A recent article on Bloomberg Business week has captured the attention of the manufacturing industry, by tackling the issue of carbon footprints and profitability. The article discusses the fact that cutting carbon emissions is one of today’s most reliable and profitable investments any business can make for itself.
To substantiate this claim, the author gives several examples of major international businesses that have seen substantial savings and/or incredible ROIs on acts that specifically target carbon emission reductions. Case in point, defense contractor Raytheon saves an estimated $100 million over ten years by upgrading its AC and energy management systems.
The World Wildlife Fund (WWF) along with McKinsey estimated that U.S. businesses (excluding utilities) can potentially save $190 billion dollars per year by 2020, provided they reduce their carbon emissions by 3% each year until then. In other words, carbon emission reduction strategies are poised to be one of the biggest opportunities for cost reduction in the coming years.
And that’s an opportunity that few manufacturers want to miss…
… but it’s also one that many are woefully unprepared to participate in.
How Streamlining Data Management Increases ROI
The fact is that many manufacturers, both OEMs and their supply chains, do not have systems in place that empower them to make informed decisions about how to efficiently cut carbon emissions. Because no business can afford to waste money on unproven or unpredictable solutions, most businesses remain paralyzed about the best route to take for reducing carbon without jeopardizing their profits.
That’s why it’s important to implement some type of EMS system that allows your business to assess potential courses of action (whether that’s replacing the materials you use, upgrading a piece of equipment, or overhauling a facility’s utilities) and perform detailed cost/benefit analyses.
In our experience, those businesses that do have some type of system in place just use restrictive spreadsheets, which not only make measuring carbon emissions difficult and time consuming, they use up valuable and costly resources by requiring hours of a specialist’s labor.
The better alternative is to implement a full-fledged automated system that directly collects air emission data based on your current chemical inventory and production schedule. That way it rolls up all the data you need to monitor and continuously improve your carbon footprint, taking far less time than manual processing.
What’s ideal about automating your carbon emissions accounting is that it not only makes it easier to decide which emissions reduction projects will most benefit you, it increases the overall return on investment of any project that uses automated data management. In most cases, the task of monitoring and measuring a new, important project falls on the shoulders of an EH&S specialist, whose hours are costly and better utilized on other duties beyond data collection and calculations. In other cases, businesses outsource this level of data retrieval to third party groups who cost even more, despite removing the physical burden of crunching numbers… and besides, there will still need to be an internal EH&S professional in charge of collecting and transmitting the data to the consultants.
But if you use an automated environmental data management system, you can remove 65 – 80% of the costs related to EH&S data administration, making carbon reduction projects more achievable and more worthwhile in terms of profitability.
Why the Aerospace Industry is Paying Attention
The aerospace industry in particular stands to gain or lose a lot in the near future depending on how it embraces recent innovations in carbon footprint tracking and reduction strategies. This is due largely in part to the looming 2014 deadline for aerospace that will see all flights entering or leaving European Union airspace paying fees on carbon emissions under the EU’s Emissions Trading System (EU ETS).
From its inception, the EU ETS has drawn harsh criticism from the aerospace industry, and that hasn’t changed over the years.
The EU ETS already covers a wide range of industries, applying a cap and trade approach to overall emissions management among manufacturers. There are also built-in annual reduction benchmarks that industries will need to meet in order to stave off the expenses of extra emissions allowances. The aerospace industry successfully asked for an extension that would allow them to better prepare for the regulation, giving them a grace period up until January 2014.
But now that the 2014 deadline is drawing nearer, aerospace businesses are feeling the crunch. Some EU-based airlines, like Lufthansa, are estimating that the EU ETS will end up costing them millions and inhibit business growth.
There’s a fear that the EU ETS will discourage airline businesses from expanding, as adding to their fleet and flights will disproportionately add to the amount of GHG allowances they’ll need to purchase to support the growth.
There’s also a question of competition: EU airlines are discouraged by the fact that other global airlines are not facing the same emissions regulations and fees. However, other airlines will still be required to pay an emissions “tax” for every flight that lands or leaves from an EU airport.
This also means that airlines will be expected to create accurate carbon footprint accounts for each flight subject to the EU ETS… a task that is not inherently difficult but certainly labor intensive and costly.
However, the issue at hand is not whether or not the EU ETS is applied perfectly, but how the aerospace industry can adapt and reduce the projected costs. Namely, the aerospace industry is facing 3 specific carbon-footprint related challenges:
- Reducing its carbon footprint.
- Accurately measuring and reporting greenhouse gas emissions.
- Eliminating or reducing costs related to the EU ETS.
It’s vital to recognize that those last two points are not contradictory – quite the opposite: the more efficient your system is for measuring and reporting GHG emissions, the less it will cost you to implement and use for the foreseeable future. Automation is one of the best methods of addressing both issues at once.
To break it down, consider this: for each of the hundreds of flights that go in and out of the EU each day, the aerospace industry needs to calculate every carbon footprint, accounting for accurate fuel usage, distance travelled, etc. … and every flight will have a different carbon footprint depending on these numerous factors.
While GHG calculations are not the most difficult process for an experienced EH&S professional, nor the most time-consuming, it will all add up when you factor the work needed to account for every flight, every day. The costs associated with these processes are already expected to be quite significant.
But if it invests in automating the bulk of this work through an EMS program and cuts down on the manual labor by 80%, the aerospace industry will see a dramatic reduction in the costs associated with complying with the EU ETS. Many avions systems now collect most of this data and transmit it to a data dump to be stored and forgotten… think of the benefits that could be realized simply by turning to an automated system that could extract that abandoned data and automatically report back comprehensive carbon emission reports on the fly.
To learn about how to keep up with the EU's ETS and the expanding REACH regulation in the most efficient way possible, check out this related article:
The Future-Proof Philosophy for REACH Compliance... (or Any Environmental Regulation)
July 18, 2013