See how you can gain the insights needed to cut your carbon emissions today – and plan a roadmap for a net-zero future.
The great decarbonisation drive
Despite the recent setback caused by Russia’s invasion of Ukraine, the global decarbonisation effort still continues apace, with multinational pacts, agreed targets, and various government incentives powering a worldwide push to reduce the impact we have on our planet.
This movement affects everything, from the supply chains and activities of governments and organisations to the sensibilities of the modern consumer. And those sensibilities, in turn, affect the behaviour of brands.
In the consumer goods space, leaders have long recognised the impact decarbonisation can have on reputation and revenue. That’s why major industries like fashion and entertainment are striving for carbon neutrality.
But for industries that don’t have such a direct relationship with the end customer – including heavy industries like manufacturing, engineering and construction – decarbonisation efforts are still in their early stages. In fact, a lack of green options in this space is one of the reasons a new coal mine may be about to open in the United Kingdom.
This may seem like a huge step in the wrong direction, but it’s not fair to say that carbon concerns have passed these industries by entirely. Take steel production as an example. CO2 emissions and energy use in Europe have already been halved since 1960. And forward-thinking manufacturers will be all too aware that trends in B2C consumer attitudes have a tendency to filter down into B2B markets over time.
This knowledge, along with financial, legislative and, of course, environmental drivers are pushing today’s manufacturers to consider new ways to reduce their emissions, with a goal of achieving carbon reductions of 80-95% by 2050.
The nagging question though, is ‘how?’ While 2050 might seem a long way away, significant changes don’t happen overnight, and it’s those that begin making moves now who will find themselves meeting their goals and leading the pack when that date arrives.
The difficulty of decarbonising heavy industries
The catch is that decarbonising heavy industries presents a far more complicated task than most.
The process of steel production, for instance, requires a huge amount of energy. The majority of which comes from fossil fuels, like coal. As a result, the production of one metric ton of steel produces 1.8 metric tons of CO2 emissions.
To help combat this, lots of new technologies and fuel alternatives are emerging. Carbon capture and storage (CCS) equipment and electric arc furnaces are both options with the potential to transform the industry. And around a third of the primary steel production in the EU is expected to be decarbonised by 2030 using renewable hydrogen. But in these early stages, it can be difficult to know which technology will prevail, and therefore which you should invest in and to what extent.
Take hydrogen steel production as an example. The feasibility of this process will depend entirely on the future costs of renewable hydrogen and electricity – which without real foresight into trends and market developments, is impossible to predict.
Similarly, biofuel is one consideration to replace coal, but there simply isn’t enough of it right now to power heavy industry. And then there are also considerations around where biofuel is sourced. For instance, is it being made from by-products of the lumber industry, or are trees being felled especially to create it?
A balancing act
For those in heavy industries looking to decarbonise, the problem comes down to balancing the costs and benefits of these solutions.
Again using steel as an example, McKinsey tells us that the cost of decarbonising the manufacturing process over the next 30 years will be around $4.4 trillion, which will increase production costs by approximately 30% by 2050.
It sounds like a huge figure, but it’s important to remember that these costs will inevitably shrink over time as technologies become less specialist. And low-emissions steel producers could gain a significant competitive advantage and market share that could make that investment worthwhile.
But how can you know which technologies should be prioritised, what biofuel producers to partner with, how low-emissions production will impact demand, how much investment should be made at what time, and, ultimately, what your long-term decarbonisation roadmap should look like?
None of this can be decided on a whim, which is why manufacturers need an expert partner to guide them on their path to net zero. Someone who can help compare investment cost with the overall benefits, and monitor market changes to identify the right suppliers and strategies.
Your strategic partner in decarbonisation
At The Smart Cube we work with a wide range of heavy industry clients, ensuring they have the insights, market knowledge and expertise to navigate the path to net zero in a way that benefits them, their customers and our planet.
Combining human knowledge and artificial intelligence, we can provide in-depth procurement insights to help you establish the best market strategies going forward, and ensure responsible sourcing for your production.
We also use our vast resources of data to monitor and predict market trends and their knock-on impacts. And we can deploy state-of-the-art what-if modelling to help establish what your organisation’s future will look like depending on a variety of different scenarios and decisions.
Our recent work has seen us help some of the world’s leading automotive manufacturers reduce emissions in their paint shops, using advanced analytics to assess the benefits of different types of ovens, heating solutions, air management systems and paint types.
Armed with these insights, we were able to help one manufacturer reduce the CO2 emissions from its paint shop in Thailand by 17,000 tonnes a year. And another manufacturer was able to reduce energy consumption by 60% at its UK facility.
We also recently explored the potential of green fuel sources for forklift trucks in the UK construction industry, assessing the costs, feasibility and benefits of alternative solutions to diesel. In doing so, we identified an opportunity for the industry as a whole to lower carbon emissions by 90% using HVO biodiesel.
Through our work in this area, we know as well as anyone that decarbonisation is a complicated undertaking. But we also know that if it’s approached the right way, it can be an investment that benefits everyone.
To learn more about our research and analytics work in your industry, or to talk about how we can help you advance your strategic category and business priorities, visit our website.