The world took notice when the UN's Intergovernmental Panel on Climate Change (IPCC) declared a 'Code Red for Humanity' in August 2021. The urgency of halting the rise in global temperatures to limit catastrophic climate impacts became the centerpiece of global environmental discourses. In this call to action, the Paris Agreement and various UN missions have focused on industries, particularly manufacturing, for their crucial role in climate change mitigation.
Here's why: energy-intensive industries - cement, iron and steel, and chemicals and petrochemicals - account for about 25% of total global CO2 emissions and 66% of industrial sector emissions. These are not small numbers, and they point to a sector that is a significant contributor to and a potential solution to the global environmental crisis.
Take the cement industry, for example. Cement is the second-most-consumed product globally, producing about 7kg of CO2 per revenue dollar. As economies continue to grow and urbanize, the global demand for cement will rise by 12-23% by 2050. If unchecked, this growth could lead to a significant increase in greenhouse gas emissions.
Navigating these rapid changes is critical for manufacturers. In this article, we'll guide you through understanding current carbon terminology and countermeasures, highlight how adopting sustainable solutions can improve your financial health, and highlight key trends to watch in this space.
In this piece, we'll delve into:
When you're done, you'll know exactly how to maintain a thriving, carbon-neutral business amidst these rapidly changing trends.
Embarking on the journey toward sustainability might seem like learning a new language, especially with the slew of carbon-related terminologies. But don't worry! Together, let's decode these buzzwords - Carbon Neutral, Carbon Positive, Carbon Negative, and Net Zero. What exactly do these terms mean, and how can they map the route toward a greener future for the manufacturing industry?
As we journey into the heart of the carbon lingo, 'Carbon Neutral' is one of the first stops. This term refers to achieving a balance between emitting carbon dioxide and absorbing it from the atmosphere in carbon sinks, resulting in a net zero carbon footprint. It's like a scale in perfect balance, with carbon emissions on one side and carbon removal on the other. This is the target that the United Nations has set - achieving carbon neutrality by 2050 to prevent catastrophic impacts from climate change.
Next, we encounter 'Carbon Positive,' which might sound great, but it's not where we want to be. Being carbon-positive means that we're adding more carbon dioxide to the atmosphere than we're removing, thus tipping the scale in the wrong direction.
On the flip side, we have 'Carbon Negative.' This term means we go beyond achieving net zero carbon emissions to actually create an environmental benefit by removing additional carbon dioxide from the atmosphere.
Lastly, we arrive at 'Net Zero.' This term refers to reducing or offsetting all of our carbon emissions or offsetting them so our activities don't contribute any additional CO2 to the atmosphere. It's like a more holistic version of carbon neutrality, encompassing not just CO2 but all types of greenhouse gas emissions.
These terminologies serve as our compass in the world of sustainability, guiding the manufacturing sector toward a greener, cleaner future. After all, understanding these concepts is the first step towards aligning our actions with the global climate targets set by the UN.
While adopting sustainability might seem like a Herculean task, especially for manufacturing organizations, the rewards it reaps are multi-fold, both for the planet and the organizations themselves.
First, let's look at how sustainability enhances a brand's reputation. In the age of information, consumers are becoming increasingly discerning and aware of their purchasing power. A recent study by Deloitte discovered that a significant number of consumers (34%) actively seek brands with robust sustainability credentials. It's clear that wearing the badge of sustainability isn't just an environmental responsibility - it's a ticket to increased consumer trust and loyalty.
And the advantages don't stop there. A McKinsey study highlighted that products boasting Environment, Social, and Governance (ESG) related claims in two-thirds of categories witnessed faster growth than their less eco-friendly counterparts. Moreover, specific demographics, such as higher-income households, urban and suburban residents, and households with children, showed a stronger inclination toward these products.
Here's a nugget worth noting: Products that made less prevalent claims like "vegan" or "carbon zero" outperformed their peers that didn't, increasing sales by 8.5%. And even more striking is that products with multiple ESG classification themes grew sales about twice as fast as those that made only a single claim.
