Strategies for net zero emissions for manufacturing businesses - 100% Renewables

Strategies for net zero emissions for manufacturing businesses

As companies around the world commit to reducing their carbon footprint and achieving net zero emissions, it’s important for manufacturers to understand the risks and opportunities of this transition. In this post, we explore why net zero emissions matter, how the Paris Agreement affects manufacturers, and strategies for decarbonising your manufacturing business.

We have also created a video of the content in this article.

 

Why net zero emissions matters – lessons from Kodak and opportunities for manufacturers

Kodak’s rise and fall is a cautionary tale for businesses. Kodak, once a giant in the photography industry, filed for bankruptcy in 2012 because it failed to adapt to the digital revolution. The photography industry shifted from film rolls to digital cameras and smartphones, and Kodak missed the tipping points. In the face of changing markets, Kodak resisted the change and failed to reinvent itself. No one at the top tried to address the problem or even recognise the urgency of the problem. Kodak avoided risky decisions and instead maintained the status quo.

Figure 1. The rise and fall of Kodak

Where Kodak was in the late 1990s may be where we are now, or we may even be a little past that. Rising levels of CO2 and other gases in our atmosphere are the turning point for our climate. We have enjoyed a stable climate for thousands of years, but our burning of fossil fuels is causing dangerous levels of carbon dioxide in our atmosphere, resulting in global warming of more than 1 degree, visible in droughts, floods, and extreme weather events.

Figure 2. The turning point in our climate

The Paris Agreement and how it affects manufacturing businesses

In 2015, the landmark Paris Agreement was reached. The adoption of this Agreement sent a clear signal that we must reach net zero emissions by 2050 to avoid catastrophic climate change.

Figure 3. The Paris Agreement affects manufacturers

The Paris Agreement affects manufacturers in several ways. Governments of countries that have signed up to the Paris Agreement are now putting additional focus on climate action. Big emitters may have to reduce their emissions or pay for their emissions. Investor pressure, such as via the Task Force on Financial Disclosures, is increasing. Many large manufacturers are committing to net zero and climate action, and smaller and medium-sized organisations are following. International trade implications, such as the EU’s Carbon Border Adjustment Mechanism, are also emerging.

What could the future look like for your business?

Figure 4. Driving net profit with zero emissions

Here is how we see a company that is fully aligned with a net zero economy.

Your brand is synonymous with sustainability and purpose, your senior leadership recognises the climate emergency and leads the company with sustainability in mind, inspiring staff and customers. Your company is aligned with the Sustainable Development Goals.

Your executive management walks the talk, you have loyal and inspired employees who are brand ambassadors and see you as an employer of choice. Your customers experience the sustainability culture and purpose.

You take stewardship for the products you produce, from cradle to grave, and your business model is circular, meaning that your waste can form another business’ input and you perhaps can take the waste of another business as your input.

Your operations are powered with renewable energy. Where possible, you have installed solar panels and are energy efficient. You value innovation and continuous improvement, and you’ve embedded sustainable procurement principles.

And climate change is also part of your risk management. You are protecting yourself against regulatory risk and against your competitors taking a leadership position, and you are also adapting to a changing climate.

Your company could be aiming to achieve these goals. If you are already on your way towards net zero and have seen the benefits firsthand, then you’ll know that our mantra ‘Driving Net Profit With Zero Emissions’ is true.

Helping you on your net zero journey

In the figure below, you can see market drivers on the left side. They are all the reasons why you should act – investor pressure, keep temperature within 1.5C, physical and market risks, as well as peer, customer and staff pressure. On the right, you can see the rewards for going on the net zero journey. Being able to stand out from the competition, improved reputation in the marketplace, being able to attract and retain employees, more customer loyalty, and in the end, more money and value for your business.

 

Figure 5. Net zero journey

Your carbon footprint

Your journey to net zero starts with drawing the boundary around your carbon footprint, deciding what emission sources you are responsible for. You then set a net zero target year sometime in the future, ideally with a shorter term, interim emissions reduction target. Then you calculate the carbon footprint, which you’ll need to repeat yearly to measure your progress.

As a manufacturer, you may have large energy consumption, which causes emissions, but you may also purchase carbon-intensive inputs such as steel. And you may sell carbon-intensive products to companies or customers downstream from you, like fabricated metal products, or processed foods for example.

Here are some sample emission sources:

  1. A boiler that takes natural gas as a fuel directly generates carbon dioxide emissions when gas is burnt.
  2. Refrigerants in air conditioning and refrigeration equipment are another source of potent GHG emissions.
  3. If you own or control a truck fleet, this will contribute to emissions you are directly responsible for. If you are engaging contractors to meet your transport needs, this also causes emissions. This could be the transport of input materials to your place of business, or the transport of the goods you produce for your customers.
  4. Everything that consumes electricity in your business, causes emissions at coal or gas-fired power plants that produce the electricity for you, unless you only purchase renewable electricity.
  5. Pretty much everything you buy comes with embodied emissions, or upfront carbon. This is because someone else would have produced that good or service with the help of fossil fuels, such as electricity consumption or by burning gas, petrol, or diesel. Typically, embodied emissions in manufacturing inputs are carbon-intensive.
  6. Packaging also forms part of your carbon footprint. The packaging of the goods you buy, and the packaging of the goods you sell.
  7. Unfortunately, manufacturing processes produce waste. And when waste ends up in landfill, it can produce methane emissions, which is a powerful greenhouse gas.
  8. If the products you sell cause emissions when they are used, then this is another emissions source.

