Quick off the gas? Sustainable production involves more

To get a nice piece of glass, you have to sand and cut it. They are masters at the French building material multinational Saint-Gobain. Only: you sometimes have to heat the material with which you process glass considerably so that it becomes extra hard. And that takes a lot of energy.

“We have been able to adapt these processes,” says Benoit d’Iribarne. At Saint-Gobain, he is responsible for the operational processes of the mega-group’s hundreds of factories (166,000 employees worldwide). “We have managed to reduce the temperature and duration of the heating process. That sometimes resulted in a gain in energy consumption of 20 to 25 percent.” He adds: “We wouldn’t have done that without the pressure of high energy prices.”

What will the energy crisis do to companies’ sustainability plans? Are they trying to get rid of their fossil fuel resources more quickly now that gas is very expensive? Then the current crisis would accelerate the energy transition, as an unexpected positive side effect.

Large energy consumers, such as the chemical industry, are suffering greatly from the high prices of fossil energy. Fertilizer factory Yara and zinc manufacturer Nyrstar were already forced to halt production in their Dutch factories: it no longer paid off.

One reason why energy-intensive companies in the Netherlands receive little support from the government is the idea that this slows down sustainability. De Nederlandsche Bank put forward this theory this spring, for example, in an analysis in which the question was whether companies should receive support.

Yet the practice is more complex, according to conversations with energy-intensive companies and their consultants. Real sustainability takes a long time, and you don’t just accelerate projects to that end. Moreover, rising interest rates make investing more difficult.

Lack of materials

Just this video call with NRC, and then Jeroen van der Wal has a telephone consultation about the possible installation of a heat pump at his home. “Not because I’m just starting with that now, but because it just took a long time until it was my turn,” he says with a laugh.

The example fits exactly with the point that Van der Wal, who helps consultancy firm Deloitte to make companies more sustainable, wants to make. He has reservations about the idea that greening is accelerating. Companies do want to get rid of fossil fuels as quickly as possible, but that depends on all kinds of external factors – and these are by no means always favorable. One of them is the availability of materials and manpower, and it is precisely the lack of these that makes it complicated to invest in greening.

Companies want to get rid of fossil fuels as quickly as possible, but that depends on all kinds of external factors – and these are not always favorable

Van der Wal: “I recently spoke to someone from a company that wanted to install solar panels. But there were no inverters available at that time.” And you do need it to convert power from solar panels into usable alternating current.

De experts die NRC agree that the energy crisis has increased, if not already, the urgency of conversion. At consultancy firm EY, they have seen an increase in demand for help with drafting reports since February science based targets. These types of climate goals are popular among companies, explains EY’s Taco Bosman, who helps them develop climate strategies. But whether that popularity is due to the current crisis is difficult to say. “Demand has been increasing for years.”

Lower gas price

There are no simple ways to get rid of fossil energy, outline Bosman and Van der Wal. Neither hears from customers that they are suddenly setting up or prioritizing all sorts of green projects. Because greening processes often take a long time, enormous accelerations are often not easy to achieve. Bosman: “Take a steel company. Getting rid of coal requires a lot of technological adjustments.” For example, Tata Steel is working on plans to change the layout of the entire factory site and to install new installations.

Van der Wal: “Or take fertilizer factory Yara. That one goes CO2 capture, but that will only become operational in 2025 or 2026.” The latter doesn’t even have much to do with it switch of energy sources. The point is: structural greening requires such far-reaching changes that you cannot just bring them to the fore.

Photo Waltraud Grubitzsch/ZB Photo via Newscom

Another factor: according to Van der Wal, some companies expect the gas price to fall again in the long term. As a result, a project that will only be completed in seven years’ time will yield less than it now seems – whether rightly so or not. In addition, the rapid and large rise in interest rates and inflation does not make investing easy. “A rate hike of 200 basis points [2 procentpunt] is a lot on a sustainable energy project worth millions.”

That the Council of State recently canceled the building exemption for the Rotterdam CO2storage project Porthos also sees Van der Wal as an impediment. The judgment makes it more difficult to carry out construction projects due to the nitrogen load on Dutch nature.

At Saint-Gobain they also know factors that stand in the way of greening. According to d’Iribarne, the company has enough plans to electrify, but there is not enough green energy in many places. This does not apply to Norway, where Saint-Gobain will soon open a new plasterboard factory that runs on green electricity. The decision to do so was made last year.

There may be a growing urgency among companies to go green and decisions about these types of projects will become somewhat easier in the coming years. But it will always be slow and balanced. Bosman: “It often takes more effort than companies think in advance.”

However, it is not the case that nothing happens at all. Companies are thinking more creatively about smaller savings, for example by making processes more efficient – ​​such as Saint-Gobain and the heating of abrasives. The company has also turned down the thermostat in the head office by 1.5 degrees and in storage rooms by 7 degrees. And in some locations, according to d’Iribarne, production goes up when the energy price is lower, such as on weekends and at night.

But these are relatively small steps compared to a complete change of energy source. Bosman of EY: “And companies are already doing it all the time, looking for more efficiency.”

Awareness about energy has grown, especially in politics

Political awareness

So much for the somewhat pessimistic story. Because Jeroen van der Wal of Deloitte wants to make another point: it is not only about companies, but also about governments. “In the end, I am still positive. Awareness about energy has grown, especially in politics.”

According to him, the government plays a huge role in sustainability, for example in granting permits and subsidies. It is now clear that speed is required here, says Van der Wal.

This is in line with the positive conclusions in a report published a few weeks ago by the International Energy Agency (IEA). It states that governments have recently been thinking intensively about how they can speed up permitting processes and support the transition to green energy.

According to the agency, the current crisis will ultimately prove to be an accelerator of sustainability, partly due to government plans. For example, the IEA points to legislative proposals from August by US President Joe Biden, which include huge investments in electric driving and the construction of solar and wind energy parks. In the meantime, the EU has tightened the targets for the generation of green energy. A nuance from the IEA: many governments will choose to use more fossil fuels in the short term.

Given these kinds of plans, Van der Wal denies that there is no support for energy-intensive companies. “Support comes in different shapes and sizes. The cabinet has said that it will invest heavily in the construction of wind farms, part of which will be used for hydrogen. That is stimulating.”

In this way, the contours of a sustainable future are emerging. Looking back on this period, one can perhaps conclude that governments were shaken awake at that time. And the companies followed suit.

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