An excerpt from Balancing Green by Yossi Sheffi

Making with Less Taking

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As the English physician Sir Thomas Browne wrote in 1642, “Charity begins at home.”1 Likewise, sustainability also begins at home, and many companies look inward and focus their initial sustainability initiatives on self-improvement. “Developing and implementing sustainable manufacturing practices is an essential part of doing business today,” said Michael Darr, plant manager at Bridgestone's passenger and light truck tire plant in Wilson, North Carolina.2

In most cases, these initial efforts align with the company's economic goals. Thus, improvements in the “make” process are often motivated by eco-efficiency considerations, including reducing the use (and therefore cost) of energy, water, and other inputs. These and other initiatives may also be motivated by eco-risk mitigation considerations, such as reducing or eliminating toxins in products or emissions, either of which could create expensive liabilities for the company or invite NGO criticism and attacks. This chapter emphasizes sustainability improvements in the manufacturing processes of a company's existing products, rather than changes to the products themselves (see chapter 8), changes in the raw materials and parts (see chapter 5), or changes in disposal (see chapter 7).

From the Taming of Flame to the Shaming of Flame

A blazing fire can either be an untamed terror that consumes all before it or a comforting source of light and warmth that brings cheer on a cold winter night. At least half a million years ago, humanity tamed fire to harness this chemical process for an ever-growing number of applications.3 Centuries of innovation have exploited the miracle of fire inside furnace boxes, beating pistons, and the twirling turbines of jets and power plants. The discovery of abundant fossil fuels, such as coal, oil, and natural gas, made energy cheap and plentiful, which fueled the modern world of industry and transportation.

As oil derricks drilled deep into the ground to extract black gold, so, too, did smokestacks, chimneys, and exhaust pipes rise into the sky. Emissions from the bright fires of early industry cast a dark pall over the landscape and sparked a wave of environmental laws after the Industrial Revolution. In response to regulation, engineers designed more efficient combustion systems that ensured more of the fuel was converted to useful heat. They also added a host of exhaust system add-ons, such as catalytic convertors, ash precipitators, and scrubbers, to further remove pollutants from exhaust.

Nevertheless, for all the control that humanity has exerted over this powerful natural reaction between air and fuel, it has failed to contain the most basic by-product of combustion: carbon dioxide. Each day, nearly 100 million tons of carbon dioxide flow into the atmosphere from the burning of fossil fuels in vehicles, factories, power plants, and other sources.4 Those emissions have outstripped the present-day capacity of vegetation and other natural geochemical processes to absorb the excess CO2, leading to a 27 percent increase in atmospheric carbon dioxide between 1960 and 2016.5 The majority of scientists (but by no means all) believe that these emissions have been and will be responsible for significant climate change that could threaten the viability of agriculture and ecosystems.

Supply chains play a major role in the atmospheric buildup of CO2 through the consumption of energy in both manufacturing and transportation. In the United States, industrial applications consume about one-third of all energy. Worldwide, industry consumes half of all energy. For that reason, many green supply chain initiatives focus on improving energy efficiency and reducing the carbon-intensity of energy sources. Under the Greenhouse Gas Protocol6 described in chapter 3, these are, in large measure, improvements to Scope 1 and Scope 2 emissions. According to the US Department of Energy, “Energy efficiency is one of the easiest and most cost-effective ways to combat climate change, clean the air we breathe, improve the competitiveness of our businesses and reduce energy costs for consumers.”7

Four Steps to Lower Footprints

In 2006, Siemens began implementing a “very German”8 four-step approach to internal energy efficiency. The process begins with selecting a site for improvement, continues through an “energy health check,” then moves on to an analysis of energy use, and ends with the implementation of a performance improvement contract between that Siemens facility and Siemens corporate headquarters.9 This cycle of assessment and improvement is largely an eco-efficiency initiative.

