Manufacturing a response to net zero – energy efficiency at centre stage

• Energy efficiency often delivers cost savings with rapid payback at minimal risk
• Energy efficiency technologies are well-proven and commercially viable today
• Thought-leading companies are realising substantial cost and carbon savings by focusing on immediate opportunities to improve process energy efficiency

The recent Net Zero Stocktake 2022 report found that more than one-third of the world’s largest publicly-traded companies now have net zero targets: however, 65% of these businesses have no detailed plans in place for delivery.

Energy price volatility is now widely recognised as a key business risk. Energy efficiency provides a practical way to mitigate this risk and make a substantial positive contribution to the delivery of net zero commitments in the short-term.

Here we reflect on how and why energy efficiency projects can help manufacturing businesses to develop and accelerate their net zero programmes and deliver significant cost-benefits.

Light manufacturing businesses are extremely important to achieving net zero - because they are technically much easier to decarbonise than more energy-intensive industries, and hold much greater potential for short-term energy efficiency gains.

To date, the decarbonisation of industry has been driven primarily by the large-scale procurement of renewable power. Globally, corporate renewable power purchase agreements (PPA’s) grew from near zero to around 24GW in the decade from 2010 to 2020. Bloomberg reported further growth beyond the 30GW mark in early 2021. While PPA’s often save money, they ultimately still leave manufacturing businesses vulnerable to volatile energy markets. A more robust and cost-effective approach is to reduce demand for energy, recover wasted energy, and reduce dependence on grid energy imports.

The three top priorities for the manufacturing industry to put net zero ambitions into action are:

1. Minimising losses in energy generation and distribution systems
2. Designing and fitting out manufacturing processes to minimise energy use
3. Recovering waste heat

The most recent annual Energy Efficiency Report from the International Energy Agency (IEA), highlights the vast potential that remains for efficiency improvement in the light manufacturing sector. The report indicates that savings in the sector could account for as much as 70% of the overall contribution to energy savings potential from industry as a whole. This includes the potential that exists in energy-intensive sectors, such as steel and cement. The report estimated that if these efficiency gains are delivered in practice, manufacturing business could create twice as much value for each unit of energy consumed.

The report also highlights the importance of heat recovery, and concluded that the majority of the carbon emissions saving potential in the sector could be delivered using heat recovery heat pumps. The technology to deliver this potential in practice is commercially available, here and now. This conclusion was also supported by the World Business Council for Sustainable Development who recently suggested more than a third of total carbon emissions from light manufacturing could be eliminated through the use of heat pumps. These are big numbers underpinning enormous cost and carbon saving potential.

Ramboll is currently supporting a range of manufacturing businesses – including Devro, Henkel, BMW and others to address the following key objectives:

• Minimise heat wastage / maximise heat recovery
• Decarbonise heating systems
• Deliver associated benefits to the company bottom line

The majority of these projects are focused on de-steaming manufacturing operations, recovering waste heat and deploying heat pumps wherever commercially viable.

In one case, a single direct heat recovery project is expected to reduce the heat energy consumed by the manufacturing process concerned by circa 35%, reducing operating costs by over £600K annually. Our clients are looking to identify and where viable rapidly implement similar concepts, with similar benefits, across their global site portfolios.

The energy crisis has put energy costs into sharp focus for most manufacturing businesses. Companies that are not hedged through favourable long-term contracts faced price increases of up to 400% in 2022 alone. The flip side is that these price shocks have a huge positive impact on returns on energy efficiency investments.

In the UK, the availability capital grant funding support for energy efficiency is also helping to de-risk investments and soften the blow where cashflow and/or borrowing is a problem.

At Ramboll, we believe there are likely to be substantial opportunities for manufacturing process energy efficiency wherever the following criteria are met:

• Continuous waste heat sources – anything from heat rejected from refrigeration systems to hot exhausts, hot vapours from evaporators, condensates, cooling waters and warm/hot process effluents
• Continuous demand for low temperature (<100C) heat – anything that doesn’t necessarily require steam, even if that means ’de-steaming’ an existing process or process element – e.g. cleaning systems, pre-cooking, drying etc
• Close matching between the operating duties and loads of heating and cooling demands – this allows heat pumps to work ‘in both directions’ dramatically increasing their efficiency and payback

To manufacture a faster, low risk route to net zero, energy efficiency should be the first port of call. We believe that the technology is there for many manufacturers to set themselves apart from their competitors now, without waiting for a longer-term net zero ‘fix’. Use less, recover more and save more. As energy prices continue to fluctuate, this will become the mantra of the successful low carbon businesses of the future.