In the second part of TM's environmental regulations feature, Edward Machin considers the theory, rhetoric and practicalities of carbon compliance
Stephen Johnson has less than six months to ensure his company is compliant with the Carbon Reduction Commitment (CRC). Our operations director’s remaining hair is disappearing in his desire to become a green manufacturer, and not without reason.
The rewards for environmental excellence, its proponents argue, are extensive.
Higher profit, lower costs, increased efficiency and a raft of reputational benefits to boot.
But with league tables highlighting the best and worst carbon emission performers, Johnson questions whether turning green into gold is really that simple. He is not alone.
Manufacturers are finding the cost of complying with environmental regulation, or even best practice targets, can be high.
Case Studies
Boss Design
Founded in 1983, Boss Design manufactures seating and upholstery to markets including automotive, hospitality and leisure, public sector, broadcasting and utilities and telecoms. In 2007, the company undertook the first steps in a carbon reduction drive — having its footprint measured by the Carbon Neutral Company and verified by the Edinburgh Centre for Carbon Management.
Says operations manager Virginia Seaward: “This process allowed Boss to put a complete carbon reduction plan into the business, with 30 items which we felt could be targeted to reduce our footprint. We’ve very recently been remeasured, and managed to reduce our carbon emissions by approximately 0.1 kilo per employee.” Given such achievements, are Seaward and Boss Design awaiting the Carbon Reduction Commitment’s implementation in 2010, and the potential for big fiscal savings? “While as a company we are ready for the CRC,” she says, “there remain a number of profound concerns around the project going forward. Because our carbon reduction drives have been in place for two years, the significant reductions which are required have already been made. The fact the company will potentially be penalised because we cannot backdate the considerable reductions in our carbon emissions is both disappointing and a source of deep frustration.”
Precision Engineering Plastics
Precision Engineering Plastics (PEP) initially applied for a £10,900 interest free Energy Efficiency Loan from the Carbon Trust to fit energy optimisers to 19 motors used on injection moulding machines and chillers in its 24,000 sq ft factory in north London. As a result, the company made annual energy savings of £3,114.
In February 2008, in line with its continued growth, the company approached the Carbon Trust again, this time for help to replace two injection-moulding machines with newer models.
A second interest free loan of £47,285 to help fund the purchase of the new machines was provided.
Besides being quieter and more energy efficient, the replacements are also quicker.
Together with reducing cycle times and running costs, this has reduced PEP’s annual energy bill by £18,700. At the end of 2008, the company used a third Carbon Trust loan of £10,500 to buy a power factor correction unit and regulate the amount of power consumed by the plastic moulding machines. “The Carbon Trust’s interest free loan scheme was a perfect way to keep PEP at the forefront of our market in terms of technology, while enabling us to steadily reduce our energy costs over time,” says PEP codirector, Vince Marino. “If not for this, it would be much more difficult for a company of our size to finance and purchase new equipment, and therefore to stay competitive.”
A carbon revolution?
More than a quarter of Britain’s carbon emissions come from industry.
Accordingly, says Henrietta Stock, technology acceleration manager, the Carbon Trust: “Working with UK manufacturers to reduce both their carbon footprint and related industrial emissions is vital to meeting the UK’s overall carbon reduction targets. Most importantly, improving energy efficiency within industry remains central to making British manufacturing leaner and more competitive.” At its simplest, reducing energy consumption can have a significant — and immediate — impact on the bottom line. In fact, says Stock: “Detailed analysis conducted through our Industrial Energy Efficiency Accelerator programme has identified opportunities to reduce energy costs and carbon emissions by an average of 28% in asphalt, plastic bottle, and animal feed manufacturing. We are working to roll out this research more widely, unlocking major efficiencies in other areas of industry; bakery, confectionery and dairy, among others. In order to realise truly substantial cuts, we must get to the very heart of manufacturing and the processes that individual industries rely on. This collaborative approach will enable companies to rethink the way that factories and plants operate from the ground up.” In the longer term, by spearheading a low carbon industrial revolution we will increase demand for innovation, generate jobs and create economic value, Stock says. “As the UK moves to develop a thriving low carbon economy, we have an opportunity to become a leading supplier of sustainable products to the rest of the world. Indeed, with major brands already looking to squeeze carbon out of their supply chain, reducing carbon emissions at the point of manufacture will play a significant role in driving down the carbon footprint of the goods that the UK consumes and exports.” Those companies that demonstrate a commitment to reducing their environmental impact will reap the rewards in this new, lower carbon world. “Cutting carbon today equates to cost savings tomorrow — of this we must be clear.
Vitally, it holds the key to a revitalised and competitive manufacturing base that, 300 years after the start of the industrial revolution, the UK can be proud of.”
Is UK plc ready for low carbon? – An EEF report
The global market for climate-friendly ‘cleantech’ goods and services, worth £3tr in 2008 — and projected to reach £4.5tr by 2015 — is driven by powerful long term trends; accelerating resource depletion, growing environmental awareness and increasingly aggressive climate policy, among others.
Manufacturing accounts for a big share of this market, particularly in the fastest growing sectors such as renewable energy.
The UK remains some way from being a global leader for manufacturers of low carbon technology. That being said, there are both strong foundations and encouraging recent progress which can be built upon. Through a combination of more strategic industrial policy, better joined-up thinking from government, and active engagement from industry, the UK can still position itself as the premier location for the low carbon industrial revolution.
To create a compelling business environment for cleantech companies, government must ensure that skills, tax and industrial policies are all pulling in the same direction to create an environment where private enterprise is compelled to look at cleantech. Failure to do so could well leave the UK with the worst of both worlds — incurring the costs of the transition to a low carbon economy without taking advantage of the benefits.
As such, EEF recommends that government should:
•Enhance the effectiveness of low carbon industrial policy by focusing on a smaller number of industries and making a long-term commitment to support them. Nuclear power, carbon capture and storage, offshore renewables, and low carbon vehicles are prime candidates
•Raise public support for clean energy research, development, and demonstration from its current low level to the OECD average and make greater use of public procurement to stimulate the development of low carbon technologies
•Introduce a ‘green bond’ scheme that allows manufacturers to use future tax benefits to finance low carbon technologies at the critical stage of their development
•Avoid attempting to plan in detail or micromanage the supply of skills for a low carbon economy. Policy should focus on creating a strong supply of core skills and a genuinely demand-led vocational training system
•Work together with all stakeholders and use the issue of climate change to inspire young people to study for and pursue careers in the STEM professions
