CO2 emissions becoming a competitive factor
By the year 2100, average global temperatures will rise by 2.5 degrees compared to the pre-industrial era. The consequences for climate, environment and economy are hardly foreseeable. What sounds like a world-end scenario from a Roland Emmerich film, is a science-based prediction from the latest World Energy Outlook of the International Energy Agency (IEA), which only takes into account the currently binding climate protection measures. This would put the expected increase well above the 1.5 degrees aligned in the Paris Climate Agreement.
Thus, the IEA report underlines that the climate crisis remains the greatest challenge of our time. To limit its effects, man-made greenhouse gas emissions must be drastically reduced, ideally to net zero by 2050. To this end, most industrialised countries are successively tightening their CO2 reduction targets. However, these only apply to locations in the respective country and do not relate to global supply chains. Here, production continues to take place in best-cost countries where there are hardly any reduction targets.
However, many companies are now taking one step further on their own responsibility. For example, banks increasingly expect information on a company's carbon footprint as part of their ESG (Environmental Social Governance) strategies. Other companies have announced that they will produce in a climate-neutral way within the next few years, or that they will produce climate-neutral products in the future. One example is the automotive industry where several major players, such as VW, Daimler and Volvo, have announced that their supply chains will be climate-neutral by 2040 at the latest. Having said that, they are already tightening the requirements for this. For many suppliers, the presentation of a CO2 strategy is a considered a minimum criterion to be shortlisted. Other than that, some components are already required to be produced emission-free. This trend will intensify in the future, and it certainly will have its effect on the machine tool industry, too.
70 to90 per cent of companies' product-related emissions occur in the value chain
For producers of machine tools, there are basically two basic levers to contribute to the reduction of their customers' CO2 emissions:
Provision/use of more energy-efficient machines
Reduction of the carbon footprint of provided machines
As CO2 emissions have often been treated as synonymous with energy costs, the focus has been primarily on developing more energy-efficient machines that reduce both costs and emissions. However, according to our surveys, depending on the depth of the value chain, 70 to 90 per cent of the emissions of a product are procured through the supply chain. At the same time, this means that only a small part of the emissions can be influenced by a company directly. This leads to the conclusion that energy efficiency alone will not be sufficient in the long run. Instead, the CO2 footprint of the products and the machine tools used to manufacture them will themselves come more into focus in the future.
Exemplary corporate CO2 emissions. // © Strategy Engineers
Determine and optimise the carbon footprint of products
To determine and optimise the carbon footprint, a distinction is commonly made between Scope 1, 2 and 3 emissions. The terms are taken from the Greenhouse Gas Protocol of the World Resources Institute (WRI) and differentiate emissions according to their origin:
Scope 1 emissions result from the direct combustion of fossil fuels by the company
Scope 2 emissions arise from the provision of useful energy used, by the company, such as heat and electricity
Scope 3 emissions arisein the production of supplier parts or operating resources,in the operation of the enterprise itself orduring the use of the manufactured products.
In recent years, companies have primarily focused on reducing Scope 1 and Scope 2 emissions, e.g., by replacing fossil fuels, purchasing green electricity or implementing energy efficiency measures. However, this alone is not enough to provide climate-neutral products. For this, scope 3 emissions must also be considered.
The most suitable method to address a large part of Scope 3 emissions is to determine the CO2 footprint of particular products. The product footprint can be understood as the manufacturing costs of a product in the currency CO2. The first step to optimize the footprint is to understand what emissions are generated in the production/ procurement of which subcomponent. In this way, the CO2 drivers of a product can be determined. The next step is to identify measures to reduce them. Effective measures here are, for example, the development of CO2-optimised products, the increase of the raw material recycling rate, the implementation of CO2 as cost factor when selecting suppliers or the re-allocation of component production to certain climate balance-optimised locations.
How can CO2 emissions be determined? // © Strategy Engineers
CO2 optimisation must be tackled centrally and across divisions
When looking at these measures, it becomes clear that the reduction of CO2 emissions cannot be delegated to individual production locations that can only optimise Scope 1 and 2 emissions. An effective strategy for reducing CO2 emissions, which also includes Scope 3 emissions, must rather be designed centrally and across divisions. In doing so, both the view from the outside ("When or how much more are customers willing to pay for climate-neutral products? How long will customers continue to buy non-climate-neutral products? "), as well as the internal view ("What levers do I have? How much potential do they have? Which levers can be pulled and when?"). This must then be derived into concrete goals for the company and translated into specific packages of measures. In this way, companies can already position themselves for a future with climate-neutral supply chains and products that keep global warming at an acceptable level.
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