Decarbonization: an environmental challenge and a competitive factor
As an environmental and societal issue at the heart of corporate strategies, how can decarbonization be a lever for competitiveness?
How can we implement an effective decarbonization strategy at a corporate or local level?
Decarbonization as a key factor in the competitiveness of companies and regions was the subject of the first part of Investor Day 3 on October 10, 2023.
Here’s a look back at what ArcelorMittal, Li-Cycle, SKF and the Dunkirk Urban Community had to say.
Decarbonization, a real challenge for companies
With the introduction of European standards, the fight against climate change is accelerating.
According to the International Energy Agency, industry is responsible for around 20% of the world’s CO2 emissions.
Decarbonization is at the heart of corporate strategies and is often the subject of a roadmap.
The ultimate goal: carbon neutrality, following the example of ArcelorMittal, a major CO2 emitter as a result of its activity:
“Our roadmap must meet the challenge of producing the same amount of steel but in a carbon-neutral way as quickly as possible. ” Thierry Flament, Director of the ArcelorMittal Dunkirk site
The challenges of decarbonization are technical, economic, financial and societal.
Successful decarbonization means:
- Tackling rising energy costs
By optimizing a site’s energy efficiency, producing renewable energies…
- Reducing production costs and expenses
By moving towards low-carbon or circular solutions
- Adapting to new climate regulations
Such as the European Climate Law or the Paris Agreements
- Responding to pressure from stakeholders
Attitudes are changing. Customers and employees expect more from companies when it comes to the environment.
Decarbonizing your business means offering your partners products with a positive impact on their scope 3.
But it’s also a way of demonstrating the company’s commitment to its employees and attracting new talent.
“Nowadays, young people are no longer enthusiastic about working in a factory. But cleaning up the world is a noble cause, so working at Li-Cycle will appeal to them. We’re already starting to receive résumés for our French site. ”
Alessandro Tripoli, Director, Southern Europe, Li-Cycle
“It’s very important for traditional companies like ours to have an extremely clear decarbonization strategy, because that’s part of being attractive, including to our young people.”
Vincent Mégret, SKF Managing Director
By investing in decarbonization, companies optimize their performance, and thus their competitiveness and attractiveness.
“It’s not just an environmental issue, but also a competitive one. ” Thierry Flament, ArcelorMittal
“The ecological transition imperative is a driver of business opportunities and innovation for the ball bearing sector. ” Vincent Mégret, SKF.
It’s a challenge for companies, but also for local authorities, and one that the Hauts-de-France region was quick to grasp.
To meet this challenge, the Region launched the Rev3 initiative in 2013, making it a pioneer in decarbonization.
6 levers for decarbonizing companies
“By the very nature of our business, we are a major producer of CO2. Our challenge is to find a way of producing the same amount of steel in a carbon-neutral way. ” Thierry Flament, ArcelorMittal
Companies have several levers at their disposal that can be activated simultaneously to reduce their carbon footprint.
1. Performance and energy efficiency
At a time of soaring energy prices, efficiency and sobriety are the order of the day.
These improvements involve:
• Optimized production processes
• Energy loss detection and correction
• Stopping production on oversized equipment
• The mutualization of goods…
2. The introduction of green energy
To reduce dependence on fossil fuels, companies can make use of renewable and recovered energies.
“A project to transform our processes was validated by the European Commission this summer. At ArcelorMittal, CO2 is primarily emitted by our blast furnaces. We would like to replace one of these blast furnaces with a DRI*, which would allow us to replace the use of coal with natural gas and then hydrogen when it becomes available. We could thus reduce our CO2 impact by 36%” Thierry Flament, ArcelorMittal
*DRI = direct reduction of iron. This technology has great potential for reducing CO2 emissions. It is one of ArcelorMittal’s three decarbonization routes.
3. Recycling and circularity
Using recycled materials reduces the need for raw materials.
A need shared by several speakers at Investor Day 3.
“We have invested €60 million in steel circularity. We want to find better ways of reusing steel, which is a product that can be recycled indefinitely. This would allow us to achieve an 8% reduction in CO2 emissions” Thierry Flament, ArcelorMittal
“For SKF, remanufacturing and recycling bearings are key to the future of aerospace. This represents a major investment, and the sector is still in its infancy.
When we recondition a bearing, the ecological balance is -90% in terms of the CO2 footprint. ” Vincent Mégret, SKF
4. The modernization and digitalization of production facilities
France’s industrial park is aging.
To ensure energy efficiency, it is essential to invest in production facilities.
“The development of Industry 4.0 is a unique opportunity to fully reconcile technology and the ecological transition, in the interests of creating more skilled jobs and improving business competitiveness. “ Fabien Laleuf, Managing Director France, ABB
5. An informed choice of suppliers
A company’s scopes 2 and 3 are the most difficult to turn green.
