment. Claimed uneven playing field on subsidies

• Brexit and associated market uncertainty, esp. regarding joining up UK and EU regulations. Regulation changes post-Brexit.

• Uncertainty of planning consent for future developments • Uncertainty of energy and raw material price fluctuations. “High energy prices” limit EII

propensity to invest • Competition from other UK regions for skilled workers • Other regions may be positioning and promoting themselves better for funding

• Increase in global competition for EII products limits product value

• Decentralised energy projects require long term investment and planning – raises risk • Competitor ports may be more proactive with infrastructure development.



1.5 Industrial opportunities

The stakeholder engagement highlighted a number of industry-wide opportunities and threats

captured through the SWOT analysis, but there were also a large number of specific projects

identified within the companies interviewed. These comprise energy reduction projects, wider

decarbonisation projects, symbiosis projects, and projects focussed on growth in capacity or

production of new products. Many of these are confidential, but the types of projects that have

been shared with the Humber LEP include:

Cross-site energy reduction programmes e.g. new large compressor, improved heat

integration, furnace efficiency optimisation, steam turbine replacements, more efficient

motors, VSDs and LED lighting (multi MW savings available in largest sites)

Waste heat recovery projects.

Renewable energy (e.g. solar, onshore wind, AD) and battery storage installations.

New CHP power plant installations.

Various waste re-use projects e.g. sewage sludge, AD, energy from waste etc.

Synthesis of chemical feedstocks from bio sources.

Addition of new production lines within chemical manufacturing companies.

Attracting new industries e.g. battery production, especially where these make use of locally

produced products as their raw materials.

A host of potential symbiosis projects eg

o Upstream and downstream chemical intermediate manufacture

o Use of waste such as dusts, tars, oils, effluent, sludges, ash, used filter media

o Capture and sharing of waste heat

The report recommendations include measures to support the development of these projects, as

well as harnessing the wider opportunities captured through the research.

1.6 Recommendations and next steps

There is a massive opportunity for the Humber region to become an exemplar of a leading

integrated low carbon manufacturing region and the UK Hub for Renewables Excellence. The

feedback from stakeholders is that there are numerous opportunities for growth, innovation,

efficiency and decarbonisation – but that currently the support provided could be more joined up,

more clearly coordinated and communicated and more focussed on specific goals. There is also a

feeling that the Humber is not seen to punch its weight within the UK manufacturing base – that it is

often forgotten within discussions about the Northern Powerhouse.

What is needed to enable the ambitious vision described is to build a strategic platform for

industrial leadership, underpinned by a set of strategic focus areas for action.

This report highlights the key features of the platform and the focus areas – followed by a suggested

list of recommended actions which could be implemented to push them forward.



To execute the platform objectives, the proposed focus areas (described further below) are:

A strategic platform for industrial leadership

Key to the platform is a vision and mission statement for the EII cluster, agreed across a wide range

of stakeholders. This should be backed by an appropriate governance structure, and supported by

approved regional strategy documents, including a Humber energy strategy, local industrial strategy

and updated strategic economic plan.

One critical success factor is to ensure there is an overarching umbrella organisation that

represents and speaks for the EII cluster, which can coordinate cross sectoral programmatic activity.

Rather than create another new organisation, it is proposed that the remit of CATCH is expanded to

fill this role.

It is recommended that the LEP should set and oversee strategy, steered by business and the local

authorities, with CATCH’s remit to design and implement programmes, with input from industry,

academia and training providers.

The LEP will continue to speak to Government on behalf of the region, with a united voice. This

discussion should seek to influence Government strategy and policy on the key issues facing EIIs,

seek increased recognition of the strengths and opportunities for the EII cluster, pursue increased

funding and policy support for renewable and energy intensive industry development in the

Humber, and seek high level and visible support and commitment for organisations considering

inward investment.

Within this framework, the EIIs in the region will be enabled and encouraged to collaborate more

effectively, have a stronger voice in Government and more effectively take advantage of the

opportunities provided by the Industrial and Clean Growth Strategies and other industrial initiatives.

Strengthening strategic sectors

Strengthening the region

Unlocking new opportunities

Improving efficiency of operations

Collaboration and coordination




This theme concerns growth in the key sectors in which the Humber can succeed, building on long

fostered strengths and more recent successful progress. Many stakeholders have reiterated the

need to maintain and grow once more the traditional industries of petrochemicals and speciality

chemicals, high temperature industries (cement, lime, steel, glass) and food processing, whilst

bringing modernisation, flexible processing, and decarbonisation. Alongside this, recent successes

in renewables, and the development of the port and other transport & logistics industries should

be capitalised upon. Finally, priorities should be linked to the key challenges within the national

Industrial Strategy, for example bringing Artificial Intelligence and digitisation to offshore wind

optimisation and industrial process control.

The priority is to maintain a pipeline of growth and decarbonisation programmes and projects,

rank them against the mission criteria, and provide real and tailored support through the project

lifecycles, starting with funding for feasibility studies and business case development to overcome

initial hurdles. Beyond that hand-holding and both private and public backing will help maximise

outcomes. There will be a need to ensure that the voice of the key sectors is heard within

Government – especially for traditional manufacturing which is often not thought as exciting or as

imperative to support.

One proposal to help the chemicals sector is to work with BEIS to establish a process industry

testing hub – where new processes or methods of operation could be tested in a safe environment.

Strengthening regional support

For industry to succeed in the Humber, improvements in infrastructure, availability of skills, training

and incentives must at least match those offered by other regions. Further improvements are

required to road and rail infrastructure to bring in materials and move out goods more efficiently,

but also to allow the workforce to more quickly and painlessly travel to/from work and on business.

The electricity and gas networks must have the capacity for businesses to expand and new business

to connect, without excessive cost and restrictions. Where possible decentralised energy provision,

private wire and power purchase agreements etc. should be enabled to provide competitive cost,

high reliability energy supplies, with an emphasis on incentivising lower carbon energy sources.

Some competitor ports are running initiatives that can help attract new operators. Humber should

look to match or provide equivalent initiatives to those on offer in other UK locations, and in

competitor ports in Europe e.g. Cologne, Antwerp and Rotterdam.

Crucially, new and existing investors need to know about the impressive offering and commitment

to future support, to ensure Humber locations are first shortlisted for consideration, and then

selected for inward investment. A common voice, coordinated locally and marketed globally is

needed. It is recommended that the umbrella organisation proposed above has a role to work in

partnership with the LEP and local authorities to facilitate a clearer, cross-region messaging to



stimulate inward investment, and a role in promotion and outreach on behalf of the EII cluster as a

whole.


Building on the existing strengths and successes, there are opportunities to develop into new

priority sectors and technologies which will be needed as the UK moves to a decarbonised future,

with carbon capture, smart grids, energy storage and clean cooling.

A series of deep dive technology and local market scoping studies is proposed to determine the

benefits that could accrue to the Humber by taking a leading stance – or whether a collaborative

approach with other regions would be more effective.

Where major new opportunities arise, be they proactive (e.g. wide roll out of energy storage to

supplement offshore wind generation in the region) or reactive (e.g. potential for major investment

from an existing industry player at their Humber site), a mechanism is needed to mobilise all

available resources to cultivate the opportunity and secure the best outcome for the region.

Within this theme a programme to identify and implement symbiosis opportunities and other

synergies should be initiated.

Conventional funding approaches can be a barrier to taking forward innovations. It is proposed to

consider developing a Novel Business Models Accelerator to test solutions to known but un-tackled

commercial barriers.


The starting point in any programme of decarbonisation should be to determine whether the

processes being undertaken are necessary at all – and then if so, are they being undertaken

efficiently. It is always important to reiterate that there is no point in generating or buying

renewable energy (for example) to power a process which could be run with 30% less energy, given

some investment – especially as such investments will often bring other product or process benefits.

And in some cases the level of investment required is minimal, or even zero.

Most energy intensive industries will have undertaken ESOS audits in the last 2-3 years, detailing

energy efficiency recommendations. Many will be due a second audit soon. Several stakeholders

have stated how the audits opened their eyes to a series of projects than are now being

implemented, and savings being made.

It is recommended that local support programmes are implemented to encourage and assist

companies to improve their existing efficiency, building on ESOS. More strategically, the

LEP/CATCH etc. could work closely with BEIS and local process industries to be front-runners in

implementation of the of 2050 decarbonisation action plans.




To enable all this to happen will require stronger coordination, collaboration and facilitation. It is

proposed that this is managed by the umbrella organisation proposed above. There is already some

good networking within mini-clusters (e.g. Saltend, and around the South Humber Bank refineries)

but businesses across the Humber – and to the east and west - are less joined up. Working together

to highlight common issues, agree priorities and share best practice will be to the benefit of all

companies in the wider EII cluster.

To illustrate how the themes above could be enabled, a sample of suggested activities are proposed

below. They are listed in priority order, with the most urgent activities presented first within each

grouping.



Recommendation Priority Timescale Difficulty Investment needed

Impact/Comment

Develop strategic platform for industrial leadership – define Vision, Governance, Strategies and single region messaging

Highest Immediate Low <£100k Enables cluster / region to present a more coherent message

Create local industrial strategy and local energy strategy. Highest Immediate Low <£100k Align closely with BEIS objectives to achieve maximum support

Set up EII cluster workshops to learn about, influence and prepare to take part in Government clean growth programmes

Highest Immediate Low <£100k Proactive approach could give Humber EIIs an advantage and maximise participation

Engage more widely with Government on biomass policy and programmes

Highest Immediate Med - High

<£100k Seek influence which benefits the growing industry in the Humber

Expand remit of CATCH as umbrella organisation for EII cluster

Highest Short Med <£1m Organisation to represent and campaign for the interests of the cluster

Implement ESOS follow up and support programme to realise the potential energy efficiency savings. Invite in equipment suppliers and funding suppliers to support.

Highest Short Low <£1m Often savings of 10-20% identified. > 5% saving realistically achievable

Carry out series of deep dive technology reviews: Energy storage (and smart energy systems) Carbon Capture and use/storage Clean cooling Renewables potential (excl. offshore wind)

Highest Short Low <£1m Provide foundation for significant structural development and prepare for the future. Alignment with Industrial Strategy maximise chances of future action/investment.

Produce updated marketing brochures and websites for inward investment in the Humber.

Highest Short Low <£100k Important to showcase the best the region has to offer. Benefits the whole region.

Create and maintain a pipeline of industry decarbonisation and growth projects. Create mechanism to coordinate support: coordinate local champions, focussed assistance (planning, enterprise funding), obtaining local and national support and future commitment.

High Short Low <£100k Will help to prioritise and coordinate local support on highest impact projects – and bring in national Govt. backing, raising profile of region.

Expand existing fora to bring in working level, cross-cluster communication, collaboration and action planning mechanisms.

High Short Med <£100k Activity needs to be underpinned at working level to ensure action

Implement charm offensive to increase exposure of opportunities within EII cluster – lobby for devolution style

High Med High <£1m Lots of effort required, but potentially £multi-million rewards



regional deal

Undertake heat network master planning study focussed on use of industrial waste heat. Consider implementing incentives for the first industrial companies to connect.

High Med Low <£1m Impact of tapping into significant waste heat resource could be great, and also set a precedent for other UK schemes.

Further examination of shared, private wire, power generation opportunities – cost benefit analysis of installing further heat and power stations along the banks of the Humber. Seek HNIP funding

High Med High £multi-million

Providing secure, good value energy production increases willingness to invest and allows maximum carbon saving by increasing control of technology selection.

Part fund local feasibility studies and assist with project business case development, and technical advice to de-risk projects

High Med Low <£1m Business is resource constrained but external help can unlock action

Undertake discussions with other regions to form cluster of clusters. Collaborate with Northern energy hubs.

Med Short Low - Med <£100k In some areas, greater impact by working together

Survey of local businesses and future trends in core EII and renewable industries – identify and proactively develop new training offers. Bolster regional engineering level training and development.

Med Short Low <£100k Already underway but stay ahead of the game – part of placing Humber in leadership position.

Seek funding for a Process Industries Testing hub Med Short High £multi-million

Could make Humber a real front runner in industrial decarbonisation agenda.

Seek industry support to work with BEIS as a leader in the implementing 2050 decarbonisation action plans across sectors. Provide appropriate incentive e.g. co-funding for technical assistance and R&D.

Med Med High <£1m - £multi-million

Will be difficult to achieve but could driver forward industry is local players persuaded to engage.

Implement Symbiosis Incubator Med Med Med <£1m Very high potential but time needed to realise benefits.

Implement Novel Business Models Accelerator Med Med High <£1m Could prove to be a role model for other regions.

Review of enterprise zone effectiveness – can further encouragement be given to underperforming zones? Identify new areas that can be proposed for EZ status e.g. Saltend?

Med Med Med <£100k Setting up new zones is a long-term activity – but could bring significant expansion of process industries



Implement programme of measures through the ports to further increase sustainability. Complete the EcoPorts Self-Diagnosis to determine environmental benchmarks and consider applying for Eco Port certification Post to consider signing up to Green Award scheme for shipping

Med Med Low <£100k Could raise ports profile and attractiveness for inwards investment.

Road infrastructure improvements – acceleration of existing improvement plans for Hull and South Humber Bank

High Short - Med

High £multi-million

Multiple benefits across region – not just EII cluster

Rail infrastructure improvements Med Med - Long


Electrical infrastructure – partnership with NPG and NGN to ensure that capacity is in place for planned developments – and if possible that excess capacity is considered – give confidence or “guarantees” of development plans to encourage this.

Med Med High £multi-million

Difficult to encourage a pro-active approach. Stakeholders have said in Europe ports, the infrastructure is delivered first – and then investment follows.



1.7 Summary of selected industry support organisations in the

Humber

Feedback from interviewed industry stakeholders is that there are some excellent organisations

providing very strong support to businesses in the Humber region. A brief summary of some of those

mentioned is provided below:

Organisation Name Description Types of Support Offered

Humber Local Enterprise

Partnership (LEP)

Aims to drive economic growth in the Humber region, by way of supporting businesses, developing local skills and providing infrastructure to encourage growth, as well as playing a more general strategic role in promoting devolved government and directing its resources. Includes:

Single Conversation creating a smoother process for local developments.

Humber Business Growth Hub: business advice and support to local SMEs.

Growing the Humber: capital investment grants to SME businesses.

Business Loan Fund: capital loans aimed at unlocking infrastructure projects.

Growth Deals and Local Growth Fund funding for local growth priorities.

Supporting Northern Powerhouse Investment Fund delivery in the Humber

Strategic role in lobbying for the Humber region and its key industries

Key role in giving wider strategic steer to the regions’ economy through targets, information and training

Vehicle for the resources of devolved government

Offers loans, grants, advice, and can help in the development of projects that will benefit the region

Will ‘champion’ particular projects that are well aligned with its objectives

Humber Enterprise Zone

Managed by the LEP, the Humber Enterprise Zone is the largest enterprise zone in the country, at 1,238 hectares. Sector focuses include energy and offshore wind, ports and logistics, chemical and process, creative and digital, and food manufacturing.

Provides space for manufacturers and their supply chains to co-locate

Offers efficiencies in infrastructure, in logistics, and in networking

Provides affordable sites and tax incentives, such as business rate discounts and Enhanced Capital Allowances

Green Port Hull The Green Port Hull initiative is currently funded by the RGF Round 2 funded Green Port Growth Programme, and acts as a key enabler to establishing Hull and the Humber Energy Estuary as a world class centre for renewable energy.

Supports the local renewables sector supply chain

Encourages investment in renewables

Provides local residents with the skills training needed to access the opportunities on offer

CATCH A partnership led by industry and supported by local public authorities, which promotes the interests of the process, energy, engineering and renewable region across the Humber.

CATCH focuses on skills development to match the needs of local industries

The CATCH Network provide forums for groups interested in specific knowledge and training




topic areas to meet regularly throughout the year

University of Hull The only university in the Humber region. A range of academic institutes relating to business, industry and energy:

Business School

Logistics Institute

Enterprise Centre

Engineering Innovation Institute

Environmental Technologies Centre for Industrial Collaboration

Institute for Chemistry into Industry

Published studies on industry within the Humber

Hosts research institutes relevant to the Humber’s key sectors

Planning to support industry though the creation of an offshore wind talent and innovation hub

Hull and Humber Chamber of Commerce

The Chamber has a network of 2,000 members and affiliates covering North East Lincolnshire, North Lincolnshire, Hull and the East Riding of Yorkshire.

Produces and shares resources and publications, and hold events and exhibitions to bring local businesses together

Bondholders A membership organisation that promotes the Humber across the UK and internationally, showcasing business success stories and promoting the benefits of choosing to locate in the region.

Facilitates networking through Bondholder breakfasts

Holds promotional events, including Young Talent Network Events, Humber Roadshows and hosting national/international delegations

Offers marketing material and resources to members

Humberside Engineering

Training Association (HETA)

HETA is a local specialist training provider offering apprenticeships at all levels, industry upskilling courses and Higher National Certificate (HNC)/ Higher National Diploma (HND) courses.

Runs an apprenticeship programme with a focus on engineering

IChemE – Hull and Humber Members

Group

The local branch of the Institution of Chemical Engineers.

Provides events and networking opportunities for chemical engineers based within the Humber region.

IMechE – Yorkshire Region

The regional branch of the Institution of Mechanical Engineers, with a dedicated sub-group for Humberside Process Industries.

Runs events and mentoring activities for mechanical engineers based in the Humber.



2 Introduction

2.1 Context

Scene setting

The Humber has a long-standing reputation as one of the UK’s leading industrial regions, one of the

top chemicals clusters, as the capital of seafood processing and as a leader of other industries

facilitated by its east coast deep-water ports (e.g. importing cars). Its industries are a significant user

of energy, and the Humber and neighbouring authorities are major contributors to the UK’s

generation capacity. In 2015 the energy intensive industries are estimated to have consumed over

8GWh energy, at a cost of over £300m. The total of all industrial and commercial energy use in the

region is 23GWh, costing nearly £1bn1. There is over 4.4 GW of installed electrical capacity in the

region – the majority powered by fossil fuel.

The past decade has seen significant investment in the Humber region. The development of offshore

wind in the North Sea has led to some revival in the region’s fortunes and new facilities have taken

root in Hull and Grimsby to build and maintain offshore installations. This has stimulated a wider

adoption of renewable and clean energy developments, including bioenergy and energy from waste.

Existing industries are also investing in expansion, as the Humber holds significant positional

strengths that provide global advantages, including several ports, transport connections, energy

infrastructure, land availability and low costs. In total the Gross Value Added (GVA) in the Humber

was over £18bn in 2016, with over ¼ related to manufacturing2.

The UK’s strategic trading, industrial and regional narratives are changing. Within the national policy

context, the recent release of the Industrial Strategy, the Clean Growth Strategy and the Industrial

Decarbonisation and Energy Efficiency Action Plans to 2050, and greater interest by central

government in regional industrial and decarbonisation opportunities sets the stage for a renewed

strategic engagement leading, if embraced and championed, to growth and increased wealth for the

region, and the nation. The planned contribution of the Northern Powerhouse to achieving the UK’s

economic potential brings a real opportunity, particularly given the focus on manufacturing and

energy: strengths of the Humber region.

Within this setting, there is real opportunity for the Humber region to build upon and expand its

strategic ambitions to:

Become the UK Hub for Renewables Excellence with an extensive renewables supply chain

of global reach, grown by new ideas cultivated and championed by regional institutions. In

doing so become the UK’s leading exemplar of green, low cost power and heat.

Set an energy intensive industries decarbonisation vision to overcome key barriers holding

back widespread decarbonisation and industrial symbiosis across energy intensive

industries. Such a vision might include:

o Creation of a Process Industry Testing Hub to de-risk processes before live

deployment

o A Novel Business Models Accelerator to give solutions to known but unresolved

commercial barriers

1 Chapter 6

2 Chapter 5.2



o Pathways to decarbonisation of the energy intensive industries, including

decarbonisation of energy supply

o Through executing such a vision, the Humber could become a world leading

exemplar of a low carbon manufacturing region

Identify markets with reducing commercial longevity (gas production, gas storage,

conventional power generation, oil refineries) then work with these markets to develop

diversification strategies.

Maintain, reinforce and grow traditional industries to increase UK competitive advantage in

expanding globally competitive markets (e.g. steel, oil refining, commodity chemicals,

speciality chemicals, food).

Utilise the region’s leading industrial university and industrial training capabilities to take a

leadership position in applied STEM skills and industrial process training. Establish national

capabilities in the training of engineers and technologists for process, renewables and digital

industries.

Encourage growth in digital & AI, and transport sectors, to align with Industrial Strategy

priorities.

The Humber region is geographically well-placed, sitting as a gateway to the Northern Powerhouse.

With assets of strategic national importance in its deep-water ports, a strong supply chain of high

value engineering and technical services and a diversified industry base of old and new sectors, the

Humber is already on a transformational path and is well-placed to embrace the future.

Project scope

In order to begin to realise these ambitions, the Humber LEP identified a need to increase

understanding of the current characteristics of the energy intensive industries cluster, and to

recognise opportunities with the best potential to accelerate growth, whilst aligning to the UK-wide

need to decarbonise industry. The Humber LEP wishes to understand how best to prioritise support,

to ensure that the region’s energy intensive sectors play a significant and strategic role in UK value

creation, amid increasing environmental challenges and requirements. Recommendations have been

developed which align with the opportunities presented by the Government’s recent Industrial

Strategy White Paper, Clean Growth Strategy and Northern Powerhouse Strategy. Some of the

recommendations can be implemented in isolation, whilst others feed into the development of a

local industrial strategy and a local energy strategy for the Humber region.

A vision of the Humber region was developed to act as a foundation for this study:

In 10 years, the Humber Energy Estuary will be a leader in the renewables energy industry

whilst maintaining the economic contribution from a sustained and evolved chemicals

industry.

Industry will have decarbonised through energy efficiency, process optimisation, renewable

energy generation, and renewable energy purchasing. Progress will be made towards

Carbon Capture, Usage and Storage (CCUS).

Renewable energy generation will be supported by extensive energy storage, and be

supplied to local businesses through various market arrangements (e.g. PPAs).

Waste heat (and other resources) will be more effectively shared between neighbouring

sites.



The port facilities will be thriving, and have stimulated further inward industrial investment,

cementing the Estuary’s economic value to the UK.

2.2 Methodology

This study was undertaken by the Carbon Trust to present a comprehensive assessment of the

Humber’s Energy Intensive Industries (EII) Cluster. The sectors that comprise the EII Cluster are

regional strengths within the Humber, namely chemicals, other energy intensive manufacturing (e.g.

food, steel, minerals), renewables, ports and logistics. The sectors selected for study are the highest

users of energy, including energy generation businesses and supporting businesses to these sectors

(as key conduits and facilitators to the energy intensive industries who also have energy intensive

operations). This report aims to provide a baseline against which regional opportunities can be

identified and quantified for decarbonisation, cost reduction and growth in the Humber’s EII Cluster.

The evidence base developed will facilitate the assessment of planned projects and programmes, to

determine their relative impact, prioritise options, and support business case development.

There is a strong base of existing research on the regional economy, industry and energy system,

and a comprehensive review of these served as the starting point for this study. This knowledge has

been built upon through conducting 33 in-depth semi-structured stakeholder interviews across the

Humber region as part of a comprehensive industry consultation (see Appendix 1 for a list of

interviewees). Interviews have provided critical understanding of stakeholder perspectives, including

first-hand knowledge of local markets, and barriers and opportunities faced by industry.

Stakeholders also gave useful perspectives on local business support services and national policy

developments.

These two research processes (i.e. literature review, interviews) together give a snapshot of the

Humber’s EII Cluster. They enabled identification of a series of opportunities and recommendations

for the Humber LEP, which will support organisations and local industry to accelerate the Humber’s

industrial decarbonisation and growth.

The output of the study of the Humber Energy Intensive Industries Cluster is this report, which

comprises:

an audit of the attributes of energy intensive industry and energy generation on the

Humber;

identified opportunities for business efficiencies, decarbonisation and economic growth;

identified opportunities to contribute to national decarbonisation and growth strategies in

the Humber region; and

recommendations for local business support organisations to unlock opportunities.

The opportunities include specific project opportunities that could be executed by local energy

intensive businesses, alongside strategic cross-sector opportunities that will need coordination and

resource allocation to unlock. Recommendations are built upon a series of SWOT and TOWS

analyses to determine how the EII Cluster can proactively exploit its key attributes to take advantage

of future opportunities and mitigate future threats.

The following two sections address the national and regional context in which the Humber Energy

Intensive Industries Cluster is developing, including significant recent developments in UK energy

and industrial policy. Chapters 6 and 7 present snapshots of the energy intensive industries and

power generation in the Humber’s Energy Estuary, and a summary of stakeholder views from the



interviews. Chapter 10 includes an analysis of strengths, weaknesses, opportunities and threats

(SWOT) for the EII Cluster, informed by a number of previous studies on this topic and updated and

expanded through industry feedback. Chapters 11-12 identify specific opportunities to improve

competitiveness through energy efficiency, decarbonisation and industrial symbiosis, as well as

opportunities for support organisations to stimulate those opportunities and wider growth in the

region. The study concludes (Chapter 13) with a series of recommendations to take forward the

identified opportunities.



3 Humber’s Energy Intensive Industries Cluster

3.1 Energy Intensive Industries

Energy intensive industry sectors in the UK are loosely defined as those with high heat and/or

electricity demand. Whilst the exact definition varies somewhat, there is a broad consensus on

which sectors are considered to fall within the definition. The BEIS Industrial Decarbonisation and

Energy Efficiency Roadmaps to 2050 (“2050 Roadmaps”) focused on the eight most heat-intensive

industrial sectors: iron and steel; chemicals; oil refining; food and drink; pulp and paper; cement;

glass; and ceramics3. Through its eligibility criteria for the Energy Intensive Industry Exemption, BEIS

defines energy intensive companies more specifically as those with an electricity intensity of at least

7%4. Application of this definition on a sector level includes a total of 70 extraction, manufacturing

and processing sub-sectors5, which are more granular than those focused on in the 2050 Roadmaps.

In the context of industry in the Humber region, we have primarily focused on the sectors covered

by the 2050 roadmaps, together with the renewable energy sector (which is in itself a significant

end-user of energy) and the port sector (due to its significant influence upon all industrial activity in

the region). The sectors covered have been prioritised into two tiers. First tier sectors comprise the

most energy intensive (i.e. energy use per tonne of product produced) industries, and are typically

larger businesses with high temperature processes, namely, chemicals, cement, lime, glass, steel,

and power generation. Second tier sectors comprise smaller or less intensive industries that

nevertheless have a significant collective energy impact, such as food and drink, agriculture,

bioenergy, and the Humber ports. The stakeholder interviews were predominantly focused on first

tier sectors as the highest energy users, although second tier sectors are acknowledged to

contribute to the Humber Energy Intensive Industries Cluster and are referenced in places.

3.2 Clusters

An oft-cited definition of industry clusters is “geographic concentrations of interconnected

companies and institutions in a particular field” 6. The Humber Energy Intensive Industries Cluster

aligns with this definition, through its strong representation of energy intensive companies in the

manufacturing, logistics and renewable energy sectors within a relatively small geographic area

surrounding the Humber estuary.

3 https://www.gov.uk/government/publications/industrial-decarbonisation-and-energy-efficiency-roadmaps-to-2050 4https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/660829/091117_Revised_Scheme_Guidance_For_Publication.pdf 5 Full list in Annex 1, p. 21 https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/660829/091117_Revised_Scheme_Guidance_For_Publication.pdf 6 Clusters and the New Economics of Competition, Michael E. Porter, 1998 https://hbr.org/1998/11/clusters-and-the-new-economics-of-competition

https://www.gov.uk/government/publications/industrial-decarbonisation-and-energy-efficiency-roadmaps-to-2050

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/660829/091117_Revised_Scheme_Guidance_For_Publication.pdf




https://hbr.org/1998/11/clusters-and-the-new-economics-of-competition




Figure 1 - Characteristics of industry clusters7

Industrial clustering provides business benefits to participating companies, including enhanced

reputation, knowledge sharing, networking and business development opportunities (see Figure 2).

From an efficiency perspective, clustering presents opportunities for resource optimisation and

shared infrastructure. This brings particular opportunities for reducing business costs and

decarbonisation. Many examples of resource optimisation and shared infrastructure already exist

within the Humber EII Cluster. It has been observed that further opportunities exist to increase

optimisation of resources between companies.

Figure 2 - Benefits of industry clusters8

7 Derived from: Clusters and the New Economics of Competition, Michael E. Porter, 1998 https://hbr.org/1998/11/clusters-and-the-new-economics-of-competition; and The capability of the Humber region, University of Hull, 2013, http://lido.hull.ac.uk/Uploads/Publications/BD1651B7436E353E0B1795054BC54BAB/University_of_Hull_Capability_of_the_Humber_region_-_with_Appendices_-_November_2013_for_print.pdf 8 Industrial clusters in England, 2017, BEIS, https://www.gov.uk/government/publications/industrial-clusters-in-england

Typical characteristics of industry clusters

Critical mass of business success in a particular field around one location.

Often base around an important geographical or labour market feature e.g. port or

supply of labour.

Often extend up and downstream through value chain and laterally to

manufacturers of similar products. Chains of related industry are common.

Often have specialist training, consultancy, research and technical support

available locally.

There is also cooperation, especially vertical, between companies in related

industries.

Within some definitions, companies within the cluster are interdependent, and the

cluster brings efficiencies of operation, e.g. common sourcing of materials.

A study of Industrial Clusters in England commissioned by BEIS and published in 2017

attributed the following benefits to recognised clusters:

• Improved firm visibility

• Diffusion of knowledge and good practices

• Development of trust

• Sharing of common resources

• They act as a ‘trusted partner’

• They facilitate networking

• They act as a focus for industry expertise

• They are a source for long-term strategic leadership

• They increase the visibility of a region



http://lido.hull.ac.uk/Uploads/Publications/BD1651B7436E353E0B1795054BC54BAB/University_of_Hull_Capability_of_the_Humber_region_-_with_Appendices_-_November_2013_for_print.pdf

http://lido.hull.ac.uk/Uploads/Publications/BD1651B7436E353E0B1795054BC54BAB/University_of_Hull_Capability_of_the_Humber_region_-_with_Appendices_-_November_2013_for_print.pdf

https://www.gov.uk/government/publications/industrial-clusters-in-england



Whilst the energy intensive and renewables industries around the Humber estuary can be

considered overall to be a cluster, there is still more potential for collaboration and integration

between the smaller groupings of businesses (which could be considered as mini-clusters e.g.

Saltend, Immingham) across the Humber, particularly between North and South. By working to

reinforce the characteristics of clusters across the whole region benefits could be enhanced.

Notably, increased networking and cooperation could highlight opportunities for symbiosis, common

needs for shared infrastructure (power capacity, supply/use of waste heat), common supply of raw

materials, options to share storage tanks, and opportunities for funding research which would

benefit multiple companies.

Company to company relationships are not enough to hold an industry cluster together, due to

conflicting needs, competition for business and lack of time for collaboration. Support from outside

organisations is needed to strengthen links and reassure those involved of the benefits of their

participation9. This is a role that can be filled by local business support groups, industry associations

or other umbrella organisations. Organisations such as the Humber LEP, HCF CATCH and the Green

Port Hull partnership have opportunities to foster closer working and business cooperation across

both sides of the estuary. This could increase cluster benefits to the energy intensive industries in

the region.

Furthermore, if energy intensive businesses across the Humber are clearly seen to operate as a

cluster, there is an increased likelihood of securing additional Government support. The UK

Government’s Industrial Strategy White Paper plans to develop prosperous communities throughout

the UK by agreeing “Local industrial strategies that build on local strengths and deliver on economic

opportunities”. The Industrial Strategy states “We will prioritise areas with the potential to drive

wider regional growth, focusing on clusters of expertise and centres of economic activity.”

In their response to the original Industrial Strategy Green Paper, the Humber LEP and local

authorities set out their ambitions to take advantage of the opportunities by strengthening linkages

between companies within particular sectors both within the Humber and across the North10. The

response also outlined a need to involve universities and research institutions in industrial growth,

as well as encouraging SME innovation.

