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Did you know that the manufacturing industry accounts for one-third of global energy use and 20% of CO2 emissions? These staggering numbers pose a serious threat to the environment and the future of humanity.
But don’t despair. In this post, we’ll compare the challenges of energy vs. CO2 for manufacturers and show you some of the most promising solutions and innovations that can help you achieve your sustainability goals.
The Current State of Energy and CO2 in the Manufacturing Industry
The manufacturing industry is one of the largest consumers of energy and emitters of CO2 in the world. According to the International Energy Agency (IEA), the manufacturing industry accounted for one-third of global energy use and 20% of CO2 emissions in 2022. These numbers are expected to rise as the global demand for manufactured goods increases.
But why is the manufacturing industry so energy-intensive and carbon-intensive? What are the main challenges and opportunities for reducing its environmental impact? And how does reducing energy use and CO2 emissions affect each other?
Let’s take a closer look at the current state of energy and CO2 in the manufacturing industry.
Energy Consumption in the Manufacturing Industry
The manufacturing industry uses energy for various purposes, such as powering machines and equipment, heating and cooling buildings and processes, and transporting materials and products. The amount and type of energy used depend on the specific manufacturing subsector, such as food and beverage, chemicals, metals, or textiles.
The IEA estimates that the manufacturing industry consumed 142 exajoules (EJ) of energy in 2022, equivalent to 37,778 terawatt-hours (TWh). This is more than the total electricity generation of China, the US, and India combined.
The main sources of energy for the manufacturing industry are fossil fuels, such as coal, oil, and natural gas. Fossil fuels accounted for 77% of the total energy use in the manufacturing industry in 2022. Renewable energy sources, such as solar, wind, and biomass, accounted for only 10% of the total energy use in the manufacturing industry in 2022.
The manufacturing industry faces several challenges and opportunities for reducing its energy consumption, such as:
- Technology: The adoption of more efficient and innovative technologies, such as smart manufacturing, energy management systems, waste heat recovery, and energy storage, can help reduce the energy intensity and improve the productivity of the manufacturing industry.
- Cost: The cost of energy is a significant factor for the competitiveness and profitability of the manufacturing industry. Reducing energy consumption can help lower the energy bills and increase the margins of the manufacturing industry. However, investing in energy efficiency and renewable energy may require high upfront capital and long payback periods, which can deter some manufacturers from taking action.
- Competition: The manufacturing industry operates in a global and dynamic market, where it faces pressure from both domestic and foreign competitors. Reducing energy consumption can help the manufacturing industry gain a competitive edge and access new markets, especially in regions where energy prices are high or where customers demand more sustainable products. However, some manufacturers may also face the risk of losing market share or relocating to regions where energy prices are low or where environmental regulations are lax.
- Supply chain complexity: The manufacturing industry is part of a complex and interconnected supply chain, where it depends on and influences the energy use and emissions of its suppliers and customers. Reducing energy consumption can help the manufacturing industry optimize its supply chain and reduce its operational costs and risks. However, achieving supply chain collaboration and coordination may require overcoming technical, organizational, and contractual barriers, as well as addressing the uneven distribution of costs and benefits among the supply chain actors.
CO2 Emissions in the Manufacturing Industry
The manufacturing industry emits CO2 mainly from two sources: the combustion of fossil fuels for energy use and the chemical reactions of industrial processes, such as the production of cement, steel, and ammonia. The amount and type of CO2 emissions depend on the specific manufacturing subsector, as well as the energy mix and the carbon intensity of the region where the manufacturing takes place.
The IEA estimates that the manufacturing industry emitted 10.6 gigatonnes (Gt) of CO2 in 2022, equivalent to 2.9 tonnes of CO2 per person. This is more than the total CO2 emissions of the European Union, Russia, and Japan combined.
The main drivers and barriers for reducing CO2 emissions in the manufacturing industry are similar to those for reducing energy consumption, such as technology, cost, competition, and supply chain complexity. However, there are also some additional factors to consider, such as:
- Regulation: The manufacturing industry is subject to various environmental regulations and policies, such as carbon taxes, emissions trading schemes, standards, and subsidies, that aim to reduce its CO2 emissions and incentivize its transition to a low-carbon economy. These regulations and policies can create both opportunities and challenges for the manufacturing industry, depending on their design, implementation, and enforcement.
