In a recent survey, some 68% of manufacturing industry respondents said their organisation has made public commitments to a carbon reduction plan by 2050, with many setting interim target dates for milestones. However, in the same survey, the respondents acknowledged that there are many potential barriers to achieving those commitments.
The importance of these commitments is that the company’s reputation is on the line. Stakeholders (investors, shareholders, C-suite, staff, customers, suppliers, regulators, local community) will judge their involvement with the company based on delivery of its commitments.
Since 2019, for UK companies with over £36 million turnover or £18m assets, inclusion of a Carbon Reporting statement in their filed annual accounts has been mandatory. This statement, driven by Streamlined Energy and Carbon Reporting (SECR) legislation requires the company to report:
Scope 1 emissions, which includes gas and fossil fuels used for the core process; Scope 2 emissions, which includes bought in electricity and heat; Scope 3 emissions, which relates to transport emissions using company vehicles, and as a consequence of the activities of the company, but occur from sources not owned or controlled by the company, including its supply chain; KPIs – a typical metric is CO2 per tonne of product; Disclosure of material measures taken to reduce energy and carbon emissions.
There is also a requirement to include a comparison to the prior year. Customers are now able to compare the carbon intensity of its suppliers via these audited financial statements and use them in contract negotiations.
UNDER THE MICROSCOPE
The obvious answer is to electrify processes or purchase renewable energy contracts to reduce Scope 2 emissions.
“This process takes very little logistical input,” says Steve Hughes, sustainability manager at speciality chemical supplier, Azelis. “Because you’re not trying to find way to run a reactor at a slightly lower temperature or lowering the amount of mixing, these really technical details that can have quite a large effect on the performance of your product.
However, David Kipling, CEO of carbon reduction solutions organisation, On-Site Energy, says that this may not be the panacea it appears to be: “Purely changing from gas to electric would increase chemical processing costs certainly four-fold, perhaps five-fold.”
Kipling says companies need to understand what is capable of being decarbonised today with today’s technology. He gives common examples as finding other ways to produce low grade heat or steam more effectively, upgrading old, inefficient equipment, or even completely changing the method of producing steam to something more efficient like recovering waste heat and re-upgrading that so that it can be used elsewhere in the process or plant.
“There’s also a big question mark about timing,” Kipling adds: “When is the right time to act? When does it make most sense commercially? When is it possible? There’s no silver bullet, it’s about customising solutions to the individual site requirement.”
The issues around grid capacity are outside of the control of most companies and is more of a governmental issue, as tens of billions will have to be spent to upgrade the grid for country-wide electrification, let alone industry-wide.
Kipling states that he expects many organisations’ Net Zero plans, and even adding renewable energy into their mix, will have to be “pushed back into the 2030s whether they like it or not, and it’s even questionable whether the grid investment will have taken place by then to achieve Net Zero goals”.
He says that one solution to this is for the government to allow regulatory change for organisations to develop micro-grids that operate outside the National Grid infrastructure, as this could be a cheaper alternative to upgrading the National Grid itself. However, chemical processing companies can begin making changes now to get ahead of the curve.
DEVIL IN THE DATA
At a fundamental level, organisations should stay on top of their data and understanding consumption patterns and changes and having somebody appointed to review and act on those. Also, having a data-led strategy and understanding the direction of travel. Additionally, keeping abreast of technology changes that can be relevant and figuring out when to acquire it.
“There’s no point rushing into this,” Kipling warns. “Don’t take knee-jerk reactions because making decisions without a full consideration of the risks and issues can be fundamental even to whether your business is profitable or not. Take account of your own local circumstances first.”
Another area in which chemical processing companies can look to gain traction regarding carbon reduction is through process optimisation using machine learning, AI, and digital twins. “There’s certainly value in using digital twin technology to mirror the actual processes that are taking place, in real time, to model process optimisation opportunities that the company can then trial and see if the real-world outcome of making those changes suggested by the digital twin will work,” reasons Kipling.
It could find, for example that a reactor vessel has been mis-specified or is oversized, or a valving arrangement is wrong or inefficient and suggest better hardware to replace it.
Kipling adds that companies must first get comfortable that the digital twin is accurate and does in fact reflect the real world. Next, having achieved that level of comfort, they must be willing for AI to take over and make the process changes directly. “It’s a very big step for most businesses to effectively change to a ‘self-driving car’ equivalent in running processes,” he admits. “But the technology exists and a big part of energy optimisation and Net Zero has to be energy efficiency and the only way you’re going to do that is through machine learning, AI, and digital twins. There’s enormous opportunity in the chemicals sector.”
STANDARDS
Currently, a major share of the industry’s greenhouse gas emissions arises from the upstream value chain (Scope 3). Increasing data transparency and accuracy on the product-level is a key element to drive emission reductions along the value chain and is a strategic cornerstone of many corporate climate mitigation strategies.
Together for Sustainability (TfS) has launched its Product Carbon Footprint (PCF) Guideline drawing on the knowledge of its member network to set a standard for the chemical industry. The PCF Guideline is fully compliant with existing standards including ISO and the Greenhouse Gas Protocol and aims to create benefits for TfS members, their suppliers, as well as other industries initiatives as a drop-in solution for the chemical sector.
“The number of companies that have monitors on each part of their process to measure electricity and heat per product and can generate exact CO2 equivalents per kilo are very small,” says Hughes, whose company, Azelis, is a member of TfS). “The guideline outlines how to make estimations of the products coming into your process, how to make estimations on your process, as well as the hierarchy of estimations: When to use one over another for the best result. It’s about taking the first step to improving your accuracy.”
If this sounds daunting, TfS is developing a software platform, called SiGREEN, which is due for release before the end of 2024 when it will be made available open-source to help with the process of capturing this data.
The idea of adopting SiGREEN alongside the PCF Guideline is that everyone using it can share PCF data for all parts of a product, meaning the finished product has an accurate PCF and so does each company that had a hand in making it. This is especially important in the chemicals industry as it underpins almost every manufacturing industry on the planet.
“The only way companies can achieve their Net Zero by 2050 targets is by lowering the embedded carbon in their products,” Hughes states. “Section 3.1 of Scope 3: purchased goods and services, is our largest section of scope 3 emissions. If we’re going to lower that section, we have to purchase products with lower embedded carbon. That’s the driver behind all of this, we’ve set targets, most will have some kind of financial commitment against those targets, and so we’ve got to reduce them. The first step in reducing them is knowing where they are, and that’s what the baseline PCF is about.”