9 Industrial regions and climate change policies, TUC, 2015, p.26

https://www.etuc.org/sites/www.etuc.org/files/document/files/etuc_report_17_july_2015_v1_1.pdf 10

Response to the Industrial Strategy Green Paper, Humber LEP, April 2017, p. 8 http://www.humberlep.org/wp-content/uploads/2017/03/Humber-Industrial-Strategy-response-April-2017.pdf

https://www.etuc.org/sites/www.etuc.org/files/document/files/etuc_report_17_july_2015_v1_1.pdf

http://www.humberlep.org/wp-content/uploads/2017/03/Humber-Industrial-Strategy-response-April-2017.pdf




4 National context

4.1 The Climate Change Act and decarbonisation strategies

With the rising national and international focus on clean growth, economies must decarbonise in

order to remain competitive in the global market. This is especially true for economies reliant on

energy intensive industries, where innovation is needed to both limit dependence on fossil fuels and

exploit clean technology opportunities to accelerate growth. The economic growth ambition of the

UK and especially the Northern Powerhouse should be placed in the wider UK decarbonisation

context. Wide spread decarbonisation is consistent with economic growth, and the UK has been one

of the leading nations demonstrating this truth.

In 2008 the government passed the Climate Change Act, which commits the UK to an 80% reduction

in greenhouse gas (GHG) emissions below 1990 levels by 2050. As part of the Act, the Government

has set legally-binding interim carbon budgets:

3rd (2018-2022) – 35% by 2020

4th (2023-2027) – 50% by 2025

5th (2028-2032) – 57% by 2030

The UK Government has a long-term vision to encourage decarbonisation across all industries. This

vision has driven the creation and execution of the Decarbonisation 2050 Roadmaps for the most

energy intensive sectors (e.g. the Humber EII Cluster), the design of the Energy Savings

Opportunities Scheme (ESOS), and the Clean Growth and Industrial Strategies. These policy

mechanisms, and others, advance the UK’s carbon reduction agenda. Several operate as deterrents

for energy consumption, whilst others incentivise energy generation from renewable sources. The

overriding message is clear: decarbonisation has to happen and at an accelerated pace. The

industries that comprise the Humber EII Cluster need to be engaged, encouraged and supported to

progress their decarbonisation journeys.

Figure 3: UK policy mechanisms to drive decarbonisation



4.2 Northern Powerhouse

The Northern Powerhouse was first set out in 2014 by Rt. Hon George Osborne, who described a

vision for the North as “a vibrant and growing economy, a flourishing private sector and a highly

skilled population able to make the most of the great opportunities that the North has to offer.” A

dedicated strategy for the Northern Powerhouse was published by the UK Government alongside

the 2016 Autumn Statement to work towards achieving the full economic potential of the North of

England, by identifying regional strengths and barriers and creating a plan to build upon and

overcome these.

This government strategy was based upon the findings of the Northern Powerhouse Independent

Economic Review, commissioned and published by Transport for the North in 201611. Strengths were

11

Northern Powerhouse Independent Economic Review: Core Messages, SQW Ltd and Cambridge Econometrics, June 2016 http://www.transportforthenorth.com/wp-content/uploads/NPIER-Core-Messages.pdf

Renewable Heat Incentive (RHI): an incentive for the deployment of renewables heat, to

contribute to 12% of heating coming from renewables by 2020. Includes biomass, heat pumps

and combined heat and power (CHP) systems amongst others.

Feed in Tariff scheme (FiTs): a financial incentive scheme for small scale renewables with

payment for each unit of electricity produced.

Contracts for Difference (CfD): a financial scheme allowing energy generators using low carbon

sources to earn back a proportion of the investment cost.

Enhanced Capital Allowances (ECA): a tax incentive for businesses that invest in energy

efficient plant or machinery. Separately, an incentive for investment within some Enterprise

Zones.

Incentives

Climate Change Levy (CCL): introduced over 15 years ago as a tax on UK business energy use,

charged at the time of supply and applicable to large industrial organisations among others.

Carbon Reduction Commitment (CRC): an emissions pricing scheme priced per tonne of carbon

applicable to medium sized energy users.

European Union Emissions Trading Scheme (EU ETS): EU-wide scheme designed to reduce

carbon emissions across the EU by allocating emissions allowances and permitting these to be

traded.

Taxes and regulations

http://www.transportforthenorth.com/wp-content/uploads/NPIER-Core-Messages.pdf

http://www.transportforthenorth.com/wp-content/uploads/NPIER-Core-Messages.pdf



highlighted in the manufacturing, pharmaceuticals, energy and digital sectors12 and barriers have

been recognised in the areas of transport connectivity, skills, enterprise and innovation, and trade

and investment13.

These strengths and barriers largely correspond to the Humber’s own economic strategy and some

local achievements were mentioned by name, such as Hull winning City of Culture for 2017 and

private investment in offshore energy. The focus on manufacturing and energy sends a strong

supportive signal to industrial clusters like the Humber EII Cluster that existing strengths will be built

upon to encourage growth.

Throughout our engagement with industry, feedback was very clear in that the Humber region has

much to offer, and equally much to gain, from strong engagement with the Northern Powerhouse.

Sitting on the southern border and shore of the Northern Powerhouse, the Humber region is

strategically located to be a strong industrial contributor, logistics centre, and renewables hub. The

Humber, together with Merseyside, provides strong regional City of Culture foundations upon which

the Northern Powerhouse rests.

4.3 Industrial Strategy

The Industrial Strategy White Paper released in November 2017 took into account the consultation

responses to the initial Green Paper and set out a fixed national strategy. The White Paper includes

five foundations: Ideas, People, Infrastructure, Business Environment and Places; together with four

grand challenges presented in Figure 4 below.

Figure 4: Industrial Strategy Four Grand Challenges

A number of funding vehicles were presented in the Industrial Strategy, including:

£275m Industrial Strategy Challenge Fund for innovation

£31bn National Productivity Infrastructure Fund for investments in transport, housing and

digital infrastructure

£1bn public investments, including £176m for 5G and £200m for local full-fibre networks

£400m for electric vehicle charging and £100m extra for plug-in car grants

£1.7bn Transforming Cities fund for intra-city transport within regions

£2.5bn Investment Fund within the British Business Bank

12

Northern Powerhouse Strategy, UK Government, November 2016, p. 6 https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/571562/NPH_strategy_web.pdf 13

Ibid, p. 7

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/571562/NPH_strategy_web.pdf

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/571562/NPH_strategy_web.pdf



In addition to contributing to the national Strategy, each Local Enterprise Partnership will create its

own local Industrial Strategy. The Humber LEP is well placed to take advantage of the national

Industrial Strategy by accessing funding vehicles for regional industrial expansion, renewal and

growth within its local Strategy. The Humber region’s old and new industries combined with its

vision to be the leading UK Renewables Hub give it a very credible case upon which to engage with

other Northern LEPs and with wider Government on both the Industrial Strategy and its place in the

Northern Powerhouse.

An emerging narrative can already be presented for the Humber for decarbonising the region’s

energy intensive industries, expanding its renewables industries, and scaling its impressive skills,

training facilities and services to meet wider local and national audiences.

In preparing its local Industrial Strategy the Humber LEP can use the new language of the national

Industrial Strategy to explore a new regional vision of industries, technology innovation and business

models, to stretch its ambitions even further. It should build upon its goals in decarbonising

industries and renewables (from energy efficiency to the hydrogen economy, from offshore wind to

smart energy systems). But it should also seek to advance other challenges within the Industrial

Strategy, for example to encourage growth in the digital economy and artificial intelligence (e.g. new

digital technologies for manufacturing and the renewables industry) and in mobility (e.g. shipping

electric vehicles from its ports, local construction).

The Humber LEP should not be limited by the boundaries of the new Industrial Strategy. It should

continue with its ambitions to succeed beyond those encouraged through the national dialogue,

using the language of the national Industrial Strategy to clearly present a bold vision.

4.4 Energy Intensive Industries Decarbonisation to 2050

To combine economic growth and decarbonisation ambitions, the government released a number of

decarbonisation strategies and plans focusing on industry and economic growth. These have

included a series of Industrial Decarbonisation and Energy Efficiency Roadmaps and subsequent

Action Plans to 2050 for energy intensive industries published in 2015 and 2017 respectively.

The 2050 Roadmaps covered the iron and steel, chemicals, oil refining, food and drink, pulp and

paper, ceramics, cement and glass sectors and provided detailed analysis on the enablers, barriers

and decarbonisation potential for each of these groups. Focused Action Plans for each sector were

published in October 2017 to complement the 2050 Roadmaps and to provide a clear set of steps for

each industry as a whole to follow14.

The Action Plans present opportunities that can be exploited by the Humber EII Cluster to benefit

from industrial decarbonisation; indeed the Humber region could set itself the goal of working with

BEIS as a leading change agent taking forward actions from these plans, particularly in the Chemicals

or Oil & Refining Action Plans (see Figure 5).

14

Industrial Decarbonisation and Energy Efficiency Roadmaps, UK Government, October 2017 https://www.gov.uk/government/publications/industrial-decarbonisation-and-energy-efficiency-action-plans

https://www.gov.uk/government/publications/industrial-decarbonisation-and-energy-efficiency-action-plans



Figure 5: 2050 decarbonisation action plan items to progress

4.5 Clean Growth Strategy

The Clean Growth Strategy aims to combine decarbonisation with economic growth by “securing

the most industrial and economic advantage from the global transition to a low carbon economy” i.e.

accelerating the pace of growth through clean economic opportunities. The Strategy introduces a

variety of opportunities related to meeting the UK’s Paris Agreement targets through accelerating

clean growth, and claims that the UK’s current stage of clean tech development means that it is well

placed to capitalise on these opportunities15.

The £2.5 billion investment that was announced to deliver the Clean Growth Strategy between 2015

and 2021 represents a significant prospect for regions throughout the UK to strengthen their clean

growth capabilities. Key opportunities from the Clean Growth Strategy that could be particularly

relevant to the Humber region include:

£20m new clean technology early stage investment fund

Industrial Energy Efficiency scheme to help large companies install measures to cut energy

use and bills

Up to £100m investment in carbon capture usage and storage (CCUS)

Support for the recycling of heat produced in industrial processes

£162m investment in research and innovation in energy, resource and process efficiency,

including up to £20m to encourage switching to lower carbon fuels

£14m Energy Entrepreneurs Fund for innovative technologies

Up to £557m for Pot 2 Contract for Difference auctions for renewable technologies

15 Industrial Decarbonisation and Energy Efficiency Roadmaps, UK Government, October 2017, p. 8 https://www.gov.uk/government/publications/industrial-decarbonisation-and-energy-efficiency-action-plans

BEIS 2050 chemicals decarbonisation action plan items to take forward in the Humber region

Increase clustering – stimulate more active collaboration between chemicals (and

other EII) companies to maximise clustering benefits

Support commercial and technical feasibility studies on key symbiosis opportunities

– and assist with implementation of most promising projects

Improve marketing of the cluster as a whole to simulate inward investment

Proactively prepare for and capitalise on the IHRS programme. Implement

knowledge sharing and exchange of best practice in Industrial waste heat recovery

Engage in smart energy system development and examine potential for energy

storage

Engage with Government on discussions around the best uses of bioenergy and

biofeedstocks across industry

Partner with chemicals companies in other regions to examine CCU/CCS

https://www.gov.uk/government/publications/industrial-decarbonisation-and-energy-efficiency-action-plans



Sector Deal for offshore wind

£177m to reduce the cost of renewables, including innovation in offshore wind turbine blade

technology and foundations.

Several of the national initiatives described above have already been launched and present real

opportunities for businesses in the Humber region.

The Industrial Heat Recovery Support programme (IHRS) was launched in autumn 2017 with an

open consultation process in order to design the programme in accordance with industry’s needs.

The IHRS programme aims to facilitate recovery and reuse of industrial waste heat by overcoming

barriers and initiating a series of demonstrator projects16. The programme is due to launch in 2018,

and companies can receive financial support to commission heat recovery feasibility studies in order

to overcome common barriers and develop costed options for different heat recovery technologies

and uses of the recovered heat. Companies can apply for grant funding during the second phase in

order to implement industrial heat recovery projects locally.

The Industrial Energy Efficiency Accelerator (IEEA) also presents an opportunity for accelerating

industrial energy efficiency in the Humber, as a new £9.2m programme that aims to lower the cost

of near-market energy efficient technologies for a range of industrial sectors, through

demonstration projects. All manufacturing sectors are eligible to apply for co-funding of up to £1m

in order to install near-commercial innovations on manufacturing sites and receive development

support17.

The plan to invest up to £20m to encourage switching to lower carbon fuels has commenced with an

Industrial Fuel Switching Market Engagement Study. This study will highlight the potential for low

carbon fuel switching across industrial sectors, whilst identifying potential fuel switching

technologies that can reduce the carbon intensity of industry18. Hydrogen and electrification are

likely to be key components of this study, both of which are relevant to the Humber EII Cluster,

therefore local industry should be encouraged to contribute to the discussion.

Finally, the Carbon Capture and Usage (CCU) Demonstration Programme has been launched with a

Scoping Study, with results expected to be published in summer 2018. The Scoping Study will

identify participants of the Demonstration Programme and work with them to produce site-specific

cost estimates of potential projects for co-funding19. The Humber region has already demonstrated

local CCUS expertise through multinational companies that are involved in CCUS globally, and

through previous feasibility work on the White Rose project as part of the Government’s 2012 CCS

Commercialisation Competition. Since the premature closure of this project there has been some

disillusion surrounding CCUS technology. This programme presents an opportunity to revisit it and

benefit from the region’s existing strengths.

These programmes all present clear opportunities for the Humber EII cluster to grow and

decarbonise industry. Chapter 13 of this report provides further detail on how to exploit these

16 Industrial Heat Recovery Support Programme, UK Government, October 2017, p. 8 https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/651125/IHRS_Consultation_Document-October_2017.pdf 17 Industrial Energy Efficiency Accelerator https://www.carbontrust.com/client-services/programmes/industrial-energy-efficiency-accelerator/ 18 Industrial Fuel Switching Market Engagement Study Contract Notice, BEIS, November 2017 https://www.delta-esourcing.com/tenders/UK-UK-London:-Research-and-development-services-and-related-consultancy-services./8A6RQ4N9Q4 19 Phase 1 Scoping Study for the BEIS CCU Demonstration Programme Contract Notice, BEIS, November 2017 https://www.delta-esourcing.com/respond/23XKWPMJJ3

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/651125/IHRS_Consultation_Document-October_2017.pdf

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/651125/IHRS_Consultation_Document-October_2017.pdf

https://www.carbontrust.com/client-services/programmes/industrial-energy-efficiency-accelerator/

https://www.carbontrust.com/client-services/programmes/industrial-energy-efficiency-accelerator/

https://www.delta-esourcing.com/tenders/UK-UK-London:-Research-and-development-services-and-related-consultancy-services./8A6RQ4N9Q4

https://www.delta-esourcing.com/tenders/UK-UK-London:-Research-and-development-services-and-related-consultancy-services./8A6RQ4N9Q4

https://www.delta-esourcing.com/respond/23XKWPMJJ3

https://www.delta-esourcing.com/respond/23XKWPMJJ3



opportunities by encouraging local industry to play an active role, as well as by coordinating pre-

work to identify opportunities locally which can be exploited.

4.6 Exiting the EU

Wider political threats to industry have grown in significance since the 2016 referendum and a

strong lack of clarity remains around the impact that withdrawal from the European Union will have

on the UK economy.

Initial reactions in the Humber region highlighted funding as the main concern for local industries

that receive European subsidies, though most industries are waiting for new regulations and trade

deals to be agreed before determining whether new opportunities will be sufficient to outweigh the

risks20. Several months after the referendum the Humber LEP coordinated a small consultation to

gauge reactions from local businesses and partners and published the feedback in a letter to BEIS21

and supporting summary22 in November 2016. The issues raised included uncertainty impacting

investor confidence, currency devaluation increasing costs of imported raw materials (though

positive for the export market), immigration regulations restricting EU labour and trade deals

restricting access to markets.

The impacts on trade will largely transpire as a result of top-down negotiations, namely the deal

reached with the EU and policies set by UK Government in the aftermath of leaving the EU (“Brexit”),

which currently limits the level of risk mitigation that local companies can implement. The

subsequent trade agreements reached will have a significant effect on how local businesses in the

Humber will operate in the future. As trade agreements to date have been negotiated with the EU as

a whole, the UK will need to renegotiate agreements with each country upon leaving the Union23.

Energy Intensive Industry within the Humber region counts shipping connections to the continent as

one of its main trade strengths, therefore the success of these negotiations with European countries

in particular will have a material impact on accessible markets in the future.

Despite the uncertainty of this top-down approach, the reaction (and proactivity) of individual

businesses has the potential to temper the outcome. Adaptability of UK businesses to market

changes is key to this. A recent report commissioned by Solent LEP on the implications of Brexit

stated that without radical changes in UK company behaviour, GDP growth in the UK will decrease24.

The extent of this decrease varies significantly depending on trade and policy scenarios, but the

adaptability of current business operations is expected to have a substantial impact on the outcome.

The report identified an increasing emphasis on the world’s fast-growing emerging markets and

move away from the slow growth of European markets as the best approach to navigate Brexit

uncertainty. This will be a key challenge for Humber EIIs, who export a significant proportion of

products to the EU, or who rely on transportation of products throughout Europe.

20

Brexit Business Reaction, Humber Business, June 2016 http://humberbusiness.com/news/views-from-seafood-fishing-ports-

renewable/story-2187-detail/story 21 Draft Letter to Government, Humber LEP, November 2016, http://www.humberlep.org/wp-content/uploads/2016/08/Paper-B-Appendix-1.pdf 22 Brexit Implications – views from the Humber, Humber LEP, November 2016, http://www.humberlep.org/wp-content/uploads/2016/08/Paper-B-Appendix-2.pdf 23 Solent LEP: Baseline forecasts and the implications of Brexit, Oxford Economics, January 2017, p. 34 https://solentlep.org.uk/the-solent/economic-outlook/baseline-forecasts-and-the-implications-of-brexit/ 24 Ibid. p. 36

http://humberbusiness.com/news/views-from-seafood-fishing-ports-renewable/story-2187-detail/story

http://humberbusiness.com/news/views-from-seafood-fishing-ports-renewable/story-2187-detail/story

http://www.humberlep.org/wp-content/uploads/2016/08/Paper-B-Appendix-1.pdf




https://solentlep.org.uk/the-solent/economic-outlook/baseline-forecasts-and-the-implications-of-brexit/

https://solentlep.org.uk/the-solent/economic-outlook/baseline-forecasts-and-the-implications-of-brexit/



With multiple deep-water ports servicing offshore wind and regional, European and global shipping

activity, the Humber Estuary ports complex is an enviable asset of UK strategic significance. Focused

efforts by the UK to refresh and expand its industries as it moves out of the inner European circle

could provide renewed economic impetus to the region. The Humber Estuary should examine how it

can capitalise and expand on new trade opportunities whilst ensuring sustenance of its existing

trading basis.

4.7 Feedback from stakeholders on national initiatives

When questioned about the Government’s plans for the Industrial Strategy, Northern Powerhouse

and Clean Growth Strategy, most stakeholders were positive about the intention to stimulate both

industrial growth and decarbonisation. However, concerns were expressed regarding whether these

strategies will develop into material support, and whether the Humber will see significant benefit.

Many interviewees stated that while the investment in the offshore wind industry has been a

success, the Humber region has otherwise seen little benefit from the Northern Powerhouse

discussions. There is a feeling that the current focus is on cities such as Manchester, Liverpool and

Leeds or other industrial clusters such as Teesside. It was specifically stated that other regions such

as Teesside have a more coordinated and louder voice when it comes to engaging with Government

for support.

“We don’t hear much about the Humber when the Northern Powerhouse is

discussed” Chemicals interviewee

A common theme from stakeholders was that competition between regions is counterproductive

when trying to secure the best deal for the North. Collaboration may be more fruitful, particularly as

some businesses operating on the Humber also have operations across the North.

One interviewee was concerned that whilst the Industrial Strategy Green Paper had a strong focus

on skills, there was too little emphasis on re-skilling the existing workforce. However this has been

addressed within the final White Paper. A number of concerns were expressed about a dwindling

pool of experienced engineers.

Stakeholders also commented on the likely impact of the UK leaving the EU. Most stated that while

they are certain that Brexit will have an impact on their business, they did not have any idea of what

that impact is likely to be. Views ranged from nervousness over the impact on import and export of

goods to the EU and a concern that some markets have already slowed (e.g. construction), to

confidence in the ability of businesses to quickly respond to market changes. Concern was expressed

as to whether UK regulation will align with the EU after leaving, for example the carbon price floor

within EU-ETS.

There was little awareness of the programmes being planned under the Clean Growth Strategy, and

some negativity towards a CCUS programme, since previous programmes were abandoned.

4.8 Developments within the energy supply market

Decarbonisation and the increasing proportion of renewables in the UK’s energy mix are triggering

changes in the way energy is supplied in the UK. Unpredictability caused by intermittent energy

generation from renewable sources requires a new approach to regulating the system to ensure



demand matches supply. Electricity market mechanisms such as demand side response and

frequency response work to align supply and demand to compensate for irregular electricity

generation. Similarly, the uptake of alternative technologies such as energy storage, small scale

renewables and decentralised energy are affecting the way we consume and generate energy in the

UK as a whole.

Demand side response

Demand side response (DSR) works on the basis that significant peaks in energy use result in higher

costs for consumers during those times. Incentivising high energy consumers to reduce their energy

use temporarily during unusually high peaks allows them to reduce their costs accordingly.

Conversely consumers are able to benefit from lower prices when energy demand is low (for

example at times of high renewable electricity generation), thereby softening both peaks and

troughs of energy demand. There are several DSR mechanisms in use throughout the UK, including

balancing services (Frequency Response, Demand Turn Up, Short Term Operating Reserve), capacity

mechanisms and peak avoidance25.

Within the Humber EII Cluster companies interviewed for this study, under half claim to take part in

DSR mechanisms, although some respondents were not aware as they were not involved in energy

purchasing. Many sites operate at constant capacity and opportunities to modify demand to reflect

energy price signals are limited.

Energy Storage

Energy storage is an increasingly key component in the energy system that allows generated energy

to be stored and then released to match demand. This is especially important to regulate

intermittent energy supplies from renewables. Energy storage can also align the supply of energy

from conventional fuel sources to daily demand peaks and troughs. Several different types of energy

storage technologies exist, each with different characteristics that make them suitable for different

applications. Battery, flywheel, pumped hydroelectric and thermal storage make up the commonly

used types of commercial energy storage in the UK. Battery storage in particular is growing rapidly,

and there is significant innovation investment in other technologies (e.g. liquid air). Policy,

regulations and standards are all evolving to cater for the new requirements as UK energy storage

capacity continues to grow.

A variety of views towards energy storage were captured from interview respondents to this study,

which ranged from not being currently interested, to taking an interest in battery based electrical

storage, and monitoring the evolving landscape (particularly the financial incentives). One centrally

based company claimed that the capacity of storage that they could install is limited by the local

electrical infrastructure.

“We are not looking at electrical storage as it is not our core business” energy

company

“Energy storage is too expensive – and if a third party finances it, there isn’t

enough benefit to us” major manufacturer

25 Demand Side Opportunities, National Grid, November 2016 http://www2.nationalgrid.com/WorkArea/DownloadAsset.aspx?id=8589935075

http://www2.nationalgrid.com/WorkArea/DownloadAsset.aspx?id=8589935075



But some work is moving forward - Drax has announced plans for a 200MW electrical storage facility

in the region and Green Hedge Energy UK have been granted planning permission for a 30MW,

£10m battery storage project in Grimsby26.

Renewable energy supply

The uptake of small scale renewables, driven by falling costs and financial incentives such as the

Feed in Tariff (FIT) scheme and the Renewable Heat Incentive (RHI) has enabled organisations to

operate their own energy supplies, rather than relying on the electricity and gas grids. This is

typically solar PV, biomass boilers, or small onshore wind turbines. Developments are taking place in

the field of bioenergy, such as the practice of producing biomethane from organic material using

anaerobic digestion for injection into the gas grid. The UK has the third largest market for injected

biomethane in Europe, so this has an increasing effect on the source of the UK’s energy supply.

For both renewably generated electricity and injected biomethane it is possible for users to purchase

Guarantees of Origin to link the energy used to renewable energy supplied – and therefore claim

reduced or zero carbon for electricity use. Several companies in the Humber already claim to

purchase renewable electricity, and a handful of others were planning to in the near future. No

respondents reported purchasing biogas guarantees of origin.

Some industries have installed their own renewable energy generation including a wind turbine at

Croda and anaerobic digestion at Singleton Birch.

A number of companies reported investigating installation of wind turbines, but plans were shelved

due to long payback times, declined planning permission, or wildlife protection concerns.

26 Humberbusiness.com, Nov 2017 http://humberbusiness.com/news/10m-energy-storage-plant-gets-the/story-7672-detail/story

Case Study: Singleton Birch Anaerobic digestion

Singleton Birch is the UK’s leading independent lime supplier, an energy intensive producer of

quicklime, hydrated lime, natural hydraulic lime, graded chalk, aggregates and other specialist

products and services. The North Lincolnshire-based company has been operating in the lime

and quarrying sector for over 200 years, and over the past decade has been exploring

alternative energy and fuels, to lead the way in decarbonising energy intensive industrial

processes.

In 2014 spin-off Birch Energy was created, alongside the construction of Singleton Birch’s first

on-site anaerobic digestion plant. Birch Energy designed, constructed and operates the 2MW

anaerobic digester on an ongoing basis. As well as providing energy to the site and reutilising

maize, sugarbeet and pig slurry waste products, the plant has been presented as an example

to other energy intensive industries globally as an example to follow for decarbonisation.

Whilst it currently generates over 92% of its total electricity use through renewable low carbon

sources, Singleton Birch has set its sights on even higher ambitions. The company is currently

developing a proposal to build a waste to energy plant, using non-recyclable waste from across

North Lincolnshire as a fuel source.

http://humberbusiness.com/news/10m-energy-storage-plant-gets-the/story-7672-detail/story



“Wind turbines have been considered but there is a danger that they would

constrain future expansion of the process plant”

At least one site is considering installing energy from waste plant and anaerobic digesters.

Decentralised energy

As we enter a new era of energy supply, more and more companies outside of the energy sector are

planning to become net exporters of energy27. Decentralised energy generation is transforming the

way energy is supplied and consumed in the UK. Decentralised infrastructure allows energy to be

generated near to the end use point, creating local networks that efficiently transmit heat and

electricity to a local area. Efficiency is increased in comparison to national grid networks, as shorter

transmission distance minimise energy losses between the generator and the end user. Where both

electricity and heat are generated using Combined Heat and Power (CHP) technology, efficiency is

increased further, by utilising the waste heat produced during electricity generation. Different

energy centres linked to a heat network can be designed to use different fuels, whether they are

lower carbon options such as biomass or waste to heat plants, or conventional fossil fuel sources.

The UK Government is an advocate of decentralised energy and district heating networks and has

accelerated the uptake of heat networks in the UK by creating the Heat Network Delivery Unit

(HNDU), which provides funding and support to local authorities that are developing their own heat

networks28.

Few of the businesses spoken to have actively considered the production or use of decentralised

energy, beyond the renewable projects mentioned above. There is a general interest from some

businesses in providing waste heat into a network, or installing heat/power generation for their own

use and feeding into a network. Some of the global businesses located in the region have experience

of this overseas, but have not actively pursued options on the Humber.

All four local authorities across the Humber are carrying out heat mapping exercises, and these

studies should identify opportunities for heat networks with decentralised energy sources. Looking

at them together may identify wider, strategic opportunities for provision of new low carbon energy

generation, sharing energy across the region, and more effective use of waste heat.

4.9 Global and local trends for key energy intensive sectors

Chemicals

According to the Chemical Industries Association (CIA)29, the chemicals industry is well established in

the EU and has grown by almost 60% over the past 20 years. The EU currently ranks joint second

with the US in terms of worldwide industry share. Amongst other European countries, the UK ranks

fourth for chemicals production behind Germany, France and Italy.

The chemicals industry is the UK’s third largest industry, just behind the food processing and

automotive sectors. Whilst this is a well-established sector, it has seen significant global change over

27 People Power: How consumer choice is changing the UK Energy System, Green Alliance, April 2017 http://www.green-alliance.org.uk/resources/People_power_how_consumer_choice_is_changing_UK_energy_system.pdf 28 Heat Networks Delivery Unit, UK Government https://www.gov.uk/guidance/heat-networks-delivery-unit 29 Landscape of the European chemical industry, Cefic, 2017, http://www.chemlandscape.cefic.org/wp-content/uploads/combined/fullDoc.pdf

http://www.green-alliance.org.uk/resources/People_power_how_consumer_choice_is_changing_UK_energy_system.pdf

http://www.green-alliance.org.uk/resources/People_power_how_consumer_choice_is_changing_UK_energy_system.pdf

https://www.gov.uk/guidance/heat-networks-delivery-unit

http://www.chemlandscape.cefic.org/wp-content/uploads/combined/fullDoc.pdf

http://www.chemlandscape.cefic.org/wp-content/uploads/combined/fullDoc.pdf



the past ten years. The wider availability of natural gas as a feedstock in the US and significant

progression in China have increased global competition.

In terms of the worldwide market the EU share has halved due to a variety of limitations such as

slow innovation (relatively), regulations and high energy and labour prices, especially in comparison

to the world leader China.

The Humber is one of four main hubs for Chemicals production and distribution in the UK. Initial

analysis of the information collected during interviews suggests that the Humber chemicals sector is

holding its market share, but there has been limited opportunity for capturing new market shares

(see section 5.2 for some comparative data).

Interviewees have said that there are limited opportunities for new bulk commodity chemical

production locating to the Humber region. With the existing infrastructure and skills base there are

good opportunities for higher value speciality chemicals – especially those using feedstocks that are

produced locally – to be attracted to the region. There are already a number of good examples of

this including:

Nippon Gohsei – production of EVOH coatings for packaging

Croda – producing polymer additives from rapeseed oil

Novartis - producing active pharmaceutical ingredient

Greenergy – producing Biodiesel from waste cooking oil

A new plant is currently under construction at Saltend by Accsys, BP and Medite to produce Tricoya®

a rot-proof hard wood product made by treating softwood with acetic anhydride.

Further large-scale opportunities for key chemical intermediates include the potential to locate

plants to produce vinyl acetate monomer (VAM) and ethylene oxide. A more detailed review of

opportunities for speciality chemicals should be undertaken to determine the potential benefits of

locating in the Humber region. Reliable sources of ethylene, propylene, and naphtha are available,

along with potentially toluene, cumene, benzene and other aromatic compounds.

There is also manufacturer interest in the emerging low global warming potential gasses such as

fluorinated refrigerant gasses (e.g. hydrofluoroolefins), which could help to reduce harmful

greenhouse gas emissions. The European low global warming potential (GWP) refrigerant chemicals

market will continue to grow rapidly in the coming years due to the impact of the European

Fluorinated Gases Directive (F-Gas Directive). Recently the Kigali amendment to the Montreal

Protocol was agreed which will transform HFC use in 197 countries. This will, over the next 30 years,

trigger widespread transformational impact in design, manufacture, and use of refrigerant gases.

Given the extensive use of refrigeration in the region, and the existing technology expertise, there is

an opportunity to take a proactive approach to both the development and use of new refrigerants

and refrigeration technology.

In addition, multilateral organisations (e.g. United Nations, International Energy Agency) together

with developed nations are leading transformation change in the use of refrigeration technologies in

the developing world, to stimulate more rapid economic growth in developing nations. This will have

a substantial scaling factor on the size and reach of the production and supply of low global warming

potential refrigerant gases.



Figure 6 Main UK chemical sites - blue lines represent ethylene pipelines

Source: Landscape of the European chemical industry, Cefic 2017

Oil refining

The UK’s proximity to crude oil resources and an established refining base places it in a strong

position in the European refinery sector30. However, the sector has faced difficulties in the past few

years, especially due to competition with more modern refineries in the Middle East and Asia Pacific

and the regulatory burden from both the UK and the EU31. Whilst several UK-based oil refineries

closed in recent years and UK demand for oil products is decreasing, two of the UK’s major

operational refineries located in the Humber region still remain competitive. Phillips 66 and Total

Lindsey Oil, both of which began operation in the later 1960s32, have a combined refining capacity of

over 22 million tonnes per year33.