- Innovation: The manufacturing industry can reduce its CO2 emissions by adopting more innovative and disruptive solutions, such as carbon capture and storage, circular economy, green product design, and low-carbon supply chain. These solutions can help the manufacturing industry decouple its growth from its emissions and create new value propositions and business models. However, these solutions may also require overcoming technical, economic, and social barriers, as well as scaling up and diffusing across the manufacturing industry.
- Communication: The manufacturing industry can reduce its CO2 emissions by communicating and engaging with its stakeholders, such as customers, investors, employees, and regulators, on its sustainability efforts and achievements. This can help the manufacturing industry enhance its reputation, brand, and trust, as well as attract and retain more loyal and satisfied stakeholders. However, this may also require addressing the challenges of measuring, reporting, and verifying the CO2 emissions and reductions of the manufacturing industry, as well as avoiding the risks of greenwashing and backlash.
Energy vs. CO2: Trade-offs and Synergies
Reducing energy use and CO2 emissions are both important and interrelated goals for the manufacturing industry. However, they are not always aligned or compatible. Sometimes, reducing energy use may increase CO2 emissions, and vice versa. Other times, reducing energy use and CO2 emissions may have synergistic effects and benefits. Therefore, it is essential to understand and balance the trade-offs and synergies between energy and CO2 reduction in the manufacturing industry.
Some examples of trade-offs and synergies between energy and CO2 reduction are:
- Switching to renewable energy sources: Renewable energy sources, such as solar, wind, and biomass, can help the manufacturing industry reduce both its energy use and CO2 emissions, as they have lower energy losses and carbon intensity than fossil fuels. However, switching to renewable energy sources may also entail some trade-offs, such as higher costs, intermittency, and land use impacts.
- Improving energy efficiency: Energy efficiency, such as using more efficient machines and equipment, can help the manufacturing industry reduce its energy use and CO2 emissions, as it reduces the amount of energy needed to produce the same output. However, improving energy efficiency may also have some trade-offs, such as rebound effects, lock-in effects, and split incentives.
- Using low-carbon materials: Low-carbon materials, such as recycled or bio-based materials, can help the manufacturing industry reduce its CO2 emissions, as they have lower carbon intensity than conventional materials. However, using low-carbon materials may also increase the energy use of the manufacturing industry, as they may require more energy for processing and transportation.
As you can see, the current state of energy and CO2 in the manufacturing industry is complex and dynamic. There is no one-size-fits-all solution or strategy for reducing energy use and CO2 emissions in the manufacturing industry. Instead, the manufacturing industry needs to adopt a holistic and systemic approach, taking into account the specific characteristics, challenges, and opportunities of each manufacturing subsector, region, and supply chain.
The Potential Solutions and Innovations for Each Challenge
The manufacturing industry has a huge potential to reduce its energy use and CO2 emissions by adopting more efficient, innovative, and disruptive solutions. These solutions can help the manufacturing industry not only mitigate its environmental impact, but also create new value propositions, business models, and competitive advantages. However, these solutions may also require overcoming technical, economic, and social barriers, as well as scaling up and diffusing across the manufacturing industry.
In this section, we will explore some of the most promising solutions and innovations for each challenge: reducing energy consumption and reducing carbon emissions. We will also showcase some of the manufacturing companies that have successfully applied these solutions and innovations in their operations.
Reducing Energy Consumption
Reducing energy consumption is one of the most effective and immediate ways to reduce the environmental impact and operational costs of the manufacturing industry. According to the IEA, improving energy efficiency in the manufacturing industry could save up to 25 EJ of energy and 1.8 Gt of CO2 emissions by 2030.
Some of the solutions and innovations that can help manufacturers reduce their energy consumption are:
- Smart manufacturing: Smart manufacturing is the use of advanced technologies, such as artificial intelligence, internet of things, cloud computing, and big data, to optimize the manufacturing processes and systems. Smart manufacturing can help manufacturers monitor, control, and automate their energy use, as well as improve their product quality, productivity, and flexibility.