At one of its Bavarian factories, Siemens installed €1.9 million in new energy-efficient equipment and processes. The program cut the factory's energy use by 20 percent and cut its carbon emissions by more than 2,700 metric tons of CO2 per year.10 Of course, a 2,700-metric-ton reduction at one factory is negligible in comparison to the 2,737,000 metric tons of CO2 that Siemens emitted in 201311 and is infinitesimal compared with the 2013 global carbon emissions from fossil fuels of 36,000,000,000 metric tons.12 The initiative does nothing to mitigate emissions at Siemens’ tens of thousands of suppliers. And Siemens has thousands of business customers that use the company's products in ways that emit further carbon. However, the Bavarian factory improvement was only one of hundreds of initiatives undertaken by Siemens.

For example, at its factory in Newcastle, Siemens defined 13 individual initiatives in three categories: extension of existing building automation, modernization of measurement and control technology for the heating system, and installation of energy-efficient lighting. Siemens implemented its four-step energy saving process at its 298 major production and manufacturing plants worldwide. As a result, between 2010 and 2014, the company improved its overall energy efficiency by 11 percent and its CO2efficiency (output per unit of CO2 emitted) by 20 percent.13

These examples show that sustainability is a broadly implemented process, not a “silver bullet” point solution; reducing environmental impacts requires multiple points of intervention. In other words, as any golfer knows, “you don't get to the green in one stroke.” Such is the case with many of the examples outlined in this book, which exemplify the kinds of initiatives companies are pursuing rather than exhaustively documenting every single initiative.

Furthermore, many of these small changes are eco-efficient and are, therefore, financially justified because they meet the company's return on investment thresholds. The Bavarian initiative paid for itself in four-and-a-half years with projected annual savings of almost €700,000.14 The Newcastle improvements delivered a 27 percent internal rate of return (IRR).15 In addition, each modest success story (and its cumulative effect on impact reduction) contributes to eco-risk mitigation by demonstrating ongoing progress.

A 2006 study by the US Department of Energy (DOE) involving 200 energy savings assessments of steam or process heating systems utilized by manufacturers found that the average company in the study could save $2.4 million a year on natural gas alone if it implemented best practices in energy management or made modest upgrades to systems.16 Companies interested in superior energy performance can pursue ISO 50001 certification, which is an international standard that specifies requirements for industrial energy management systems.17 The US DOE claims that companies that achieve both ISO 50001 and the DOE's Superior Energy Performance (SEP) certification typically save 10 percent on their energy costs within 18 months of SEP implementation.18 Of course, such studies do not test each environmental improvement against other possible efficiency investments that companies could make or the investment hurdle rate used by each company.

Beyond making improvements in the efficiency of each industrial process, companies can pursue more systemic solutions.

Cogeneration, Coproduction, and Verbund

Visit almost any factory and you will see pipes, ducts, and conduits of all sizes carrying chilled water, hot water, steam, natural gas, and electricity. Manufacturing processes often require various cycles of heating and cooling of ingredients, intermediate products, and finished goods. Much of the energy in a factory is consumed by attaining and maintaining the right temperature for all these industrial processes. Yet, many of these processes duplicate efforts, with one system consuming energy to chill down hot materials while another system consumes energy to warm cold materials. Moreover, the cooling towers and cooling ponds of electric power plants offer graphic evidence of the “wasted” heat produced in powering all these industrial heating and cooling systems.

To reduce such systemic waste of energy, Unilever spent about €28 million on a cogeneration program in Europe. Cogeneration, also called combined heat and power (CHP), is the intentional co-location of electricity generation and heat-dependent manufacturing systems. With cogeneration, Unilever captures more of the total energy latent in the fuel than a traditional power plant would and avoids the need for separate boilers. The program made both environmental and economic sense: it avoided 60,000 tons of CO2 emissions and saved about €10 million a year.19 Overall, cogeneration can be 20 to 60 percent more efficient than standard power plants.20 “So we basically have a much cleaner energy generation, and it saves money,” said Tony Dunnage, group environmental engineering manager at Unilever.21

