Decarbonise or Deindustrialise? Is this really the choice facing Britain?

Aruna, Phil, Patrick and Rachel at the Octopus offices

May 2026

Featuring: Phil Cohen(Clean Air Task Force),Aruna Ramsamy, Patrick Matthewson (Make UK) and Rachel Fletcher(Octopus Energy)
Venue: Octopus Energy & EV offices, London.

Britain has moved quickly to clean up its power system. But it has not yet built an economy that can use that clean power competitively. At Earth Set this month, we brought together perspectives from engineering, industry, investment and regulation to explore a question that is becoming harder to avoid:
are we decarbonising industry, or simply deindustrialising?

The tone of the discussion was constructive, but the underlying diagnosis was not comfortable.

As one panellist put it plainly, “on the current trajectory… we are moving towards a smaller industrial base.”

Industry: exposed, and already under pressure

Industry accounts for roughly 15% of UK energy demand, with both transport and domestic heating using a higher proportion. But for sectors such as chemicals, steel, glass, ceramics and fertilisers, energy is not just a cost, it is foundational to the process itself. Since the 2022 energy crisis, output in some of these energy-intensive subsectors has fallen by around 25%.

At the same time, investment decisions are being delayed, scaled back, or moved elsewhere. And once capacity leaves, it is hard to rebuild. As one audience member put it during the Q&A, the concern is not just decarbonisation, it is whether the UK still “wants British industry to be here in 10–15 years.”

Electrification: the logic is clear - the reality is not

There was broad agreement that electrification is the long-term direction of travel. It is more efficient, more controllable, and central to any low-carbon system. As Rachel Fletcher noted, this is not just about emissions: electrification is also about productivity, doing more with less energy.

But the pathway is uneven, as for some sectors, particularly high-temperature industrial processes, electrification technologies are not yet ready at scale. And even where they are, the economics are often prohibitive. Patrick Matthewson captured the tension clearly felt by some of the members of Make UK that he represents:

“They’re really keen to take these steps… they can see the efficiency benefits… but the equation just isn’t working for them right now.”

The electricity problem

At the heart of the issue is the price of electricity. The UK has built a system where electricity carries a disproportionate share of policy and system costs, while the benefits of cheap renewables are not fully passed through to users. The result is a fundamental contradiction: “We are at risk of making power so expensive that we hold back the very electrification we are building the system for.”

These prices suppress demand and lower demand keeps system costs high, and that, in turn, delays electrification . So the prices create a systemic problem as well as an affordability one. Several panellists described this as a doom loop, or, more precisely, a form of negative compounding.

Industry is willing, but cannot act

A striking feature of the discussion was the lack of resistance from industry itself. Manufacturers are not pushing back against decarbonisation, in fact many are actively planning for it. Survey data cited during the discussion suggested strong support for a low-carbon, electrified future. But the constraints are immediate and practical: high capex, high opex, and uncertainty.

As Patrick put it: “There’s appetite there… but the opportunities have not been made for them.”

In other words, the barrier is viability rather than intent.

Capital follows energy economics

From an investment perspective, the message was equally clear. Electrification-driven decarbonisation only works where electricity is cheap, abundant and reliable. Aruna Ramsamy pointed to the example of H2 Green Steel (Stegra) in northern Sweden, a project made possible by access to low-cost power, strong infrastructure, and supportive policy.

Without those conditions, it would not exist. The implication for the UK is direct. If electricity remains structurally expensive, investment will go elsewhere, whether that is the US, Europe, or Asia. This is already happening in parts of the market, particularly where companies face the “valleys of death” between innovation, scale-up and full industrial deployment.

CCS, hydrogen, and contested pathways

While electrification dominated, there was not full alignment on the pathway. Phil Cohen made a strong case for CCS as a necessary part of the transition, particularly for sectors like cement and chemicals where emissions are process-driven:

“CCS is vital… for maintaining industry that we’re going to need for the next 20–30 years.”

But this was not a universally optimistic view. From an investment perspective, CCS remains difficult: capital-intensive, slow to scale, and often commercially marginal without significant policy support. Hydrogen, too, was treated as situational rather than universal. The consensus, if there was one, is that there is no single solution, but every solution runs into the same constraint: cost and commercial viability.

A fragmented system

A recurring frustration was the lack of alignment between energy policy and industrial strategy. The UK has focused heavily on building clean supply: renewables, networks, future capacity. But much less on the users of that system, particularly industrial demand. Rachel Fletcher put it starkly: “We’ve got policy that is focused on building out a system, and has forgotten about the people and businesses that use that system.”

This disconnect shows up in pricing, in grid connections, and in the lack of incentives for demand-side flexibility — despite the UK having some of the most advanced market structures in theory.

The deeper risk: compounding decline

The UK risks entering a downward spiral:

• industrial demand weakens

• investment falls

• capability erodes

• future demand declines further

This is not linear decline. It is negative compounding, a system reinforcing its own trajectory, and this sense of the UK being currently stuck in this cycle was one of the most revealing parts of the evening.

Decarbonise or deindustrialise?

The panel resisted framing this as an inevitable trade-off, but nor did it offer false comfort.

There are credible pathways to a decarbonised, competitive industrial base: electrification, efficiency and innovation all point in that direction. But on the current trajectory, the risk is clear:
decarbonisation coupled with buoyant industrialisation may happen — just not here.

With many thanks to Clean Air Task Force for supporting this discussion - and for backing a series of Earth Set events and podcasts this year that aim to engage seriously with the political, industrial and economic realities of the transition.