In this opinion piece, Carlos Urbano, Vice President, Industry for the Pacific Zone at Schneider Electric, reports how moves to reduce emissions are bringing wider benefits to industry – including profitability.
Recent visits to customers all over Aotearoa have confirmed to me that large businesses, from primary producers to manufacturers and retailers, are paying more than lip service to sustainability issues.
They are sensitive to the fact that consumers and investors, here and around the globe, are increasingly choosing to direct their money to companies with credible and visible decarbonisation goals. They also want to play their part in decarbonising the New Zealand economy.
From next year, around 200 New Zealand entities, including listed companies with a market capitalisation of $60 million or more, will be required to produce independently audited climate-related disclosures. This will become the norm in many parts of the world, allowing the progress of businesses towards their decarbonisation goals to be benchmarked and easily tracked.
New Zealand has a head start over much of the world, thanks to extensive renewable energy resources.
Hydro advantage
In 2022, the share of renewables accounted for 86.6 per cent of power generated in the country, the highest globally, except for my home country Brazil (89.2 per cent) and renewables leader Norway (98.5 per cent). Hydro power underpins the production of clean energy in these three countries, with wind and solar projects set to add clean energy generation to support the electrification of transport and industry.
So New Zealand has a major opportunity to accelerate its energy transition and become more efficient and competitive in the process. But the required transition, nevertheless, represents a major challenge for many sectors of the economy.
For instance, shifting from the use of coal or gas-fired steam boilers to heat pumps in the dairy sector for drying milk powder, or transitioning from oxygen furnaces to electric arc furnaces in steel production, requires significant investment, planning and expertise.
Our 2022 New Zealand Business Sustainability Index, which featured input from 300 New Zealand business decision-makers across major industries, found that a lack of financial resources for sustainable technology, the absence of government incentives, and the need to prove ROI (return on investment) to business stakeholders, were some of the key barriers to decarbonisation efforts.
New Zealand businesses don’t have to go on this journey alone, nor must they complete it in one giant leap. Many steps can be taken to reduce greenhouse gas emissions now with the use of existing technologies. Aotearoa can take its famous ‘NZ Inc.’ approach to sustainability, sharing ideas and experience, partnering to speed the transition.
The power of data
The key to doing so is harnessing what we at Schneider Electric call the digital triad of sustainable industry – energy optimisation, automation, and software to digitise systems and make use of data analytics for more efficient production and operations.
Recently we helped one of our customers, a large cement maker, address a key area of inefficiency; large amounts of raw materials were going to waste when equipment failed at its cement plant. Using sensors monitoring temperature and vibration, coupled with intelligent software and analysing two years of data, we were able to predict, within a timeframe of a few weeks, when a key bearing in machinery was likely to fail in future. Our prediction turned out to be accurate.
The prior warning our system provided meant the cement company avoided a costly pause in production due to an unexpected equipment failure – and avoided the need to discard raw materials, improving its sustainability position.
Emissions reduction efforts can start with basic approaches, such as replacing inefficient motors or automating manual processes, through to the application of digital twin and artificial intelligence to redesign products, enabling them to work in a circular economy. Most businesses use less than 10 per cent of the data they generate, missing out on opportunities to gain insights to improve productivity, reduce waste and save energy.
At Schneider Electric we walk the talk. We have many of our own smart factories around the world using the energy-saving, automation technology available to our customers. Recognised by the World Economic Forum for leading the way in smart manufacturing, our factories in Lexington, USA, and Le Vaudreuil, France, have been recognised as Sustainability Lighthouses; two of only six worldwide.
They, along with facilities in Batam, Indonesia, Hyderabad, India, and Wuxi, China, are designated Advanced 4th Industrial Revolution (4IR) Lighthouses. At our Lexington plant, and similarly in Batam, we’ve reduced energy costs by 10-30 per cent and maintenance costs have reduced 30-50 per cent.
Benefits beyond emissions reduction
Sustainability forces an organisation to be agile and innovative. A drive towards industrial sustainability means highly optimised operational efficiency, smart energy consumption and, in many cases, almost zero waste.
Manufacturing leaders can look to centralised, cloud-based optimisation and project
management technologies to glean data-driven insights that support more informed decision-making around environmental action.
Achieving this requires a review of existing processes, equipment, organisational culture, and technology to identify and tackle inefficiencies and waste. The skills required to do so are lacking in many large New Zealand businesses.
But the challenge has been set with the Government’s net zero 2050 goal and the milestones for emissions reduction along the way. We know from experience that the benefit of the industrial sustainability triad goes far beyond reducing emissions.
Organisations we work with that have converged process performance and electrical power consumption into a single overview, are experiencing a 20 per cent capital expenditure reduction, a 15 per cent decrease in downtime, 7-12 per cent reduction in their carbon footprint, and a 3 per cent increase in profitability.
Every New Zealand organisation’s sustainability journey will be unique. But Schneider Electric can help them along the way. By drawing on our extensive technical capabilities and extensive global experience, we can assist at every step of the way as we collectively undertake the largest and most urgent transformation in human history.
For more information: se.com/nz/en/work/campaign/industries-of-the-future/