As the effects of the gas price shock ripple through advanced economies, asset and energy-intensive industries will also have to adapt to the EU’s ambitious carbon-reduction proposals. The ‘Fit for 55’ measures put forward by the EU Commission will effectively mandate that organizations in the bloc achieve major increases in efficiency and sustainability. The aim is to eliminate 55 percent of carbon emissions by 2030, compared with 1990 levels, advancing Europe towards the goal of being the first ‘climate-neutral continent’ by 2050. The 12,000 pages of proposals include significant increases in the use of renewable energy, a carbon-based border tariff on imported steel and concrete and a tax on aviation fuel (with a tax holiday for low-carbon alternatives). The restrictions it proposes on vehicle emissions will have the effect of banning sales of new petrol and diesel-powered vans and cars. These stringent proposals have yet to be approved, but if they are, it will inevitably open the floodgates to a wave of renewable and low-carbon energy in the EU market.
But the EU is not acting alone. Sustainability is rising up the political and corporate agenda everywhere. China, for example, has unveiled a major circularity initiative as part of its fourteenth Five-Year Plan (2021-2025), setting aggressive new targets to cut energy and water consumption.
Given the uncertainty in the world, it may be tempting for some companies to hold back, in the belief that the governments will eventually dilute their plans or that some game-changer technology will erupt on to the scene. The reality, however, is that concerns about emissions and sustainability are not going to disappear. The EU’s Single Use Plastics Directive has been in force since 2019, for example. And despite all the advances in green energy, there are as yet, no technologies that can wish away greenhouse gas emissions.
Industries must now balance the desire for increased standards of living among a growing population, while also addressing climate change and the push for carbon-reduction. It is ultimately about the decoupling of economic growth from resource depletion. In the majority of industries this demands a complete redesign of current processes and products to integrate by-products and waste and to source alternative feedstocks and energies.
Rather than remaining by-standers, however, businesses should act now to cut emissions through accelerated implementation of digitalization and greater efficiency. Increasing efficiency may not be as spectacular as breakthrough technologies, but it is by far the most efficient way to achieve rapid reductions in emissions. The International Energy Agency and the European Union, for example, both highlight the importance of integrating digital capabilities to achieve their demanding targets.
Chemicals and energy are two industries where process optimization should drive sustainability, using hybrid modelling and emissions dashboards. In Germany, many chemical companies have advanced digitalization since Industry 4.0, which was a turning point.
When the purpose is efficiency and sustainability, digitalization 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 to target reduction initiatives
- Utility planning to manage steam and utility balances to improve efficiencies
Embedding digital capabilities in this way cuts down emissions and waste. Assets become more reliable, more efficient and more productive, resulting in a plant that is far better positioned to maximize and sustain value.
Although companies must use digitalization to nurture new levels of agility, flexibility and insight, there should not be any trade-off with profitability. Agility requires monitoring and control of processes using advanced process control (APC) with dynamic optimization. This ensures efficient resource-use and avoidance of unexpected disruptions and quality problems. Flexibility comes when an organization has achieved better visibility across its entire enterprise and is able to examine alternative scenarios and make better business decisions. These are capabilities founded upon insights derived from data integration and management that genuinely reflect current operations, and that also define future targets and chart progress.
This data will prove its worth, as it is 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 based on captured operational data.
Only the naïve would suggest it is easy to boost sustainability when markets are so volatile and businesses also want to grasp the opportunities presented by increasing consumer demand. These conditions make annual planning processes much more challenging in 2021. Yet if, as is likely, major governments such as the EU impose much more aggressive emissions targets, companies in carbon-intensive industries need to act quickly to integrate digital capabilities. This is the most direct and least painful way to both achieve greater efficiency and bring tough sustainability goals within reach. More advanced digital capabilities will also prepare companies for the long-term innovation necessary in the greener and more sustainability-oriented regulatory regimes that industries will face.
Matt Holland is VP EURA, AspenTech. Aspen Technology (AspenTech) is a global leader in asset optimization software. Its solutions address complex, industrial environments where it is critical to optimize the asset design, operation and maintenance lifecycle. AspenTech uniquely combines decades of process modelling expertise with artificial intelligence. Its purpose-built software platform automates knowledge work and builds sustainable competitive advantage by delivering high returns over the entire asset lifecycle. As a result, companies in capital-intensive industries can maximize uptime and push the limits of performance, running their assets safer, greener, longer and faster.
For further information please visit: www.AspenTech.com