- Energy management systems: Energy management systems are software tools that help manufacturers measure, analyze, and improve their energy performance. Energy management systems can help manufacturers identify and eliminate energy waste, implement energy-saving measures, and track and report their energy savings.
- Waste heat recovery: Waste heat recovery is the process of capturing and reusing the heat that is generated and lost in the manufacturing processes. Waste heat recovery can help manufacturers reduce their energy consumption and emissions, as well as generate additional power, steam, or cooling for their processes.
- Energy storage: Energy storage is the technology that enables the storage and release of energy on demand. Energy storage can help manufacturers reduce their energy consumption and costs, as well as enhance their energy reliability, security, and quality. Energy storage can also enable the integration of renewable energy sources, such as solar and wind, into the manufacturing processes.
Some of the manufacturing companies that have successfully reduced their energy consumption by using these solutions and innovations are:
- Bosch: Bosch is a global leader in engineering and technology, with a diverse portfolio of products and services, such as automotive, industrial, consumer goods, and energy. Bosch has implemented smart manufacturing solutions, such as sensors, software, and data analytics, to optimize its energy use and efficiency across its 270 plants worldwide. Bosch has also adopted the ISO 50001 standard for energy management systems, and has invested in waste heat recovery and energy storage technologies. As a result, Bosch has reduced its energy consumption by 32% and its CO2 emissions by 35% since 2007.
- ArcelorMittal: ArcelorMittal is the world’s largest steel producer, with operations in 60 countries and a production capacity of 114 million tonnes of steel per year. ArcelorMittal has implemented several energy efficiency measures, such as improving its furnaces, boilers, and motors, as well as recovering and reusing its waste heat and gases. ArcelorMittal has also developed and deployed innovative technologies, such as the Torero and Steelanol projects, which convert waste wood and steel gases into bio-coal and bio-ethanol, respectively. As a result, ArcelorMittal has reduced its energy consumption by 11% and its CO2 emissions by 8% per tonne of steel since 2012.
Reducing Carbon Emissions
Reducing carbon emissions is one of the most urgent and long-term challenges for the manufacturing industry, as it requires a fundamental transformation of the industrial processes and systems. According to the IEA, achieving net-zero emissions in the manufacturing industry by 2050 would require a reduction of 8.4 Gt of CO2 emissions per year, equivalent to the total emissions of China and India combined.
Some of the solutions and innovations that can help manufacturers reduce their carbon emissions are:
- Carbon capture and storage: Carbon capture and storage is the technology that captures the CO2 that is emitted from the manufacturing processes and transports and stores it in underground geological formations, such as depleted oil and gas fields. Carbon capture and storage can help manufacturers reduce their carbon footprint, as well as create new revenue streams from the utilization of the captured CO2, such as enhanced oil recovery, carbon mineralization, or carbon-based products.
- Circular economy: Circular economy is the concept that aims to eliminate waste and pollution, keep products and materials in use, and regenerate natural systems. Circular economy can help manufacturers reduce their carbon emissions, as well as improve their resource efficiency, competitiveness, and innovation. Circular economy can involve strategies such as designing for durability, repairability, and recyclability, using recycled or bio-based materials, extending the product life cycle, and creating closed-loop systems.
- Green product design: Green product design is the practice of designing products that minimize their environmental impact throughout their life cycle, from raw material extraction to end-of-life disposal. Green product design can help manufacturers reduce their carbon emissions, as well as meet the customer demand and regulatory requirements for more sustainable products. Green product design can incorporate principles such as eco-efficiency, eco-effectiveness, biomimicry, or cradle-to-cradle.
- Low-carbon supply chain: Low-carbon supply chain is the approach of reducing the carbon emissions associated with the sourcing, production, distribution, and consumption of goods and services. Low-carbon supply chain can help manufacturers reduce their carbon emissions, as well as enhance their supply chain performance, resilience, and transparency. Low-carbon supply chain can involve actions such as switching to low-carbon or renewable energy sources, optimizing the transport modes and routes, collaborating with suppliers and customers, and disclosing and reporting the carbon footprint.