Shifting gears to talk about cost and resources, industry experts suggest that a low carbon footprint often equates to monetary savings and increased efficiency. Organizations can significantly lower operating costs by optimizing energy use, adopting renewable energy sources, implementing recycling programs, and reducing waste. Such steps could also open doors to tax credits, subsidies, or grants that support low-carbon initiatives.
So, while the path to sustainability requires some initial investment and effort, the return on investment it brings - both in terms of brand reputation and cost savings - is more than worth it.
Indeed, the journey towards reducing carbon emissions should not be taken alone. Various initiatives and tools can help manufacturers move towards sustainable practices. One such tool is the Carbon Credit system (Carbon Markets)established by the UN. In this setup, companies can earn carbon credits for every tonne of CO2 they prevent from entering the atmosphere. These credits can then be sold to other companies or countries that exceed their carbon emission limits, providing a financial incentive to reduce emissions.
Besides carbon credits, offsetting has become an increasingly common practice. This involves balancing the amount of emitted CO2 with an equivalent amount sequestered or offset, often through renewable energy projects or reforestation initiatives.
Sequestration - the long-term storage of carbon dioxide or other carbon forms to mitigate or defer global warming - is another method being leveraged. This can occur naturally through plants absorbing CO2 during photosynthesis or artificially through technological solutions.
As manufacturing sectors start their journey towards net-zero carbon emissions, it's important to understand some concerns around this approach. For instance, the big oil companies, Shell and BP, have been under scrutiny because they announced plans to reach "net-zero" emissions by 2050. But the details of how they planned this were a bit fuzzy, making some people skeptical.
Experts, like those from Stanford University's Millennium Alliance for Humanity and the Biosphere (MAHB), point out a few things we should watch out for. They are concerned about depending too much on technologies that haven't been thoroughly tested yet. This reliance on new tech could end up causing more problems than solutions.
Another issue is that to reach net zero, we'd need to plant many trees to absorb the CO2, which requires large plots of land. This could lead to conflicts over land ownership and unfairly impact farmers and Indigenous people, especially in less developed countries.
And here's the kicker: aiming for net-zero doesn't necessarily mean we stop using fossil fuels. This is a big problem because burning fossil fuels is one of the main reasons we're in this climate mess in the first place.
So, the experts from MAHB suggest that instead of only focusing on net zero, we should also look at other effective ways to reduce greenhouse gas emissions. This could mean leaving fossil fuels in the ground, farming in ways that are good for the environment, and preserving our natural forests.
In response to the net-zero critique, it's heartening to see innovative solutions addressing these concerns, particularly in the manufacturing sector. One such approach is utilizing Fourth Industrial Revolution (4IR) technologies, such as AI and data-driven tools, that offer the potential for both enhanced sustainability and improved profitability.
The Global Lighthouse Network (GLN) offers a beacon of hope here. This initiative celebrates businesses successfully implementing 4IR technologies. In these 'Lighthouse' companies, sustainability and competitive excellence aren't conflicting goals but harmonious ones. Over 60% of the Lighthouses have reported significant sustainability impacts due to their 4IR transformations.
For instance, Ericsson has bolstered sustainability using 4IR smart factory technologies. At their Lewisville, Texas factory, they've installed advanced HVAC, lighting, and energy management systems. These systems are constantly monitored by sensors, which notify digital management tools of unusual energy or water consumption. This strategy has led to a dramatic drop in carbon emissions, achieving a remarkable 97% reduction.
Another inspiring example – the first carbon-neutral plant. Innocent, a renowned drinks manufacturer, is blazing the trail in carbon-neutral manufacturing by constructing "the blender" — the world's first carbon-neutral juice factory in the Port of Rotterdam, Netherlands. This groundbreaking project aims to significantly slash Innocent's overall carbon footprint and road miles.
The project revolves around two pivotal principles:
Optimizing current manufacturing processes for efficiency and lower emissions is a practical alternative to building new, cutting-edge facilities. Implementing AI technologies is an effective way to achieve this, as it can significantly improve operational performance and reduce carbon footprints without substantial capital investment.