In terms of carbon emissions, oil refining is the third most polluting of the energy intensive industry

sectors34 but could have the potential to reduce emissions by up to 64% compared to 2012 by

205035.

30 Industrial Decarbonisation and Energy Efficiency Roadmap Action Plan: oil refining, BEIS, October 2017 https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/652109/oil-refining-decarbonisation-action-plan.pdf 31 Ibid. 32 Refining and UK refineries, UKPIA, accessed 02/01/2018 http://www.ukpia.com/industry_information/refining-and-uk-refineries/refineries.aspx 33 ibid 34 Industrial decarbonisation and energy efficiency roadmaps to 2050: oil refining, DECC, March 2015 https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/416671/Oil_Refining_Report.pdf 35 Industrial regions and climate change policies, TUC, 2015 https://www.etuc.org/sites/www.etuc.org/files/document/files/etuc_report_17_july_2015_v1_1.pdf

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/652109/oil-refining-decarbonisation-action-plan.pdf

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/652109/oil-refining-decarbonisation-action-plan.pdf

http://www.ukpia.com/industry_information/refining-and-uk-refineries/refineries.aspx

http://www.ukpia.com/industry_information/refining-and-uk-refineries/refineries.aspx

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/416671/Oil_Refining_Report.pdf




Renewables

The renewables sector has experienced impressive progress in the UK and across the world. The

International Energy Agency (IEA) announced this year that globally, nearly two thirds of net new

power capacity introduced in 2016 was derived from renewable technologies. The key technologies

within this group are wind and solar, which are predicted to account for over 80% of capacity growth

from renewables in the short term and could exceed 25% of total generation in countries that are

particularly suited to these technologies36.

The situation in the UK is equally encouraging where, one day in June 2017, over 50% of energy

demand was met by renewables; a record high37. In October 2017 the UK Government announced a

further £557m of support for green energy projects and the release of the aforementioned Clean

Growth Strategy outlined further funding commitments to improve manufacturing innovation for

offshore wind components.

Wind (offshore and onshore)

The UK already has the largest installed capacity of offshore wind at over 5GW38 and has the

potential to hold this position with a further potential capacity of 25GW by 203039. According to an

annual study by EY on the world’s most attractive countries for renewable energy investments (EY

Renewable Energy Country Attractiveness Index)40, the UK has once again made it into the top ten.

The attractiveness for investments in offshore wind in the UK is significantly higher than the average

attractiveness of the top nine countries.

Figure 7 EY Renewable Energy Country Attractiveness Index, October 2017

36 IEA Market Report Series: Renewables, IEA, 2017 37 UK sets new renewable energy record as wind and solar surge, The Telegraph, June 2017 http://www.telegraph.co.uk/business/2017/06/07/uk-sets-new-renewable-energy-record-wind-solar-surge/ 38 Global Wind 2016 Report, GWEC, 2017 http://www.gwec.net/wp-content/uploads/2017/05/Global-Offshore-2016-and-Beyond.pdf 39 New report highlights UK’s massive offshore wind potential, RenewableUK, June 2017 http://www.renewableuk.com/news/348633/New-report-highlights-UKs-massive-offshore-wind-energy-potential-.htm 40 EY Renewable Energy Country Attractiveness Index, http://www.ey.com/gl/en/industries/power---utilities/ey-renewable-energy-country-attractiveness-index-our-index

45.8

37.8

47.9

42.8 42.8

57.3

36.6

46.2

30

35

40

45

50

55

60

Wind (onshore) Wind (offshore) Solar PV Biomass

Technology indices scores (out of 100)

Top 9 UK

http://www.telegraph.co.uk/business/2017/06/07/uk-sets-new-renewable-energy-record-wind-solar-surge/

http://www.gwec.net/wp-content/uploads/2017/05/Global-Offshore-2016-and-Beyond.pdf

http://www.ey.com/gl/en/industries/power---utilities/ey-renewable-energy-country-attractiveness-index-our-index

http://www.ey.com/gl/en/industries/power---utilities/ey-renewable-energy-country-attractiveness-index-our-index



Source: EY Renewable Energy Country Attractiveness Index October 2017, Carbon Trust analysis. Top 9 are

China, India, US, Germany, Australia, France, Japan, Chile and Mexico

In the September 2017 UK Contracts for Difference (CfD) auction, offshore wind power set a new

record low strike price of £57.50 per MWh, confirming the cost reduction trend that the technology

has been seeing since 2015. A month later, the Government announced that the next round of CfD

will be awarded in spring 2019. The Clean Growth Strategy published in mid-October strengthened

the UK’s commitment to offshore wind deployment and triggered The Crown Estate’s

announcement in November 2017 that it would work with stakeholders in 2018 to make seabed

rights available for new offshore wind developments in the UK41.

The Humber Estuary is a world player in the offshore wind sector due to its advantageous proximity

to the North Sea.

Hull and Grimsby are the largest local hubs for wind energy with the presence of world-leading

offshore wind manufacturers Siemens Gamesa and Ørsted. Offshore wind uptake is predicted to

accelerate in the North Sea and the Humber Estuary is well-placed to act as a leading service,

maintenance and grid connection point for these developments.

Certainly in terms of the UK, the ports on the

Humber Estuary are potentially the most

advantageous connection points for two of the

three areas pinpointed for UK-based offshore

wind development. In addition to this, the North

Sea Wind Power Hub is an international project

with significant energy generation potential that

has been designed to comprise artificial energy

islands around which turbines will be built42. The

Hub Consortium said in 2017 that a total of

180GW of offshore wind is needed in the North

Sea to meet European climate targets43. The

Humber is strategically placed to take advantage

of these opportunities, as Aberdeen did during

the growth of the Northern North Sea oil and

gas industry.

Onshore wind received a less favourable rating

in the UK in the EY Renewable energy country

attractiveness index, despite being one of the most cost effective technologies available at present,

offering construction and transmission cost savings in comparison to offshore wind. This rating is

due to a lack of political support for onshore wind in the UK, with planning barriers and high levels of

risk for developers. The number of planning applications for onshore wind developments in the UK

dropped by 78% in 2016 compared to the previous five years44. Interviews have identified that

41 The Crown Estate to consider new leasing for offshore wind projects, The Crown Estate, November 2017, accessed 05/03/2018 https://www.thecrownestate.co.uk/news-and-media/news/2017/the-crown-estate-to-consider-new-leasing-for-offshore-wind-projects/ 42 North Sea Wind Power Hub, TenneT, September 2017 http://nsrac.org/wp-content/uploads/2017/08/TenneT-presentation.pdf 43 North Sea Wind Power Hub Consortium Adds Gas and Storage to the Mix, Offshorewind.biz, September 2017, http://www.offshorewind.biz/2017/09/13/north-sea-wind-power-hub-consortium-adds-gas-and-storage-to-the-mix/ 44

Renewable energy planning database monthly extract, UK Government, September 2017 https://www.gov.uk/government/publications/renewable-energy-planning-database-monthly-extract

Case Study: Siemens Gamesa offshore wind

turbine production and installation facilities,

Green Port Hull

The new Siemens Gamesa offshore wind

turbine facility in Green Port Hull is a

testament to the rapid growth that the

Humber has seen over the previous decade.

The facility is the result of £160m investment

from Siemens and wider stakeholder

investment to total a combined £310m.

At full capacity it is expected to support 1,000

jobs in manufacturing, assembly and

servicing of offshore turbines, ensuring the

continued development of local expertise in

this sector.

https://www.thecrownestate.co.uk/news-and-media/news/2017/the-crown-estate-to-consider-new-leasing-for-offshore-wind-projects/

http://nsrac.org/wp-content/uploads/2017/08/TenneT-presentation.pdf

http://www.offshorewind.biz/2017/09/13/north-sea-wind-power-hub-consortium-adds-gas-and-storage-to-the-mix/

https://www.gov.uk/government/publications/renewable-energy-planning-database-monthly-extract



several Humber-based manufacturers have failed in their attempts to deploy onshore wind assets

due to planning restrictions and other barriers.

Biofuels and biogas

Liquid biofuels are derived from biological processes such as agriculture and anaerobic digestion and

most commonly take the form of bioethanol and biodiesel, with other advanced biofuels including

cellulosic ethanol, and hydrogenated vegetable oil. The current global biofuels market is skewed

towards the US and Brazil, which are jointly responsible for 85% of bioethanol production45. Biofuels

are especially important for sectors reliant on fuels which would otherwise be difficult to

decarbonise, such as shipping.

Biomethane or ‘green gas’ is produced by removing carbon dioxide from biogas, typically sourced

from anaerobic digestion, landfill gas or synthetic gas (‘syngas’) from the gasification of biomass. It

can be injected into national natural gas networks for consumption by existing gas appliances. Global

production of biogas was around 59 billion cubic metres in 201346 with the UK as the fourth largest

producer (tied with Italy).

A growing biofuels and biogas market provides a significant opportunity for the Humber region,

which already has strong existing biofuel capability at the £350m Vivergo Fuels plant, the second

largest bioethanol producer in Europe (currently offline awaiting renewed policy commitments for

biofuels). Anaerobic digestion and energy from waste facilities continue to grow in the region,

further stimulating local biofuels production. Energy Works’ 25MW energy from waste plant in Hull

will be the newest addition to this, due to become operational in 201847. Once fully operational, the

facility will produce biomethane to inject directly into the grid, as well as synthetic gas to power

turbines to generate enough electricity to power 43,000 homes locally.

In terms of solid biofuels, the Drax biomass power station is leading the industry locally. In addition,

a factory at Immingham Docks is currently under construction for a new type of ‘biocoal’. Carbon

neutral biocoal will be produced by heating leftover food and garden waste under pressure to trigger

carbonisation, which can be used to substitute traditional charcoal48.

Carbon Capture and Storage (CCS)

CCS can be applied to new and existing fossil fuel power stations, as well as directly to energy

intensive industries, in order to capture CO2 that would otherwise be emitted into the atmosphere

and transfer it to underground stores. As a relatively new, costly technology, CCS requires public

investment in order to enable initial uptake and encourage widespread implementation into the

future. The UK Government initially provided this support from 2012 through the CCS

Commercialisation Competition, which promised £1 billion of capital funding and selected the

Yorkshire-based White Rose project in Selby as one of two main funding recipients49. This support

45 Technology Roadmap: Delivering Sustainable Bioenergy, 2017 https://www.iea.org/publications/freepublications/publication/Technology_Roadmap_Delivering_Sustainable_Bioenergy.pdf 46 World Bioenergy Association, 2016 47 Energy Works, accessed 28/12/2017, http://energyworkshull.co.uk/about/ 48 Lincolnshire factory to make ‘coal’ from food waste, BBC News, December 2017 http://www.bbc.co.uk/news/uk-england-humber-42354354 49 UK carbon capture and storage: government funding and support, UK Government website, accessed 02/01/2018 https://www.gov.uk/guidance/uk-carbon-capture-and-storage-government-funding-and-support

http://energyworkshull.co.uk/about/

http://www.bbc.co.uk/news/uk-england-humber-42354354


https://www.gov.uk/guidance/uk-carbon-capture-and-storage-government-funding-and-support



was unexpectedly cut short in 2015 with the announcement that the funding was no longer

available50.

Many reports published since have called for renewed investment in CCS from the UK Government

for the Humber region, and other energy intensive industrial areas. The region is particularly well-

placed to exploit CCS technology due to its concentrated EII Cluster and proximity to potential

carbon stores underneath the North Sea, which has the capacity to store carbon from all EU

emissions over the next 100 years51.

As transport and storage account for a quarter of the total CCS facility costs, clustering emissions

from local industries has the potential to result in early cost reductions to increase the financial

viability of CCS in the UK52. A calculation of how this would work in the Humber region showed cost

reductions of almost two thirds for each tonne of CO2 captured53. Several of the Industrial

Decarbonisation and Energy Efficiency Action Plans identify opportunities for CCS to be deployed at

industrial clusters in the UK as a key action54.

Joining up with other prospective projects in other regions, such as the Caledonia Clean Energy

Project in Grangemouth55 and the Teesside Collective56, could lead to further economies of scale. A

proposed national project titled the East Coast CCS Network has set out an initial framework to link

these regions (shown in Figure 8), allowing costly infrastructure to be shared and investment to be

phased over several decades to reduce risk57.

An alternative to storing captured CO2 is to use it within other processes carbon capture and usage

or CCU. These could range from carbonation of soft drinks, to supplementing the atmosphere in

greenhouses in the agricultural sector. There is increasing interest and research into using CO2 as a

feedstock for producing fuel or chemicals, powered by renewable energy. There are a number of

possible synthesis routes being considered. Within the region, for example, there would likely be

interest in using CO2 to produce methanol sustainably.

50 Future of carbon capture and storage in the UK, Energy and Climate Change Committee, 2016 https://publications.parliament.uk/pa/cm201516/cmselect/cmenergy/692/692.pdf 51 A positive negative, DRAX, January 2017 https://www.drax.com/energy-policy/a-positive-negative/ 52 Decarbonising British industry: why industrial CCS clusters are the answer, Green Alliance, March 2015 http://www.green-alliance.org.uk/resources/Decarbonising_British_Industry.pdf 53 Ibid. p. 7 54 Industrial decarbonisation and energy efficiency action plans, BEIS, October 2017 https://www.gov.uk/government/publications/industrial-decarbonisation-and-energy-efficiency-action-plans 55 https://summitpower.com/projects/carbon-capture/ 56 http://www.teessidecollective.co.uk/ 57 Clean Air, Clean Industry, Clean Growth: How Carbon Capture Will Boost the UK Economy, Summit Power, October 2017, http://www.ccsassociation.org/news-and-events/reports-and-publications/clean-air-clean-industry-clean-growth/

https://summitpower.com/projects/carbon-capture/

http://www.teessidecollective.co.uk/

http://www.ccsassociation.org/news-and-events/reports-and-publications/clean-air-clean-industry-clean-growth/



Figure 8 Proposed East Coast CCS Network (Source: Summit Power)

4.10 Industrial Symbiosis

Industrial symbiosis involves the creation of mutually beneficial business opportunities to generate

new supplies of raw material and new methods of waste disposal. This can lead to reduced raw

material costs, reduced disposal costs, new revenues from waste materials and by-products,

diverting waste from landfill and reduced carbon emissions. Industrial symbiosis can create synergies

between two or more existing organisations in an area, and it can also be used to identify scope for

the creation of new businesses in the area to use available feedstocks and waste streams.

There are many direct business benefits of industrial symbiosis. These include increased

competitiveness through the more efficient conversion of raw materials into products and

decreased costs associated with legislation and regulations such as waste treatment or the Landfill

Tax. Adopting sustainable practices such as ISO14001 is an increasing requirement in supply chains

and industrial symbiosis would be seen to be an excellent initiative for all parties concerned.58

Global experience

Many industrial symbiosis projects are progressing around the world. For example, BASF have

harnessed a significant number of industrial symbiosis opportunities in its plants across the world,

creating worldwide annual savings of more than £1 billion and 3.8 million tonnes of CO2. One

58 Industrial Symbiosis in the UK, January 2006 https://www.researchgate.net/publication/252394796_Industrial_Symbiosis_in_the_UK

https://www.researchgate.net/publication/252394796_Industrial_Symbiosis_in_the_UK



example is creation of a method of recovering N-dimethylacetamide (DMAC), which is used as a

solvent in the production of spandex fibres to minimise solvent loses. 59

Similarly, in other chemicals industries two Kemira coagulant plants were able to utilise by-products

from polymer company Convestro as a raw material. In 2016 approximately 27% of Kemira raw

materials across all business segments were industrial by-products from other industries. 60

RESLAG involves the use of waste steel slag from the steel industry in Europe. According to statistics

approximately 76% of slag is already recycled as an aggregate for road materials. RESLAG aims to

identify an effective use for landfilled slag. Current potential uses are being investigated in industrial

processes, which may lead to carbon savings and the reduction of negative impacts associated with

mining.61

District heating powered by industrial waste heat is another theme that has worked well in other

parts of the world. In Hamburg, a sulphuric acid producer, Aurubis, shares its waste heat with the

city, saving the equivalent of 15,000 homeowners collectively around 140,000 tCO2. Similarly, in

Rotterdam, Shell supplies waste heat released from its Pernis refinery to the equivalent of 16,000

households.62

UK experience

A significant amount of industrial symbiosis has already occurred in the UK, including in the Humber

region, facilitated by programmes such as the National Industrial Symbiosis Programme (NISP)

through the Waste and Resources Action Programme (WRAP), and through EU Horizon 2020

funding.

An early industrial symbiosis project in the Humber region, beginning in 1998, involved the creation

of the Immingham CHP plant with ConocoPhillips, providing energy and steam to both the P66 and

Total oil refineries; one of the largest scale industrial CHPs in Europe.63

The NISP programme was highly successful, running from 2003 to 2012. It engaged with over 15,000

organisations in the UK, generated £1 billion sales and cost reductions of £1.1 billion for the

participating companies. It also claimed to reduce carbon emissions by 39 million tonnes and divert

45 million tonnes of material from landfill, creating or saving more than 1,000 jobs across the UK.

The majority of organisations involved were small and medium-sized enterprises (SMEs)64.

Yorkshire and Humber was one of NISP’s pilot regions. Projects included:

NISP explored the potential for a collaborative water treatment facility for non-potable

water for businesses in the Humber region. The study allowed Anglian Water Services to

identify a way to release the non-potable water in a way that would help the local industries

on the South Humber Bank.65

59 Accelerating Europe towards a sustainable future, Cefic, 2017 https://chemistrycan.com/app/uploads/2017/10/SD-Report2017.pdf 60 Ibid. 61 Turning waste from steel industry into a valuable low cost feedstock for energy intensive industry, H2020, 2015 – 2019 http://cordis.europa.eu/project/rcn/196819_en.html 62 Ibid. 63 Immingham Combined Heat and Power, the Green Age, accessed 29/11/2017 https://www.thegreenage.co.uk/cos/immingham-combined-heat-and-power/ 64 Mutual benefits of industrial symbiosis, IEMA, August 2015 https://www.environmentalistonline.com/article/mutual-benefits-industrial-symbiosis 65

Ibid.

https://chemistrycan.com/app/uploads/2017/10/SD-Report2017.pdf


http://cordis.europa.eu/project/rcn/196819_en.html


https://www.thegreenage.co.uk/cos/immingham-combined-heat-and-power/

https://www.thegreenage.co.uk/cos/immingham-combined-heat-and-power/

https://www.environmentalistonline.com/article/mutual-benefits-industrial-symbiosis

https://www.environmentalistonline.com/article/mutual-benefits-industrial-symbiosis

http://www.wrap.org.uk/sites/files/wrap/Pathway%20Report.pdf



NISP also assisted with a symbiosis between Hamon UK and Native Island Ltd to detoxify

Copper Chromium Arsenic treated timber. This resulted in the prevention of hazardous

waste being incinerated and greatly reduced the costs.66

EPOS

More recently there is a further study into the potential for industrial symbiosis opportunities in the

Humber region through the Enhanced energy and resource Efficiency and Performance in process

industry Operations via onsite and cross-sectorial Symbiosis (EPOS), a four year EU SPIRE Horizon

2020-funded project.

Opportunities identified through EPOS have included the creation of a direct waste stream between

CEMEX and INEOS where INEOS could send one of its liquid waste streams to CEMEX to be burnt in

its waste kilns. CEMEX has the ability to burn 100% waste in its cement kilns. Currently CEMEX only

burns approximately 80% waste, therefore there is more potential for reducing the use of primary

fuels, reducing costs and indirect emissions. The study has identified “real economic potential for

both companies”. However, there are also a number of hurdles to solve before implementation can

occur such as acquiring a permit for transporting dangerous goods, and the need for CEMEX to

obtain a new license for hazardous waste. Furthermore the CAPEX requirements will require a board

level decision67.

It has also been identified through EPOS that CEMEX could also take chalk reject material from

Omya, a producer of industrial minerals, to be used as a limestone replacement. In return, CEMEX

can provide its cement kiln dust to Omya for land reclamation of their quarry.

According to the current EPOS scheme the industries with the largest potential in Europe include

steel, cement and petrochemical companies and Hull and the North East of England have been

identified as a ‘hotspot’ for the potential of industrial symbiosis. The EPOS project could bring

significant benefits to EII cluster companies.

LOCIMAP

Another relevant Horizon 2020 funded project is LOCIMAP (low carbon industrial manufacturing

parks) which includes the Humber region.

LOCIMAP is looking at the potential for the integration of a number of carbon intensive industries

such as the cement industry, paper making, iron and steel, petrochemicals and the ceramic industry.

Residual low grade heat has been identified to have a potential to be used across many industrial

parks, and to power absorption chillers used for data centres, cold stores and where refrigeration is

required. As a consequence of this study, the UK study consultants Link2Energy have identified that

the South Humber Bank region may be an ideal location for this, using waste heat from

petrochemicals companies to support the chilling requirements of food companies in the area.68

Further opportunities

A range of further potential opportunities have been identified as a result of stakeholder interviews

for this study. Some of these are listed in section 11. More in depth study across the value chain is

66 Ibid. 67 Industrial Symbiosis in the Humber Region, INEOS and CEMEX, December 2016 https://www.spire2030.eu/sites/default/files/users/user222/Epos-docs/epos%20insights%206_v2.pdf 68 https://link.springer.com/chapter/10.1007/978-3-319-20571-7_19

http://www.wrap.org.uk/sites/files/wrap/Pathway%20Report.pdf

https://www.spire2030.eu/sites/default/files/users/user222/Epos-docs/epos%20insights%206_v2.pdf

https://link.springer.com/chapter/10.1007/978-3-319-20571-7_19



recommended to identify the most valuable opportunities and take them forward with materials

research, technical advice and business case development support.

There are some key barriers to the uptake of symbiosis ideas however. Firstly identifying the

opportunities can be difficult – they are not always obvious. This requires gaining the enthusiasm

from organisations to participate against other competing priorities. The cost and funding available

to research and then implement symbiosis projects can be a barrier, especially when there is no

guarantee of success. But perhaps the biggest barrier is to overcome the risks associated with long

term supply contracts, which are necessary for symbiosis to be cost effective. The supplier needs to

be sure that there will be a long term customer demand for the product they are supplying whether

that be waste, energy, or a commercial product. The customer needs to be sure of a long term

reliable supply at a competitive cost. Furthermore, both parties must be ready at roughly the same

time (within their company investment cycles) to push projects forward.

Integration in practice

Chemicals industries are some of the most advanced in implementing symbiosis through site

integration. Saltend in the East Riding, just outside Hull provides an excellent example of the

potential for site integration. Figure 9 below illustrates some of the material and energy flows at the

site. Clearly this brings significant advantages to the companies in terms of “guaranteed” supplies of

power and utilities and/or markets for their products. However, it also brings risks of security of

supply (if a plant closes) and material costs (where there is only one source of supply).

Figure 9: Illustration of process integration at Saltend Chemicals Park



4.11 Climate change risk and adaptation

The effects of climate change are increasingly becoming accepted in the private sector as a real

threat to business as usual. The exact impacts of climate change are difficult to predict, due to

unknowns around whether global efforts will limit warming to 2ºC and which tipping point will

intensify impacts. Recognition from businesses is reflected in the growing representation of the

private sector at COP events in recent years, as well as ambitious carbon reduction plans and the

increasing prevalence of science-based targets among multinationals.

Risks facing businesses in the Humber and elsewhere could include:

Increased flood risk restricting operation times and damaging premises

Extreme weather interrupting grid infrastructure for power distribution and increasing the

need for refrigeration and heat

Increasing prevalence of storms affecting the transport of goods, especially shipping

Water scarcity limiting water use in industrial processes

Changing weather patterns impact on agriculture (especially relevant for food processing

sector)

Impacts worldwide affecting industry supply chains, especially those dependent on raw

materials from abroad that require large amounts of water for processing.

Climate change mitigation through decarbonisation is key to minimising climate change risks to

businesses, but even with the most rigorous approach the impacts of climate change will be felt

across industry. This means that businesses will need to increase their resilience through other

means, which falls under the concept of climate change adaptation.

It is important to note that whilst many businesses view climate change as a threat to business as

usual, others see it as a potential opportunity to diversify into new business streams. Examples of

this include renewables and flood prevention infrastructure, and the Humber provides clear

examples of leveraging this opportunity through its extensive renewables growth in recent years.

Adaptation strategies are diverse, and examples relevant to the Humber EII Cluster include:

Supporting suppliers to become climate resilient

Diversifying supplier group

Identifying business opportunities to develop new products and services

Identifying climate risks to help make investment decisions (e.g. purchasing high value

machinery/technology) to future-proof operational effectiveness and costs

Incorporating climate risks into asset design to reduce future expenses

Considering climate risk when choosing new business locations

Future-proofing employee conditions to ensure a mobile, health and safe workforce

Disclosing how the business is managing climate risks and maximising opportunities, which

can provide confidence to investors, consumers and other stakeholders.

Climate change risk and adaptation is a broad area with strong regional idiosyncrasies, depending on

geographies, climate, infrastructure and local business needs. The MET Office Climate Impact

Assessment of the UK will be published in late 2018, and it is recommended that the Humber uses

this output as the basis to inform a regional study into climate change risk and adaptation strategies

for local industry.





5 Regional context

5.1 Area profile

The Humber Estuary is located within the former Government Office Region of Yorkshire and the

Humber, (one of the nine former regions in England), and is therefore still included in this

geographic boundary for statistical purposes. The Humber region incorporates the four local

authorities of Hull, East Riding of Yorkshire, North East Lincolnshire and North Lincolnshire. Facing

the North Sea coastline, the Humber region borders with Lincolnshire, Nottinghamshire, West Riding

of Yorkshire and North Riding of Yorkshire, effectively on the dividing line between the Midlands and

the North of England. It therefore marks the southern boundary to the Northern Powerhouse.

The Humber Estuary drains a catchment area of some 24,000 km2 and provides the largest single

input of freshwater from Britain into the North Sea (Figure 10)69. The Estuary is also home to several

port towns. Grimsby is a renowned centre for food processing, and more recently has established

leading offshore wind operations and maintenance (O&M) activities. Immingham is the UK’s largest

port by tonnage, handling around 55 million tonnes per year.

Figure 10 Humber Estuary Catchment

Source: Tide Facts, The Humber Estuary, www.tide-project.eu

69 Tide-project EU, http://tide-project.eu/downloads/TIDE_Facts-Humber_Estuary.pdf

http://www.tide-project.eu/

http://tide-project.eu/downloads/TIDE_Facts-Humber_Estuary.pdf



Kingston upon Hull (commonly known as Hull) is the only city in the Humber Estuary region. It is

home to Siemens Gamesa, a new offshore wind turbine blade manufacturing facility, with a vision to

establish the region as a world class centre for renewable energy. In 2017 Hull was awarded the UK

City of Culture status, which brought 2,000 events, exhibitions and cultural activities to the city and

attracted millions of visitors.

The Humber Estuary is well connected due to its geographical location, its port activities and its long-

standing track record of serving the needs of local industry. The proximity of the port to a range of

offshore energy technologies means that access to energy resources is advantageous in the region,

including oil, natural gas and offshore wind70. This proximity naturally leads to lower transmission

costs for energy for local industry71.

In terms of transport links, the region is served by a reasonable road and rail network, though there

are some congestion hot spots. Industries based within the Humber region can transport goods by

road to over three quarters of the UK’s manufacturing sites within four hours. Many industrial sites

have direct rail access and tracks on both sides of the estuary provide a lower carbon means of

freight transport, with further investment planned for the South Humber line to increase container

capacity. Furthermore, the port shipping links open up the Humber Estuary to Europe, with 60% of

European markets reachable within 12 hours of sailing72.

The economy of the Humber region is varied, but strongly focussed on the port & logistics,

manufacturing (particularly chemicals), and food processing sectors. The fishing and seafood

industry has declined, but there has been a transition to a thriving renewable energy industry,

particularly focused on offshore wind. The port in Hull has attracted over £310 million in investment

from Siemens and ABP alone. Figure 13 shows the results of a non-exhaustive survey of regional

press coverage demonstrating both challenges and growth in the region’s economy over the last five

years. Overall, over this period, employment has reached a five-year high.

Energy is at the heart of the region’s economy, and it is described as the ‘Energy Estuary’. Around 25% of UK oil refinery and coal import requirements are provided through the Humber, in addition to over a fifth of national gas demand73. Due to its proximity to North Sea offshore wind farms, the Humber Estuary has also become a hub for offshore wind manufacture and servicing. The industry in the region is also a significant energy user - 6% of England’s industrial and commercial energy use is by businesses in the Humber region.

The largest Enterprise Zone in the UK is located across over 40 sites around the Humber Estuary,

principally composed of areas on the north and south bank of the river around Hull, Brough,

Immingham, Grimsby, Cleethorpes and Goole, as well as inland locations around Scunthorpe and

Humberside Airport. The Enterprise Zones offer a variety of benefits to businesses located within

the boundaries, such as access to deep sea ports, proximity to offshore renewables and land at the

local airport.74 Some of the benefits of locating in Enterprise Zones are listed in Figure 12.

70 ETUC Yorkshire and The Humber Regional report, 2015 https://www.etuc.org/sites/www.etuc.org/files/document/files/etuc_report_17_july_2015_v1_1.pdf 71

The capability of the Humber region, University of Hull, November 2013 http://www.humberlep.org/wp-

content/uploads/2014/11/Capability-of-the-Humber-region-excluding-Appendices-November-2013-for-web.pdf 72 Humber Enterprise Zone, Humber LEP http://www.humberlep.org/wp-content/uploads/2015/03/Humber-Enterprise-Zones-AH-Digital-Brochure-With-Links2.pdf 73 Response to the Industrial Strategy Green Paper, Humber LEP, April 2017 http://www.humberlep.org/wp-content/uploads/2017/03/Humber-Industrial-Strategy-response-April-2017.pdf 74 Humber Enterprise Zone, http://www.humberlep.org/business/enterprise-zones/



http://www.humberlep.org/wp-content/uploads/2014/11/Capability-of-the-Humber-region-excluding-Appendices-November-2013-for-web.pdf



http://www.humberlep.org/wp-content/uploads/2015/03/Humber-Enterprise-Zones-AH-Digital-Brochure-With-Links2.pdf

http://www.humberlep.org/wp-content/uploads/2015/03/Humber-Enterprise-Zones-AH-Digital-Brochure-With-Links2.pdf



http://www.humberlep.org/business/enterprise-zones/



Figure 11: Humber Enterprise Zones Map

Data source: ONS

Figure 12 - Benefits of Enterprise Zones 75

75

ibid

Enterprise Zones benefit from government backing and incentives for investment. Incentives

include:

Business rate discounts of up to 100%

Enhanced Capital Allowances – 100% first year allowances on capital investment

Simplified planning arrangements

Government support for superfast broadband throughout the zone

Could qualify for additional financial support from Government under state aid rules

Additional benefits available locally include:

Single Conversation Group brings together local agencies and partners to ensure a

smoother development process

Humber LEP Business Loan Fund to support sustainable employment

Growing the Humber providing grants

Green Port Hull supporting renewable energy /low carbon businesses and supply

chains



Figure 13: Media timeline of decline and growth in the Energy Intensive Industry sector



5.2 Economy of the Humber region

Regional landscape

The Humber is a region with infrastructure and industries of national and often strategic national

importance. Particularly its deep-water docks complex, it’s chemical and petrochemicals industries

that operate within a wider energy intensive industries cluster, a cluster of large food processing,

and more recently significant growth in offshore renewables industries. Together these and other

industries delivered £18.38 billion in Gross Value Added (GVA76) for the Humber. The United

Kingdom’s nominal GVA in 2016 was £1,748 billion.

Economic comparators

In Table 1 we highlight key economic characteristics of the Humber and compare these with

economic characteristics of comparator regions: Tees Valley, Solent, Cheshire & Warrington and

New Anglia. Comparisons are also made in places with Hampshire or Country Durham (due to

existing or future industry similarities, e.g. chemicals, energy cluster, renewable offshore hub).

The Tees Valley and Cheshire & Warrington LEPs have similar heavy industry clusters, and Tees

Valley and New Anglia have strong ambitions to capture and hold strong positions in the offshore

renewables industry. The Solent has a strong deep water port operation.