Some of the manufacturing companies that have successfully reduced their carbon emissions by using these solutions and innovations are:
- LafargeHolcim: LafargeHolcim is the world’s largest cement producer, with operations in 80 countries and a production capacity of 386 million tonnes of cement per year. LafargeHolcim has implemented several carbon reduction measures, such as increasing the use of alternative fuels and raw materials, improving the energy efficiency and clinker factor of its plants, and developing and deploying low-carbon cements and concretes. LafargeHolcim has also invested in carbon capture and storage technologies, such as the LEILAC and CO2MENT projects, which aim to capture and utilize the CO2 from the cement kilns. As a result, LafargeHolcim has reduced its CO2 emissions by 25% per tonne of cement since 1990.
- Nike: Nike is one of the world’s leading sports brands, with a global presence and a revenue of $37.4 billion in 2020. Nike has adopted a circular economy approach, such as designing its products for circularity, using recycled or renewable materials, extending the product life span, and creating circular business models. Nike has also developed and launched innovative products, such as the Flyknit, Flyleather, and Space Hippie, which use less material, energy, and water, and generate less waste and emissions. As a result, Nike has reduced its CO2 emissions by 36% per unit of revenue since 2015.
As you can see, the potential solutions and innovations for reducing energy consumption and carbon emissions in the manufacturing industry are diverse and exciting. However, they also require a lot of collaboration, investment, and experimentation to scale up and spread across the manufacturing industry. In the next section, we will provide some best practices and recommendations for manufacturers to achieve their sustainability goals.
The Best Practices and Recommendations for Manufacturers to Achieve Sustainability Goals
In this blog post, we have compared the challenges of energy vs. CO2 for the manufacturing industry, and shown you some of the most promising solutions and innovations that can help you achieve your sustainability goals. We have also showcased some of the manufacturing companies that have successfully reduced their energy use and CO2 emissions by using these solutions and innovations.
But how can you apply these insights and learnings to your own manufacturing operations? How can you make your manufacturing process more sustainable, resilient, and profitable?
Here are some best practices and recommendations for manufacturers to reduce their energy consumption and carbon emissions, based on the web search results:
- Set clear and measurable targets: The first step to achieving sustainability goals is to define what you want to achieve and how you will measure your progress and performance. You can use frameworks such as the Science Based Targets Initiative (SBTi), the Carbon Disclosure Project (CDP), or the Global Reporting Initiative (GRI) to set and report your targets for reducing energy use and CO2 emissions, as well as align them with the global climate goals and best practices.
- Invest in technology and innovation: The second step to achieving sustainability goals is to invest in the technology and innovation that can help you reduce your energy use and CO2 emissions, as well as create new value propositions and business models. You can use tools such as the Technology Innovation Platform (TIP) or the Mission Innovation Solutions Platform (MISP) to identify and access the best available technologies and innovations for your manufacturing subsector, region, and supply chain.
- Collaborate with suppliers and customers: The third step to achieving sustainability goals is to collaborate with your suppliers and customers to reduce the energy use and CO2 emissions across your value chain, as well as optimize your resource efficiency, competitiveness, and innovation. You can use platforms such as the Sustainable Manufacturing and Environmental Pollution (SMEP) or the Responsible Business Alliance (RBA) to engage and coordinate with your suppliers and customers on sustainability issues, as well as share best practices and solutions.
- Communicate your sustainability efforts: The fourth step to achieving sustainability goals is to communicate and engage with your stakeholders, such as investors, employees, regulators, and society, on your sustainability efforts and achievements. This can help you enhance your reputation, brand, and trust, as well as attract and retain more loyal and satisfied stakeholders. You can use channels such as your website, social media, newsletters, or events to communicate and showcase your sustainability stories, data, and impact.
By following these best practices and recommendations, you can make your manufacturing process more sustainable, resilient, and profitable. You can also contribute to the global efforts to combat climate change and create a better future for humanity and the planet.
We hope you enjoyed this blog post and learned something new and useful. If you have any questions, comments, or feedback, please feel free to share them with us. We would love to hear from you and continue the conversation.
