Industry 5.0 objectives of human awareness and sustainability require a complete rethink of manufacturing operations. In this Power of Unified Manufacturing webcast, CGI experts Peter Warren, and Robert Ylitalo join LKAB executive Stefan Savonen and Michael Nilsson of Lulea University of Technology to discuss how the energy transition is driving change in manufacturing.
Decarbonization: driving change in manufacturing
Creating sustainable manufacturing operations hinges on an effective energy source. Stefan Savonen is Senior Vice-President for Energy and Climate at LKAB, Europe's largest publicly owned iron ore mining company. He explains that the drive toward decarbonization in manufacturing started in 2016 with Hydrogen Breakthrough Ironmaking Technology (HYBRIT), a joint effort between SSAB, LKAB and Vattenfall to reduce CO2 emissions with the goal of fossil-free steel by 2035. With HYBRIT, LKAB will use fossil-free hydrogen instead of coal or natural gas in the reduction process and cut the CO2 footprint of their value chain by up to 50 million tons yearly in 2050.
Although there are different ways for manufacturers to adapt, depending on their location, Savonen says, one thing is clear: "The drive to decarbonize is here. If you are not on the train, you will be left when it leaves the station."
Michael Nilsson, project manager at Luleå University of Technology in Sweden, agrees. "The big energy-intensive players like the data center industry are very much aware of using a green energy philosophy for their services. They understand that 1 billion users could just leave ‘by a click’ if they don't try to be sustainable, to save the planet, and to be energy efficient."
Getting more energy locally and becoming more circular
Although every industry is driving toward the same goal of being carbon neutral, CGI’s Peter Warren suggests that, to be successful, this means not only using alternative forms of energy, but also sourcing and creating more energy locally, which has significant impacts on the organization’s value chain.
For example, instead of buying coal and oil from abroad, LKAB uses assets that are more regional, such as wind power and hydropower. As a result, Savonen explains, “Our value chain is shortened, and we take more responsibility.” A company that takes more responsibility can generate more business.
Savonen also suggests that businesses can consider using waste material to be more circular, a practice that Nilsson endorses. "Using things that were seen as waste is now an asset."
The role of data in sustainability-focused environments
Increasingly, collecting data is an important part of demonstrating a product’s sustainability. According to CGI’s Robert Ylitalo, tracking data helps companies prove they are green. As a result, companies need to collect accurate data about every step of the production process — from the raw materials used, to the final product that ends up in users’ hands.
Ylitalo explains, "You can't get a premium price if you can't prove that you're green. You can't get lower taxes if you can't prove that you're green. Then you have to connect the whole supply chain, having some kind of 'green handshake,' confirming the company has delivered a green product."
Nilsson adds that the next step is for industry to develop a standard that manufacturers and consumers agree on and trust to help verify that manufacturers are upholding these standards in all steps of the supply chain.
What actions should manufacturers take?
In terms of next steps to take in the energy transition journey, the panel members offered some advice:
- Savonen: If you have started that transition, speed up. If you haven't started, it's time to start. Climate is a driving force, but a large part is also business. There is this huge business opportunity for the company, for yourself and for your well-being to start now … no time to lose.
- Nilsson: For companies asking, "How can I fit into this green transition?" conduct an exercise to get the facts on where you are: pre, under or after. Pre: What energy do you bring into the company? You can change that. Under: How are you doing manufacturing inside the company? Is it the most efficient way? After: Is the final product or service energy-efficient enough?
- Ylitalo: This change is a journey of people to people. So, wherever you are, whatever you are doing, start inspiring people to train, to learn, to change, to be a part of the journey.