To create more efficient and sustainable production systems, businesses are turning to technologies like the Process Booster AI, powered by the aivis®, industrial AI. The unique capability of the AI lies in its ability to detect the 'fingerprint' of process inefficiency. Each fingerprint is a pattern formed by various signals indicating a shift from a normal to an abnormal process state. These patterns help uncover the root causes of the process inefficiency, offering a deeper understanding of disruption reasons and enabling its proactive prevention. Check out our latest blog post to learn more about the fingerprint of inefficiencies and how identifying the fingerprint of inefficiencies enables you to improve OEE in manufacturing.
With such an understanding, manufacturers can achieve profound control over their production processes and escape unplanned downtimes. Besides, this AI-based solution leads to the advanced technique of optimizing process KPIs, so-called centerlining.
The process begins with defining a KPI, such as quality, performance, energy consumption, or CO2 emissions. Operators have the flexibility to select and prioritize multiple KPIs as per their business requirements.
Industrial AI identifies the key parameters influencing the chosen KPIs after the KPI selection. Each associated with a critical threshold, these parameters are organized into a 'key parameter tree.' This tree is a visual guide for process experts, enabling them to understand which parameters need adjusting to achieve the optimal KPI outcome.
The AI then creates a model that actively monitors the current production situation. The model identifies the all-time optimal settings based on historical data for every scenario, targeting the selected KPIs. These settings are promptly relayed to the operator, guiding them to maintain the set points as close as possible to the centerline.
A notable advantage of this KPI-centered approach is its potential for environmental management. By including CO2 emissions as a KPI, businesses can maintain real-time control over their carbon footprint. The AI continuously updates the optimal settings, ensuring emissions are kept within a pre-defined, sustainable range. Therefore, industries can effectively balance their production goals with their commitment to sustainability, contributing to a more sustainable future while maximizing operational efficiency.
Another vital application of AI in manufacturing that promotes sustainability is through emission predictions and compliance with regulations. AI can model and predict power plant emissions accurately, facilitating better adherence to carbon pricing policies prevalent in many countries. These policies impose charges on emitters based on the amount of CO2 they release into the atmosphere, creating a financial incentive for industries to reduce emissions.
In the European Union, the Emissions Trading System (ETS) covers CO2, nitrous oxide, and perfluorocarbons emissions from over 11,000 energy-intensive plants across 31 countries. AI can help manufacturers comply with these regulations, thus avoiding extra charges and fines.
Further, manufacturers are now subject to greater transparency requirements with implementing the new Environment, Social, and Governance (ESG) regulations in the EU. Adherence to these new ESG reporting standards is becoming a mandatory aspect of business operations. Non-compliance could have serious repercussions, including penalties and reputational damage. Here again, AI proves invaluable by assisting industries in maintaining compliance with these standards, enabling businesses to operate sustainably while mitigating financial and reputational risks.
In this complex climate landscape, we've recognized the significant role of manufacturers in shaping our planet's future.
Our journey led us to uncover the economic appeal of eco-friendly business models, revealing potential boosts in sales by 8.5%, affirming that green choices can also be profitable. Furthermore, the Fourth Industrial Revolution's advancements present significant opportunities for manufacturers, including the potential to reduce carbon emissions by up to 97%. AI is a potent tool, actively helping optimize processes, control carbon emissions, adhere to environmental regulations, and enhance efficiency and financial performance.
Standing at the forefront of this rapidly changing environment, manufacturers have a clear path forward. Sustainability represents not only a moral commitment but also a lucrative opportunity. It's a way to run a prosperous, carbon-neutral business in a cleaner, more sustainable world.
As we conclude, the following steps are for you to define. How will your organization transition to sustainability and carbon neutrality? What role will AI play in your future vision? And where do you stand on the debate around net-zero emissions?
Is AI a job killer in the manufacturing industry or is this technology empowering today's workforce?