By Peter Halliday, Global head of Building Performance and Sustainability at Siemens Smart Infrastructure
In a year dominated by the COVID-19 crisis, the threat of climate change nevertheless remains an existential challenge and continues to drive policy and business decision making.
Decarbonization is at the heart of our global response and is increasingly affecting the commercial and industrial (C&I) sector. The question for businesses in this space is: “What does decarbonization mean for me, and how should I respond?”
Decarbonization can provide forward-thinking C&I companies with several new opportunities. One is the ability to distinguish themselves from the competition in ways that can help them acquire and retain customers.
Given that sustainability is increasingly a broad-based societal concern, more and more retail consumers are looking for products and services that demonstrate a commitment to environmentally friendly operations.
For B2B companies looking to decarbonize their supply chains, such as intermediate-goods manufacturers, the ability to modify production processes to require less water, waste and power, or to produce fewer CO2 emissions, is extremely attractive.
At the same time, there are significant risks from inaction. Most immediately, those slow to act may face higher energy costs driven by policy actions such as new taxes and levies.
Another implication facing companies who haven’t made the move to being carbon neutral is that they are automatically disqualified from providing their products and services to decarbonized supply chains of other companies.
Also, companies that fail to decarbonize are likely to face penalties and expenses resulting from climate protection regulations. By moving now to take decarbonization steps, companies can ‘future-proof’ themselves against similar policy actions in the future.
Not all CO2 emissions are the same
Before outlining possible actions, it’s important to define what we mean by emissions. The Greenhouse Gas Protocol classifies three types of business carbon emissions: Scope 1 emissions are direct emissions from owned or controlled sources; Scope 2 emissions are indirect emissions from the generation of purchased energy; and Scope 3 emissions are indirect emissions that occur across the company’s value chain that are not covered by Scope 1 or 2. These include items such as business travel, waste management, and the supply chain. So, what specific measures can companies take to decarbonize?
Make an internal energy specialist responsible for developing and implementing a realistic overall strategy and ensure that a C-level executive is reviewing energy-related decisions.
Crucially, be sure that your energy reduction KPIs are aligned with, and support business success and business KPIs. Challenge your supply chain to decarbonize and support them in those efforts.
The next opportunity is to reduce energy use, which delivers both carbon and OPEX savings. Some places to start:
Replace and renovate outdated equipment. This can mean switching to LED lighting, reviewing HVAC systems, or upgrading to electric motors and their drives in factories.
Use smart load controls. These digital solutions provide controls and automation for systems, facilities, and equipment. One example: building energy management systems.
Electrify your transport fleet. Electric vehicles and smart charging can significantly reduce Scope 1 emissions.
Review production processes. Look for ways to adjust production processes that save energy without compromising process quality, for example, lowering the temperature of steam in a process.
Looking at the other side of the equation, there are additional ways to reduce emissions, particularly Scope 2 emissions.
Generate “green” energy on site. Add solar PV panels, windmills, or generation of bioenergy/biogas at offices, warehouses, and manufacturing plants.
Shift to low-carbon heat. Look to more efficient supplies, such as combined heat and power systems, electrification of heat (low- or high-temperature heat pumps), or decarbonize the fuel source, e.g., shift from natural gas to “green” gas.
Become a prosumer. Build enough sustainable energy generating capacity that excess electricity can be sold into energy markets or use it in Power-to-X.
Purchase zero-carbon electricity. Sign up for green tariffs with suppliers, or sign power purchase agreements with renewable energy generators.
Deploy energy storage. Onsite batteries, for example, can enable carbon savings when used to optimize consumption of onsite generation or event to participate in the electricity market.
Optimize supply with demand and energy tariffs. Combining onsite generation with storage or going a step further to create a microgrid can further enhance carbon savings. This can be combined with energy tariff adaptation.
Taking action toward decarbonization can seem a daunting task. C-suite engagement is key, but so is hiring an energy service company (ESCO) that operates across the entire energy value chain. ESCOs can help by prioritizing what to do and where to start in order to secure the biggest impact in the most efficient manner.
No matter how you pursue your company’s decarbonization journey, the opportunities it provides to the C&I sector are immense – while the benefits to society and the planet are incalculable.