Table 1 Overview of key economic metrics for the Humber, and comparisons with selected regions

Key economic metrics

Comparison

Humber Solent Tees Valley

Cheshire & Warrington

New Anglia

Population 927,866 1,300,000 669,946 1,048,087 1,638,144

Unemployment 5.0% 3.7% 7.0% 3.7% 3.6%

Number of businesses77

37,135 49,955 22,990 49,210 74,580

Enterprise birth rate

12.4% 16.6%78 12.2% 13.1% 9.6%

Enterprise death rate

10.2% 13.5% 9.1% 10.5% 8.2%

GVA (per head – 2016)

£19,807 £24,163 £19,111 £31,848 £21,276

GVA (total – 2016)

£18.38bn £25.68bn £12.80bn £29.34bn £34.85bn

Sources: ONS Annual Population Survey December 2017, ONS Nominal GVA Data December 2017, ONS GVA by LEP Reference Tables

December 2017, Business Demography 2016, NOMIS 2018

Good progress has been made in the Humber in respect to falls in unemployment which fell from

6.4% to 5.0% between September 2016 and September 2017. Also, between 2015 and 2016 the

number of businesses in the Humber grew by 3.3%.

76 Regional GVA(I) by local authority in the UK, UK Government, March 2017 https://www.ons.gov.uk/economy/grossvalueaddedgva/datasets/regionalgvaibylocalauthorityintheuk 77 Local units 78 Challenges in bounding the dataset may be overstatement of business births or deaths

https://www.ons.gov.uk/economy/grossvalueaddedgva/datasets/regionalgvaibylocalauthorityintheuk



Humber long-term GVA performance

Looking at the ONS available dataset since 1998, it can be observed that the Humber region’s year

on year growth – as GVA per head of population – has remained broadly aligned with the UK and its

regional neighbours. For a short period between 2009 and 2013 the Humber was out of step with

both, and experienced negative or very low GVA per head growth. Aside from this short post-

recessionary period the Humber’s growth has stayed in alignment with the UK and its Northern

regional neighbours.

Figure 14: GVA per head growth, Humber LEP Region and neighbouring regions, 1998-2016

Source: ONS GVA Reference Tables2 December 2017, Carbon Trust analysis

Humber GVA

3-year average79 nominal GVA growth performance for the Humber was 2.8%, the same as New

Anglia and very similar to the Solent (3.0%), but lower than the UK average of 3.8%. Between 2014

and 201680 the Humber achieved annual GVA growths’ of 2.7%, 4.7% and 1.0% respectively.

79 Average on 3 years annual growth 80 Currently available data, 2016 provisional

-6.0%

-4.0%

-2.0%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Humber North East North West United Kingdom



Figure 15: GVA: year on year growth

Source: ONS GVA by LEP Reference Tables December 2017, Carbon Trust analysis.

Humber GVA per head of population

Humber’s GVA per head of population was £19,807, 26% lower than the UK average of £26,584. At

2.6%, average three year growth in GVA per headcount has been stronger in Humber than New

Anglia, Solent or Tees Valley (2.2%, 2.1%, 2.1%); and close to the UK average of 2.9% (see Figure 16).

Annual growth for the Humber was 2.6%, 4.5% and 0.7% respectively. Cheshire & Warrington

achieved 3.8%.

Figure 16: GVA per head of population: year on year growth

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

2014 2015 2016

An

nu

al G

VA

gro

wth

Humber Tees Valley Cheshire & Warrington Solent New Anglia UK

-1.0%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

2012 2013 2014 2015 2016

Year

-on

-yea

r gr

ow

th

Humber Tees Cheshire New Anglia Solent UK



Figure 17: GVA per head of population and 3 year average GVA per head of population growth

Figure 18: GVA characteristics of comparator regions

Source: ONS GVA by LEP Reference Tables December 2017, Carbon Trust analysis



Humber Sectorial GVA analysis

Figure 19: Sectorial GVA analysis for Humber, Tees Valley, Solent, New Anglia, and Cheshire & Warrington

Source: ONS GVA by LEP Reference Tables December 2017, Carbon Trust analysis

A sectoral GVA analysis shows that at 24.7% the Humber has a highest GVA contribution due to

manufacturing, closely followed by Cheshire and Warrington at 24.3%. The Tees Valley, Solent and

New Anglia have much lower GVA contributions from manufacturing (12.4%, 11.2%, 13.2%). Across

all regions a strong GVA contribution is provided by the wholesale, retail, transport & storage, food

processing sectors (16.6%-21.1%, Humber 19.2%). Compared with the comparator regions the

Humber has relatively weak GVA contributions from ICT, financial service and professional and

technical services. Some of this underperformance may be linked to: proximity to large population

markets, and relative regional values of commercial properties (see Figure 19).

In seeking to strengthen the regional economy, the Humber’s focus on developing a strong UK

capability as an offshore renewables hub, and in developing the Energy Estuary make sense. For

businesses to achieve these ambitions they will require well trained and highly skilled professional,

technical and administrative labour which should deliver growth to this sector of the economy.

Equally, thought may still need to be dedicated to how to ensure that opportunities in the ICT,

financial service and professional and technical services sectors, which may be stimulated by

increased ambitions in renewables and manufacturing, are not lost to other regions. Alongside

existing ambitions the region should examine its capacity in the cold economy: chemicals,

refrigeration technology, cold storage and more broadly the emerging concept of clean cooling.

There is potential within manufacturing and refrigeration equipment to lower the environmental

impact of refrigeration in the region, focusing on the chemicals and food processing sectors in

particular. The cold economy may also be an additional path for local energy storage.

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Cheshire and Warrington

Humber

Tees Valley

Solent

New Anglia

Farming, mining, utilites Manufacturing

Construction Wholesale, retail, transport & storage, food

ICT Financial services

Real estate services Profressional, technical, administrative

Public sector, education and health Arts, recreation and other services



Regional employment

The closest region geographically and economically is the Tees Valley, whilst compositionally it is

Cheshire & Warrington. Below these regions are used as comparators to bring clarity to analysis.

Employment in the Humber stood at 414,300 in September 2017, 73.2% of the employable

population of 565,700. Whilst marginally below the 75.2% national average, regional employment in

the Humber is 5% stronger than the Tees Valley. Employment in Cheshire & Warrington is in-line

with the national average.

Table 2: Demographics81

of Humber, Tees Valley and Cheshire & Warrington

Humber Cheshire & Warrington Tees Valley

Population 927,866 1,048,087 669,946

Employable (16-64) 565,700 558,600 411,600

Employed 414,300 420,400 280,400

Employment rate 73.2% 75.3% 68.1% Source: ONS Annual Population Survey, Population estimates - local authority based by single year of age. NOMIS.

Of these regions, the Humber is the only one to have shown consistent growth in the employment

rate over the past four years – employment levels grew 2.4% from 70.8% to 73.2%. Tees Valley and

Cheshire & Warrington’s employment rate only grew by 0.5% each, i.e. the Humber achieved nearly

a five-fold increase in employment growth when compared to these regions.

Figure 20: Employment rates in Cheshire & Warrington, Humber and Tees Valley (2014-2017)

Source: ONS Annual Population Survey, NOMIS 2018

Progress on employment rate is likely tied to the significant progress the region has made in the area

of skills and training, after a skills shortage was identified and ambitions to resolve this were

outlined in a number of reports on local industry82.

81

Business Register and Employment Survey, population Surveys queried through NOMIS

62.0

64.0

66.0

68.0

70.0

72.0

74.0

76.0

2014 2015 2016 2017

Emp

loym

ent

rate

(%

)

Cheshire & Warrington Humber Tees Valley



A Skills Commission was established to take a long-term look at skills issues in the Humber and

opportunities emerging from national skills policy83. The Humber LEP’s Employment and Skills Board

led on the development of a six year Employment and Skills Strategy84, aligned to the Strategic

Economic Plan (SEP) that identified the skills needed to support local growth and priority

interventions to deliver them. These actions and others have, in Hull in particular, seen the number

of residents of working age without qualifications drop by almost a quarter85. This progress has been

a combined effort from the public sector, academia and local industry. A good example of this cross-

sector approach is the Siemens Gamesa apprenticeship programme and training facility, set up in

partnership with a local college to ensure that local workers have the necessary skills to work in the

turbine manufacturing industry86. Sponsorship arrangements between local University Technical

Colleges and local industry are supporting the growth of a highly-skilled workforce87.

GVA per employee

Analysis of GVA per employee highlights that employed productivity is £50,814 for Cheshire &

Warrington, £49,023 for Tees Valley and Durham, and £46,846 for the Humber. This is markedly

different to the outcome of GVA per headcount. The region is 7% lower in GVA per employee, but

26% when compared on a GVA per headcount basis.

Manufacturing makes an appreciably strong GVA per employee contribution compared to most

other sectors of the region’s economy, ranking fourth out of twenty sectors – behind real estate,

electricity, gas, steam & air-conditioning supply, and financial services.

Table 3: Sectorial GVA contribution per employee

Sector Cheshire & Warrington (£GVA per employee)

Tees Valley & Durham

(£GVA per employee)

Humber (£GVA per employee)

Mining and quarrying 104,000 179,791 43,119

Manufacturing 123,333 63,608 68,483

Electricity, gas, steam and air-conditioning supply 244,242 262,329 269,818

Water supply; sewerage and waste management 56,637 131,743 58,929

Construction 66,186 69,506 61,436

Wholesale and retail trade; repair of motor vehicles 35,349 35,307 32,344

Transportation and storage 33,514 45,112 48,320

Accommodation and food service activities 18,857 18,545 20,727

Information and communication 72,167 109,813 36,515

Financial and insurance activities 72,991 95,245 79,701

Real estate activities 333,902 366,719 454,458

Professional, scientific and technical activities 35,371 42,465 35,362

82

An audit of existing low carbon strategy from across the Humber, and York, North Yorkshire and East Riding Local Enterprise Partnership

regions, June 2016 http://www.esiftap.org/wp-content/uploads/2016/04/An-audit-of-existing-low-carbon-strategy-across-the-Humber-and-YNYER-LEP-Regions.pdf 83 Humber Skills Commission http://www.humberlep.org/skills/skills-commission/. 84 Employment and Skills Strategy http://www.humberlep.org/skills/employment-and-skills-strategy/ 85 Review of the Humber Strategic Economic Plan, Humber LEP, July 2016 http://www.humberlep.org/wp-content/uploads/2016/08/Paper-F-SEP-Refresh-SEP-Review-document.pdf. 86 Setting the pace: Northern England's low carbon economy, Aldersgate Group September 2016 87 Triton Knoll supports Humber University Technical College to help grow local talent base, Triton Knoll, December 2016 http://www.tritonknoll.co.uk/triton-knoll-supports-humber-university-technical-college-to-help-grow-local-talent-base/

http://www.esiftap.org/wp-content/uploads/2016/04/An-audit-of-existing-low-carbon-strategy-across-the-Humber-and-YNYER-LEP-Regions.pdf

http://www.esiftap.org/wp-content/uploads/2016/04/An-audit-of-existing-low-carbon-strategy-across-the-Humber-and-YNYER-LEP-Regions.pdf

http://www.humberlep.org/skills/skills-commission/

http://www.humberlep.org/skills/employment-and-skills-strategy/

http://www.humberlep.org/wp-content/uploads/2016/08/Paper-F-SEP-Refresh-SEP-Review-document.pdf

http://www.humberlep.org/wp-content/uploads/2016/08/Paper-F-SEP-Refresh-SEP-Review-document.pdf

http://www.tritonknoll.co.uk/triton-knoll-supports-humber-university-technical-college-to-help-grow-local-talent-base/



Administrative and support service activities 34,647 27,725 23,082

Public administration and defence; social security 44,824 50,291 52,960

Education 28,150 37,462 34,676

Human health and social work activities 28,142 31,167 29,273

Arts, entertainment and recreation 22,044 15,963 15,758

Manufacturing

The detailed manufacturing sector GVA data presented below is drawn from 2015 GVA data NOT

2016 GVA data. The ONS has changed how it records GVA data. It no longer publishes separate

GVA data for chemicals, pharmaceuticals and petrochemicals.

Manufacturing plays a significant role in the Humber, providing more than 55,000 jobs (15% of

employment) and £4,528 million (23%) of the regions GVA. This just higher than Cheshire &

Warrington', and much higher than Tees Valley. Manufacturing GVA per employee in the Humber

and Tees Valley are very similar. Manufacturing GVA per employee in Cheshire & Warrington is

significantly higher. There are very simple explanations for this substantial difference.

Cheshire & Warrington has nearly 6 times the GVA contributions from the basic pharmaceutical

products and preparations sector when compared with the Humber Estuary or Tees Valley, but only

2.5 times the number of employees. This suggests the products manufactures are of higher

economic value than those produced on the Humber or the Tees Valley, and also that volumes of

production are higher. Cheshire & Warrington also has two-fold greater GVA contribution from the

manufacture of transport products.

Table 4: Manufacturing GVA and people employed

Region GVA (£million)

Manufacturing GVA

(£million)

GVA contribution

(Manufacturing)

People employed

Manufacturing GVA (£)

per employee

Humber 19,316 4,528 23% 55,225 81,992

Tees Valley 12,862 1,812 14% 23,529 77,096

Cheshire & Warrington

28,466 6,450 23% 50,365 128,224

Source: ONS GVA by LEP Reference Tables June 2017, ONS Business Register and Employment Survey: open access NOMIS February 2018

Removing the effects of the substantial manufacturing advantages that Cheshire & Warrington has

in this subsector, the Humber would outperform it and the Tees Valley on Manufacturing GVA

output by approximately £800m. This demonstrates the strength of the diversified manufacturing

base in the Humber.

Diversified manufacturing base

The Humber has a diversified manufacturing base with substantial employment in the food products

(29%: 16,000), chemicals88 (23%: 12,725 people), and metals including fabrication sectors (19%:

10,415). By comparison, Cheshire & Warrington and Tees Valley have respectively, 14% and 15%

employed in the food products, 28% and 35% in chemicals, and 13% and 22% employed in the

metals including fabrication sector (see Table 5).

88 A broad definition of chemicals is used for comparison including all items in Table 5 from Coke and refined products to Other Non-metallic mineral products.



Table 5: Manufacturing employment89

. Blue colouring denotes leading employment position for Humber

Manufacturing Sector Humber Cheshire & Warrington

Tees Valley

Jobs Job (%) Jobs Job (%) Jobs Job (%)

Food products 16,000 29% 7,100 14% 3,150 15% Beverages 155 0% 450 1% 60 0% Textiles, apparel and leather products

320 1% 595 1% 760 4%

Wood and of products of wood and cork

2,175 4% 1,600 3% 405 2%

Paper and paper products 1,200 2% 1,240 2% 250 1% Printing and reproduction of recorded media

2,045 4% 1,800 4% 335 2%

Coke and refined petroleum products

1,300 2% 1,060 2% 270 1%

Chemicals and chemical products 3,550 6% 5,300 11% 4,100 19% Basic pharmaceutical products and pharmaceutical preparations

1,600 3% 3,960 8% 1,530 7%

Rubber and plastic products 4,250 8% 2,100 4% 1,150 5% Other non-metallic mineral products

2,025 4% 1,545 3% 300 1%

Basic metals 4,215 8% 825 2% 1,600 8% Fabricated metal products, except machinery and equipment

6,200 11% 5,950 12% 3,100 15%

Computer, electronic, optical and electrical products

1,045 2% 3,050 6% 910 4%

Machinery and equipment n.e.c. 1,975 4% 2,450 5% 1,165 6% Transport 3,090 6% 9,540 19% 1,350 6% Furniture 3,790 7% 925 2% 290 1%

Other manufacturing 290 1% 875 2% 395 2%

TOTAL 55,225 100% 50,365 100% 21,120 100%

Source: ONS Business Register and Employment Survey: open access NOMIS February 2018

Manufacturing chemical and chemicals products

Total GVA contribution from chemicals and chemical products manufacturing in the Humber Estuary

was less than either Tees Valley (including Durham) or Cheshire & Warrington. When employment is

factored in a different picture emerges. The productivity per employee of all regions is clustered

between £157,465 and £158,293. This is likely to reflect the highly competitive nature of global

chemical markets, the longevity of the UK assets, long term sharing of technical learnings, and

optimised manufacturing processes.

89 Business Register and Employment Survey : open access 2016



Table 6: Chemical and chemical products GVA and GVA per employee

Region

GVA

(£million)

People

employed

GVA per employee

(£)

Humber 559 3,550 157,465

Tees Valley 649 4,100 158,293

Cheshire & Warrington 733 4,700 155,967 Source: ONS Regional GVA by local authority in UK (2015), ONS Business Register and Employment Survey: open access

NOMIS February 2018

Manufacturing of basic pharmaceutical products and preparations

Cheshire & Warrington is the largest producer of basic pharmaceutical products and preparations in

the UK. Humber Estuary and County Durham (as there is no basic pharmaceutical products and

preparations production in the Tees Valley) achieve only 16% and 14% respectively of the Cheshire &

Warrington GVA. Merseyside and Surrey & East & West Sussex are also large producers of product.

These three regions operate at a different scale of production to rest of the UK. The Humber Estuary

is the fourth largest producer of basic pharmaceutical products and preparations in the UK closely

followed by County Durham.

Basic pharmaceutical products and preparations make a very significant GVA per employee

contribution to the Humber Estuary. This is similar to County Durham suggesting similar levels of

operating efficiency and productive capacity.

Table 7: GVA and GVA per employee of the basic pharmaceutical products and preparations sector

Region

GVA (£million)

People employed

GVA per

employee (£)

Humber 468 1,600 292,500

County Durham 409 1,530 267,300

Cheshire 2,801 3,960 707,323 Source: ONS Regional GVA by local authority in UK (2015), ONS Business Register and Employment Survey: open access NOMIS February

2018

Manufacturing of refined petroleum products

The Humber Estuary, Cheshire & Warrington, and Hampshire are leading producers of refined

petroleum products. Until 201590 the Humber Estuary was, for 15 consecutive years, the largest

producer of refined petroleum products. Over the three years to 2015 the region is still the largest

producer of product (£1,105m GVA), closely followed by Hampshire (£967m GVA) and then Cheshire

& Warrington (£891m GVA).

GVA per employee statistics are broadly comparable for the Humber Estuary and Hampshire, but

Cheshire & Warrington stands out by being 22% and 15% higher respectively. Notably Humber

Estuary and Hampshire annual GVA from refined petroleum products has fallen by 20% over the last

90 2015 is the latest available GVA data



three years, whilst Cheshire & Warrington’s has increased by 10%, reflecting regional supply

readjustments across the market.

Table 8: 2015 GVA and GVA per employee for refined petroleum products

Region

GVA

(£million)

People

employed

GVA per

employee (£)

Humber 319 1,300 245,385

Hampshire 284 1,000 284,000

Cheshire & Warrington 326 1,060 307,547 Source: ONS Regional GVA by local authority in UK (2015), ONS Business Register and Employment Survey NOMIS February 2018

Humber Ports

According to Associated British Ports91, some 32,937 jobs are related to Humber port activities. And

of these 9,610 are directly employed with the remaining jobs spread across the supply chain. By

contrast Southampton has 14,730 jobs related to port activities and 4,903 direct employees.

Southampton has about 50% of the port employment levels of the Humber. ABP also highlight that

the ports in the Humber region support in excess of £2.2bn GVA p.a. Their equivalent value for

Southampton is nearly £1bn GVA p.a.

Together all ports on the Humber processed 77,359 tonnes of goods in 2016, approximately 16% of

UK total trade and appreciably more than any other estuary or port complex.

Table 9: Humber Ports Tonnage (2016)

Humber Ports

'000s tonnes (2016)

'000s tonnes. Cumulative (2016)

Grimsby & Immingham 54,403 54,403

Hull 10,167 64,571

Rivers Hull & Humber 10,155 74,726

Goole 1,379 76,105

River Trent 1,255 77,359

Source: DfT PORT0101

Grimsby & Immingham Port Complex

Table 10: Top 5 UK Ports based on tonnage

Port

'000s tonnes (2016)

Grimsby & Immingham 54,403

London 50,380

Southampton 36,046

91

Economic Value of ABP to UK plc: Associated British Ports. January 2014



Felixstowe 28,202

Dover 27,326


The Humber is home to the UKs largest complex of deep water ports. With 54,402 thousand tonnes

of goods handled during 2016, Grimsby & Immingham is the largest port by tonnage in the UK;

comprising some 12% of the UKs 472,772 tonnes total trade. It is third largest by units processed. At

36,056 tonnes, Southampton’s trade was only two-thirds that of the Humber.

Table 11: Grimsby & Immingham Port Market Shares

Grimsby & Immingham UK Rank

Market share

Humber '000s tonnes

Percentage Humber '000s tonnes

Liquefied gas 6 2.20% 292 0.5%

Crude oil 8 6.80% 5,884 10.8%

Oil products 3 15.70% 12,298 22.6%

Coal 1 44.20% 5,303 9.7%

Ores 2 27.10% 4,254 7.8%

Agricultural Products 6 4.70% 659 1.2%

Other dry bulk 2 11.30% 5,749 10.6%

Forestry Products 5 5.30% 283 0.5%

Iron and Steel Products 8 6.30% 439 0.8%


Grimsby & Immingham are a top 10 player in the key UK bulk products markets. Of these it holds

leadership or near leadership position in 4 markets and is mid-tier in 3 markets.

Comparison of key ports

Trade across all UK ports has been gradual falling, and fell 3% between 2015 and 2016. This fall was

attributed to, in particular, the fall in the import of coal. Grimsby & Immingham, Southampton and

Tees & Hartlepool all saw declines in 2016 when compared with 2015. A particularly strong decline

was seen in Tees & Hartlepool. A noticeable decline also occurred at Grimsby & Immingham.

Table 12: Ports comparison

All traffic '000s tonnes

2010 2011 2012 2013 2014 2015 2016

Grimsby & Immingham

54,029 57,227 60,091 62,614 59,370 59,103 54,403

Southampton 39,365 37,878 38,107 35,797 36,688 37,660 36,046

Tees & Hartlepool 35,697 35,198 33,967 37,641 39,537 35,849 26,873




Source of trade

The leading UK ports have multiple sources of trade: around the UK, with the EU, wider Europe and

deep sea trade. Grimsby & Immingham and Southampton have similar levels of deep water trade,

but both have only half the deep water trade of Felixstowe or Dover.

Grimsby & Immingham has the UKs highest level of EU trade, closely followed by Dover then

London. Southampton’s EU trade is modest when compared with Grimsby & Immingham. Whilst

Grimsby & Immingham EU trade shows a strong competitive position it is also, given Brexit, a future

trading risk.

Table 13: Shipping tonnage by geography

Port '000s tonnes (2016)

One port

Coastwise EU Other EU Deep sea Total

Grimsby & Immingham

196

4,903

29,466

6,318

13,520

54,403

London 8,537

1,838

24,908

6,358

8,736

50,377

Southampton 1,241

5,189

8,304

7,418

13,894

36,046

Felixstowe -

616

7,091

3,224

28,202

39,134

Dover -

8

27,106

15

27,326

54,455


Trade in vehicles

With 1,102,000 vehicles processes Grimsby & Immingham are the largest vehicle handling port in the

UK. Southampton processes approximately 81% of the volume of Grimsby & Immingham. However,

when direction of trade is examined a different picture emerges. At 851,000 movements, Grimsby &

Immingham import the largest volume of vehicles in to the UK – nearly the combined import volume

of Southampton and Bristol. However, at 531,000 vehicles Southampton export the largest volume

of vehicles from the UK – over twice the volume from Grimsby & Immingham.

Table 14: Port processing of vehicles

Port '000s vehicles

Inward Outward Total

Grimsby & Immingham 851 251 1,102

Southampton 363 531 895

Bristol 520 193 713

London 479 69 548

Tyne 187 402 589




GVA Forecast to 2020

Making a well-reasoned GVA growth forecast with the unknown implications of exiting the EU is

extremely challenging. The approach selected to create a GVA forecast has been to align it with the

February 2018 GDP forecast released by HMT (i.e. align the GVA forecast with a basket of market

forecasts that HMT synthesise to produce its single GDP forecast). This ensures comparability with

future data released by HMT. The UK GDP, UK GVA and Humber GVA growth forecasts are

presented below.

Figure 21: UK GDP, UK GVA and Humber GVA Forecasts

Brexit implications on key Humber industries could be material and impactful. Analysis done by

Oxford Economics highlighted that the most exposed industries include chemicals, oil & fuel,

pharmaceuticals and vehicles. All industries that would have a substantial impact on the Humber

region if less desirable trade deals were agreed. Equally being outside the EU brings new

international trade opportunities and these may enhance GVA or counter-balance changes in GVA

due to reduced trade with the EU. The GVA contribution of key Humber sectors is given below to

give a sense of the potential positive or negative impacts leaving the EU could have on Humber GVA.

Figure 22: GVA contribution by key sectors impacted by exiting the EU

GVA (£million)

GVA contribution

(%)

Chemicals and chemical products 559 3.1%

Basic pharmaceutical products and preparations 468 2.6%

Coke and refined petroleum products 319 1.8%

Transport and storage 1208 6.8%

Humber GVA (2015) 17,801

-6.0%

-4.0%

-2.0%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

19

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99

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20

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20

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An

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UK GDP growth UK GVA Growth

Humber GVA Growth GDP Forecast

GVA Forecast Humber GVA Growth Forecast



5.3 Industry support structures in the Humber region

There are a wide number of organisations that provide local support to businesses in the region. A

brief summary of some of these is provided below:


Humber Local Enterprise

Partnership (LEP)

Aims to drive economic growth in the Humber region, by way of supporting businesses, developing local skills and providing infrastructure to encourage growth, as well as playing a more general strategic role in promoting devolved government and directing its resources92.

Single Conversation is a national pilot bringing together statutory agencies, local planning authorities and the LEP to create a smoother process for developments.93

Humber Business Growth Hub provides business advice and support to local SME businesses, a number of which will be or could be part of the supply chain.

Growing the Humber offers business investment grants to SME businesses, again a number of which are or could be part of the supply chain.

Business Loan Fund offers capital loans aimed at unlocking stalled infrastructure projects to all size businesses.

Growth Deals and Local Growth Fund financing is leveraged by the LEP for local business growth.

Supported the contribution of £5m ERDF funding allocation to the Northern Powerhouse Investment Fund.

Strategic role in lobbying for the Humber region and its key industries

Key role in giving wider strategic steer to the regions’ economy through targets, information and training

The LEP is also a vehicle for the resources of devolved government, and makes these resources more granular, giving specific (even tailored) support

Offers loans, advice, and can help in the development of projects that will benefit the region

Will ‘champion’ particular projects that are well aligned with its objectives

Humber Enterprise Zone

Managed by the LEP, the Humber Enterprise Zone is the largest enterprise zone in the country, at 1,238 hectares. Sector focuses include energy and offshore wind, ports and logistics, chemical and process, creative and digital, and food manufacturing.94

Provides space for manufacturers and their supply chains to co-locate

Offers efficiencies in infrastructure, in logistics, and in networking

Provides affordable sites and tax incentives, such as up to 100% business rate discount and Enhanced Capital Allowances (100% tax relief in the first year) for investments in

92

http://www.humberlep.org/ 93

http://hub.humberlep.org/ 94

http://enterprisezones.communities.gov.uk/enterprise-zone-finder/humber-enterprise-zone/

http://www.humberlep.org/

http://hub.humberlep.org/

http://enterprisezones.communities.gov.uk/enterprise-zone-finder/humber-enterprise-zone/




plant and machinery

Green Port Hull The Green Port Hull initiative is currently funded by the RGF Round 2 funded Green Port Growth Programme, and acts as a key enabler to establishing Hull and the Humber Energy Estuary as a world class centre for renewable energy.

Supports the local renewables sector supply chain

Encourages investment in renewables

Provides local residents with the skills training needed to access the opportunities on offer

Humber Chemical Focus (HCF) CATCH

A partnership led by industry and supported by local public authorities, which promotes the interests of the process, energy, engineering and renewable region across the Humber.95

CATCH focuses on skills development to match the needs of local industries

The CATCH Network provide forums for groups interested in specific knowledge and training topic areas to meet regularly throughout the year

University of Hull The University of Hull is the only university in the Humber region with an annual economic impact of almost £1bn and providing 8,000 jobs.96 Energy is a key research topic at the institution. A range of academic institutes relate to business, industry and energy:

Business School

Logistics Institute

Enterprise Centre



Institute for Chemistry into Industry97

Published several studies on industry within the Humber

Hosts several research institutes relevant to the Humber’s key engineering and manufacturing sectors

Planning to support industry though the creation of an offshore wind talent and innovation hub

Hull and Humber Chamber of Commerce

The Chamber has a network of 2,000 members and affiliates covering North East Lincolnshire, North Lincolnshire, Hull and the East Riding of Yorkshire.98

Produces and shares resources and publications, and hold events and exhibitions to bring local businesses together

Bondholders A membership organisation that promotes the Humber across the UK and internationally, showcasing business success stories and promoting the benefits of choosing to locate in the region.99

Facilitates networking through Bondholder breakfasts, drawing an average attendance of 260 people

Holds promotional events, including Young Talent Network Events, Humber Roadshows and

95 http://www.catchuk.org/ 96 Response to the Industrial Strategy Green Paper, Humber LEP, April 2017 http://www.humberlep.org/wp-content/uploads/2017/03/Humber-Industrial-Strategy-response-April-2017.pdf 97 The University of Hull, Hull City Council, accessed 29/11/2017 http://www.hullcc.gov.uk/portal/page-_pageid=293,644462&_dad=portal&_schema=PORTAL 98 https://www.hull-humber-chamber.co.uk/pages/about-the-chamber 99 http://www.marketinghumber.com/

http://www.catchuk.org/



http://www.hullcc.gov.uk/portal/page-_pageid=293,644462&_dad=portal&_schema=PORTAL


https://www.hull-humber-chamber.co.uk/pages/about-the-chamber

http://www.marketinghumber.com/




hosting national/international delegations

Offers a range of marketing material and resources to members, including documents, presentations and an image library

Humberside Engineering

Training Association (HETA)

HETA is a local specialist training provider offering apprenticeships at all levels, industry upskilling courses and Higher National Certificate (HNC)/ Higher National Diploma (HND) courses.100

Runs an apprenticeship programme with a focus on engineering

IChemE – Hull and Humber Members

Group

The local branch of the Institution of Chemical Engineers.

The group provides events and networking opportunities for chemical engineers based within the Humber region.

IMechE – Yorkshire Region

The regional branch of the Institution of Mechanical Engineers, with a dedicated sub-group for Humberside Process Industries.

The local group runs events and mentoring activities for mechanical engineers based within the Humber region

Performs Local Authority economic development functions

Stakeholder feedback on local support to industry

Feedback from interviewed industry stakeholders is that there are some excellent organisations

providing very strong support to businesses in the Humber region.

CATCH was singled out by many as a leading centre of excellence providing excellent training,

apprenticeships, networking opportunities, and up to date information on local initiatives. A number

of stakeholders suggested CATCH is their first port of call, and that much of their networking with

other businesses in the region occurs there, providing real added-value. It is important to point out

that a number of the businesses interviewed are CATCH members, and a few of the individuals are

CATCH board members. Therefore their opinions may not be entirely representative.

“CATCH is a fantastic facility – I can’t think of anything negative to say about them.” Major

energy supplier

The Humber LEP was praised for its coverage of the whole region, for finding common ground to

unite businesses from across multiple local authority areas, and for finding common ground to work

for the region as a whole. It is felt additional funding would give the LEP further strategic impact, to

either promote the region and cluster more vocally, provide more coordination of Local Authority

support, or fund specific programmes e.g. feasibility studies etc.

Other local providers offer valued services, especially training provision and apprenticeships,

including: HETA, a specialist engineering training provider; Modal, a specialist training centre

100 http://www.heta.co.uk/

http://www.heta.co.uk/



provided by the Grimsby Institute Group which offers logistics, port and offshore training; and HEPS

emergency planning service. The University of Hull is viewed favourably for undertaking

collaborative research projects. The colleges provide valuable training including Hull College for

apprenticeships, and the University technical colleges. A number of the businesses spoken to forge

active links with the training providers and colleges mentioned, as well as with local schools. They

may be members, sit on the executive boards, or fund research studies.