Decarbonising your manufacturing business

Achieving net zero emissions for your manufacturing business requires a multi-faceted approach. Here are some opportunities to reduce your carbon footprint:

  1. Electrification is where you change from burning a fossil fuel such as natural gas to using electricity. So, for instance changing from a boiler that uses natural gas to an electric heatpump. In episode 9 of our Driving Net Profit with Zero Emissions show, we interview Saul Griffith on electrifying everything. It’s worthwhile to listen to this episode if you want to find out more about this opportunity.
  2. Hybrid and electric vehicles are another form of electrification. Even if an electric vehicle is charged from the grid, emissions are so much less compared to internal combustion engines. Even better if you can charge your electric vehicles from solar.
  3. The more energy efficient your air conditioning and refrigeration are, the less you have to pay to run them, and the fewer emissions you will have. The air conditioning and refrigeration sector is also shifting towards less greenhouse-intensive refrigerant gases, so you can reduce your emissions for this source as well.
  4. Switch to LED lighting and implement smart controls to further reduce energy consumption and emissions.
  5. Installing solar panels is a cost-effective way to generate renewable energy. 30% of Australian dwellings have solar on them, making it the cheapest energy in the world..
  6. Battery storage is a great addition to solar power, but it can be expensive. As prices continue to drop, it will become a more feasible option.
  7. Buying renewable energy can eliminate emissions associated with your electricity consumption.
  8. Sustainable design can help you reduce emissions and operating costs.
  9. Work with your landlord to make your leased facilities more energy-efficient by installing solar panels, upgrading air conditioning systems, or moving to high star-rated buildings or tenancies.
  10. Specify that your products must be carbon neutral when purchasing materials, and work with suppliers to reduce shared emissions.
  11. Not sending waste to landfill reduces methane emissions. Adopt circular economy principles to reduce waste in the first place.
  12. Consider the emissions that your products produce when in use. Products that are highly efficient, such as motors or refrigerators, can save emissions and money for customers downstream. The fewer embedded emissions your products have, the better for companies or people that buy your products.
  13. Calculate the carbon footprint of your products and work to reduce it. Consider certifying your products as carbon neutral for better positioning in the market.

To achieve net zero emissions, you can invest in projects that remove carbon from the atmosphere to offset your residual emissions. While offset purchases should be minimised in the long term, they can be a great strategy in the short term to show leadership and set an internal price on carbon. You can even purchase enough offsets to cover your entire carbon footprint and declare carbon neutrality, with the ultimate goal of reducing offset purchases as you reduce emissions.

Cost savings and other benefits

It’s not always clear what the business benefits will be when you embark on your net zero journey. You may be thinking that it will be too expensive for your business, but there are so many benefits associated with transitioning. Some will be direct, through cost savings, some will be indirect, through increased reputation.

Here are a couple of quotes from guests that I have interviewed on my podcast.

In NextDC, we think about sustainability because it can drive cost advantages and significant opportunities for organisations to improve the efficiency of their operations. “

-Craig Scroggie CEO of NextDC (Click HERE to listen to the podcast)

Staff were really excited to see us commit to a carbon neutral organisation. They knew that we had done the biogas, we’d done the onsite solar, the PPA and energy efficiency. So, in a sense this is just the way of saying, we’re not stopping there. We continue to accelerate action and the carbon neutral commitment was a good way to demonstrate that. Staff was also very interested in the offsets and the types of co-benefits that they were delivering. Staff are very proud of the outcome, and I think it has been motivating for them.”

-Justin Merrell, Group Environment Director at Lion (Click HERE to listen to the podcast)

I think it’s justified that the built environment moves much more quickly. Rather than casting out long-term scenarios, for many sectors of the economy, the question should be, why not net-zero today? If not, why not?”

-Bruce Precious, Principal Consultant at Six Capitals Consulting (Click HERE to listen to the podcast)

There are numerous benefits to pursuing a net zero strategy for your manufacturing business. Not only will you enhance your chances of winning awards and achieving a better ranking, but you’ll also improve your reputation and attract more work. By becoming an employer of choice, you’ll find it easier to retain and recruit top talent who share your vision for sustainability.

In addition to the reputational and recruitment benefits, identifying net zero projects will likely save you money and could even open up grant funding opportunities. By pursuing a net zero strategy, you’ll position your business for success in a carbon-constrained economy and be better equipped to export to regions like Europe. Moreover, you’ll have the opportunity to innovate and produce low or no-carbon products that are in high demand.

Customers will also be more loyal to your brand because of the values you embody, and your business value will increase. It may seem daunting to decarbonise your manufacturing business, but it’s a crucial step towards ensuring a sustainable future for your company and the planet.

Don’t delay action, aim high, and act now. If you need help developing a net zero strategy, contact us today to learn how we can support your transition. Reach out to  Barbara or Patrick for more information.

Feel free to use an excerpt of this blog on your own site, newsletter, blog, etc. Just send us a copy or link and include the following text at the end of the excerpt: “This content is reprinted from 100% Renewables Pty Ltd’s blog.

Barbara Albert

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