Energy reduction: Are manufacturers doing enough?

Related tags Global warming Kyoto protocol Carbon dioxide

Global warming is a real threat and needs to be addressed now,
argues BP group chief executive John Browne. He says that
manufacturers need to start taking steps immediately to reduce
carbon dioxide emissions in order to make a big difference in the
future. But are they really prepared to do so, asks Anthony

In an article for the July/August issue of Foreign Affairs​, Lord Browne of Madingley stresses that private sector efforts will be crucial in improving fossil fuel efficiency and developing alternative sources of energy. To harness business potential, however, governments in the developed world must create incentives, improve scientific research, and forge international partnerships.

"The most recent IPCC assessment, published in 2001, concludes that if no precautionary action is taken, carbon dioxide concentrations will rise by 2050 to between 450 and 550 ppm and will continue to increase throughout the twenty-first century,"​ he wrote. " The IPCC estimates that temperatures will rise by between 0.5 degrees Celsius and 2.5 degrees Celsius by 2050, with an increase of 1.4 degrees to 5.8 degrees possible by 2100."

These concerns, said Browne, are serious. "But they are not the only energy security issues we face. Equally worrying is the risk that the growing consumption of hydrocarbons will impose an unsustainable burden on the earth's climate. If that threat becomes a reality, drastic action could become necessary, imposing crippling costs on the whole world."

Many manufacturers have indeed taken steps to reduce emissions associated with their operations and achieve greater energy efficiency. Kraft Foods for example has just selected Rockwell Automation's Power & Energy Management Solutions (PEMS) team to develop and execute a sustained energy reduction initiative across all its manufacturing facilities in North America.

This multiyear initiative is designed to facilitate Kraft's understanding and management of how energy is used within its plants and help the company identify opportunities to reduce energy costs through lower consumption.

"Finding ways to reduce energy demand is fully consistent with our drive to achieve efficiencies in all aspects of our business,"​ said Fred Sherriff, vice president of manufacturing technical services for Kraft. "It is also consistent with our efforts as a responsible corporate citizen to reduce the environmental impact of our operations."

Unilever is another food giant that has actively been looking at ways to achieve energy reductions. For expample, a distribution centre in Coventry, UK, has been fitted with state-of-the-art insulation and energy re-use facilities and has produced savings in refrigeration costs of some 40 per cent compared with traditional designs.

For manufacturers, large cost savings can be made. Browne gives the example of "smart grids" that make more efficient use of electricity transmission and the greater use of waste heat in factories. The construction of more energy-efficient buildings is another means of achieving both cost savings and environmental targets.

"The establishment of market-based mechanisms to cap and trade emissions will create space in the market for a new set of energy sources by making carbon emissions more expensive,"​ wrote Browne. "Several promising initiatives are already in development - at the state level in the US and at the continental level in Europe - that could be used as building blocks for an international system."​ Last year in the UK, the Food and Drink Federation (FDF) reported that food and drink companies had managed to reduce harmful carbon dioxide emissions by 160,000 tonnes since 2001.

But there is cause for concern. In contrast to Browne's optimistic view of an enlightened manufacturing sector, a recent survey of attitudes to the upcoming EU Emissions Trading Scheme suggests that many companies are not sufficiently prepared. Even though no firm thinks that the EU ETS will be scrapped, only 51 per cent think that they will be ready on time.

The report, from LogicaCMG, illustrates that although many manufacturers are aware of the legislation, action has been slower than words. For although the EU ETS is a board level issue at 66 per cent of companies questioned, only 36 per cent have so far set a budget to move to full compliance.

The EU Emissions Trading Scheme (EU ETS) is one of the policies being introduced across Europe to tackle emissions of carbon dioxide and other greenhouse gases and combat the serious threat of climate change. The scheme comes into force on 1 January 2005.

Levels of knowledge of the scheme are low for a regulatory change of this scale. Across Europe, only one third are very well informed, slightly higher in Germany and Spain, and three out of every 10 companies admit to being poorly informed. These levels indicate a significant lack of in-depth knowledge for a scheme with such far-reaching impact, just a few months away from its intended start date.

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