Useful networking and learning opportunities are afforded by the regional groups of the iMechE,

iChemE, Energy Institute and CBI.

Also mentioned were the local oil refineries, who themselves also provide support and expertise to

businesses in their supply chain.

There were few negative comments from stakeholders. Several stakeholders commented on the

provision of services by the port. Whilst feedback was mostly positive, several interviewees

suggested that they have not always received the support they need, and that infrastructure

provision and upgrading had occasionally been difficult. It was however stated that such challenges

are reducing, as the port seeks to diversify its service and funding.

In addition there were some comments that the Local Authorities could be seen to do more to

influence speedy upgrades to transport infrastructure.

All interviewees were asked if they had experience of business support in other

regions. A number had worked in other regions, but very few examples were

provided of support that is available in other regions but not in the Humber.

Further opportunities for support organisations to consider can be found in section 12. These may

include increased and more coordinated promotion of just what support and networking is available.

5.4 Features of other comparable clusters

Other regions across the UK and Europe are similarly striving to identify themselves as industrial

clusters with a reputation for certain sectors. There is potential to learn from regions that have

successfully marketed themselves as a sector leader, as well as opportunities to collaborate with

neighbouring regions that have similar objectives. The following sections examine other relevant

clusters in the UK and abroad.

Teesside and the North East

Teesside is home to a range of energy intensive industries and is known for its chemicals industry,

holding 58% of the UK industry share and exporting products to the value of £4 billion every year101.

There are already examples in the region of recognising the potential to reduce the carbon impact of

these energy intensive industries, by strengthening links between industry players to reduce

resource use and share emission reduction infrastructure.

101 Setting the pace: Northern England's low carbon economy, Aldersgate Group September 2016, p. 12



The Tees Valley Combined Authority released a new Strategic Economic Plan in 2016 and set the

circular economy as one of its key priorities, to be implemented through designing infrastructure to

reuse waste and heat by-products and by encouraging integration between companies to streamline

production processes102. Another focus within the region is the potential to introduce shared CCS

infrastructure, led by a group of companies working in the energy intensive industries sector, called

the Teesside Collective. The Teesside Collective aims to create the first low emission industrial zone

in Europe by connecting existing and planned industrial processing sites to a regional CCS network,

thereby drastically reducing their emissions impact103.

Projects like these have the potential to spread beyond the Tees Valley region to benefit the North

East as a whole. The North East process industries employ 190,000 people at over 1,400 companies

and contribute £26 billion to the UK economy every year104. Collaboration between industrial

clusters across the region and more specifically along the East Coast could encourage industrial

decarbonisation to speed up and have a greater impact over a larger area. The Teesside Collective

has identified potential for industry clusters located in Teesside and Humberside, who are already

considering decarbonisation pathways, to share expertise and infrastructure in order to implement

decarbonisation in a cost-effective way105.

Grangemouth

Grangemouth is well known for industrial processing, particularly in the petrochemicals sector and

manufacturing plants located around the Port of Grangemouth. The Grangemouth industrial

complex has already been identified as a target location for CCS technology, due to its high

concentration of emissions and proximity to existing pipelines leading to offshore storage

facilities106. A £4.2 million fund for research was committed by the Scottish and UK Governments in

2015 to undertake feasibility work on the deployment of a CCS network in the Grangemouth area107.

This would bring Grangemouth closer to the reality of significant industrial emissions reduction and

will pave the way for ports and industrial areas around the UK to implement similar projects.

In terms of circular economy efforts, an example study is underway to investigate opportunities

related to bio-refining, led by the Scottish chemicals industry108.

Port of Rotterdam

With approximately 90,000 people employed by industry operating within the Port of Rotterdam, it

is Europe’s largest seaport and accounts for 18% of the Netherlands’ total CO2 emissions109. The

port’s main energy intensive industries include oil refineries, chemicals, and power & steam

generation.

102 Tees Valley Strategic Economic Plan, Tees Valley Combined Authority, 2016, p. 17 https://teesvalley-ca.gov.uk/wp-content/uploads/2016/12/TVCA207-SEP-Document-Full-WEB.pdf 103 Setting the pace: Northern England's low carbon economy, Aldersgate Group September 2016, p. 12 104

East Coast links vital to clean industrial growth, Teesside Collective, April 2016 http://www.teessidecollective.co.uk/east-coast-links-vital-to-clean-industrial-growth/ 105 Ibid. 106

Scotland’s industry ‘clusters’ hold key to reducing cost of UK climate action, SCCS, July 2016 http://www.sccs.org.uk/news/326-sccs-

study-scotland-s-industry-clusters-hold-key-to-reducing-cost-of-uk-climate-action 107

£4.2m for CCS research at Grangemouth, Scottish Government, March 2015 https://news.gov.scot/news/42m-for-ccs-research-at-

grangemouth 108

Biorefining Potential for Scotland, Zero Waste Scotland, September 2017

https://www.zerowastescotland.org.uk/sites/default/files/Biorefining%20Potential%20for%20Scotland%20Final%20report.pdf 109

Decarbonisation Pathways for the Industrial Cluster of the Port of Rotterdam, Wuppertal Institute, 2016, p. 23

https://www.portofrotterdam.com/nl/file/18544/download?token=4Ri58reM

https://teesvalley-ca.gov.uk/wp-content/uploads/2016/12/TVCA207-SEP-Document-Full-WEB.pdf

https://teesvalley-ca.gov.uk/wp-content/uploads/2016/12/TVCA207-SEP-Document-Full-WEB.pdf

http://www.teessidecollective.co.uk/east-coast-links-vital-to-clean-industrial-growth/

http://www.teessidecollective.co.uk/east-coast-links-vital-to-clean-industrial-growth/

http://www.sccs.org.uk/news/326-sccs-study-scotland-s-industry-clusters-hold-key-to-reducing-cost-of-uk-climate-action

http://www.sccs.org.uk/news/326-sccs-study-scotland-s-industry-clusters-hold-key-to-reducing-cost-of-uk-climate-action

https://news.gov.scot/news/42m-for-ccs-research-at-grangemouth

https://news.gov.scot/news/42m-for-ccs-research-at-grangemouth

https://www.zerowastescotland.org.uk/sites/default/files/Biorefining%20Potential%20for%20Scotland%20Final%20report.pdf

https://www.portofrotterdam.com/nl/file/18544/download?token=4Ri58reM



In 2016, the Port of Rotterdam commissioned a study to investigate a series of decarbonisation

pathways, in order to meet its ambitious emissions reduction target of 50% by 2025 and 60% by

2030, compared to a 1990 baseline110. Three decarbonisation scenarios were presented in addition

to a Business As Usual scenario:

Technological Progress: CCS connections for power plants and some refineries, and fast

implementation of best available technology

Biomass and CCS: significant supply of sustainable biomass to power refineries, chemical

processing plants and power stations, in addition to the technologies from the previous

scenario

Closed Carbon Cycle: electricity generated from almost entirely renewable sources to

provide heat and power, in addition to hydrogen for the chemicals sector.111

Opportunities identified in the three decarbonisation pathways include renewable energy, CCS,

retrofit of fluidized bed crackers (FCC) and cokers, connecting steam reforming facilities to CCS,

water electrolysis in hydrogen generation, energy storage, biomass- and waste-fired thermal power

stations, geothermal and heat grids.112 Due to the similar processing functions at the Port of

Humber, similar decarbonisation opportunities could also be considered by UK industry based in the

Humber region.

The Port of Rotterdam uses industrial ecology to increase its attractiveness in comparison to

competitors, and has been involved in multiple research and funding programmes to promote

energy efficient innovation113. In order to encourage green shipping & logistics, the Port of

Rotterdam offers a Green Award incentive114. This provides a discount of 6-30% on seaport dues for

vessels that have made efforts to improve environmental performance, safety and quality on-board.

The Green Award scheme is international and accreditations are carried out by an independent

body. No other UK ports operate this incentive, so it would set Humber apart in terms of UK

competition115.

Port of Antwerp

The Port of Antwerp is the largest port in the world in terms of geographical area, spanning 12,068

hectares and employing 150,000 people through a range of industry sectors116. Most well-known

internationally for its energy and chemicals industries, the Port of Antwerp has a forward-looking

approach to integrating sustainability into its ongoing strategy. As part of these efforts the Port has

created a dedicated Sustainable Port of Antwerp website117, which has detailed information on its

progress in the areas of sustainable business, mobility, energy, environment and nature,

employment and living and working around the port. In 2015 and 2017, sustainability reports were

110

Ibid, p. 7 111 Ibid, p. 11 112 Ibid, p. 42-63 113 The Competitiveness of Global Port-Cities, OECD, 2014, https://books.google.co.uk/books?id=Gaa_BQAAQBAJ&pg=PA129&lpg=PA129&dq=industry+incentives+port+of+rotterdam&source=bl&ots=TvkBrluRd3&sig=_O6czNuxl17CHYNdKbT9X18TRPg&hl=en&sa=X&ved=0ahUKEwjd_rSjrt3ZAhXmIMAKHfnVCWgQ6AEIXTAJ#v=onepage&q=industry%20incentives%20port%20of%20rotterdam&f=false 114 https://www.portofrotterdam.com/en/shipping/port-dues/discounts-on-port-dues/green-award-discount 115 http://www.greenaward.org/greenaward/ 116 Port of Antwerp, http://www.portofantwerp.com/en/port-antwerp 117 Sustainable Port of Antwerp, https://www.sustainableportofantwerp.com/

https://books.google.co.uk/books?id=Gaa_BQAAQBAJ&pg=PA129&lpg=PA129&dq=industry+incentives+port+of+rotterdam&source=bl&ots=TvkBrluRd3&sig=_O6czNuxl17CHYNdKbT9X18TRPg&hl=en&sa=X&ved=0ahUKEwjd_rSjrt3ZAhXmIMAKHfnVCWgQ6AEIXTAJ#v=onepage&q=industry%20incentives%20port%20of%20rotterdam&f=false



https://www.portofrotterdam.com/en/shipping/port-dues/discounts-on-port-dues/green-award-discount

http://www.greenaward.org/greenaward/

http://www.portofantwerp.com/en/port-antwerp

https://www.sustainableportofantwerp.com/



published, providing an overview of progress to date and its mission, vision and strategy for the

future118.

As well as ensuring that the sustainability of the port is well-documented and communicated, the

Port of Antwerp is implementing three key projects to promote environmental sustainability in the

region:

Sustainability Award: in 2016 a Sustainability Award was launched to recognise sustainable

initiatives implemented by private companies located at the Port. The first winner was

ECLUSE, which aims to introduce a heat network for companies located on the Left Bank, fed

by waste-to-heat plants.

Biofuels: a feasibility study has been conducted for a power-to-methanol plant to be

produced from captured CO2 and hydrogen. This would increase the availability of biofuels

to be used as a feedstock for the chemicals industry.

Alternative Energy Hub: the Alternative Energy Hub is a joint initiative led by the Port of

Antwerp and ENGIE, to include a shore-to-ship bunkering station, a LNG and CNG filling

station and a fast charging system for electric vehicles. This has increased the number of

environmentally-friendly ships visiting the Port.

Source: Port of Antwerp119

Green Port Hull is well placed to offer similar services to the ones listed here, and indeed already

runs some similar initiatives. A dedicated sustainability report with clear decarbonisation targets in

key areas would provide more clarity on progress in the Humber ports.

Feedback on comparison of the Humber region with other UK regions

As part of this study, all stakeholders were asked to compare the support offered to businesses in

the Humber region with what they know about support in other regions. Some interviewees had

little detailed awareness of support provision in other regions, but a number did, having worked

elsewhere or having responsibility for other sites as part of their role.

In most cases, respondents did not highlight any material support available in other regions that

could not be obtained in the Humber region. Several claimed that national or government support is

scarce across all English regions.

“Funding and support for energy developments and energy reduction opportunities is

provided in Wales and Scotland for our sector at a level that is not seen in the UK”

Manufacturer

118

Port of Antwerp Sustainability Report 2015, http://www.portofantwerp.com/sites/portofantwerp/files/Sustainability_Report_2015.pdf

and

https://www.sustainableportofantwerp.com/file/L3NpdGVzL2RlZmF1bHQvZmlsZXMvZG93bmxvYWRzL2R1dXJ6YWFtZWlkc3ZlcnNsYWcyM

DE3X2VuX2xyX3YyLnBkZg (in English);

https://www.sustainableportofantwerp.com/file/L3NpdGVzL2RlZmF1bHQvZmlsZXMvZG93bmxvYWRzL2R1dXJ6YWFtaGVpZHN2ZXJzbGFnX

zIwMTcucGRm (in Flemish)

119 Port of Antwerp Annual Report 2016, p. 17 http://www.portofantwerp.com/sites/portofantwerp/files/POA-2071_Jaarverslag2017_UK_WEB%20FIN.pdf

http://www.portofantwerp.com/sites/portofantwerp/files/Sustainability_Report_2015.pdf

https://www.sustainableportofantwerp.com/file/L3NpdGVzL2RlZmF1bHQvZmlsZXMvZG93bmxvYWRzL2R1dXJ6YWFtZWlkc3ZlcnNsYWcyMDE3X2VuX2xyX3YyLnBkZg

https://www.sustainableportofantwerp.com/file/L3NpdGVzL2RlZmF1bHQvZmlsZXMvZG93bmxvYWRzL2R1dXJ6YWFtZWlkc3ZlcnNsYWcyMDE3X2VuX2xyX3YyLnBkZg

https://www.sustainableportofantwerp.com/file/L3NpdGVzL2RlZmF1bHQvZmlsZXMvZG93bmxvYWRzL2R1dXJ6YWFtaGVpZHN2ZXJzbGFnXzIwMTcucGRm

https://www.sustainableportofantwerp.com/file/L3NpdGVzL2RlZmF1bHQvZmlsZXMvZG93bmxvYWRzL2R1dXJ6YWFtaGVpZHN2ZXJzbGFnXzIwMTcucGRm

http://www.portofantwerp.com/sites/portofantwerp/files/POA-2071_Jaarverslag2017_UK_WEB%20FIN.pdf

http://www.portofantwerp.com/sites/portofantwerp/files/POA-2071_Jaarverslag2017_UK_WEB%20FIN.pdf



Some felt that other regions may be better at presenting themselves as leading clusters, suitable for

inwards investment. Leeds may pave the way to become a “Hydrogen city”, and Teesside and

Grangemouth are leading the way on CCS.

One respondent commented that Welsh and Scottish Government had provided financial project

support to other companies in his sector for energy saving or decarbonisation studies or projects,

but that the respondent had not been able to secure any similar support from BEIS for England.

One interviewee who previously worked at a chemicals site on Teesside, said the businesses there

had closer links and more communication than those in the Humber. In Teesside there was a local

chemicals partnership and companies met regularly. There were also more umbrella organisations to

bring like-minded companies together.

The most significant advantages mentioned of the European ports over those in the UK, are more

strategic and forward approach to development, with more significant up-front investment, and

more proactive installation of infrastructure (private wire electricity supplies, heat networks etc.).

“In Europe they put in all the infrastructure first – and then business will come. In the UK we

have to wait for business commitment before guaranteeing the infrastructure” Chemicals-

related business

Further aspects of comparison with other regions are brought out in the SWOT analysis is section 10.

Environmental best practice for ports in Europe

EcoPorts is a knowledge-sharing initiative to establish environmental best practice for ports across

Europe120. The initiative is managed by the European Sea Ports Organisation (ESPO) and has 89

members representing 21 European countries. It has its own environmental standard, the

Environmental Port Review System (PERS) as well as listing ports that are certified to alternative ISO

and EMAS standards that are not port-specific. 25 ports have been certified to PERS since its launch,

of which are located in the UK.

In 2012 ESPO published the definitive Green Guide for ports, setting out the principles to encourage

excellence in port environmental management and sustainability. The guide also presents guidance

on overcoming challenges to realising five key environmental priorities: air quality, energy

conservation and climate change, noise, waste and water. Guidance covers setting a good example

through managing own operations sustainably, providing infrastructure to facilitate sustainable

performance, providing incentives to port users, encouraging knowledge-sharing and setting rules

and ensuring compliance121.

EcoPorts also annually publishes research on green shipping benchmarks and environmental

priorities for ports and how these have changed over the past 20 years. This is based on data

collected through the EcoPorts’ Self Diagnosis Method (SDM) checklist (91 participants in 2016). The

top three environmental priorities for ports have changed significantly over time, from port

development, water quality and dredging disposal in 1996 to air quality, energy consumption and

noise in 2016. The green shipping benchmarking activity identified three potential services that ports

can provide to encourage better environmental performance and surveyed the percentage of ports

that had implemented these services by 2016: providing an onshore power supply (53%),

120 EcoPorts, https://www.ecoports.com/about 121 ESPO Green Guide, 2012 https://www.espo.be/media/espopublications/espo_green%20guide_october%202012_final.pdf

https://www.ecoports.com/about

https://www.espo.be/media/espopublications/espo_green%20guide_october%202012_final.pdf



implementing LNG bunkering facilities (22%) and applying a differentiated fee charging system to

reward green vessels (62%)122.

In order for the Humber ports to determine how they perform against the benchmarks, they would

need to take part in the study in future.

122 Insight on port environmental performance and its evolution over time, ESPO, 2016, p. 8 https://www.ecoports.com/laravel-filemanager/files/common/publications/ESPO_EcoPorts_Port_Environmnetal_Review_2016_v1.pdf

https://www.ecoports.com/laravel-filemanager/files/common/publications/ESPO_EcoPorts_Port_Environmnetal_Review_2016_v1.pdf

https://www.ecoports.com/laravel-filemanager/files/common/publications/ESPO_EcoPorts_Port_Environmnetal_Review_2016_v1.pdf



6 Snapshot of energy intensive industry in the Energy Estuary

6.1 Energy intensive industry locations

The Humber has a number of key energy-intensive industries, including: petrochemicals, refineries

and alternative fuels production; chemical manufacture and storage; steel making; cement and lime

manufacture; glass manufacture; food processing and manufacture; and onshore and offshore gas

storage.

Although spread across the estuary, industries tend to be clustered around particular locations.

Many businesses are located close to the ports of Hull, Grimsby and Immingham. Figure 23 shows

the Humber EII interview respondents for this study, which comprise the majority (but not all) of the

largest energy users in the region (the full list of respondents and their industrial sectors is shown in

Appendix 1).

The Humber’s Energy Estuary ports complex is the UK’s largest and offers excellent access to Europe

and the world for both import of raw materials and components, and export of UK manufactured

products. Although in interviews some sites referred to the flood risk within the region (which can

for example increase site construction cost), the majority expressed positive opinions of the

transport accessibility that their location provides.

Figure 23 - A selection of energy intensive industry in the Humber region, showing clusters of activity



The Humber region forms one of four major chemicals producing regions in the UK. There are two

major chemicals clusters: the Saltend Chemicals Park, and a cluster spread along the South Humber

Bank between Immingham and Grimsby, which includes two of the UK’s four oil refineries.

Manufacture of renewable fuels and infrastructure represents another key industry in the Humber,

notably offshore wind turbine manufacture and servicing, and several large UK players in the

biofuels industry. Further energy intensive industry in the region includes one of the two UK

integrated steel works, a cement works, a lime works and a float glass plant at Goole.

The Humber is believed to have the largest concentration of food manufacturing research, storage

and distribution facilities in Europe, contributing over £1bn to the UK economy123. Grimsby is

referred to as ‘Europe’s Food Town’, with around 500 food related businesses and a full supply chain

of food sector services. Large food manufacturers, are also concentrated around Hull, in addition to

major pharmaceutical and personal care product manufacturers which have significant energy use

needs (e.g. for steam use, clean rooms).

The ports along the estuary support the majority of energy intensive activity in the region by

facilitating transport and handling of raw materials and finished products.

6.2 Material Flows

Figure 24 gives an indication of the flow of materials into and out of the Humber region. Note that

this diagram is primarily based on the companies interviewed for this study, and is therefore not

intended to be comprehensive. Notably, it does not include any representation from the food

manufacturing and processing sectors, nor SMEs.

Nevertheless, it demonstrates the very wide range of value adding processing and manufacturing

which occurs in the region.

Based on indicative production volumes provided in confidence by interviewees, total production of

the products shown is estimated at nearly 30 million tonnes per year.

123 Humber Bondholders – industry, accessed 11/11/2017 http://www.marketinghumber.com/region/industry/

http://www.marketinghumber.com/region/industry/



Figure 24: Selection of material flows into, around, and out of the Humber



6.3 Energy consumption in the EII cluster

Due to the concentration of Energy Intensive Industry around the Humber estuary, the area

consumes a significant amount of energy compared to other similar size regions. Some key statistics

are laid out in Figure 25124.

Figure 25 Key Energy statistics

Figure 26 below is a heat map of energy intensive industries currently operating in the Humber, and

delineates their energy consumption through the size of the bubbles on the chart. This shows a clear

clustering of EIIs, in particular around Hull and along the ports of Grimsby and Immingham. This is

further highlighted by the heat density map below (Figure 27).

Figure 26 Total energy consumption of Humber Energy Intensive Industry

124 Source for energy use in the Humber from: Total final energy consumption at regional and local authority level: Sub-national total final energy consumption statistics: 2005-2015. Accessed 13/02/2018 https://www.gov.uk/government/statistical-data-sets/total-final-energy-consumption-at-regional-and-local-authority-level. Estimated energy consumption based on survey returns and estimates developed for heat maps using industry benchmarks, GIS data, and expert analysis

Some key energy statistics:

Total energy use in the Humber in 2015 was: 37,200 GWh

Energy use by the Industrial and Commercial sectors in 2015: 23,200 GWh

Estimated energy used by EII companies interviewed: 7,600 GWh/yr

Energy used by 380 companies modelled for heat maps: 9,200 GWh/yr

Estimated energy used by EII companies in regions: 8,200 GWh/yr

Estimated energy spend by EII companies: £330 million/yr

https://www.gov.uk/government/statistical-data-sets/total-final-energy-consumption-at-regional-and-local-authority-level

https://www.gov.uk/government/statistical-data-sets/total-final-energy-consumption-at-regional-and-local-authority-level



Figure 27 Total energy consumption heat density map for Humber Energy Intensive Industry

Industrial and Commercial (I&C) energy use makes up nearly two thirds of energy used in the

Humber (Figure 28). And the four local authority areas that make up the Humber LEP area are

responsible for almost half of Industrial and Commercial (I&C) energy use in the Yorkshire and

Humber region (Figure 29). Comparing the I&C energy consumption of the Yorkshire and the

Humber region as a whole with other Northern regions shows that it is similar to the North West,

and much larger than the North East (Figure 30). Figure 31 shows that the Humber alone represents

a material slice of energy use for England and the UK.

Figure 28 Total energy used in 2015 across the

Humber region (GWh)

Figure 29: Humber I&C energy use as a proportion of Yorkshire and the Humber (GWh)

Industrial &Commercial

Domestic

Road transport

23,174

30,698

Humber only

Rest ofYorkshire andHumber



Figure 30: I&C energy used in 2015 across the North of England (ex. bioenergy & wastes) (GWh)

Figure 31: Humber I&C energy use as a proportion of England and the UK (GWh)

Figure 32: I&C energy usage in 2015 across the Humber region by fuel type (GWh)

Source (all graphs on page): Sub-national total final

energy consumption statistics: 2005-2015, BEIS

Importantly, the split by fuel type for the

Humber I&C sector is shown in Figure 32. This

highlights the continued reliance on fossil

fuels by EIIs based locally, and shows the need

for energy efficiency and industrial

decarbonisation to align with the UK’s

industrial decarbonisation pathways and meet

its ambitious emissions reduction targets.

The following charts show how energy consumption has changed in the five years to 2015 (the most

recent data available), both for the Humber region (Figure 33), and more broadly for Northern

England (Figure 34). Between 2014 and 2015, there was a significant (>25%) decline in I&C energy

use in the Humber region, compared to the wider North of England (~5% decline). This does not

necessarily indicate an ongoing trend in energy use as a number of factors may have contributed to

this change, including industrial decline and technical innovation – or data collection issues.

37,495

56,698

53,871 North East

North West

Yorkshire and theHumber

23,174

343,273

132,268

Humber only

Rest of England

Scotland, Wales& NorthernIreland

504

3,604

11,355

4,328

3,382

Coal

Manufacturedfuels

Petroleumproducts

Gas

Electricity



Figure 33 Industrial vs Total energy use in the Humber region only

Figure 34: Industrial and Commercial usage trends in Northern England

One area where progress can clearly be seen is in the use of alternative fuels. Figure 35 shows the

increasing proportion of bioenergy used in the Humber, and across the North more widely, although

Figure 36 demonstrates that bioenergy is still only a small proportion of energy use.

Figure 35 Bioenergy usage in Northern England

Figure 36: Bioenergy usage vs Conventional energy usage in Northern England

Source (all graphs on page): Sub-national total final energy consumption statistics: 2005-2015, BEIS

Significant potential remains to reduce energy consumption by energy intensive industry in the

Humber, as well as to decarbonise processes by increasing the proportion of renewables and

alternative fuels.

6.4 Process emissions

Aside from the significant carbon emissions associated with the energy used in the region, several

companies also generate a large amount of carbon dioxide as part of their standard operation. The

manufacture of cement generates large volumes of CO2 – 70% of the CO2 emissions of cement

manufacture come from production rather than energy use. The production of lime, steel and some

chemicals are also significant CO2 emitters, as is the production of bioethanol (although in this case

the CO2 is closer to carbon neutral as it was originally derived from plant-based material). Further

0

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IndustrialandCommercialEnergy

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potential therefore exists to optimise waste streams and promote symbiosis opportunities within

the EII cluster.

6.5 Feedback from energy intensive industries

Over 30 of the largest energy using companies in the region were interviewed for this study. Their

feedback on potential for investment and further energy efficiency is captured below. Comments on

drivers and barriers and specific opportunities are captured elsewhere.

Investment

Stakeholders from the above industries were interviewed during this study. Despite the decline in

manufacturing seen in the region up to 2015, there is overwhelming support for the Humber as a

good location for their operations. Most of the businesses interviewed stated that their markets are

relatively stable, and that their own operations are currently stable. In some cases future expansion

opportunities exist (e.g. one major chemical producer is close to securing £multi-million investment

for debottlenecking, with potentially further investment to come).

Oil refining production levels have declined in recent years, and this is likely to continue in the long

term with Government commitments to reduce and phase out the use of fossil fuels in transport.

However, over this period, the refineries are well placed to remain competitive in their

marketplaces, and are seeking alternative options. It is recommended that proactive engagement is

taken to maximise the opportunities to repurpose the plants over time, rather than operating them

until the demand runs out, and then closure.

Despite closures such as the Huntsman Tioxide plant, the chemicals sector has seen investment in

recent years, including the high-profile Saltend Chemicals Park established by BP Chemicals Ltd in

2009125. Notable tenants include BP, Air Products, Nippon Gohsei, Ineos, and Vivergo Fuels amongst

others. The location was bought out by PX Group early in 2017126, and they have ambitious plans to

further develop the plot for its tenants by adding a marine jetty. Recently a consortium of companies

have formed to construct the world’s first Tricoya® wood chip acetylation plant. This £60m

development is expected to be completed in early 2019. The Saltend site has 5 or 6 vacant plots that

could be used for expansion by existing tenants, or to bring in new plants, along with an adjacent

Greenfield site. It is particularly suited to high value, chemical processes, possessing low cost,

reliable steam and power, water, water treatment, storage tanks, and jetty. The good security is also

important to the plants located there.

Currently the chemical industry has been described as “challenging” or “static” and that impacts

other businesses such as industrial gas providers and port services. However there is still a significant

amount of investment planned, with several examples listed below.

“Production is stable and we are considering investment into a second production line”

Chemicals Manufacturer

The market for steel remains competitive, but British Steel’s financial position appears to have

strengthened.

125 Saltend Chemicals Park, http://saltendchemicalspark.co.uk/ 126 BP sell off Saltend Industrial Park, Humber Business, March 2017, http://humberbusiness.com/news/bp-sell-off-saltend-industrial-park/story-4952-detail/story

http://saltendchemicalspark.co.uk/

http://humberbusiness.com/news/bp-sell-off-saltend-industrial-park/story-4952-detail/story

http://humberbusiness.com/news/bp-sell-off-saltend-industrial-park/story-4952-detail/story



The lime and cement companies continue to invest in their plants, and are also diversifying into

renewable power and alternative, more sustainable products.

A number of companies have made, or are planning to make significant investments to expand

capacity. Greenergy and Vivergo have made successful developments in their manufacturing sectors.

Indivior and Smith & Nephew have recently opened research centres, investing £23m and £8m

respectively. Croda are investing £27m to expand their manufacturing facilities, and RB are building

a £100m research centre in Hull. And of course the £multi-million investments into Green Port Hull

by Siemens and ABP, is expected to catalyse further investment, particularly into the renewable

sector.

Many of the companies spoken to have, or have access to, sufficient land should they wish to

expand their operations.

A number of £m and £multi-million investments have been made in the cluster companies including

new production facilities, new power plant, efficiency improvements, and debottlenecking projects

to increase capacity. And there is significant level of continuing investment planned by the cluster

companies. Many of these are confidential and were not discussed in detail, but examples include:

A company is considering a very large £multi-million investment in new power plant.

Assistance with feasibility studies to select a cost effective, but “no regrets” low carbon

solution may be worthwhile.

One chemicals company is seriously considering installation of a second product line at a

cost of well over £100m. The investment will likely occur at one of their global locations and

Humber is under consideration.

A company is close to securing a £10m investment for debottlenecking to increase capacity,

with another £10m that could follow to improve efficiency, if sufficiently competitive

operation can be demonstrated.

Another is planning a £7m plus heat distribution system refurbishment.

One of the large petrochemical companies claims to spend £10’s millions each year on plant

investment.

Another business with a long heritage in the region is planning to extend their

manufacturing facility in the next year, again £multi-million

One company is hoping to construct an energy from waste plant on site, which could be

anything up to £100m investment

Furthermore, a number of companies are planning ongoing smaller investments to improve energy

efficiency, increase capacity (which in itself often leads to efficiencies) and replace end of life

equipment.

“Debottlenecking our production will have the added benefit of reducing relative energy

consumption” Chemicals Manufacturer

It is important to note that for most EII Cluster businesses the market is highly competitive and

fortunes can change rapidly. For example not long after discussions with Vivergo, it was announced

that they would be suspending production as the price for bioethanol has fallen and market demand

has not materialised as expected. This is claimed to be a result of delays to implementing regulations

to require an increased proportion of biofuel within UK transport fuels.



Energy efficiency and carbon saving

Most businesses spoken to had made some investments in energy efficiency. Energy is a high

variable cost for energy intensive industries. In the current very competitive market place, there is a

need to reduce operating cost through operational energy efficient improvements (e.g. new

equipment procurement, larger plant investment).

Energy savings have been achieved through LED lighting refurbishment projects (for example across

ABP, British Steel, BOC, RB and others), replacement of very large motors and compressors, and use

of variable speed drives. British Steel has saved around 3MW of average energy demand through a

programme of energy efficiency good practice. This included a 0.6MW saving through the

replacement of a single compressor.

Several sites claim to be world class exemplars of energy efficiency for their sector – with further

savings requiring increasingly larger investment. Carbon Trust experience of working with such

forward thinking sites has shown these businesses often export their knowledge to their sister

operations located elsewhere in the world.

“We have halved our carbon per tonne of product produced by improving operational

techniques and investing in energy efficiency” Manufacturer

Other operating companies have only recently started to focus on energy efficiency. One business

stated that they have just started implementing a programme of sub-metering so that they can

target the most cost effective energy efficiency improvements. (Previous Carbon Trust analysis in

support of BEIS decarbonisation 2050 activities highlighted that lack of sufficient sub-metering is

common on large industrial plants). There are several industrial sites in the region with a potentially

Case Study: Tricoya wood chip acetylation plant, Saltend

The first wood chip acetylation plant in the world is being constructed at the Saltend

Chemicals Plant in Hull. Tricoya wood processing uses an innovative process to alter the

chemical structure of raw materials, resulting in improved wood products with increased

stability and durability.

