Two leading businesses in South Wales will receive a share of more than £12m UK government funding to help energy-intensive industries cut their carbon emissions and energy costs.

A local food processor in Carmarthenshire and two steel projects in Cardiff are three of the 22 winning projects across England, Wales and Northern Ireland to have been awarded UK government funding to help clean up their industrial processes – benefiting industries including pharmaceuticals, steel, paper, and food and drink.

This funding was awarded as part of the Industrial Energy Transformation Fund (IETF), which has awarded grants to British projects across the country to increase the energy efficiency of their industrial processes, from car manufacturing to steel production and food processing.

This includes awarding just over £1 million to Dunbia, a leading harvester in Carmarthenshire, to install a new air source heat pump harvesting system and over £4 million to Celsa Manufacturing in Cardiff, which uses the most environmentally friendly and sustainable technology currently available to produce steel.

It is estimated that industry is currently responsible for producing 16% of the UK’s emissions and will need to cut emissions by two thirds by 2035 in order for the UK to achieve its net zero target. Today’s funding will play a crucial role in helping to clean up big-emitting industries as part of the UK’s green industrial revolution – decarbonising their industrial processes and reducing their reliance on expensive fossil fuels, such as gas. This means businesses will not only reduce their environmental impact, but also save on their energy bills and safeguard thousands of British jobs.

Graham Stuart, Minister at the Department for Energy Security and Net Zero said:

“South Wales has both a proud history of industrial enterprise and a wide catalogue of next generation green innovators.

“That is why today the UK government has awarded two leading Welsh companies with funding that will help to boost the energy efficiency of their industrial processes.

“This will create new opportunities for the region to become a leader in the low carbon sector, while cutting costs and securing jobs and investment for the region.”

Welsh Secretary of State, David TC Davies said:

“It’s great to see significant UK Government investment supporting green technology in Wales and helping energy intensive businesses cut their emissions and their fuel bills

“We want employers to grow their businesses so they are fit for our modern economy, ensuring both jobs and future prosperity are secured, whilst also helping us achieve our net zero ambitions. This funding is exactly what is needed to help us towards those goals.”

So far, £34.8 million of funding has been awarded through the Industrial Energy Transformation Fund, which was first launched in June 2020. Today’s £12.4 million represents a combination of winning projects from the final Phase 1 competition window and first Phase 2 competition window. Winners located in Wales include:

• Sustainable harvesting: One of the biggest food companies in Europe, Dunbia, based in Carmarthenshire, Wales, has been awarded £1,024,100 to upgrade its heating system from a gas oil fired steam boiler to an air source heat pump that is powered by renewably sourced electricity. This allows the company to harvest edible products and process the food with hot water washing, through a sustainable and energy efficient thermal supply system, reducing carbon emissions each year.
• Green steel: Based in Cardiff, Celsa is a leading user in the UK of an Electric Arc Furnace (EAF – the most environmentally friendly and sustainable technology currently available to produce steel), repurposing 100% UK-sourced recycled steel scrap to allow manufactured products to return to the life cycle without the need to overexploit natural resources. Celsa reprocesses and supplies the construction market with about 1.2 million tonnes of recycled scrap each year. Celsa has been awarded:
• £3,868,481 for its Integrated Resource Circularity and Lifecycle Energy project which utilises Celsa’s inhouse expertise of shredding and repurposing steel scrap to maximise efficiency, make material savings and closing loops for waste.
• £426,970 for its study into hydrogen-based steelmaking techniques, with the IETF funds supporting plans to replace their reheat furnace into a bespoke furnace fired using Green hydrogen, achieving both energy savings and zero carbon status

Today’s announcement builds on the wide-ranging support that is available to energy-intensive industries. The UK government recognises that businesses are feeling the impact of high global energy prices, including steel producers, which is why the Energy Bill Relief Scheme was launched to bring down costs. This is in addition to more than £800 million of support the government has provided since 2013 to help industrial sectors with energy costs, with many businesses able to bid into Government competitive funds worth more than £1.5 billion to support them going green, cutting emissions and becoming more energy efficient.

Niall Browne, CEO, Dunbia (UK), said:

“Dunbia (UK), through its parent company Dawn Meats, was the first European beef and lamb processor to make a commitment to the Science Based Targets Initiative. We have been working for more than 10 years to reduce emissions internally and more widely across our supply chain and recognise the urgency to adopt even more aggressive measures to reduce emissions.

“We welcome this opportunity to work with the Department for Energy Security and Net Zero via the Industrial Energy Transformation Fund to further improve our energy efficiency and cut our carbon emissions.”

A Celsa company spokesperson said:

“Neither of these projects would have been possible without IETF funding. The furnace feasibility study needed support to de-risk the proposed first hydrogen implementation at a UK furnace while maintaining production output at the mill, enabling a sensible transition from natural gas supply to hydrogen usage.

“The benefits of the CIRCLE project would not satisfy normal payback criteria for globally competitive decarbonisation & circular economy projects for CELSA Group. The IETF support in combination with our own resources means we can continue with our ambitious plans for reaching net zero.”