This article first appeared in New Zealand Manufacturer magazine
Every manufacturer needs reliable, affordable energy. The electricity you use, the thermal energy or coal that powers your boilers, the liquid fuels that run your vehicles – energy is one of your business’ most important resources.
So, let’s take your energy requirements a step further. Adding ‘clean, renewable energy’ to the list will make your manufacturing operations less dependent on fossil fuels and help avert climate catastrophe. Include a ‘resilient source of energy’ and you’ll help your business withstand potential energy shocks as geo-political tensions grow.
Reliable. Affordable. Clean. Renewable. Resilient. That’s a lot to ask of an energy source! Or is it? In this article we show you how to get started – and where to look as you become more ambitious.
1. Start with the UN’s Sustainable Development Goals (SDGs)
The 17 SDGs aim to end poverty, protect the planet, promote prosperity, and ensure peace for all. All 193 UN member states, including New Zealand, have adopted the goals.
Based on our thinkstep-anz research, the Climate Change goal (SDG 13) is the top sustainability priority for companies in New Zealand and Australia – and maybe for your manufacturing business too.
For many manufacturers, SDG 7 (Affordable and Clean Energy) will be another critical goal. SDG 7 and SDG 13 share some common targets: encouraging energy resilience, moving away from fossil fuels, and improving access to clean energy. Tackling either goal is a win for your business, our planet and its people. Operational efficiency + sustainable action together!
2. Understand your energy consumption
100% renewable energy is SDG 7’s holy grail. The share of renewables in New Zealand’s total primary energy supply is currently around 40% (MBIE, 2020). We’re not where we need to be as a country, but every manufacturer can push the market along. Look at your business’s energy use and find ways to reduce it or use energy more efficiently. Where to start? Calculate your carbon footprint (below).
But first, a sobering statistic to raise the stakes. According to local energy start-up Vortex Power Systems, approximately 50% of the world’s energy consumption is lost as waste heat from industrial processes. More on Vortex below.
3. Calculate your carbon footprint
This is a good place to start. Your carbon footprint is an inventory of all your Greenhouse Gas (GHG) emissions by source. Scope 1 emissions come from running your business, Scope 2 from the energy you buy, and Scope 3 from your value chain. More on Scope 3 shortly.
Compare your emissions with benchmarks for your industry. Then identify your carbon ‘hotspots’. These are the areas of your operations that generate the most carbon.
We’re willing to wager that, as manufacturers, your carbon hotspots will be the parts of your business that use the most energy. They’re likely to include your manufacturing process itself and transport to and from your premises. Use your hotspots to review where and how your business uses energy.
4. Reduce your carbon emissions
Armed with this knowledge, put a plan in place to reduce the hotspot emissions that come from using energy. Good news: becoming more energy-efficient is good for business, not just the planet. You’ll boost your bottom line and make your business more resilient.
5. Make your business accountable by setting targets
The best way to do this is through the Science Based Targets initiative. By setting a Science-based Target (SBT) you can be confident that you’re doing right by the planet. Approved SBTs are backed by the latest climate science. Bonus: with an SBT in place, you can promote your energy-saving efforts publicly. (No marketing greenwash here!)
6. Invest in your own R&D
Develop your own energy-efficient products and processes. Your customers will likely thank you.
7. Benefit from others’ R&D
There are some interesting start-ups out there. Vortex Power Systems converts low-grade waste heat recovered from thermal processes into clean electricity. The result: lower carbon emissions and greater energy resilience too, with an on-site source of power.
8. Be an advocate and procure with SDG 7 in mind
Let’s look at electricity. Despite your best intentions, even choosing a supplier that generates its own power from 100% renewables is not enough. That’s because electricity is impossible to track once it enters the national grid. Eighty-four percent comes from a renewable source, but you can’t be sure it’s not the other 16% that’s powering your factory.
Where to turn to make a difference? The New Zealand Energy Certificate System will help you. Here’s how it works.
New Zealand Energy Certificates let you ‘reserve’ renewable units of electricity. When you redeem these units from your power retailer (and your retailer redeems them from a generator), you send a clear message on the demand side of the electricity system: renewable energy matters to me.
On the supply side, the certificates shine a light on the non-renewable electricity that remains in the electricity pool: where has it come from? Over time, these demand and supply side forces will push generators to produce more renewable electricity.
9. Share your tips
Much of your carbon footprint will be Scope 3 (value chain) emissions. As a manufacturer, the raw materials you buy from your suppliers and the finished products you sell to your customers will account for a large share of your Scope 3 emissions.
Supply chains are linked. When you lower your Scope 1 and 2 emissions by manufacturing your product in a more energy-efficient way, you help your customers reduce their Scope 3 emissions. Similarly, when a supplier lowers their Scope 1 and 2 emissions, maybe by investing in energy-saving R&D, they help you reduce your Scope 3 emissions.
In other words, share the love! If you’ve found a way to reduce your energy use, pass it on within your value chain. Everyone benefits. It’s a shining example of our favourite SDG in action – SDG 17: Partnerships for the goals.
April 2022