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By Katherine Bonfante, Digital Managing Editor
Sustainability is not new. In the paper and plastics industries, recycling has been a way of life since the 1960s. For years, even decades, some manufacturers have been involved with cogeneration, alternate energy, water reuse/recycling and chemical reuse, and many more companies are following their example. What is new is the insistence from the public, the economic community and the government that we must be sustainable now. Add to that the growing understanding that sustainability efforts can drop quickly to the bottom line, and you have much more than a feel-good marketing effort. Now you're talking about a sensible business strategy that's a win-win for manufacturers, their customers and the environment.
At the Siemens User Summit in 2008, Bruce Taylor, then with Suncor Energy USA Inc. (www.suncor.com), described the sustainability task that its executive management set for him. They asked Taylor and his team to produce a viable energy management system. The first challenge they addressed was not on the plant floor, but in the accounting department.
"We started building awareness that energy is not a fixed cost," said Taylor. "There was an 'abundance' energy mentality with aggressive focus on production growth. Our energy and carbon dioxide costs were not fully valued. Our energy budgets would more than double if fuel internally consumed was assigned a cost. There was distributed accountability for energy management, and there was a lack of linkages between targets and performance."
Taylor continued, "Just from shaping behavior, we can impact a 3% to 5% annual improvement in energy costs, culminating in a cumulative improvement of 25% to 30% in carbon footprint."
How is the new mentality different from the old? There's no entry in a cost-accounting rollup for saving the environment or moderating global climate change.
What happened is best described by a concept called the "economic calculus." As with the air and water pollution control drives that erupted in the 1960s after the publication of Rachel Carson's The Silent Spring, the economic calculus was widened to permit those costs to be incorporated into the ongoing operating costs of an enterprise.
No company today would think twice about including air or water or solid waste pollution controls and mitigation strategies in a new or rehab plant design. The management support Taylor received is a clear indication that the economic calculus is widening once again, this time in favor of sustainable manufacturing.
"Energy is a hot topic right now, mainly because of the volatility of energy costs," says Marcia Walker, global market development manager for sustainable production at Rockwell Automation (www.rockwellautomation.com). "For the past 12 months, energy costs have gone down. However, industry professionals are preparing for the future, and they want to able to keep energy costs under control, especially because energy is the largest variable production cost."
The cap-and-trade policies under discussion now have also put energy costs in the spotlight. Whatever the final shape of these policies, manufacturers want to be ready—and controlling energy costs is part of that preparedness. From an environmental perspective, when manufacturers are able to control carbon emissions, they also are able to control energy usage and save on their energy costs. Most manufacturers today continue using coal- or gas-fired energy processes with big emission footprints—and big emission footprints cost more than small ones.
Environmental policies have a financial impact. For example, getting rid of industrial waste often is, in the end, more costly than implementing green practices. Furthermore, local communities are discouraging industrial plants—usually through taxes or fees—from dumping industrial waste into landfills.
That financial penalty encourages creative waste disposal. Many process plants send their industrial waste to re-use facilities. Here businesses use someone else's "garbage" for raw material. More than a dozen years ago, Fluke Corp.'s (www.fluke.com) George Bissonnet showed Control's editor in chief, Walt Boyes, that the circuit board and spent chemical recycling business he developed was actually a profit center.
Safety compliance is another strong driver in sustainability. This is based, one assumes, on the proposition that a safe plant is more sustainable than one prone to damage from unsafe practices. Study after study has shown that safety compliance, both in traditional workplace safety and in process safety management produces higher profit levels over time than ignoring safety issues does.
Walker adds, "[The process industries] are looking at things through a new lens. They want to improve their environmental performance, not just for responsibility reasons, but also for financial reasons."
Manufacturers also have a responsibility to shareholders to maximize profits. As T. J. Rogers, chairman of Cypress Semiconductor (www.cypress.com) says, "If you want businesses to do something, show them the money." This is another example of that widening economic calculus.
Rockwell's Walker explains that sustainability consists of making operations cleaner, safer and more energy efficient. "[Rockwell Automation] buckets sustainability into energy efficiency, environmental applications and safety. Energy, environment and safety are the three main components of it, with energy being the component that surprises people the most," says Walker.