BASF, the large German chemical producer, extended the eco-efficiency principle behind cogeneration to other make processes that produce significant quantities of by-products, such as those in the chemicals and agricultural products industries. BASF uses a holistic eco-efficiency practice of site-wide management of products and by-products, which it calls verbund, the German word meaning “combined,” “linked,” or “grouped.” The largest of BASF's six verbund sites is located next to its headquarters in Ludwigshafen, Germany. The site integrates 160 production facilities interconnected by 2750 km of pipelines in a 10 square km campus. “At our verbund sites, production plants, energy and waste flows, logistics, and site infrastructure are all integrated,” BASF claims on its website.22 The strategy saves BASF more than €300 million annually.

Cogeneration and verbund take advantage of a supply chain that is more complex than the linear stages shown in the typical SCOR diagram. The verbund sites are a mesh in which each make step might consume multiple input materials (e.g., various raw materials and hot water) and produce multiple outputs (e.g., the intended product, valuable by-products, and cool water). Within this mesh, a by-product chemical from one production facility can provide a key ingredient to a second facility, while the second facility produces by-product heat used to power the first facility. With verbund, every production unit is potentially both a supplier and a customer of every other production unit. This holistic vision is also found in the circular economy: a sustainability concept borrowed from ecological sciences in which materials continually cycle in the environment (see chapter 7).23

Cogeneration and verbund require both large scale and breadth to be cost-effective. A smaller, more specialized chemical plant typically produces by-products in volumes that are too low to be economically viable for sale or further refinement, so they are typically burned for fuel or dumped. However, by integrating multiple large production facilities that can feed off each other's by-products, the volume of the by-products is large enough to justify storage and further processing, reducing the costs of subsequent manufacturing steps, and cutting by-product disposal costs. Yet, even the most efficient systems still need energy to drive manufacturing processes, which raises the issue of minimizing the carbon-intensity of these energy sources.

The Answer is Blowing in the Wind (and Shining in the Sky)

Starting in 2016, the winds sweeping across the hot dry plains of central Mexico have been helping General Motors build cars. The company signed an agreement with Enel Green Power to build a 34-megawatt wind farm to supply four of GM's Mexican factories. The new wind farm covers about 3 percent of the company's North American power needs and reduces GM's carbon footprint by nearly 40,000 tons annually.24

“There's also a good business case [because] prices for traditional power [in Mexico] are about a third greater than the United States,” said Rob Threlkeld, GM global manager of renewable energy.25 In addition to the environmental benefits, GM will save about $2 million annually over Mexico's electricity rate.26 “Using more renewable energy to power our plants helps us reduce costs, minimize risk and leave a smaller carbon footprint,” said Jim DeLuca, GM's executive vice president of global manufacturing.27

Again, while such a reduction is trivial (vehicle manufacturing and assembly constitute only 4 percent of the total life cycle value of energy use and carbon emissions of a vehicle), it is but one effort among many potential renewable energy technologies being tested by the automaker. For example, two of GM's Ohio plants have multimegawatt rooftop solar arrays. “You don't often think of the Midwest when you think of ideal locations for solar, but reduced costs and increased utility rates have made sites like Lordstown and Toledo optimal locations to expand GM's use of solar power,” Threlkeld said.28 GM expects to get 12 percent of its total energy from renewables.29 Overall, GM claimed to have achieved a 14 percent reduction in carbon intensity between 2010 and 2015.30 Nevertheless, some companies are targeting 100 percent renewables.

Apple uses one kind of flat-panel product to supply power for another kind of flat-panel product. On the one hand, Apple buys hundreds of millions light-emitting display panels each year for its iPhones, iPads, and iMacs.31 On the other hand, in 2015, the company pledged to invest $848 million in light-absorbing solar panels with First Solar's “California Flats Solar Project.”32 This commitment is part of $3 billion in investments by Apple in solar facilities in California and Arizona.33 Those solar panels will power Apple's energy-hungry data centers that the company uses to fill the display panels of Apple users with apps, maps, videos, messages, and other data.

