Food and drink manufacturers face conflicting challenges when it comes to decarbonisation – but could soon pay a heavy cost for inaction.

The imperative for industrial decarbonisation is clear. Due to CO2 levels in the atmosphere, the global temperature has been steadily rising for 50 years – and at the current rate of CO2 production, we have just a decade to limit the temperature rise to within 1.5°C.

The UK Government has set a net zero target of 2050, while the Food and Drink Federation has gone ten steps further, setting an ambitious goal of 2040 for the food and drink sector.

While dealing with a number of pressing problems – including escalating costs and a skills shortage – food and drink manufacturers may be tempted to put the challenge of decarbonisation on the backburner. Our own survey in 2022 revealed that 46% of producers had zero plans so far to tackle the issue.

But we’ve now reached a tipping point. The price of inaction on net zero will soon outweigh the cost of getting on the pathway. It’s imperative for all businesses to start taking action now.

Under the 2008 Climate Change Act, the UK introduced carbon budgets – a series of five-year statutory caps on carbon emissions, which must not be exceeded if the country is to meet its reduction commitments.

The first two, covering the period from 2008 to 2017 were met, and we’re on track to meet the third, but from 2023 onwards the UK is off-target. And this means the Government is ramping up its incentives for businesses to accelerate progress.

The ‘carrot’ is the significant funding they’re investing in energy transformation projects and new technology – including generous competitive grants for manufacturers to run decarbonisation demonstrations in their own settings and test the technical feasibility of a transition to low-carbon manufacture.

The ‘stick’ however, is carbon taxation.

Food and drink manufacturers already in the UK Emissions Trading Scheme (ETS) will be aware of the cost of carbon to their business – and their free allowances.

It is anticipated that these free allowances, which were due to fall at a steady rate, will in fact decline rapidly over the next two to three years, at the same time that the ETS expands its membership criteria and draws more businesses in.

This means that current ETS participants will see their carbon costs rise significantly, while smaller businesses could experience carbon taxes much sooner than anticipated. Acting to reduce carbon emissions will be the only way to mitigate these costs.

A second imperative for food and drink producers to act sooner rather than later is energy price volatility.

Every manufacturer in the UK will have experienced the recent rapid spike in energy costs to some degree. But not only have energy prices increased, so too has the rate of volatility – the price of energy is changing much more frequently, making long-term cost planning near impossible.

With little control over pricing and the fluctuating nature of the market, for many businesses a focus on energy efficiency and reducing usage is one of the only ways to cut costs, and at the same time, cut emissions.

The third reason to act now is the changing nature of consumer demand.

Recent research commissioned by The Carbon Trust revealed that 67% of consumers support the idea of carbon labelling on the products they buy.

Your customers are becoming much more aware of their personal impact on the climate and more active in seeking out low carbon products and services.

For the food and drink producers who take action on the emissions and sustainability of their goods, there’s a prize to be won, in terms of capitalising on this growing demand.

For those who fail to act, there’s a very real risk that inertia will lead to a loss of reputation, and a loss of business.

In this environment, can you afford to wait?

If you haven’t yet taken action on net zero, the challenge of decarbonisation can seem daunting, but it is possible to take it step by step.

In our blog, we set out some of the options for food and drink producers.

BOC is currently working on a number of transformative projects in hard-to-decarbonise industries. Talk to our decarbonisation experts about your challenges and we’ll discuss the steps you can take to get on the pathway to net zero.