The project is an example of investment in new and growing sectors in the Humber region,

with a multi-funder and management structure. The plant is expected to become fully

operational by mid-2019, with funding and future management being provided by a

consortium of companies including Accsys Technologies, BP Ventures, BP Chemicals, Medite,

Business Growth Fund (BGF) and Volantis. The project has also taken advantage of local and

large scale support programmes, namely the Green Port Growth Programme and the EU Life

programme.

The wood chip acetylation plant’s sustainability credentials include sourcing raw materials

from sustainable resources (certified, reclaimed or recycled timber) and significantly

increasing the lifespan of finished wood products, to around 50 years. Acetic anhydride used

for the process is already produced at the site by BP and the Humber ports are already major

importers of wood and wood materials.



limited lifespan which means investment in energy efficiency is a lower priority and is difficult to

capture.

From a carbon saving point of view a few interviewees stated that they saw little demand from B2B

customers to be lower carbon. Conversely, some interviewees stated a number of drivers to reduce

carbon emissions, beyond pure energy cost savings. These were particularly true for products

trading on their green credentials, such as manufacturers of biofuel, animal feed from AD, and

speciality chemicals made from agricultural ingredients. This was also the case for businesses

supplying to B2C businesses, such as industrial gases companies. In some cases, a high level carbon

reduction strategy was a key part of the businesses corporate social responsibility activities, and

leads to an increase in the importance of carbon reduction projects.

Despite the high concentration of carbon dioxide emitting plants in the region, there is relatively

little current activity with regards to reuse of CO2 (e.g. as a refrigerant gas) or research or investment

in carbon capture and storage (CCS). The withdrawal of Government funding for a CCS competition

in 2015 led to the cancellation of the White Rose project between Drax, Alstom and BOC. This is seen

as a significant setback in the enthusiasm to develop CCS in the region. Several companies have said

that it is on their radar and they are watching developments, and that they would consider bringing

expertise to a CCS project, but there would be a considerable barrier to overcome to develop a full

project in the Humber. There may be more interest in carbon capture and use (CCU), but it is not

obvious that there are many major CO2 users in the region currently, although it may be used by

some food processing companies (not interviewed for this study).

Note that further energy efficiency opportunities are discussed in section 11.



7 Snapshot of energy generation in the Energy Estuary

The Humber region has long been the seat of a number of high-profile conventional power

generation businesses and in recent years has established itself as a key region for the distribution of

renewable power, heat and biofuels. A selection of renewable and non-renewable electricity

generation facilities located in the Humber is shown in Figure 37. The generation capacity of the

(mostly) larger facilities which are connected to the UK electricity transmission system is detailed in

Figure 38. Figure 39 shows the capacity of smaller electricity generators connected directly to the

distribution network, by type of generation.

Figure 37: Selection of electricity generation in the Humber

Figure 38: Megawatt capacity for Individual (operational) Power Stations connected to the Transmission network in the Humber region

32 15 99

1100

755

Innogy Renewables UK Ltd Fibrogen Ltd

Centrica Brigg Ltd Saltend Cogeneration Company Ltd

Keadby Generation Ltd



Figure 39: Total Installed generation capacity (MVA) by generator type connected to the Distribution network

Table 15 shows a breakdown of installed electrical generation capacity in the Humber by type of

fuel, and makes comparisons with other comparable regions.

Table 15 Breakdown of installed electrical generation capacity (MW) by fuel type.

UK Humber Yorkshire & the Humber

Wirral North West

Teesside North East

Advanced Conversion Technologies

2,516 51 51

Biomass 2,314 2,092 38

CCGT 29,855 3370 3,476 1,710 1,825

Coal 11,776 3,940 1,961 1,961

Diesel 138

EfW Incineration/Landfill gas/AD 365 21 62 81 89

Gas 2,114 1,280 10 190 84

Gas oil 1,257 25 100 34 34

Hydro/pumped storage 3,756 7

Light oil 17

Meat & bone meal 14

Nuclear 8,918 2,385 1,180 1,180

OCGT 632 600 600

Solar Photovoltaics 444 211 5

Straw 38

Wind Offshore 4,755 219 219 240 1,087 62 281

Wind Onshore 5,467 135 544 50 288 434

TOTAL 74,376 4,421 12,575 4,086 7,859 1,242 2,029

126

9

115 34

1

105

9

58 5

Biomass & Energy Crops (not CHP) Landfill Gas, sewage gas, biogas (not CHP)

Large CHP (>= 50MW) Medium CHP (>=5MW, <50MW)

Mini CHP (<1MW) Onshore Wind

Other Generation Photovoltaic

Small CHP (>=1MW, <5MW)



Source: Various127

7.1 Electricity infrastructure and connection potential

The Humber region has historically had strong energy grid infrastructure for both gas and electricity,

due to a legacy of energy intensive industry. As some EII sectors have declined, and in part due to

technical innovations and efficiencies, energy demand in the region has seen some decline. The

infrastructure originally installed is, generally, still in-situ. This means that there is capacity for the

connection of demand and generation.

Whilst it must be recognised that grid constraints remain in some areas around the estuary (shown

in red/orange in Figure 40), overall there are spare capacity opportunities for load and generation

connections128. It must be recognised that there are limiting constraints in some industrial areas, but

overall, there is spare capacity.

Figure 40 Demand (top) and generation (bottom) availability maps

127 Source: DUKES chapter 5, statistics on electricity from generation through to sales, BEIS, July 2017, plus data from Northern Powergrid Long Term Development Statement, Renewables UK, BEIS and National Grid 128 The ability to connect generation or demand will require additional work, the maps shown above are for guidance only.



Source: Northern Powergrid demand availability map / generation availability map

The areas of grid constraint are typically due to geographic barriers of connecting to rural sites,

shown by the red area around Easington and Burton Pidsea. Heat maps of capacity to connect

generators and end uses to existing substations (Figure 41 and Figure 42) support this finding, as the

potential for additional capacity and new connections is concentrated in urban hubs.

Figure 41 Potential to connect additional consumers to existing sub-stations

Figure 42 Potential to connect additional generation to existing sub-stations

The region receives ongoing investment in its grid infrastructure by the local distribution company,

Northern Powergrid. Figure 43 shows the investment in the local network made by Northern

Powergrid, through asset replacement (indicated in red in Figure 43), overhead line replacement

(orange), cable replacement (green), reinforcement (brown) and flood defence (blue). These works

are intended to ensure that a long term sustainable network is in place that can support the move to

a more diverse renewable driven electricity supply.

Figure 43 Ongoing investment by Northern Powergrid

Source: Northern Powergrid investment



Current regulations do not prohibit the network operators from constructing assets ahead of time,

however the network operators would be penalised if they were to construct assets that were not

required. The focus on cost efficiency has driven a nature of minimal speculation.

In 2014, Ofgem conducted a review into the electricity distribution connections market to

understand why effective competition had only developed in some sections of the market. The

review found several issues in the market that could limit competition, a number of which related to

the DNOs’ role as the sole provider of the connection process. To address this, Ofgem introduced a

new licence condition that requires DNOs to facilitate competition in the electricity distribution

connections market and maintain a Competition in Connections Code of Practice. This was

implemented in 2015 and should facilitate new connections for industry.

More detail on generation of conventional and renewable power in the Humber region is given in

the following two sub-sections.

7.2 Non-renewable power generation

The generation of power through conventional means (coal or gas fired power stations) is still an

important industry for the region. Major power stations tend to be fairly separated from one

another, often surrounded by a good deal of land. Power stations in the region include:

Gas-fired plants at Keadby (SSE - 735MW) and Glanford Brigg (Centrica, 240MW)

Large Gas-fired Combined Heat and Power (CHP) plant at Immingham (VPI, 1,240MW)

Large Gas-fired CHP plant at Saltend (Triton power, 1,100MW)

The VPI CHP Plant at Immingham is one of the largest such CHP units in Europe, and supplies steam

and power to the Phillips66 and Total oil refineries.

The region has also seen some decline, as two other large gas-fired power stations in the region

(>1,500MW capacity in total) recently closed:

Killingholme A (Centrica-owned)

Killingholme B (Uniper-owned)

A new gas fired CCGT plant has been proposed for one of the Killingholme sites.

Power generation businesses are fully engaged in market mechanisms that ensure there is sufficient

UK grid capacity. Power generation is ramped up and down according to demand and as such

generation businesses increase or decrease their electrical supply in line with demand price signals

and contractual requirements, for monetary reward.

These market mechanisms are influencing the type and size of new generation plant being installed.

For example, Centrica is currently constructing a new fast-response natural gas fired plant at

Glanford Brigg (50MW) adjacent to the existing power station. This will enable it to deliver a

baseload of power through the original power station, and increase supply through the new one

when there is sufficient demand from the grid.

Despite some innovations, conventional power stations remain relatively inflexible in terms of

rapidly varying output. Conventional power generation is under threat in the UK due to increased

uptake of renewable generation technologies, with an expected increase in energy storage and

decentralised generation accelerating this change. As increased renewable generation comes online,

there will be a greater need to balance a steady, sustainable baseload, along with more fast-



response generators that can ramp up and down quickly. This will necessitate a transition from large

scale conventional power stations operating at a high baseload to a more flexible and diverse

system.

Decarbonisation of the electricity supply

A significant proportion of EII company energy needs are provided by gas-fired CHP plant. CHP is a mature and proven technology, used to generate both electricity and heat, mainly in the form of steam in this case. The electricity is usually sold to customer sites through private wire, and excess electricity is exported to the grid. CHP is currently an efficient, lower carbon way of generating power, as much of the heat that is

wasted when electricity is generated conventionally at a power station, is instead used to provide

useful heat, to the industrial customer in this case.

Table 16 below shows the predicted emissions factors for grid electricity from the HMT Green Book.

The 2017 greenhouse gas reporting conversion factors suggest a carbon conversion factor for heat

from purchased steam is 0.197 kgCO2/kWh. This is unlikely to change significantly over time, unless

alternative fuels are used to power the CHP.

It can therefore be seen that by 2020, the carbon emissions associated with steam from a CHP plant

are higher per kWh than using grid electricity. Hence in future it is expected that electrical heating

will be lower carbon than gas CHP (and indeed using a gas fired steam boiler).

Table 16 - Predicted emissions factors for grid electricity

Year CO2 emissions per kWh electricity (g/kWh)

Long-run marginal Grid average

2015 307 334

2020 260 198

2025 198 174

2030 118 107

2040 48 48

2050 25 25

Source: Heat mapping and master planning in North East Lincolnshire for North East Lincolnshire Council and BEIS, Element Energy 2017. Original source: HMT Green Book Guidance Table 1 (March 2017) For this reason, new gas fired CHP plants no longer make sense within a decarbonisation agenda. So when looking at potential heat sources for individual sites, or clusters, then preference should be given to lower carbon alternatives such as waste heat recovery, energy from waste or renewables. Where CHP is considered, the options for conversion to renewable fuel sources in future will need to be considered in detail.

7.3 Renewable energy supply

Bioenergy

Drax is the largest and most well-known power station in the wider region, located in Selby just to

the west of the Humber region. Having been in operation as a coal-fired plant since the late 1970s,

Drax has recently undergone a dramatic change in its fuel mix. Where previously all six of the

645MW units were supplied by coal, three of these have now been converted to use 100% biomass



(compressed wood pellets), 15% of which is supplied by the Drax Group’s US organisation Drax

Biomass. There are plans to convert a fourth unit to biomass in 2018 (as well as converting the

remaining two units from coal to gas). Whilst the power station itself is just outside of the Humber

region, two major biomass handling facilities have been constructed in the Humber ports to

transport biomass to be used as fuel. Today, the power plant is currently responsible for generating

around 7% of the UK’s electricity, including around 17% of its renewable power129.

Bioenergy production is also a growing sector within the Humber region, with particular focus on

biofuels and biogas.

The estuary is home to two large biofuel plants, Greenergy and Vivergo. Greenergy produces

biodiesel at its Immingham plant at a capacity of up to 200,000 tonnes per year. Originally designed

to process vegetable oils such as soy and rapeseed oil, it is now fed by 100% used cooking oil. The

company’s biofuels production as a whole contributes to around 25% of biofuels consumed in the

UK. The Vivergo Fuels plant is the largest bioethanol producer in the UK and the second largest in

Europe, providing the Humber region with local expertise for this technology and paving the way for

further development. This plant is currently offline and is awaiting further commitment from

Government on strengthening biofuel regulations in order to be able to cost effectively restart

production.

Biogas and biomethane is currently produced at several facilities across the region, typically through

anaerobic digestion and energy from waste. The Energy Works energy from waste plant is under

construction in Hull and due to become operational in 2018. It will use gasification technology to

create synthetic gas which will be burned to generate electricity (up to 25MW) for export to the grid.

Anaerobic digestion (AD) technology will also be used to produce biomethane gas, to inject directly

into the gas grid for consumption by existing gas appliances. Further AD plants have been proposed

in the region but have not received planning permission, including a 5.45MW AD Plant in Leven in

2017130 and a 3.25 MW AD Plant near Beeford in 2016131.

The Humber region has seen significant investment in new renewable power plants. The 13.5MW

EPR Glanford (formerly Glanford Power Station) generates power through using meat and bone meal

as a fuel source (Melton Renewable Energy UK PLC). In Brigg, a 40MW straw fired power station

completed construction in 2016. This plant consumes around 250,000 tonnes straw per year,

sourced from local farmers. Renewable technologies and fuels used in the region are diverse. Figure

44 shows the locations of proposed and operational renewable energy plants within the Humber

and the wider region.

129 Drax Group, https://www.drax.com/about-us/ 130 Campaigners win battle against 'gargantuan' FD Birds anaerobic digestion plant in Leven, Humber Business, April 2017 http://humberbusiness.com/news/campaigners-win-battle-against-gargantuan-fd/story-5433-detail/story 131 Beeford food waste plant application rejected, BBC News, April 2016 http://www.bbc.co.uk/news/uk-england-humber-36044467

https://www.drax.com/about-us/

http://humberbusiness.com/news/campaigners-win-battle-against-gargantuan-fd/story-5433-detail/story




Figure 44 BEIS Renewable Energy Planning database – locations of proposed and operational renewable energy plants

Offshore wind energy

The UK already has the largest installed capacity of offshore wind and has the potential to hold this

position with extensive capacity for future offshore wind development (see section 4.9 for more

detail). The Humber contributes to the UK’s leading position for offshore wind both with existing

wind farms and planning additional developments in the North Sea; and offshore wind represents

the largest share of renewables production in the region. Humber’s offshore wind industry spans

almost every stage of wind farm development and operation, including turbine manufacture,

assembly, installation and ongoing operation and maintenance through offshore wind servicing

facilities.

As of December 2017, 16 wind farms off the Humber coastline were operational, consented, or

planned132 (Table 17). The Crown Estate announcement in November 2017 that new seabed rights

will be made available from 2018133 is expected to lead to more offshore wind development in the

Humber area, and the region should seek to capitalise upon this.

132 Offshore Wind in Yorkshire and The Humber, RenewableUK, 2016 http://c.ymcdn.com/sites/www.renewableuk.com/resource/resmgr/publications/Yorkshire_and_the_Humber.pdf 133 The Crown Estate to consider new leasing for offshore wind projects, The Crown Estate, November 2017, accessed 05/03/2018 https://www.thecrownestate.co.uk/news-and-media/news/2017/the-crown-estate-to-consider-new-leasing-for-offshore-wind-projects/

http://c.ymcdn.com/sites/www.renewableuk.com/resource/resmgr/publications/Yorkshire_and_the_Humber.pdf

https://www.thecrownestate.co.uk/news-and-media/news/2017/the-crown-estate-to-consider-new-leasing-for-offshore-wind-projects/



Table 17: Offshore wind farms: operational, consented, or planned at December 2017 in the vicinity of the Humber

Wind farms Owner/Operator Capacity (MW)

Operational

Humber Gateway E.On134 219

Lincs Ørsted (formerly DONG Energy), Green Investment Bank135

270

Lynn & Inner Dowsing Green Investment Bank136 194

Westermost Rough Ørsted, Marubeni, Green Investment Bank

210

Sheringham Shoal Statoil, Statkraft137 317

Dudgeon Statoil, Statkraft, Masdar138 402

Consented

Race Bank Ørsted 139 580

Triton Knoll Innogy Renewables UK Ltd 860

Hornsea 1 Ørsted 1200


Dogger Bank Creyke Beck A

Statoil, SSE Renewables140 1200

Dogger Bank Creyke Beck B


Dogger Bank Teesside A


Dogger Bank Teesside B

Innogy Renewables UK 1200

Planned Hornsea 3 Ørsted 2400


Hornsea 3 and Triton Knoll are currently still in development; Hornsea 1 & 2 and Race Bank are in

construction. The development status of Hornsea 4 is ‘Dormant’143. A final decision from Innogy on

whether to go ahead with construction of the Triton Knoll wind farm is expected early in 2018.

Siemens Gamesa is looking to attract third party use of its terminal which has extensive deep-water

quay facilities ideal for the offshore and marine sectors to support a number of offshore wind

projects. In February 2018, Ørsted announced that Siemens Gamesa have been awarded the

contract to supply and service the turbines for the Hornsea Project Two, with blades manufactured

in Hull.

Figure 45 and Figure 46 show the locations of Ørsted-owned wind farms Westermost Rough and

Hornsea 1, 2 and 3.

134 https://www.eonenergy.com/about-eon/our-company/generation/our-current-portfolio/wind/offshore/humber-gateway 135 http://uk.reuters.com/article/uk-centrica-wind/centrica-completes-exit-from-wind-power-with-lincs-wind-farm-sale-idUKKBN14X1D2 136 https://www.centrica.com/news/sale-glens-foudland-lynn-and-inner-dowsing-wind-farms 137 http://sheringhamshoal.co.uk/index.php 138 http://dudgeonoffshorewind.co.uk/index.php 139 https://orsted.co.uk/Media/Press-kit/Fast-facts 140 http://www.forewind.co.uk/projects/projects-overview.html 141 http://www.forewind.co.uk/projects/projects-overview.html 142 http://www.forewind.co.uk/projects/dogger-bank-teesside-a-b.html 143 Hornsea Project Four Offshore Wind Farm, 4C Offshore http://www.4coffshore.com/windfarms/hornsea-project-four-gb-uk1j.html

https://www.eonenergy.com/about-eon/our-company/generation/our-current-portfolio/wind/offshore/humber-gateway

http://uk.reuters.com/article/uk-centrica-wind/centrica-completes-exit-from-wind-power-with-lincs-wind-farm-sale-idUKKBN14X1D2

https://www.centrica.com/news/sale-glens-foudland-lynn-and-inner-dowsing-wind-farms

http://sheringhamshoal.co.uk/index.php

http://dudgeonoffshorewind.co.uk/index.php

https://orsted.co.uk/Media/Press-kit/Fast-facts

http://www.forewind.co.uk/projects/projects-overview.html

http://www.forewind.co.uk/projects/projects-overview.html

http://www.forewind.co.uk/projects/dogger-bank-teesside-a-b.html

http://www.4coffshore.com/windfarms/hornsea-project-four-gb-uk1j.html



Figure 45: Ørsted’s Westermost Rough facility location

144

144

Our Wind Farms, Ørsted, accessed 05/04/2018,

https://orsted.co.uk/en/Generating-energy/Offshore-wind/Our-wind-farms

Figure 46: Ørsted’s Hornsea projects locations145

145

Ibid.





In 2014 Ørsted created an operations and maintenance base at the Port of Grimsby in order to

support the construction and operation of their North Sea wind farms, at that time servicing

Westermost Rough and Lincs offshore wind farms. This is due to be expanded in 2018 to create the

UK’s largest operations and maintenance (O&M) facility. The facility will operate state-of-the-art

Service Operational Vessels, designed to service 6-8 offshore turbines daily146.

The Humber region is gaining a reputation for O&M expertise. The Offshore Renewable Energy

Science and Innovation Audit carried out in 2017 on behalf of BEIS found that the Humber has the

largest concentration of offshore wind O&M supply chain businesses in the north of England and

Scotland147. Expertise in the region is also set to grow, with the announcement in 2017 of an

offshore wind O&M Centre of Excellence led by the Offshore Renewable Energy (ORE) Catapult and

the University of Hull. The partnership will create a roadmap for O&M research and development by

joining forces with industry and supply chain stakeholders148.

Waste heat

Across the UK there has been a move towards using shared infrastructure and waste streams to

generate energy more efficiently. By their nature, energy intensive industries tend to produce

significant amounts of waste heat as a by-product of the manufacturing process. Uptake of schemes

to utilise industrial waste heat are currently low, but there is very significant potential. The heat

maps in Figure 47 and Figure 48 below show the estimated waste heat emitted as gas (e.g. exhaust)

or liquid (e.g. cooling water) from industrial sites across the cluster. More commentary on industrial

symbiosis projects and future opportunities is given in section 11.

Figure 47 Waste heat map for Humber Energy Intensive Industry

146 Hobson and Porter appointed to build the world's biggest O&M hub for Offshore wind in Grimsby, accessed 06/03/2018, https://orsted.co.uk/en/Media/Newsroom/News/2018/02/Hobson-and-Porter-appointed-to-build-the-worlds-biggest-OM-hub-for-Offshore-wind-in-Grimsby 147 The Offshore Renewable Energy Science and Innovation Audit, No date, http://www.ncl.ac.uk/media/wwwnclacuk/business/files/sia-report-offshore-energy.pdf 148 https://ore.catapult.org.uk/press-releases/humber-to-host-uk-centre-of-excellence-for-offshore-wind-operations-and-maintenance/

https://orsted.co.uk/en/Media/Newsroom/News/2018/02/Hobson-and-Porter-appointed-to-build-the-worlds-biggest-OM-hub-for-Offshore-wind-in-Grimsby

https://orsted.co.uk/en/Media/Newsroom/News/2018/02/Hobson-and-Porter-appointed-to-build-the-worlds-biggest-OM-hub-for-Offshore-wind-in-Grimsby

http://www.ncl.ac.uk/media/wwwnclacuk/business/files/sia-report-offshore-energy.pdf

http://www.ncl.ac.uk/media/wwwnclacuk/business/files/sia-report-offshore-energy.pdf



Figure 48 Waste heat density map for Humber Energy Intensive Industry



8 Stakeholder views of strengths and weaknesses

Stakeholders were asked for their unprompted views on the strengths and weaknesses of operating

in the Humber region. Below is a summary of their feedback.

It should be noted that transport infrastructure in particular has been highlighted as a significant

Strength by some (access to ports, good motorway connections etc.) and a major Weakness by

others (congestion in town centres, slow and limited passenger rail connections etc.). In general the

communications links were thought to be better on the South bank than the North bank.

8.1 Perceived Strengths

Trading estuary and infrastructure

Feedback from stakeholders is that the port facility is a strong benefit for import of raw materials

and, in a few cases, export of products. It has seen substantial investment, and is increasingly

adapting and developing to meet the evolving needs of the local companies.

There is also land available for further expansion for many companies. This provides a good

opportunity as the region offers a low cost base, and it is cheaper to build than elsewhere.

Some strengths have been identified with the transport infrastructure, such as good motorways

providing good East-West transportation, and subsequent North-South access (but see weaknesses

section). Feedback on the rail network is mixed, but some companies are happy with facilities to

send products out by rail.

Key sectors

The Humber is known as home to a number of key sectors. Some of these are well established and

others are developing rapidly due to new funding and investment in the area.

Feedback from stakeholders suggests a virtuous circle – the Humber is a good region in which to

operate because of other strong manufacturing companies operating there. There is a good

community between the businesses (although maybe less so from one bank to the other), and there

is good sharing and use of local knowledge, best practice, and resources such as waste, by-products

and energy. The supply chain is strong in terms of local materials supply, and warehousing, storage

STRENGTHS - Trading estuary and infrastructure

- Sectoral strengths (manufacturing and engineering, port and logistics, chemicals, agribusiness and food)

- Energy supply

- Support organisations and academia

- The people and skills

WEAKNESSES - Road/Rail transport links

- Business struggle

- Weak local brand

- Leakage of skilled employees

- Promotion of the region



and logistics facilities. A strong engineering services supply chain was mentioned by many

participants.

“There is a good cluster of engineering supply chain resource with good skills and a low cost

base” Fuel Manufacturer

UK energy needs

In general the energy needs of EIIs are well met. Some have reported issues with obtaining new

capacity when planning expansions, or considering installing renewables.

Many energy intensive businesses are supplied by their own steam and power generation plant or

communal CHP systems. These are generally seen to be reliable and can provide stable pricing.

Energy prices have been mentioned by many companies competing in global markets, as a

significant barrier to parent companies choosing to invest in their Humber facilities (despite

improved payback periods for energy saving projects when energy prices are higher). They often

prefer to invest in low cost base plants.

Local support service and academia

Energy is a key research topic at The University of Hull. It provides a range of academic institutes

related to business, industry and energy:

Business School

Logistics Institute

Enterprise Centre



Institute for Chemistry into Industry149

Through these institutions and others in different fields, the University of Hull contributes nearly £1

billion to the economy and is responsible for supporting around 8,000 jobs150.

The services offered by CATCH were universally lauded by interviewees for this study. Their events

are probably the primary opportunity for networking across businesses, and many of them take

advantage of the “excellent” training courses and facilities, and provision of apprentices. Note

however that many interviewees are members of CATCH, and are therefore not completely

unbiased.

It was also commented that there is clear evidence of proactive local thinking on a region-wide basis

by the LEP and other regional players in terms of developing and implementing strategies for growth

and development for the Humber.

People and skills

149 The University of Hull, Hull City Council, accessed 29/11/2017 http://www.hullcc.gov.uk/portal/page-_pageid=293,644462&_dad=portal&_schema=PORTAL 150 Humber LEP response to the Industrial Strategy Green Paper April 2017 http://www.humberlep.org/wp-content/uploads/2017/03/Humber-Industrial-Strategy-response-April-2017.pdf







One further area, which featured strongly in the stakeholder feedback, was the passion and skills of

the employees in the region. There are many generations of operational, production and

engineering experience in the region. Recruitment was stated as being relatively straightforward (as

long as companies pay reasonable rates). It is a relatively low cost region in which to live.

Skills and training is an area that has seen significant investment in new facilities in recent years, and

only a few stakeholders reported lack of skills in the local workforce as a major problem. Those that

did tended to identify this more as a national England or UK wide problem than a specifically local

issue.

“We have access to skilled local people, who expect to stay in their jobs long term – 95% of

our staff are local” Manufacturer

8.2 Perceived Weaknesses

Business struggle

Feedback from stakeholders noted a historical decline in fortunes of manufacturing on the Humber,

but this was not particularly a concern for the current operators in the region. A few described their

sector or operations as fragile or declining, but mostly the outlook was for stable markets, with some

positive opportunities for growth.

Some concern was expressed that previous decline has left areas looking undesirable (e.g.

abandoned plants and fly tipping), which affects the image of the region, and can discourage

investment.

Transport links

A number of stakeholders commented on transport infrastructure. Particular concerns were the

road networks around and through the towns and cities (Hull, Grimsby etc.) both for employees

travelling to/from work, and between companies, and also for freight movement. Recent and

ongoing road developments such as the A160/A180 improvements and the A18/A180 link road have

been welcomed, but in some cases seen as a “sticking plaster”. Further improvements are required,

especially on the A63 Castle Street through Hull. Stakeholders are concerned to see these happen as

quickly as possible. Road links could present a significant barrier to incoming business investment.

The rail network was highlighted as adequate to weak by many, both for transporting goods, and for

passenger connections to major cities in the UK.

Weak local brand

Feedback from interviews was generally that the region has a problem with its image. It was felt that

externally, it is not seen as an attractive place to live and work, and promotion of the region may not

be positive enough to overcome this. In some cases this is a perception issue, but in others it is

grounded in reality, with redundant plant that has not been removed, fly-tipping on major routes

into the main towns etc.

There are concerns that although the skills development and training in the region is strong, that

there may be significant leakage of skills through experienced and trained people leaving the area,



particularly young people. Particular concern was expressed that the region is not attractive to

young people – which is a common issue for the North as a whole.

However, the strong work in recent years to improve the brand was recognised, in particular Hull as

the city of culture, and promotion of the Energy Estuary.

Infrastructure

Some interviewees reported some concerns here. The region is electricity generation rich but

demand poor, and the electrical network was stated to have some constraints, being over supplied

with generation.

Some concerns were also raised regarding port facilities. Some businesses stated they felt are

sometimes treated as a captive audience and have not always been provided with the facilities they

need.

Whilst many companies stated that land may be available to them for expansion, barriers to its

development included the flood risk in some areas, and conservation and planning issues.

“A planned expansion went ahead elsewhere in the UK due to flood risk and planning

requirements in the Humber estuary” Chemicals Manufacturer

Promotion of the region

Political risks were identified that the region may not be well placed to take the maximum advantage

of Northern Powerhouse, Industrial Strategy and Clean Growth Strategy initiatives. Some other

regions have a louder voice and are seen to be better at positioning and promoting themselves to

maximise their opportunities.



9 Drivers and barriers to growth and decarbonisation

This section presents the drivers and barriers highlighted by the Humber’s Energy Intensive

Industries. The commentary focuses on investment in energy saving and decarbonisation projects, as

well as inward investment in growth more generally.

9.1 Drivers

Drivers reported by EIIs for investment in growth and energy saving projects are centred around

financial and strategic priorities. Climate change mitigation and adaptation is a secondary driver

once financial and business needs have been met.

Financial

Businesses can manage overheads and variable costs but not external factors, so energy

reduction is important.

Compliance to regulations - EUETS provides a cost driver.

Third party developers may provide capital investment for renewables, although this driver

is tempered by the level of incentive and risk of restricting future expansion potential.

Energy saving projects can offer more certain returns than process optimisation projects,

e.g. increasing throughput.

Strategic/operational

Some investment is driven by demand for new products e.g. R1234yf refrigerants.

Investment in decarbonisation is more likely where the product is sold on its green

credentials.

Carbon performance is increasingly published in annual or CSR reports, especially for larger

companies.

There is some supply chain demand, as a lower carbon footprint has some value to some

customers, especially for those that are B2C. Some customers also carry out environmental

audits of their supply chain.

There is some demand from shareholders of large corporates to increase CSR.

Compliance to regulations - some EIIs are signed up to Climate Change Agreements or the

EU Emissions Trading Scheme, so are required to reduce emissions.

Markets are generally reported to be stable for EIIs, which increases investor confidence.

Reducing energy demand and diversifying supply increases security of supply and cost

control.

Some multinational EIIs have company-wide emission reduction targets.

Energy benchmarking can result in a need to perform well against other sites.

Physical

Climate change poses a threat to business as usual, therefore mitigation by reducing

emissions and adaptation by fuel switching is a long term driver.



9.2 Barriers

Barriers to investment in business growth and energy saving surround risk, cost and competing

business priorities. Some EIIs reported these barriers as prohibitive to investment, whilst others

identified them as issues that could be overcome.

Financial

Some EIIs are located on marshland which increases construction cost.

Renewables and storage projects require significant upfront capital and slow returns, which

means that such projects often fail to meet corporate payback requirements (often require

two-year payback or less).

The cost of increasingly demanding environmental compliance can restrict capital for

decarbonisation projects.

Some EIIs report no demand or requirement from customers to lower their carbon footprint,

therefore the financial benefit from increased sales is limited.

Strategic/operational

Several EIIs reported the need to compete with international subsidiaries for investment

capital, which slows the rate of investment and increases the need of a strong local business

case.

Projects that are outside of core business are given lower priority, e.g. renewables and

energy storage.

There is a lack of metering in many industrial sites, which restricts the business case for

energy efficiency projects as there is limited knowledge on the most cost effective

improvements.

Some EIIs report that markets are not stable enough for investment.

Political

Uncertainty around the impact of exiting the EU reduces willingness to invest in the UK.

Businesses are guided by policy decisions especially in terms of subsidies and renewables,

therefore lack of certainty on policy direction and history of changing subsidies discourages

long term investment.

Physical

SSSIs and planning consent issues can restrict development.

There is a flood risk and history of flooding in some areas.

Grid capacity constraints limit growth at particular sites.



10 SWOT analysis of the Humber

A detailed analysis of strengths, weaknesses, opportunities and threats (SWOT) has been undertaken

for the Energy Intensive Industries Cluster. This analysis is based on a comprehensive literature

review of the region and interviews carried out with local industry stakeholders.

