The Green Factory

Industrial and manufacturing processes in various sectors consume a lot of energy and are large emitters of greenhouse gases. According to an estimate by the World Economic Forum, the industrial sector, along with its manufacturing processes and the associated value chains, is responsible for about 30 per cent of the greenhouse gas emissions in the world annually. In light of the Net-Zero commitments of countries (developed countries before 2050, China by 2060 and India by 2070), there is a move towards net-zero or carbon-neutral manufacturing. The EU, a leader in green initiatives, has even passed a Net-Zero Industry Act, which aims to move all manufacturing to be powered by clean energy.

Challenges in the Industrial and Manufacturing Sectors

To achieve net-zero in manufacturing, there is a need to change the production processes so that the dependence on fossil fuels is phased out. This would involve mapping out the whole production cycle and then looking for ways to reduce emissions at each stage in the supply and value chain. Typically, any manufacturing entity would have to look at energy use, recycling efforts (which encourage circularity and reduces emissions) and use of fuel in transport of its inputs and outputs (goods and services). It would then have to assess the emissions at each stage and the carbon cost thereof. This assessment could involve a host of measures at every step: the change of furnaces and boilers to improve efficiency and reduce emissions, use of inputs and components from recycled or repurposed materials and a shift to electric mobility. All these measures would require the use of the latest technology, data analytics and innovative interventions that achieve the three broad objectives: net-zero manufacturing, circularity and greater efficiency. In addition, skill development in the new and fast evolving technologies would have to go hand in hand with the application of these technologies.

In manufacturing, even more difficult is the measurement of Scope 3 emissions: those emissions that are indirect and occur in the downstream and upstream parts of the value chain and those that are not included in Scope 2 emissions. We may note that Scope 1 emissions are those made directly by the reporting company such as fuel used in manufacturing, company cars or heating/cooling and lighting of company factories and offices. Scope 2 emissions are those that are made indirectly by the company such as electricity or other inputs purchased by the company. A report by Deloitte on the Dutch industry estimated that Scope 3 emissions made up 88 per cent of total business emissions. This report spelt out the challenges in measuring and accounting for Scope 3 emissions, namely: poor data availability with key suppliers across the value chain, absence of standardised reporting formats in respect of emissions, lack of cooperation among stakeholders across the value chain and lack of resources, particularly with small enterprises and lack of access to the data of related entities.

Another challenge in the road to achieve net-zero in manufacturing is the stubborn sectors: where environment friendly production processes have been slow to emerge. These are also called ‘hard to abate’ sectors and include steel, cement, fertilisers and plastics. While there have been some developments in steel manufacturing such as hydrogen direct reduction (which uses hydrogen instead of fossil fuels to reduce iron ore) and electric arc furnaces (in place of blast furnaces which use fossil fuels for heating), these are expensive and have been adopted mainly in Europe. Similarly, low carbon fertilisers are being introduced in developed countries only because of their cost and the bulk of ammonia that is used in making fertilisers is still produced using fossil fuels. It is the same story with respect to cement and plastics. We will discuss this in more detail in the following articles.

Conclusion

Manufacturing is a large consumer of energy and accounts for 20 per cent of greenhouse gas emissions worldwide. Hence, it is important for manufacturing to become more efficient as well as reduce its emissions, if our net-zero targets are to be attained early. We have seen the problems in getting to net-zero in manufacturing in general. In the following article we will take up the ‘hard to abate’ sectors such as steel, cement, fertilisers and plastics.

The writer is Additional Chief Secretary, Department of Cooperation, Government of West Bengal.