Apple has pursued renewables very aggressively, with the intent of reaching 100 percent renewables in its own operations. In 2010, Apple got 16 percent of its power for corporate, retail, and data center facilities from renewables. Like GM, Apple has tapped into a wide variety of renewables, including solar, wind, micro-hydro, biogas fuel cells, and geothermal sources.34 Only four years later, Apple's percentage usage of renewables in its own worldwide operations had climbed to 87 percent.35

Greenpeace even recognized Apple for its progress toward using 100 percent clean energy. The NGO gave Apple straight A's on all four dimensions of Greenpeace's scorecard: energy transparency, energy commitment and siting policy, energy efficiency and mitigation, and renewable energy deployment and advocacy.36 “It's one thing to talk about being 100 percent renewably powered, but it's quite another thing to make good on that commitment with the incredible speed and integrity that Apple has shown in the past two years,” said Greenpeace senior IT sector analyst Gary Cook.37

From Rubbish to Roadsters

The smell of decay from a landfill or sewage treatment plant can also be the smell of an opportunity to reduce carbon intensity by using biofuels. Many companies convert biomass waste (e.g., food waste, agricultural waste, paper, and wood waste) into methane that can then be used as fuel. Although BMW USA in Spartanburg, South Carolina, does not produce significant biomass waste during the production of cars, the car factory is located near a large municipal landfill. The decaying garbage gives off methane and various other smelly gases. In 1999, BMW decided to harvest this gas to run the energy-intensive operations at the plant. BMW's paint shop, the single largest energy user in the factory, burns natural gas for heating spray-booth air, paint-curing ovens, a regenerative thermal oxidizer (a pollution control device that burns off paint fumes), and its energy center boiler.

The project required several capital equipment investments and modifications. First, the carmaker built a 12-inch pipeline, 9.5 miles long, running from the landfill to the factory. This pipe delivers gas as the garbage in the landfill steadily decays. Because landfill gas (LFG) is not pure methane, it has a lower heating value than fossil fuel natural gas. To accommodate the greater volume of gas needed to deliver the required amount of energy, the project required changes to many systems in the plant, such as larger pipes, nozzle mixers, firing tubes, and blowers. BMW also added control systems to easily switch between LFG and regular natural gas as needed.

As of 2006, BMW Spartanburg got 63 percent of its energy from LFG. BMW originally justified the project based on a less than three-year payback from anticipated savings. Actual savings exceeded the original estimates. The project also reduces BMW's carbon emissions by 17,000 tons of CO2 annually. In addition to the savings, the US Environmental Protection Agency awarded BMW with its Green Power Leadership Award in 2013.38,39 For BMW, methane was a solution; for other companies, however, methane can be a problem.

The Footprints of Hoof Prints

When Stonyfield Farm, maker of organic yogurt, did its first LCA in the 1990s, it was shocked to find that fuel-burning trucks and power-hungry factories were not the biggest source of the company's carbon footprint. Rather, the beloved bovines that turn grass and organic grain into wholesome milk for Stonyfield belch vast quantities of enteric methane as a by-product of microbial digestion of plant material inside each cow. Methane is a potent greenhouse gas and has 30 times the long-term heat-trapping ability of CO2. The average cow emits enough methane to equal the footprint of the average family car.

Many milk producers are aware of this crucial hotspot, and some are taking steps to mitigate it. Aurora Organic Dairy, for example, began to acquire land to grow feed for its cattle.40 This allowed the company to control the type and quality of feed to maintain its organic standards, as well as control the cost. The feed has a direct impact on the amount of enteric emissions of cows. These emissions are responsible for 78 percent of the company's GHG emissions.41 Aurora also acquired milk-processing capabilities, replacing a third party. In addition to reducing the dairy's carbon footprint, the control across the supply chain allows the company “the greatest traceability, most consistent standards and highest quality available.”42