14-1190b-innovation-managing-risk-evidence

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THE INDUSTRY PERSPECTIVE
Steve Elliott (Chemical Industries Association)
The chemical and pharmaceutical industries are the
United Kingdom’s biggest manufacturing export
earner. Our products and technologies support
modern life, both directly and through the manufactured
products that they enable. Our sector is also energy- and
trade-intensive, however, so this contribution is critically
dependent on secure and competitively-priced supplies
of fuel, which provide both feedstocks (raw material) and
energy. We are therefore concerned that, for energyintensive
industries, UK energy costs are becoming
increasingly uncompetitive and there is a growing reliance on
imported gas. Provided it is exploited in an environmentally
safe way, we believe that the country’s indigenous shale gas
resources offer a secure and potentially competitive source
of feedstock and fuel.
Until now, chemical businesses have relied on the North
Sea for feedstock supplies, but these supplies are diminishing.
We use this feedstock to make the basic chemicals that
provide key building blocks for almost every sector of
manufacturing and the wider economy. In the United States,
the shale gas ‘revolution’ has triggered planned investments
in chemical capacity worth $140 billion. While UK chemical
businesses are installing facilities to import US feedstock,
the development of indigenous shale-gas supplies could
provide a more secure and potentially competitive source,
and improve the business case for further investments in UK
chemical capacity.
We are also paying more for gas as a fuel than many
competing production locations, with costs more than three
times higher than in the United States. Recent events have
shown that the security and affordability of UK energy
supplies is a concern both for households as well as large
energy users like the chemicals industry. UK policy is driving
the replacement of old electricity-generating stock with a
low-carbon generating mix, and this will significantly increase
electricity prices out to 2020. Far from our dependence on
gas diminishing, more gas-fired generation will be needed
during the transition if we are to ‘keep the lights on’, and it
will then play a major role in backing intermittent renewable
power. Gas will also continue to be the main source of heat
in homes and industry. But we already import over half our
needs, and this reliance is set to rise to 80% by 2020. This
makes the UK more vulnerable to supply uncertainties, with
gas prices particularly high and volatile in cold winters. The
availability of shale gas could therefore be a key contributor
to both secure and affordable energy.
The development of shale gas will bring multiple economic
benefits to the United Kingdom. The development of shale
gas will bring multiple economic benefits to the United
Kingdom. It is a key enabler for our shared vision with
government of a 50% growth by 2030 of the chemical and
pharmaceutical industries’ contribution to the country’s
economy. We already have a turnover of £60 billion and
support 500,000 jobs both directly and indirectly. Such
growth will enhance the provision of key building blocks
for almost every sector of the economy — from cars and
planes through to houses, medicines, televisions and mobile
phones — products which also support our modern lives.
Estimates suggest that UK shale gas development will
require supply chain spending of £3.3 billion per annum and
generate 64,500 jobs. Communities will also receive direct
benefits from local shale gas development.
However, it is vital for communities in the UK to
be confident that shale gas can be developed in an
environmentally safe way. There is now a substantive
evidence base from government and independent expert
bodies that addresses concerns on key issues including
seismic activity, water use, impacts on ground water and
emissions, and the use of chemicals in fracking fluid. The
United Kingdom also has a strong regulatory framework for
shale gas development. It is now time for government and
industry to redouble their efforts to address environmental
concerns and explain the economic benefits.
The chemical and
pharmaceutical industries
are the United Kingdom’s
biggest manufacturing
export earner.