The SWOT analysis focused on the overarching question: How can the Humber EII cluster become the

first global exemplar of a decarbonised, high growth, resource-optimised manufacturing region? To

understand the different areas of potential within this broad question, six pertinent questions were

selected and an individual SWOT analysis was undertaken for each one:

A TOWS strategic options analysis was then created for each individual SWOT, to identify a series of

options to intensify the strengths and opportunities and limit the weaknesses and threats. Resulting

options were prioritised and themed, and fed into the report recommendations in section 13.

A summary of each SWOT and corresponding TOWS analysis is provided in the following sub-

sections. In section 12, some of the key themes from the SWOT outputs are summarised which then

lead into the recommendations in section 13.

How can decarbonisation in energy supply be taken

forward?

Consider offshore wind, onshore generation and storage, as well as heat and bioenergy

How can decarbonisation in energy-using industry be

accelerated?

Scope for energy efficiency? And for wider decarbonisation (purchasing certificates, PPAs / private wires, on site renewables, CCUS)?

How can Humber be a/the renewables centre of

excellence for the UK?

Research, innovation, manufacture, installation, and servicing renewable energy.

How can the EIIs grow, adding additional capacity

in a lower carbon way.

Maintain and grow process industries and other sectors. Reduced cost base, increased productivity, inward investment

Is there an opportunity for more decentralised low carbon heat provision?

Consider CHP, renewable energy centres (from waste & bioenergy) & heat recovery, along with heat sinks

What is scope for industrial symbiosis, integration or other synergies?

From sharing power and re-using waste to co-location of chemical process chain players

How can the Humber EII cluster become a global exemplar of a decarbonised, high growth, resource optimised manufacturing region?



10.1 How can decarbonisation in energy-using industry be accelerated?

STRENGTHS Local EIIs independently implement decarbonisation projects due to cost reduction and productivity drivers • Local EIIs tend to have a pipeline of potential energy efficiency projects • Local financing programmes / incentives exist to accelerate infrastructure upgrades in

Humber-based businesses (e.g. enterprise zones) • Research on low carbon potential of the Humber’s industries already conducted • Industries are more collaborative than they were in the past due to umbrella

organisations (e.g. HFC CATCH, Green Port) • Initial feasibility for CCUS complete and existing gas pipework for transport and storage • Unused waste heat streams from multiple local businesses, including high grade • Increased interest in carbon saving at corporate level – especially near to consumer

facing. • Energy grid infrastructure is generally good – could enable electrification

WEAKNESSES Other priorities override decarbonisation projects without additional cost or growth justification • EIIs have high dependence on fossil fuels and electricity (frequently from Gas CHP) • Two year payback is standard required for viable decarbonisation projects • UK business struggle has increased focus on cost cutting rather than investment • EIIs report strong competition for capital available for investment from other global sites • Lack of metering at many industrial hides cost effective energy efficiencies • Energy saving quick wins are largely complete in some cases, or uneconomic • Private wire supplies can eliminate or disincentives decarbonisation • Other regions have more coordinated voice and influence in Government e.g. H2 & CCS • Humber CCUS stakeholders disillusioned. Others regions more positive • Lack of customer interest in carbon footprint for commodity products

OPPORTUNITIES Decarbonisation can be accelerated by exploiting national programmes and collaborating with other regions • Humber estuary can be positioned for leading roles in the Northern Powerhouse,

Industrial and clean growth strategy • Financial incentives and support related to EII decarbonisation in the Clean Growth and

Industrial Strategies (e.g. IHRS, IEEA, CCUS support) to energise the regions EIIs • 2050 Industrial Decarbonisation and Energy Efficiency Action Plans need progressing • Implementation/further feasibility of ESOS outputs for EIIs • CCUS is being supported again under Clean Growth Strategy • Government wants to hear what regions need and devolution is in favour • Compliance to national and EU regulation (e.g. F Gas, IED) is forcing companies to act • Clean cooling movement and decarbonisation of the cold economy due to technology

innovation

THREATS Uncertainty around national policy and incentives limits long term planning and project implementation • National incentives and support programme recipients may be concentrated in other

regions in the UK. • Paybacks for renewables and storage projects often fail to meet corporate requirements.

Uneven playing field on subsidies • Changes in Government renewables policy restricts long term investment • Renewables and biofuels viability are dependent on feedstock price fluctuations • Planning constraints (incl. for SSSI mud flats and flood zone) • Brexit and associated market uncertainty, esp. regarding joining up UK and EU

regulations



Opportunities Threats

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Which of the strengths can be used to maximise the opportunities? Local EIIs have a pipeline of potential energy efficiency projects. These should

be aligned with identified financial incentives and the Industrial and Clean Growth Strategy. Local stakeholders should collaborate to influence the design of Government programmes

Quick wins are needed to make 2050 decarbonisation a success. Collaboration of regional EIIs supported by umbrella group (e.g. CATCH) could allow Humber companies to be trail blazers for early action and quick wins

Further research into market opportunities generated by tightening clean cooling regulation (F-gas etc.) which could be harnessed by regional industrial gas suppliers.

Focus on subsidies and support available for technologies that are already seen as interesting by local EIIs, e.g. ORC

Build on green branding/reputation by encouraging uptake of green electricity purchase/certificates in the UK.

How can the strengths be used to minimise the threats? The fabric of local infrastructure supporting EIIs is a regional strength. This

needs to be clearly articulated when competing for financial incentives and placement with the Northern Powerhouse, Industrial and Clean Growth Strategies

Promote Humber as a leading region for decarbonising manufacturing.

Drive forward attracting businesses to invest in the Enterprise zones. Line up all local (and national) resources to proactively chase business and sell the benefits of the Humber with one voice. Leverage the influence of CATCH and Green Port Hull

Continue to support diverse range of projects across range of technology sectors – don’t put all eggs in one basket - to limit risk from changing policy

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How can the weaknesses be minimised using the identified opportunities? Complete EcoPorts self-assessment to understand environmental progress

against an international benchmark

Alternative financing programmes to increase uptake of energy efficiency projects with marginal payback. Encourage EPC suppliers to increase availability of capital for investment

Collaborate rather than compete with other regions to develop CCUS feasibility. Use their proactive desire to participate and Humber expertise to maintain or develop longer term opportunities

Provide funding to encourage decarbonisation feasibility studies, where it is currently low on the agenda

Focus on decarbonising industry as a brand building measure

How can the weaknesses be minimised to avoid the threats? Increase regional efforts on national biofuels policy ensuring economic growth

opportunities in the region are sustained and accelerated (e.g. Vivergo)

Rebalance focus to include energy efficiency projects as well as renewables, to accommodate fluctuating national policy

Seek a louder voice in Government to seek policy certainty

Provide regional strategies and local support programmes to follow up ESOS and assist companies to implement more of the recommendations

Counter concern about flood risk that prospective businesses have that encourages them to look elsewhere through communicating more clearly the flood risk protection plan

Work with refineries to identify future strategies as oil for transport use diminishes



10.2 How can decarbonisation in energy supply be taken forward?

STRENGTHS The Humber is home to leading offshore wind and biofuels companies and has land and substation capacity for additional low carbon supply Proximity to North Sea for offshore wind connection and importing fuel feedstocks

Initial CCS feasibility work already conducted for White Rose project

Offshore wind-specific skillsets in local population and training centres to continue to grow expertise

Capacity availability at most electricity substations and land available for extra renewable connections and/or storage. Good gas networks.

Grimsby hailed ‘renewable energy capital of England’ in 2016

Humber Energy Estuary brand/reputation

Several local EIIs reported that they are watching CCS developments and would be willing to participate should a project arise

Good access to bio & waste resources e.g. rapeseed, straw, waste oil, domestic waste, industrial waste, wood

WEAKNESSES Grid constraints limit development in some areas and the Humber is still a significant producer of fossil fuels • Some substations near main industrial sites are already at capacity for supply • Grid constraints in some areas, especially at the boundary of substation regions. • Part of the local economy is based on fossil fuels - oil refining and natural gas – 25%

of UK oil demand supplied by Humber region and 25% of coal imports • Decarbonisation of supply for businesses is limited because they are tied into on site

energy supply • Recent pause in production at Vivergo knocks confidence in others to invest in

renewables • Other regions are more advanced in terms of CCS feasibility and level of interest

OPPORTUNITIES There is significant potential for diversity of supply in the region Storage can be installed close to renewable energy generation from offshore wind

CCS development in Teesside and Grangemouth provides opportunity for synergy

Potential for existing gas pipework and gas fields to be reutilised for CCS transport and storage

Industrial and Clean Growth Strategy budget announcements (e.g. Sector Deal for offshore wind, innovation in wind turbine blade tech, CCUS investment)

Current heat mapping in the region presents decentralised energy opportunities

Learnings from other ports (e.g. Port of Rotterdam decarbonisation pathways)

Growing trend of green electricity purchase/certificates in the UK

EV charging

THREATS UK energy policy influences the success of decarbonised energy supply • Uncertainty of planning consent for future developments • Uncertainty around energy price fluctuations and raw material/component part price

fluctuations affects the financial viability and willingness to invest (e.g. Vivergo) • Changes to Government policy, specifically towards renewables and changes to

regulations post Brexit, e.g. petrol car phase out, RHI & FiTs, future incentives




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Which of the strengths can be used to maximise the opportunities? Investigate opportunity to install storage technology on industrial land to

connect and store energy from offshore wind farms (e.g. energy buffers)

The Humber is seen as a hub for offshore wind and activities in this sector should be aligned to identified opportunities in the Industrial and Clean Growth Strategies

Follow heat mapping exercises with masterplanning focused on use of industrial waste heat as source for heat networks. Seek further funding from HNIP.

Investigate opportunities for decarbonising port energy supply, e.g. through a similar exercise to the Port of Rotterdam decarbonisation pathways

Encourage more biogas production and injection to gas grid, as well as biofuel production

How can the strengths be used to minimise the threats? Investigate the potential for a variety of renewable technologies to decrease

the risk of changes to Government policy threatening the viability of local decarbonised supply in the future

Use strong local base of offshore wind and biofuels manufacturers to lobby for more renewables support, e.g. E10 regulation

Use local stakeholder groups to facilitate long term planning

Facilitate local planning consent for renewable energy generators

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How can the weaknesses be minimised using the identified opportunities? Alleviate grid constraints by accelerating the uptake of energy storage,

especially in areas far from substations

Where companies are tied into energy supply, encourage purchase of green electricity and increasing use of biofuels mix

Rather than aiming to compete with regions that are more advanced in terms of CCS development, collaborate with them to accelerate progress in the Humber

Promote long term decarbonisation of energy supply where short term barriers exist, by continuing heat mapping feasibility for heat networks.

Revisit initial feasibility work for White Rose and explore opportunities for synergies for CCS development with Teesside and Grangemouth (East Coast Network), taking account of existing gas pipework and gas fields for potential CCS transport and storage.

How can the weaknesses be minimised to avoid the threats? Decrease reliance on fossil fuels economy and reutilise closed sites for

alternative generation fuels, e.g. energy from waste.

Two pronged approach – encourage purchasers to buy low carbon energy sources – and encourage suppliers to offer low carbon energy.

For shorter term investments, focus on technologies with current Government support to increase cost viability, e.g. those eligible for renewables subsidies.





10.3 How can Humber estuary become a/the renewables hub/centre of excellence for the UK?

STRENGTHS The Humber is a UK leader in research, innovation and production of offshore wind and biofuels World player in the offshore wind sector with its advantageous proximity to the North

Sea and well-placed to be a service, maintenance and grid connection point

Hull and Grimsby are local hubs for wind energy with world-leading offshore wind c Siemens and Orsted

Strong existing biofuel capability at the Vivergo and Greenergy sites, and new Energy Works energy from waste plant and biocoal plant expected in 2018

University of Hull leading research and support for renewables, e.g. Aura project and offshore wind O&M Centre of Excellence programme with ORE Catapult

Humber Enterprise Zone offers space for OEMs and their supply chains to co-locate

Energy Estuary brand and Green Port Hull vision to establish the Humber as a world class centre for renewable energy. Grimsby hailed ‘renewable energy capital of England’ in 2016

Local training providers (e.g. CATCH) upskilling & offering engineering apprenticeships

Proactive local thinking on a region-wide basis by the LEP and others

Strong existing linkages e.g. University, companies, training providers, institutions etc.

WEAKNESSES The region currently relies on few large players and the technology focus is limited mainly to offshore wind and biofuels Low take-up of renewables aside from offshore wind and biofuels, e.g. solar thermal,

PV, heat pumps, onshore wind. Offshore wind could over-dominate

Reliance on small number of large players leading the local renewables sector increases risk

Historical manufacturing decline in the region

Local branding could be clearer

More work to do for region to be dominant in renewables Innovation/R&D

Fossil fuel industries are still a key part of the local economy - oil refining and natural gas – 25% of UK oil demand supplied by Humber and 25% of coal imports

Occupation of Able Marine Energy Park not yet secured, and infrastructure not yet guaranteed

Once the offshore wind fields are fully established, the level of ongoing support needed (and jobs) will be reduced.

OPPORTUNITIES UK and global renewables markets are growing UK is ranked as a top ten country on the Renewable Energy Country Attractiveness

Index for offshore wind and biomass

Market for biofuels and biogas is growing in the UK and globally

Clean Growth Strategy budget announcements: Sector Deal for offshore wind, innovation in wind turbine blade tech, Contracts for Difference, clean tech early stage investment fund)

Estimates show that up to £120 billion investment in UK offshore wind might be needed to meet national energy targets

Further collaboration between universities, Growth Hubs, and public bodies such as Innovate UK and Catapults

Servicing and equipment for consented offshore wind farms in the North Sea can be provided by Humber’s Energy Estuary

THREATS There is competition from other UK regions for skilled workers and Government support Lack of policy support for certain renewables, e.g. onshore wind, solar PV

Policy support for further primary energy sources would be good for Humber growth but counterbalance carbon saving goals e.g. fracking and offshore oil extraction

Main players in the renewables sector in the Humber are large multinationals so could relocate Humber plants elsewhere

Attractiveness of other regions causing a skills drain, especially of younger workers

Other regions may be positioning and promoting themselves better to maximise opportunities from national funding programmes (e.g. those announced in the Clean Growth Strategy)




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Which of the strengths can be used to maximise the opportunities? The market for biofuels and biogas is growing in the UK and globally. The

Humber is well-placed to become the UK leader due its biofuels industry

The Humber estuary is already seen as a hub for offshore wind. Activities in this sector should be aligned to identified opportunities in the Industrial and Clean Growth Strategies.

Maintain and grow local facilities and skills to ensure that servicing and equipment for consented offshore wind farms in the North Sea is provided by Humber businesses

Establishing a recognised centre of excellence requires strong collaborations between stakeholders, so further focus should be placed on cultivating these

How can the strengths be used to minimise the threats? Use strong local base of biofuels manufacturers to lobby for focused

renewables support, e.g. E10 regulation

Encourage cohesive marketing and branding among local stakeholders and use training providers to retain local talent

Position the strengths and achievements of the Humber estuary and its investment needs clearly to encourage funding and support from national programmes

Ensure nuanced messaging across all renewables, but with offshore (success) focus

Foster regional renewable technology innovation and incubation (e.g. Project Aura, O&M Centre of Excellence) to create industry capability and economic growth

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How can the weaknesses be minimised using the identified opportunities? Marketing the Humber estuary as the leader for offshore wind investment will

help to strengthen the external reputation

Increase levels of innovation and R&D through opportunities identified in the Industrial and Clean Growth Strategies

Explore opportunities to increase local uptake of other renewables beyond biofuels and offshore wind, e.g. making use of new SME fund

Encourage uptake of more, small and medium size supply chain companies to diversify from few large players by incentivising lease of land near Siemens Gamesa and Ørsted sites

Consider supporting more proactive approach to infrastructure and incentive provision at Able Marine Energy Park to secure tenant commitments.

How can the weaknesses be minimised to avoid the threats? Concentrate on renewables which currently have UK policy support to

minimise risk

Improve reputation of the Humber estuary as a good place to work to reduce skills drain

Decrease reliance on fossil fuels economy through industry decarbonisation and attracting a wider profile of industry. Consider reutilising closed sites for alternative generation fuels, e.g. energy from waste



10.4 How can Humber estuary ensure the EIIs grow and add capacity in a decarbonisation sensitive way?

STRENGTHS There is capacity in the Humber for more businesses and business expansion and local EIIs report slow but steady growth • Humber Enterprise Zone provides capacity and financial incentives for new

industry. Local authorities are proactive chasing investment opportunities

• Strong local manufacturing base reduces costs and increases local supply chain for incoming companies

• Identification as a high energy intensive industry cluster attracts inward investment

• Energy Estuary brand/reputation

• Local companies report ongoing investment within current production

• Range of industry types ensures long term stability

• Local infrastructure strengths, e.g. deep-water port, ethylene pipeline

• Sources of stable, reasonable cost energy (e.g. CHP). Sources of key chemical feedstocks

• Land available for expansion. Planning permission easier than some places.

WEAKNESSES The region’s branding/reputation is not clear enough and the region as a whole has experienced economic decline • Reputation as a high energy intensive industry cluster not strong enough

• Focus is on the renewables hub rather than marketing Humber as a green

manufacturing region

• Local authorities lacking in resources – and can compete rather than collaborate

• Sector is reliant on few large players which increases risk

• Company closures reduce access to shared services to all – integration brings

business risk

• Regional business struggle has increased focus on cost-cutting rather than

investment. EIIs report intense competition for capital available for investment

• The region is lacking a single voice for manufacturing

• Transport infrastructure puts off some investors.

OPPORTUNITIES Local EIIs report stable external markets and national funding and support programmes exist to accelerate certain industries • Support offered through Northern Powerhouse and Clean Growth Strategy (e.g.

infrastructure upgrades, business/innovation support) • Support offered through local programmes, e.g. Humber Growth Hub, Growing

the Humber, South Humber Industrial Investment Programme (SHIIP), Green Port Growth Programme, North Lincolnshire Ambassador Programme, Let’s Grow North & East Yorkshire

• UK EII market is on average competitive but stable/growing

• EII supply chain companies frequently choose to locate near to their customers

• Impact of local stakeholder organisations could be increased • The UK ranks fourth in Europe for chemicals production

THREATS Some funding and support focused on other Northern regions and the North is lacking a joined up approach • Competition from other regions, especially NW, Teesside and Grangemouth for

chemicals industry. EU ports are very proactive in development.

• UK-wide decline of energy intensive industries - increase in global competition

decreases product value

• Northern Powerhouse support perceived to be focused mainly in Manchester,

Liverpool and Leeds

• Competition between regions in the North for Government support is

counterproductive

• Planning consent requirements slow down pace of development

• “High UK prices” are said to be a barrier to securing investment

• Demand for refined oil transport fuel products will decline.




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Which of the strengths can be used to maximise the opportunities? Expand the chemicals value chain in the region. In depth study of opportunities

to make required feedstocks locally – and to attract manufacturers using locally made intermediates as feedstocks for more downstream products

Local stakeholders should collaborate to influence the design of Government programmes.

Keep pace with training programmes in other regions to adapt to new industries.

Strengthen promotion of the region’s strengths, such as the deep-water port and ethylene pipeline to encourage incoming investment from particular industries.

Use Humber Enterprise Zone incentives to encourage co-location of supply chain industries.

How can the strengths be used to minimise the threats? Review impact of planning consent requirements and how to mitigate this (e.g.

more and earlier multi-party engagement and collaboration).

Influence acceleration in uptake of biofuels, e.g. uptake of E10 10% biofuel in transport fuel, to support existing Humber biofuels businesses.

Retain a range of industry types rather than focussing on one or two sectors to increase stability and counteract decline of certain industries. Align with industrial strategy where possible e.g. digitisation and decarbonisation within EIIs.

Strengthen promotion of the region’s strengths, such as the deep-water port and ethylene pipeline to stand up to competition from other UK regions.

Proactive programme to identify strategic opportunities for refineries – potentially partnering in new initiatives

Where possible attempt to match or exceed support offered in competitor locations e.g. European ports.

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How can the weaknesses be minimised using the identified opportunities? Use available capacity to attract EII supply chain companies, in order to

strengthen EII cluster reputation and reduce reliance on few large players.

Market the Humber as a green manufacturing region, to extend the reputation beyond the renewables hub.

Align local stakeholder organisations to provide Humber EII cluster with a single voice.

Exploit national funding and support schemes to increase availability of capital for investment for EIIs. For multinationals this can increase the business case for investing in the Humber rather than international sites.

Exploit Local Authority strategic plans – seek increased recognition of EIIs to push for quicker and bigger upgrades to infrastructure. Make Humber a location global players want to come to.

How can the weaknesses be minimised to avoid the threats? Market the Humber as an EII cluster to stand up to competition from other UK

regions.

Collaborate with other northern manufacturing regions where possible to increase visibility from a national perspective.

Use cluster benefits of shared infrastructure and supply chains to sell the benefits of the region, and demonstrate competitiveness in comparison to other regions.



10.5 Is there an opportunity for more decentralised decarbonised heat provision?

STRENGTHS EII cluster already shares some heat streams, and heat mapping exercises are ongoing to determine their potential • Some interest in heat networks reported by local EIIs • Potential for local EIIs to export waste heat • Heat mapping exercise currently ongoing in the region • EII clustering means infrastructure can be shared • Track record of decentralised energy projects, e.g. Immingham CHP plant • Examine potential to link Saltend to new Yorkshire Energy Park

WEAKNESSES Individual businesses are reluctant to initiate projects and cost effectiveness is a limiting factor • Waste heat is often low grade

• Distance between potential waste heat suppliers and users reported to be too far in some cases.

• Not always possible to find the right sort of heat demand for the sources available • Some companies are wary of sharing heat with others as it increases reliance on

external players. Companies are also wary of being a heat customer due to reliability and competitiveness concerns.

• There has been no clear vision for commercially sound heat cluster heat sharing

OPPORTUNITIES Decentralised energy is advocated by UK Government and support exists to accelerate development • National funding and support revealed in the Clean Growth Strategy, e.g. IHRS,

IEEA

• The UK Government is an advocate of decentralised energy and district heating networks and has accelerated the uptake of heat networks in the UK by creating the Heat Network Delivery Unit (HNDU)

• Productivity advantages exist through moving wasted heat to other commercial or domestic uses.

THREATS Decentralised energy projects require long term investment and planning, which increases risk • The value of national subsidies dictate which technologies are taken forward, and

are subject to change

• Decentralised energy projects require long term planning, significant investment and disruption to infrastructure

• Rotterdam is more developed in it heat network thinking and action (e.g. Rotterdam Heat Round about) which could deliver competitive advantage in asset placement decisions




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Which of the strengths can be used to maximise the opportunities? Build on heat mapping exercises. Consider a joined up approach to

masterplanning for the use of industrial waste heat as a source for heat networks.

Exploit EII clusters to identify opportunities for shared heat infrastructure, e.g. CHP and steam

Use existing projects and savings as examples to encourage further uptake of decentralised energy

Encourage local industries that have expressed an interest in heat networks / decentralised energy to participate in national support programmes, e.g. IHRS

Install new low carbon power and heat networks within any major plans to upgrade infrastructure (e.g. to link to Energy from Waste plants in Hull and on South Humber Bank.

How can the strengths be used to minimise the threats? Use local stakeholder groups to facilitate long term planning to increase

involvement of individual companies.

Encourage collaboration between companies and sharing of infrastructure to decrease upfront investment requirements from individual companies.

Align heat networks with other large infrastructure projects to decrease disruption to infrastructure for local companies, e.g. installation of fibre optic cables, EV charging infrastructure.

Wea

knes

ses

How can the weaknesses be minimised using the identified opportunities? Create a regional vision and objective to use and share waste heat from

industry.

Decrease risk of shared infrastructure projects by acting as an impartial mediator for local companies wishing to collaborate on decentralised energy projects

Consider options of using low grade heat with innovative technologies to increase its value

How can the weaknesses be minimised to avoid the threats? Learn from the experience of the Port of Rotterdam Heat Roundabout project

and examine for parallels and learnings

Take a long term planning approach to heat network feasibility and shared infrastructure – whilst the distance between some potential waste heat suppliers and users reported to be too far currently, incoming businesses or future technologies may improve feasibility

For shorter term investments, focus on technologies with current Government support to increase cost viability, e.g. those eligible for renewables subsidies



10.6 What is the scope for wider industrial symbiosis, integration and other inter-organisational synergies?

STRENGTHS Existing track record of symbiosis projects among Humber EIIs and potential for further project implementation • Track record of symbiosis projects through the National Industrial Symbiosis

Programme (NISP) e.g. Greenergy by-product symbiosis

• Horizon 2020 study into the potential for industrial symbiosis opportunities in the Humber region through EPOS e.g. Cemex / INEOS

• EIIs in the Humber report further opportunities for symbiosis that need feasibility support

• Useful waste materials and feedstocks are produced by the Humber EII cluster

• Saltend can be future incubator and model of industrial symbiosis

WEAKNESSES There is a general reluctance to explore further opportunities without external support unless a clear business case exists • Some local EIIs are wary of symbiosis projects as it increases reliance on external

players

• Existing decarbonisation symbiosis opportunities are not necessarily cost effective

• On land transport infrastructure for sharing feedstocks is limited

• NISP programme closed and not replaced

• Symbiosis presents risk to customer if they guarantee to take supply. OR risk to supplier if customer doesn’t guarantee long term demand.

• Pipelines are most effective way to move materials, but very expensive

• Synergistic / symbiosis projects may not always be lower carbon

OPPORTUNITIES National and international research and support programmes exist to determine synergies • Potential for decreased costs associated with legislation and regulations such as

the Landfill Tax and Climate Change Levy

• Projects facilitated through Horizon 2020 funding e.g. EPOS programme. • RESLAG project to identify effective use for landfilled steel slag

• SYBAWHEY project to identify food waste symbiosis projects

THREATS Decline of certain EII sectors nationally or globally could have knock-on effects for companies with symbiosis relationships • Further economic decline in EII sector could increase risk for businesses relying on

symbiosis with others • Lack of Government support for certain industries can increase risk e.g. changing

incentives and regulations over time




Stre

ngt

hs

Which of the strengths can be used to maximise the opportunities? Create partnership with stakeholders a strategic vision for industrial symbiosis

across the region

Investigate symbiosis projects identified through the NISP that did not reach implementation stage and revisit feasibility

Investigate opportunities identified by the EPOS project and take these forward if appropriate

Increase awareness of RESLAG and SYBAWHEY programmes amongst relevant steel and food manufacturers

Consider waste materials, feedstocks and potential symbiosis opportunities named by interviewees and start conversations between potential collaborators

How can the strengths be used to minimise the threats? Identify business models that de-risk industrial symbiosis to unlock the regions

opportunities

Consider symbiosis from multiple perspective including sharing energy resources, sharing waste streams, more integrated supply of product to input into processes further down the process chain (e.g. other chemicals manufacture)

Immediate cost savings can negate the long-term risk of sharing feedstocks and waste streams with other businesses

Use stakeholder groups to play an impartial mediation role between businesses with symbiosis opportunities.

Bring in local technical and research expertise e.g. from University of Hull

Wea

knes

ses

How can the weaknesses be minimised using the identified opportunities? Increase awareness of cost saving potential of symbiosis projects to alleviate

concern of long term risk by relying on external companies.

Incentivise decarbonisation symbiosis opportunities where cost savings are uncertain, or it is not clear where the benefit will accrue.

How can the weaknesses be minimised to avoid the threats? Identify and clearly articulate the regional, wider regional and national role

that symbiosis can play in local and national industrial strategies

Work in partnership with other regions with similar challenges to provide a consistent and impactful messages to the industry and central government - Symbiosis doesn’t have to be within one geographic region.

Seek more vocal Government support for traditional process industries, to increase confidence in long term contracts.



11 Opportunities for the Humber Energy Intensive Industries

Cluster

The stakeholder engagement highlighted a number of industry-wide opportunities and threats,

which have been collated and analysed in section 10. However there were also a number of specific

projects identified within the companies interviewed. A summary of the more promising projects is

listed in the tables below.

In some cases these projects will progress without much outside influence – simply a matter of

whether a company chooses to invest in their Humber facility. In others, either direct support

(financial or otherwise), or wider regional or national factors or decisions could impact whether the

investment decision goes ahead. The factors could range from electrical or transport infrastructure,

energy availability and prices, labour availability and training, through to planning permission,

political support or even funding availability. A more detailed list of project drivers and barriers was

listed in section 9.

The projects are split into themes:

Energy efficiency.

Other decarbonisation.

General growth.

Symbiosis.

Section 13 includes a number of recommendations which could facilitate or accelerate some of

these projects being implemented.



Table 18 Selection of promising energy efficiency projects identified by study participants

Sector Project Feasib-

ility

Rely on

external

support

Size +ve Env.

impact

+ve

Economic

impact

Timescale Comment

Steel Multi MW Energy reduction

programme

High Med Large High High Short Very significant savings opportunities

with good paybacks, but the company is

exploring collaborative financing options

to realise its energy conservation

potential.

Gas prodn Supply power for gas

compression from land, rather

than using gas turbines

offshore

Low High –grid

capacity

constraints

Large High Med Med Major project. Could potentially integrate

with new offshore wind electrical

connections.

Refining Range of energy efficiency

investments e.g. improved

integration – heat recovery -

furnace efficiency – steam

turbines to electric drives.

High Low Large High Med Short Cost effective and energy saving projects.

But can be difficult to justify if demand is

reducing and long term future market is

uncertain.

Chemicals Heat integration resulting from ‘Pinch’ analysis

High Low Med Med Med Short Cost effective improvements resulting from ESOS audits.

Ports & logistics

Programme of more efficient equipment installation e.g. pumps, VSDs

High Low Small Low Low Med Implementing best practice – possibly as equipment needs replacing.

Minerals Waste heat recovery Med Med Med Med Med Med Much already done. Low grade heat is hard to capture. ORC not cost effective. Maybe innovations to trial or take part in BEIS programmes.

Various Biggest energy savings can come from improved reliability and increased capacity.

High Low Varies Varies Med Med Can be hard to measure the savings. Capacity increase can increase absolute energy use but reduce kWh/tonne.





Table 19 Selection of promising decarbonisation projects identified by study participants


ility

Rely on

external

support

Size +ve Env.

impact

+ve

Economic

impact

Timescale Comment

Biofuel Seek to influence timetable to

introduce E10 petrol

(incorporating 10% biofuel)

Med High Small High High Short As well as the direct impact of on jobs,

plant closure would dent confidence of

other potential renewables investments

– and could have wider knock on effect

on confidence in the Humber.

Minerals

etc.

Considering large battery

installations for energy storage

Med Med Med Low Low Short Returns uncertain at present. Need more

clarity over incentives and regulation.

Minerals Consider various waste re-use

and energy generation options

– sewage sludge, AD, CHP,

energy from (hazardous)

waste

Med Med Med Med med Med Various opportunities being considered

to become lower carbon.

Biofuel Capture CO2 from

fermentation process

High High Med Med Low Med Need a local use for the CO2 to make it

cost effective.

Steel and

Chemicals

Build a new CHP power plant Med High High High High Med Could benefit wider community through

a heat network. But major investment

needed. Also important to consider low

carbon options.

Chemicals Syngas production Med Low Med Depends on route

Med Med Consideration as part of wider opportunity assessment. Carbon savings depend on route to manufacture.

Various Various including renewable energy purchasing, solar and onshore wind installations,

High/Low Med Med High Low Med Very hard to secure on-shore wind and barriers to solar PV. Higher cost than conventional energy.



Table 20 Selection of promising growth projects identified by study participants


ility

Rely on

external

support

Size +ve Env.

impact

+ve

Economic

impact

Timescale Comment

Chemicals Build Vinyl Acetate Monomer

plant

High Med Large Low High Short Decision imminent. Humber one of three

potential locations. Plant should be state

of the art efficient. Consider provision of

local support.

Chemicals Add a further production line High Med Large Low High Short Humber one of several possible locations being considered. Engage with company.

Chemicals Build Ethylene Oxide plant at

Saltend

Med Low? Large Low High Med Strong drivers for this location.

Feedstocks available. No UK plant

currently. Seek potential

providers/investors.

Offshore

wind

Ensure wind farm developers

locate to ABLE marine energy

park

High High Large Large Large Med Potential opportunity for win-win

outcome. Overcome hurdle or chicken

and egg.

