Decarbonisation: a defining moment for carbon-intensive industries

With a legally-binding target set to achieve net zero carbon emissions by 2050, many industries are facing mounting pressure to decarbonise processes and reduce their carbon footprints. For carbon-intensive industries however, achieving net zero is likely to be extremely challenging and many businesses will need to make radical changes to adapt processes and adopt green sourcing strategies. But will the transformation be worth the reward?

For carbon-intensive industries, such as aerospace, automotive, steel, oil and gas and chemicals, the pressure to decarbonise operations is intensifying. The UK government has recently launched its Industrial Decarbonisation Strategy, which is challenging process manufacturers to reduce carbon emissions by around two-thirds by 2035. With more legislation expected to follow, carbon-intensive businesses urgently need to put in place a roadmap to decarbonisation to demonstrate that they are heading in the right direction and in line with legislative targets.

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In addition to the mounting legislative pressure to reduce carbon emissions, customers and investors are placing greater emphasis on corporate Environmental and Social Governance (ESG) performance. This stakeholder pressure is encouraging businesses across industry sectors to proactively prioritise decarbonisation strategies and report on their progress.

In the automotive industry, a ban on the sale of new internal combustion engine (ICE) vehicles is due to take effect in 2030. In readiness for this, vehicle manufacturers are pressing ahead with the launch of new all-electric ranges for the mass market, which are more environmentally-friendly to run. While such vehicles are attractive to carbon-conscious motorists, the widespread use of global sourcing strategies and processes powered by fossil fuel combustion, mean that the manufacturing emissions of all-electric vehicles remain high. The batteries and other electronic components used in all-electric models also contain rare earth metals and minerals, such as lithium and cobalt. Much of the steel used to make the bodywork and body frames for vehicles is produced in China and shipped to Western production plants, incurring another significant cost for the environment. As many automotive manufacturers have little knowledge of the carbon footprint of parts sourced beyond Tiers 1 and 2, performing an end-to-end carbon impact assessment of their supply base would take a lot of time and effort.

As the green industrial transformation gathers momentum, it is possible that some fossil fuel-dependent industries will disappear altogether. In other cases, they will find a way to evolve by greening processes and making greater use of alternative technologies and renewable power sources. Supply chains will become more transparent and collaborative; sharing environmental performance data and storing inventory in a way that reduces the need for transportation, while spreading the cost burden across the supply chain. Innovative packaging solutions will be developed to fit the brief in terms of their strength and flexibility, while minimising waste and optimising recyclability.

To plot their path to the net-zero future, businesses that use carbon-intensive processes will need to put in place a bespoke decarbonisation roadmap and demonstrate their willingness to adapt their operations and systems. This roadmap should be aligned with legislative milestones, while focused on directional strategic objectives, to meet the expectations of customers and investors in the future.

For manufacturers it makes sense to utilise existing, industry-approved systems

Reliable and accurate data is critical to any successful decarbonisation strategy. However, capturing quantitative data about the carbon footprint of a specific manufacturing process is difficult to achieve as there are many subtle variations. To support businesses in making the necessary changes, industry standards and models must be developed to inform strategic decision making. For example, new industry-specific standards and models could provide an assessment of each process according to whether its carbon footprint is ‘good’, ‘bad’ or ‘average’, helping business leaders to prioritise areas for capital investment. The new standards should also be transparent and iterative, so they can continue to evolve as more data becomes available over time.

To ensure manufacturers have access to the new standards as they emerge, it makes sense to utilise existing, industry-approved systems. In the automotive industry for example, the International Material Data System (IMDS) is a global data repository for information on the materials used by manufacturers. To support the industry’s decarbonisation, automotive suppliers could be required to declare the carbon footprint of each material or part as it is entered onto the system.

With so much change required in so little time, manufacturers using carbon-intensive processes must take action as quickly as possible, and seek out industry support where it exists. A report published by the CBI, entitled ‘Seize the Moment’, has concluded that taking early action to decarbonise could unlock commercial growth opportunities for the UK economy worth £700bn by 2030 – creating low-carbon jobs and boosting green exports.

With technological advances and legislation moving quickly at the moment, those that succeed in staying one step ahead of the changes could reap significant commercial rewards.

Dominic Tribe, director and automotive sector specialist at Vendigital