Highly ambitious new carbon-reduction proposals by the EU are set to compel major increases in efficiency and sustainability for asset and energy-intensive industries that do business in the bloc.
The new “Fit for 55” measures proposed by the EU Commission seek to achieve the goal of eliminating 55% of carbon emissions by 2030, compared with 1990 levels. They include significant expansion of renewable energy, a carbon-based border tariff on imported steel and concrete, a tax on aviation fuel (with a tax holiday for low-carbon alternatives) and restrictions that will effectively halt sales of new petrol and diesel-powered vehicles.
The package is tough and although yet to be approved, will almost certainly lead to a flood of renewable and low-carbon energy in the EU market. Sustainability is rocketing to the top of the political and corporate agenda everywhere. China, for example, has announced a significant new drive for circularity as part of its fourteenth Five-Year Plan (2021-2025), setting aggressive new targets to cut energy and water consumption.
Industries face a “dual challenge" – meeting the growing demand for resources and higher standards of living from a growing population while also addressing sustainability goals, reductions in emissions and reductions in plastic waste in the environment.
In capital-intensive industries, meeting this dual challenge requires new levels of operational excellence. Companies need the agility in operations to address volatility, the flexibility to operate across different scenarios, and the access to critical supply chain insights.”
Rather than wait on events, however, businesses need to take the initiative now to reduce emissions through accelerated implementation of digitalization and greater efficiency. Increasing efficiency may not be as eye-catching as breakthrough technologies, but it is by far the most efficient way to reduce emissions rapidly. The International Energy Agency and the European Union, for example, both highlight the importance of integrating digital capabilities to achieve their aggressive targets.
Chemicals and energy are two industries where process optimization should be a fundamental element in sustainability, using hybrid modelling and emissions dashboards. In Germany, many chemical producers have accelerated digitalization since Industry 4.0, which was a turning point.
Digitalization for efficiency and sustainability needs to be holistic, covering manufacturing, supply chain, technology, marketing and sales, using existing data with new tools to create greater knowledge that accelerates functional areas. It should include:
- Hybrid models, which combine first principle simulation with AI, to improve process technologies
- Emissions dashboards to track release of emissions like CO2 and NOx and target actions for reduction
- Utility planning to manage steam and utility balances to improve efficiencies
Embedding digital capabilities in this way reduces emissions and waste. Assets become more reliable, more efficient and more productive, resulting in a plant that is well-equipped to maximize and sustain value.
Companies must use digitalization to develop new levels of agility, flexibility and insight, but without any trade-off with profitability. Agility requires monitoring and control of processes using advanced process control (APC) with dynamic optimization. This ensures efficient use of resources and avoidance of unexpected upsets and quality problems. Flexibility comes when an organization has achieved better visibility across its entire enterprise and can consider alternative scenarios and make better business decisions. These are capabilities built upon insights gained from data integration and management that genuinely reflect current operations, define future targets and chart progress.
The importance and value of this data will be essential for proposed sustainability reporting requirements emerging in all regions. Investor and consumer pressures are driving companies to disclose new metrics and KPIs that must be built upon captured operational data.
Nobody is suggesting it is easy to boost sustainability when markets are so volatile and businesses want to seize the opportunity presented by growing consumer demand. For most companies, annual planning processes are much more challenging in 2021. If, as is likely, major governments such as the EU impose more stringent emissions targets, companies in carbon-intensive industries need to move quickly to integrate digital capabilities. This is the fastest route to greater efficiency. It helps to make aggressive sustainability targets more attainable and to prepare companies for the long-term innovation that will be necessary to achieve global climate goals.
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