Refining Attract battery production to

Humber

Low High Large Large Large Long Important and growing market. Strategic

opportunity. Availability of pet coke from

local refinery.



Table 21 Selection of promising symbiosis projects identified by study participants

Sector Symbiosis opportunity

Chemicals Vinyl acetate monomer – could be made using materials available at Saltend – and a ready customer on site. Also potential to manufacture ethylene oxide at Saltend, using ethylene from pipeline and locally available Oxygen. Further downstream users of VAM and ethylene oxide (e.g. polyesters and polyurethanes) could then co-locate.

Refineries and Chemicals

Opportunity for co-location of downstream users of propylene, naphtha and aromatics end users Downstream users of acetic acid and anhydride

Steel More research on carbon and oil rich steel wastes. Utilise carbon content.

Also consider uses for dusts containing metallic wastes.

Biomass power

generation

Looking for uses for wood pellet ash (as alternative to coal ash additives). May be suitable in cement etc.

Cement Looking at novel cements, as power station fly ash less available e.g. sewage sludge, lime or glass waste. Also uses for cement kiln dust.

Power generation Could provide hot water or excess low pressure steam to heat networks – or chilled water, using absorption chillers. Another site has too much excess heat in summer – would like to export heat.

Chemicals Use of natural gas alternatives for feedstocks e.g. alternative routes to methanol e.g. via waste or bio routes to syngas

Chemicals Companies using NH3 and coke and other materials from other UK locations – when materials available locally.

Agriculture Potential to use captured CO2 from CCS or fermentation to supply greenhouses – or the drinks industry.

Various Waste water treatment, filter media, various sludges, gas condensate (could be sold to refineries), biochar (from sewage sludge gasification, Reuse of water from effluent treatment

Cement, aggregates, chemicals etc.

Chalk reject material for use as a limestone replacement, cement kiln dust for quarry land reclamation, liquid waste streams from chemicals to burn in waste kilns to produce cement (identified in EPOS project – discussed in section 4.10)

Biofuels Recovery of biofuels from alternative waste materials e.g. animal fats and oil, waste oils

Chemicals Could manufacture Hydrogen – an unused Steam Methane Reformer could be used to supply hydrogen projects in Yorkshire e.g. Leeds. Could manufacture chlorine – user in the region, and other downstream users could locate locally.



12 Opportunities for support organisations or wider

partnerships to stimulate growth

Within this section some key options are highlighted that have been identified through the

SWOT/TOWS analysis, the review of drivers and barriers, and the identification of specific company

project opportunities. These have then been used to formulate the recommendations in Section 13.

12.1 Messaging

Some common themes have emerged regarding prioritisation of support (noting that the

interviewees’ views are not impartial, and are influenced by their sector of operation).

A key message from interviewees was the need not to limit the focus of growth to renewable energy

developments. They stated that maintaining a strong traditional manufacturing base is also essential

to the long term prosperity of the region, although some recommended focussing on low carbon

credentials for manufacturing.

Continuing to support the traditional industries as they modernise is essential. This is particularly

true due to the interconnectedness of many Humber EIIs. Closure of a major chemicals plant or

refinery for example would have a very detrimental effect both up and down the value chain. It

would lead to reduction in port usage, a reduction in industrial gas demand and CHP energy supply,

and a knock on effect on customer industries e.g. steel making. The impact on business confidence in

the region can also extend more widely into companies that are not directly part of the supply chain

– impacting their investments for example.

Stakeholder feedback was split as to whether investment should be focussed on local infrastructure

and improving the image of the area i.e. make the area an attractive place to invest and industry will

come. Or whether to provide more focused and direct support to protect, maintain and grow

existing industry for example through funding mechanisms (tax relief, loans, grants) and consultancy

support (e.g. feasibility studies). Both are likely to be needed as part of a strategic platform to

maintain, grow and decarbonise industry in the cluster.

Some specific representative comments were:

• “Promote Humber as a green or low carbon manufacturing region”

• “Focus on industries that make things with long term demand”

• “Offshore wind industry investment is fantastic. Leverage this. But maintain a broad

focus – energy storage, battery technology, AD, tidal etc.”

• “Try to encourage/influence a longer term view by Government – so they don’t

move the goal posts”

• “Get better informed on forward policy visibility – in order to encourage investment.

What is the transition to a low carbon economy expected to look like?”



12.2 Maintain and grow existing industry

A series of themes have been identified from the SWOT analysis for supporting growth in existing

businesses, and these feed into the report recommendations. A summary of these themes is given

below:

There is a need to support and stimulate best practice energy efficiency improvements –

building on company ESOS audits, and taking advantage of new programmes under the

Clean Growth Strategy e.g. heat recovery and innovation programmes as well as carbon

capture and fuel switching initiatives.

Support this by bringing together like minded industries more regularly. Invite equipment

and contract energy management suppliers to demonstrate what can be achieved.

Specific support may be needed for major energy efficiency improvement projects – for

example funding feasibility studies, consultancy, tax incentives etc.

Support development for further embedded generation, e.g. within dock areas. Make use

of heat maps. Consider heat networks using industrial waste heat, and more Energy from

Waste.

Some companies are keen on renewable energy purchase or installing their own – or using

third party developers. Take a strategic view on the most effective options for the region to

avoid a piecemeal approach.

Review impact of local infrastructure on industry, and ensure that improvement

programmes take industry needs fully into account (and proceed rapidly).

Seek to influence accelerated uptake of bioenergy to support and grow the industry in the

region e.g. influence biomass inclusion in CFD, and uptake of E10 10% biofuel in transport

fuel.

A number of companies are considering renewables and energy storage - but the future incentive framework uncertain. Further development of strategic options within the region would be helpful.

12.3 Generating inward investment

In many cases generating inward investment requires the same building blocks as supporting growth

of existing industry (e.g. improvements to infrastructure, and ensuring that training provision

continues to adapt to new industries etc.). However there are some new opportunities that could be

actively pursued.

There is more potential in the short to medium term for Energy from Waste - as much waste

comes through the region anyway, and new technologies are being developed and rolled out

which expand the options available. However, this is unlikely to be a sustainable long term

energy source as waste minimisation programmes are likely to reduce amounts of waste

available (and consequently push up prices).

The Humber region (with industrial gas suppliers, significant cooling demand, and expertise

in installation, servicing and maintenance) could be a trail blazer for the implementation of

clean cooling technologies. Strategic options should be explored.

Further investigation of Hydrogen economy opportunities would be desirable, as this is likely

to be a major and valuable opportunity in the medium to long term.



Stakeholders’ knowledge and experience of CCUS should be leveraged, even if the region

isn’t likely to lead on initiatives in this area, as this is also likely to be a big growth area in

future.

Electrification of heating in industry is also likely to be a growth area in the longer term

future. Little has been done in this field (e.g. heat pumps etc.)

Given the extensive use of refrigeration in the region, and the existing technology expertise,

there is an opportunity to take a proactive approach to both the development and use of

new refrigerants and refrigeration technology.

There are two key priorities to highlight:

Making sure that potential investors outside the region know about the opportunities, the facilities,

the incentives (e.g. enterprise zones), and the regional benefits. This requires a targeted marketing

approach, coordinated across stakeholders within and supporting the EII cluster.

And providing proactive, positive and (again) coordinated support once potential investors do make

contact to explore opportunities. The LEP, Local Authorities should do everything possible to make it

difficult for investors to turn down the Humber as a place to do business.



13 Recommendations

There is a massive opportunity for the Humber region to become an exemplar of a leading

integrated low carbon manufacturing region and the UK Hub for Renewables Excellence. The

feedback from stakeholders is that there are numerous opportunities for growth, innovation,

efficiency and decarbonisation – but that currently the support provided could be more joined up,

more clearly coordinated and communicated and more focussed on specific goals. There is also a

feeling that the Humber is not seen to punch its weight within the UK manufacturing base – that it is

often forgotten within discussions about the Northern Powerhouse.

What is needed to enable the ambitious vision described is to build a strategic platform for

industrial leadership, underpinned by a set of strategic focus areas for action.

This section highlights the key features of the platform and the focus areas – followed by a

suggested list of recommended actions which could be implemented to push them forward.

To execute the platform objectives, the proposed focus areas (described further below) are:


Key to the platform is a vision and mission statement for the EII cluster, agreed across a wide range

of stakeholders. This should be backed by an appropriate governance structure, and supported by

approved regional strategy documents, including a Humber energy strategy, local industrial strategy

and updated strategic economic plan.

One critical success factor is to ensure there is an overarching umbrella organisation that

represents and speaks for the EII cluster, which can coordinate cross sectoral programmatic activity.

Rather than create another new organisation, it is proposed that the remit of CATCH is expanded to

fill this role.


Strengthening the region






It is recommended that the LEP should set and oversee strategy, steered by business and the local

authorities, with CATCH’s remit to design and implement programmes, with input from industry,

academia and training providers.

The LEP will continue to speak to Government on behalf of the region, with a united voice. This

discussion should seek to influence Government strategy and policy on the key issues facing EIIs,

seek increased recognition of the strengths and opportunities for the EII cluster, pursue increased

funding and policy support for renewable and energy intensive industry development in the

Humber, and seek high level and visible support and commitment for organisations considering

inward investment.

Within this framework, the EIIs in the region will be enabled and encouraged to collaborate more

effectively, have a stronger voice in Government and more effectively take advantage of the

opportunities provided by the Industrial and Clean Growth Strategies and other industrial initiatives.


This theme concerns growth in the key sectors in which the Humber can succeed, building on long

fostered strengths and more recent successful progress. Many stakeholders have reiterated the

need to maintain and grow once more the traditional industries of petrochemicals and speciality

chemicals, high temperature industries (cement, lime, steel, glass) and food processing, whilst

bringing modernisation, flexible processing, and decarbonisation. Alongside this, recent successes

in renewables, and the development of the port and other transport & logistics industries should

be capitalised upon. Finally, priorities should be linked to the key challenges within the national

Industrial Strategy, for example bringing Artificial Intelligence and digitisation to offshore wind

optimisation and industrial process control.

The priority is to maintain a pipeline of growth and decarbonisation programmes and projects,

rank them against the mission criteria, and provide real and tailored support through the project

lifecycles, starting with funding for feasibility studies and business case development to overcome

initial hurdles. Beyond that hand-holding and both private and public backing will help maximise

outcomes. There will be a need to ensure that the voice of the key sectors is heard within

Government – especially for traditional manufacturing which is often not thought as exciting or as

imperative to support.

One proposal to help the chemicals sector is to work with BEIS to establish a process industry

testing hub – where new processes or methods of operation could be tested in a safe environment.


For industry to succeed in the Humber, improvements in infrastructure, availability of skills, training

and incentives must at least match those offered by other regions. Further improvements are



required to road and rail infrastructure to bring in materials and move out goods more efficiently,

but also to allow the workforce to more quickly and painlessly travel to/from work and on business.

The electricity and gas networks must have the capacity for businesses to expand and new business

to connect, without excessive cost and restrictions. Where possible decentralised energy provision,

private wire and power purchase agreements etc. should be enabled to provide competitive cost,

high reliability energy supplies, with an emphasis on incentivising lower carbon energy sources.

Some competitor ports are running initiatives that can help attract new operators. Humber should

look to match or provide equivalent initiatives to those on offer in other UK locations, and in

competitor ports in Europe e.g. Cologne, Antwerp and Rotterdam.

Crucially, new and existing investors need to know about the impressive offering and commitment

to future support, to ensure Humber locations are first shortlisted for consideration, and then

selected for inward investment. A common voice, coordinated locally and marketed globally is

needed. It is recommended that the umbrella organisation proposed above has a role to work in

partnership with the LEP and local authorities to facilitate a clearer, cross-region messaging to

stimulate inward investment, and a role in promotion and outreach on behalf of the EII cluster as a

whole.


Building on the existing strengths and successes, there are opportunities to develop into new

priority sectors and technologies which will be needed as the UK moves to a decarbonised future,

with carbon capture, smart grids, energy storage and clean cooling.

A series of deep dive technology and local market scoping studies is proposed to determine the

benefits that could accrue to the Humber by taking a leading stance – or whether a collaborative

approach with other regions would be more effective.

Where major new opportunities arise, be they proactive (e.g. wide roll out of energy storage to

supplement offshore wind generation in the region) or reactive (e.g. potential for major investment

from an existing industry player at their Humber site), a mechanism is needed to mobilise all

available resources to cultivate the opportunity and secure the best outcome for the region.

Within this theme a programme to identify and implement symbiosis opportunities and other

synergies should be initiated.

Conventional funding approaches can be a barrier to taking forward innovations. It is proposed to

consider developing a Novel Business Models Accelerator to test solutions to known but un-tackled

commercial barriers.




The starting point in any programme of decarbonisation should be to determine whether the

processes being undertaken are necessary at all – and then if so, are they being undertaken

efficiently. It is always important to reiterate that there is no point in generating or buying

renewable energy for example, to power a process which could be run with 30% less energy, given

some investment – especially as such investments will often bring other product or process benefits.

And in some cases the level of investment required is minimal, or even zero.

Most energy intensive industries will have undertaken ESOS audits in the last 2-3 years, detailing

energy efficiency recommendations. Many will be due a second audit soon. And at least two

stakeholders have stated how the audits opened their eyes to a series of projects that are now being

implemented, and savings being made.

It is recommended that local support programmes are implemented to encourage and assist

companies to improve their existing efficiency, building on ESOS. More strategically, the

LEP/CATCH etc. could work closely with BEIS and local process industries to be front-runners in

implementation of the of 2050 decarbonisation action plans.


To enable all this to happen will require stronger coordination, collaboration and facilitation. It is

proposed that this is managed by the umbrella organisation proposed above. There is already some

good networking within mini-clusters (e.g. Saltend, and around the South Humber Bank refineries)

but businesses across the Humber – and to the east and west are less joined up. Working together to

highlight common issues, agree priorities and share best practice will be to the benefit of all

companies in the wider EII cluster.

13.1 Making it happen

To illustrate how the themes above could be enabled, a sample of suggested activities is proposed

below.


Develop vision/mission statements for the energy intensive sector in the Humber – this

would be owned by the LEP, and developed jointly with CATCH, in partnership with local

industry. It needs to be a shared vision to be successful.



Link into hooks in the Industrial Strategy – AI and digital (e.g. process control /offshore wind

optimisation) Future of mobility (e.g. port) and clean growth e.g. heat recovery, innovation

etc. Agree key sectors and maintain focus in strategic planning and communications.

Create a local industrial strategy, with decarbonisation and sustainable growth at its heart,

building on the drivers and opportunities identified in this report – and strongly aligned with

BEIS UK industrial strategy.

Expand the remit of CATCH as the single cross-region umbrella support and delivery body for

the energy intensive industries. Enable enhanced synergies and symbiosis opportunities.

Support and represent EIIs. Give a stronger voice to sector.

Collaboration on how to work together to influence Government at national level to ensure

advocacy for the region (focus on policy stability, competitive energy process and explicit,

visible support for the region and its industries – traditional as well as new)

Develop a common view on what the Humber has to offer other regions and Northern

Powerhouse

Continue discussions with NEPIC and Chemicals North West (and Grangemouth?) - Consider

forming a cluster of clusters.

Seek to get local authorities and MPs more vocally behind the single region message.

Consider how the region can lobby for a devolution style deal (similar to the South Tees

Development Corporation). Consider a “city/region deal” to pilot new approach to clean

Cluster Management

CATCH could expand its remit to encompass a broader set of roles undertaken by best practice cluster

management organisations. PwC defines the main roles of best practice cluster management in six

stages: (1) Define the desired outcomes for the cluster; (2) Translate the strategy into an operational

action plan; (3) Implement networking, information-sharing and promotional activities; (4) Collect and

analyse data relating to cluster activities (5) Compare impact against objectives; and (6) Revise

objectives and report to stakeholders. This should be used as a baseline to define an effective cluster

management organisation for the Humber region.

For the Humber EII Cluster, there is a need for:

A clearly defined vision and mission

An action plan for cluster development

Structured information sharing through a central communication platform

Coordinated promotion of cluster services

Performance review for ongoing cluster development

CATCH, as the cluster management organisation for the Humber EII Cluster, would be tasked with

implementing a number of the recommendations put forward by this report that fall within the remit

of cluster management. Priority actions would be, in partnership with the Humber LEP, to provide

leadership and direction through the development of a cluster vision and strategy, and encourage

further collaboration and coordination of cluster stakeholders.

Cluster management organisations can certify to the European Cluster Excellence Initiative (ECEI)

standards, as defined by the European Secretariat for Cluster Analysis. This process includes cluster

benchmarking, to allow cluster management organisations to view progress in comparison to similar

clusters and receive recommendations for improvement.



carbon.


Provide funding for scoping studies and business case development to examine specific

opportunities for investment: Energy saving, decarbonisation, process integration and

symbiosis, as well as expansion and inward investment opportunities.

Umbrella organisation in partnership with the LEP, and/or Energy Hubs, to maintain and

prioritise a pipeline of growth/decarbonisation projects. Undertake feasibility studies and

construct business cases. Devote resource to de-risk and unblock projects. Liaise closely with

the Tees Valley, North East, Yorkshire & Humber Energy Hub to ensure Humber projects are

prioritised for support.

Facilitate joined up approach to taking part in national industry support programmes (e.g.

Industrial Energy Efficiency Accelerator [IEEA], Industrial Heat Recovery Support programme

[IHRS], Fuel Switching, CCUS) and encourage uptake of support by local companies. Set up

workshops, invite Government representatives, employ technical consultancy support etc.

to help identify projects, companies or groups of companies which could benefit – get them

ready to take part (and influence programme design where possible to increase relevance).

Seek to influence timetable for Government decision on implementing E10 biofuels

regulations – seek more policy certainty, especially timeframes.

Engage with Govt. on potential to include Biomass within CFD to stimulate faster uptake.

One barrier to implementing improvements is an unwillingness to take risks which may

impact production. Government may be open to the idea of a process industry testing hub –

where new processes or methods of operation could be tested in a safe environment. This

could potentially build on the experience of the training pilot plant facility at CATCH.

Process industries testing hub

Process industries are risk averse when it comes to implementing new technology, process

improvements, upgrades etc. Interruption to the process or reductions in quality resulting from

equipment which doesn’t work as expected can cost £millions. Few companies have spare

manufacturing lines on which equipment can be tested.

It is proposed to set up a manufacturing testing facility, focussed on the process industries. This

would include generic processes e.g. mixing tanks, reactor tanks, distillation columns, heating and

cooling plant, pumping stations etc. Industries would then be able to set up the facilities to model

their processes, and use them to test alternative processes, operational parameters, energy

transfer methods, heat recovery and other process equipment.

It is proposed that local industries are given preference for access, and if possible use of the

facilities are subsidised by Government, as part of innovation or other clean growth funding.

Testing of best practice and innovation would be possible, with the latter potentially offered more

generous incentives.

Issues to be considered would include Health and Safety, commercial confidentiality, applicability

of generic equipment, providing fair opportunities to all etc.

There is already a highly acclaimed training facility at CATCH, and this site could be used as the

base for the proposed testing hub.




Build on heat maps with Master planning - potential to supply industrial waste heat into

networks. What is potential supply profile? What could incentivise connection? Define

priority projects to apply for the Heat Network Investment Programme (HNIP) for capital

support.

Examine potential to install further shared electrical generation – cheap, reliable power (and

heat) along banks of Humber – consider potential for it to be low carbon. Options include

gas CHP, supplemented by heat pumps, industrial waste heat and energy from waste. HNIP

funding can help mitigate the extra cost of lower carbon energy sources. Consider the heat

roundabout installation in Rotterdam as an exemplar.

Further development in ports sustainability. Consider joining Green Award incentive, a

global incentive for greener shipping run by an independent body and used by ports in

Belgium, the Netherlands, Canada, Oman, South Africa, New Zealand and others. No other

UK ports operate this incentive, so it would set Humber apart in terms of UK competition.

Also consider joining EcoPorts through undertaking a self-assessment, to obtain

benchmarked performance, and becoming a certified Ecoport.

More coordinated approach to maximising impact of Enterprise zones – leverage CATCH,

Green Port Hull, Able etc.

Consider whether further encouragement or pressure could be applied where enterprise

zones are not exploited (understanding that “penalties”/reclassification are not possible,

due to legislation)

Consider seeking Enterprise Zone status for Saltend to incentivise symbiotic inward

investment

Support local training providers to proactively plan for to new demands. Undertake horizon

scanning for innovations and developments in relevant industries to identify potential future

needs, and confirm priorities with local companies.

Continue to provide incentives (advice, grants, business loans etc.) for scale up of SMEs

which offer core technical and engineering services to the major traditional and new

industries in the region

Positioning and marketing:

Build further on City of Culture, Green Port Hull etc. to strengthen the brand/image of the

region. Reinforce Humber as a key part of Northern Powerhouse (so not overlooked).

Umbrella organisation – Cross-region representation of the EIIs – marketing for the Cluster

and Energy Estuary on potential for investment.

Produce / Update marketing brochures/websites for the region. Include specific detailed

lists/maps of availability of locations, facilities (e.g. port jetties), services (e.g. private wire

power), raw material feedstock availability (e.g. chemical pre-cursors/intermediates,

industrial gases).

Deep study of transport infrastructure is outside the scope of study – but current road/rail

system is threat to maintain and grow industry region. Build on the recommendations of



Symbiosis incubator

Since NISP was wound up several years ago there has been no nationally coordinated

activity to encourage industrial symbiosis in the process industries.

It is proposed to set up a symbiosis incubator in the Humber. This would have a regional

focus, but also a wider national coverage.

Services would include a market research team - initially to map potential EII markets in

detail - and in future to regularly scan the market to identify symbiosis opportunities.

It would feature a collaboration role – bringing together potential suppliers, customers,

researchers etc. initiating and managing collaborative projects.

The incubator would itself carry out, or commission (e.g. from universities) technical

research for example examining waste material properties, or treatment processes to make

waste suitable for further uses etc.

the Transport for the North Strategic Plan and also acceleration of existing improvement

plans – especially for Hull and South Humber Bank.


Funding specific scoping studies for heat networks and new renewables etc.

Programme of introducing renewables developers etc.

Develop mechanism for specific focus on major project decisions – local coordination of

champions for engagement, assistance (planning, enterprise support etc.), public support,

future commitment, support from Govt.

Series of technology deep dive studies

o Energy storage – ‘How could electrical storage offer Humber the best low cost and

low carbon energy supply to industrial end users?’

o Review of CCS appetite / opportunities in the region. What expertise and appetite to

take part exists? How could it tie into initiative elsewhere?

o Collaborate with other regions on CCUS development

o Renewables potential – study of further potential for renewable energy (supply and

use) in Humber (to follow 2011 AECOM study) – not offshore – that is strong

anyway.

o Instigate regional clean cooling initiative – market opportunities for low GWP

refrigerant supply. Opportunities for industrial companies to try clean cooling

Strategic input to development of energy networks, smart grid, available capacity, and

capacity increases for renewable connections.

Instigate a Programme to identify and implement symbiosis opportunities and other

synergies – to include more detailed studies of specific opportunities, brokering

relationships, and supporting research into the use of wastes as raw materials for other

processes. Give consideration to setting up a Symbiosis Incubator in the region to de-risk

implementation.

A Novel Business Models Accelerator is proposed to test solutions to known but un-tackled

commercial barriers. This could include underwriting some of the commercial risk of

alternative financing options.

Consider increased lobbying for inclusion in any Free Port pilot zones – to ensure other ports



Energy Savings Opportunity Scheme (ESOS) support programme

All large companies (over 250 employees or above threshold turnover and balance sheet

values) have to undertake an ESOS assessment (energy use audit) every four years. The

energy intensive businesses interviewed for this study already possess ESOS audit reports,

and many will need to complete a second audit fairly soon. These reports lay out energy

saving opportunities, including likely costs, energy, carbon and other savings.

In some cases companies have already implemented some of the energy saving measures

identified. However many others have not yet found the time or resource to take action,

or need further technical research or knowledge to implement.

It is proposed Humber takes a regional approach to encouraging the uptake of ESOS

identified opportunities. A programme should be implemented to:

Ask for permission to view reports and collate common opportunities

Offer (ideally free) follow up implementation advice on taking them forward

Offer to source technical support, equipment suppliers, contract energy

management suppliers to quote for projects

Offer 50% co-funding towards developing investment grade business case for high

impact projects

*For full eligibility details and ESOS requirements see

https://www.gov.uk/guidance/energy-savings-opportunity-scheme-esos#content

are not prioritised and given preferential treatment.


Introduce a support programme to improve efficiency of existing plants (e.g. ESOS follow-up)

Finance – Encourage EPC suppliers to promote availability of capital for investment in the

region.

Programme of introducing suppliers e.g. heat recovery etc.

Facilitate joined up approach to taking part in national industry support programmes (e.g.

IHRS) and encourage uptake of support by local companies.

Work with BEIS to be a leader in the implementation of 2050 decarbonisation action plans

across a number of sectors. (Industry would need some incentive here)

Facilitate more decentralised (low carbon) private power generation and private wire

connections.

Complete the EcoPorts Self-Diagnosis Method to determine environmental benchmarks

The pilot process industry testing hub (see Strengthening Strategic Sectors) may also be used

to test potential energy efficiency technologies prior to implementation.

https://www.gov.uk/guidance/energy-savings-opportunity-scheme-esos#content




Umbrella organisation to: Facilitate / coordinate sharing of information, best practice,

laboratory testing and engineering support.

Cross cluster communications, networking and collaboration. Regular, effective and

informed dialogue, for example through the Single Conversation group – this to be strategic,

but with a pragmatic working group too.

Seek to bolster engineer level training and development in the region to train more local

engineers.



13.2 Classification and prioritisation of recommendations

In Table 22 below, the key recommendations have been collated and prioritised. They are ordered in priority order, with the most urgent activities

presented first within each grouping.

Table 22: Prioritisation of recommendations

Recommendation Priority Timescale Difficulty Investment needed

Impact/Comment

Develop strategic platform for industrial leadership – define Vision, Governance, Strategies and single region messaging

Highest Immediate Low <£100k Enables cluster / region to present a more coherent message

Create local industrial strategy and local energy strategy. Highest Immediate Low <£100k Align closely with BEIS objectives to achieve maximum support

Set up EII cluster workshops to learn about, influence and prepare to take part in Government clean growth programmes

Highest Immediate Low <£100k Proactive approach could give Humber EIIs an advantage and maximise participation

Engage more widely with Government on biomass policy and programmes

Highest Immediate Med - High

<£100k Seek influence which benefits the growing industry in the Humber

Expand remit of CATCH as umbrella organisation for EII cluster

Highest Short Med <£1m Organisation to represent and campaign for the interests of the cluster

Implement ESOS follow up and support programme to realise the potential energy efficiency savings. Invite in equipment suppliers and funding suppliers to support.

Highest Short Low <£1m Often savings of 10-20% identified. > 5% saving realistically achievable

Carry out series of deep dive technology reviews: Energy storage (and smart energy systems) Carbon Capture and use/storage Clean cooling Renewables potential (excl. offshore wind)

Highest Short Low <£1m Provide foundation for significant structural development and prepare for the future. Alignment with Industrial Strategy maximise chances of future action/investment.

Produce updated marketing brochures and websites for inward investment in the Humber.

Highest Short Low <£100k Important to showcase the best the region has to offer. Benefits the whole region.

Create and maintain a pipeline of industry decarbonisation and growth projects. Create mechanism to coordinate support: coordinate local

High Short Low <£100k Will help to prioritise and coordinate local support on highest impact projects – and bring in national Govt. backing,



champions, focussed assistance (planning, enterprise funding), obtaining local and national support and future commitment.

raising profile of region.

Expand existing fora to bring in working level, cross-cluster communication, collaboration and action planning mechanisms.

High Short Med <£100k Activity needs to be underpinned at working level to ensure action

Implement charm offensive to increase exposure of opportunities within EII cluster – lobby for devolution style regional deal

High Med High <£1m Lots of effort required, but potentially £multi-million rewards

Undertake heat network masterplanning study focussed on use of industrial waste heat. Consider implementing incentives for the first industrial companies to connect.

High Med Low <£1m Impact of tapping into significant waste heat resource could be great, and also set a precedent for other UK schemes.

Further examination of shared, private wire, power generation opportunities – cost benefit analysis of installing further heat and power stations along the banks of the Humber. Seek HNIP funding

High Med High £multi-million

Providing secure, good value energy production increases willingness to invest and allows maximum carbon saving by increasing control of technology selection.

Part fund local feasibility studies and assist with project business case development, and technical advice to de-risk projects

High Med Low <£1m Business is resource constrained but external help can unlock action

Undertake discussions with other regions to form cluster of clusters. Collaborate with Northern energy hubs.

Med Short Low - Med <£100k In some areas, greater impact by working together

Survey of local businesses and future trends in core EII and renewable industries – identify and proactively develop new training offers. Bolster regional engineering level training and development.

Med Short Low <£100k Already underway but stay ahead of the game – part of placing Humber in leadership position.

Seek funding for a Process Industries Testing hub Med Short High £multi-million

Could make Humber a real front runner in industrial decarbonisation agenda.

Seek industry support to work with BEIS as a leader in the implementing 2050 decarbonisation action plans across sectors. Provide appropriate incentive e.g. co-funding for technical assistance and R&D.

Med Med High <£1m - £multi-million

Will be difficult to achieve but could driver forward industry is local players persuaded to engage.



Implement Symbiosis Incubator Med Med Med <£1m Very high potential but time needed to realise benefits.

Implement Novel Business Models Accelerator Med Med High <£1m Could prove to be a role model for other regions.

Review of enterprise zone effectiveness – can further encouragement be given to underperforming zones? Identify new areas that can be proposed for EZ status e.g. Saltend?

Med Med Med <£100k Setting up new zones is a long-term activity – but could bring significant expansion of process industries

Implement programme of measures through the ports to further increase sustainability. Complete the EcoPorts Self-Diagnosis to determine environmental benchmarks and consider applying for Eco Port certification Post to consider signing up to Green Award scheme for shipping

Med Med Low <£100k Could raise ports profile and attractiveness for inwards investment.

Road infrastructure improvements – acceleration of existing improvement plans for Hull and South Humber Bank

High Short - Med


Multiple benefits across region – not just EII cluster

Rail infrastructure improvements Med Med - Long


Electrical infrastructure – partnership with NPG and NGN to ensure that capacity is in place for planned developments – and if possible that excess capacity is considered – give confidence or “guarantees” of development plans to encourage this.

Med Med High £multi-million

Difficult to encourage a pro-active approach. Stakeholders have said in Europe ports, the infrastructure is delivered first – and then investment follows.



14 Appendices

Appendix 1 List of industry stakeholders interviews undertaken

Industry Stakeholder Production

Air products Industrial gases

Associated British Ports 4x ports in Humber

Associated Petroleum Terminals Oil refinery material movements

BASF Chemicals manufacture

BOC Immingham Industrial gases

BP Chemicals Chemicals manufacture

British Steel Steel manufacture

Cemex Cement production

Centrica Storage Off shore gas storage

Cristal Chemicals manufacture

Croda Chemicals manufacture

Drax Group 3x coal & 3x biomass generators

Greenergy Biofuel production

Ineos Chemicals manufacture

Nippon Gohsei Chemicals manufacture

Northern Powergrid Electricity grid provider

Novartis Chemicals manufacture

Ørsted Offshore wind

Perenco Natural gas production

Phillips66 Oil refinery

PX Group (Saltend) Chemicals site owner and operator

Reckitt Benckiser FMCG manufacture

Siemens Gamesa Offshore wind

Singleton Birch Quarry and Lime manufacture plus AD plant

SSE Gas Storage Onshore gas storage

SSE Keadby Power generation

Total Lindsey Oil refinery

Vivergo Fuels Bioethanol production

VPI Immingham CHP

In addition discussions were conducted with local stakeholders including:

Humber LEP Green Port Hull

CATCH East Riding of Yorkshire Council

Hull City Council North East Lincolnshire Council

North Lincolnshire Council University of Hull

Team Humber Marine Alliance

Documents

Study of the Humber Energy Intensive Industries Cluster · Reckitt Benckiser Siemens Gamesa Singleton Birch SSE Gas Storage SSE Keadby Total Lindsey University of Hull Vivergo Fuels