That’s why it’s essential to choose the right suppliers and subcontractors.
Some companies now prefer to choose:
- Low carbon footprint suppliers
“At SKF, we strive to make the entire product value chain greener. The decarbonization challenge for manufacturers focuses on scope 3, which accounts for almost 80% of greenhouse gas emissions. By working on greener production, SKF is helping to reduce the carbon footprint of its customers’ end products” Vincent Mégret, SKF
- Suppliers close to home, and who work as locally as possible
“In our industrial development policy, we give priority to proximity with the main sources of supply for batteries or production waste, in order to limit the environmental impact of transport. That’s why the Hauts-de-France region is so strategic for us, and the location of Harnes particularly advantageous. ” Alessandro Tripoli, Li-Cycle
6. Shared investments
Faced with sometimes colossal financial requirements, some companies choose to pool their equipment or investments.
“All the synergies we can achieve in the region are important, because we’re not the only manufacturers to have this problem. This allows us to have a global vision to share investments and solutions for this co2 capture” Thierry Flament, ArcelorMittal
Decarbonization: the necessary support from public authorities
For companies, decarbonization means heavy investment and major changes.
They can’t make this transition alone.
Support from local authorities, the French government and Europe is therefore essential in a number of respects, over and above funding.
An example of the actions implemented by the Dunkirk Urban Community, a pioneer in supporting the decarbonization of its industry.
To achieve its eco-carbon ambitions (carbon neutrality by 2050), Dunkirk, which alone accounts for 20% of the country’s CO2 emissions, has put in place a number of levers to support businesses and the region’s transition.
1. Federation and concerted dialogue of the entire regional ecosystem
“In Dunkirk, we play and think collectively ” Rafaël Ponce, DGA Dunkirk Urban Community (CUD)
Public authorities, manufacturers, local authorities, citizens.
The CUD has brought together all stakeholders in the local economic fabric so that each can define its own ambitions and objectives.
And has drawn up a list of priorities.
The continuity of this dialogue is ensured by the creation of a Public Interest Group.
“In the Dunkirk area, we have set up a GIP “Eura’énergie” to act as a link between the economic fabric and local authorities in order to speed up this transformation” Rafaël Ponce, CUD
2. Establishment of a common roadmap
Once the priorities had been defined, the CUD drew up common roadmaps for all the stakeholders.
Decarbonization, a hot topic, has brought together all of the region’s stakeholders.
“I’d like to point out that in the Dunkirk area, it’s the big industrialists, the big CO2 emitters, who initially embarked on the decarbonization process. They were then joined by the public authorities and local communities. ” Rafaël Ponce, CUD
3. Financing assistance
Although support for the ecological transition is global, financing remains the key issue.
The investments required of certain companies are too great to be borne alone.
“To finance its decarbonization, ArcelorMittal needs strong public support. Of the 1.7 billion invested, this support is estimated at around 850 million. ” Thierry Flament, ArcelorMittal
The CUD therefore contributes to the financing of certain projects.
It has also responded to numerous French and European calls for projects, in order to benefit from exceptional subsidies to meet the structural needs of companies.
“Today, Dunkirk has over 20 major investment projects for the region, worth 36 billion euros over the next 10 years.
• 19 billion for electrification
• €5 billion for industrial transformation
• €9 billion in new industries, mainly electro-mobility
• €3 billion on everything to do with land development, electrification, water infrastructures, etc.”.
Rafaël Ponce, CUD
4. Training support
The transformation of companies involves major, often structural, changes.
Although companies have a role to play in the ongoing training of their employees, public-sector support for training detection is essential.
“Our project is to transform the factory within the factory.
We’re going to continue production by replacing half the plant.
This means that we’re going to have to support our staff through training.
We need to work together to see how we can move faster, because the kinetics of all these issues are 2-3 years, not the next 10. So it’s important to share these issues. Because no matter how powerful you are, you can’t do it alone. It’s all about finding the right solutions. Some of these are more in the hands of manufacturers, so we can think about how we can provide better in-house training in the future. But there are inevitably solutions that need to be found at regional or local level to support this transformation. ” Thierry Flament, ArcelorMittal
5. Serving as an intermediary and advocate for companies at national and European level
Les collectivités locales sont le premier contact des entreprises avec l’administration française.
It’s important for public-sector economic stakeholders to listen to the needs and challenges of companies and pass them on to the national level and beyond.
The attractiveness of the region depends on it.
“The scheme that will be set up in 2024 (MACF*) is a key issue for manufacturers with a view to defining fair conditions of competitiveness between manufacturers who are decarbonizing and others who are not. So that tomorrow, there will be no carbon products on the European market that destroy jobs in Europe. This is the real challenge for all European countries.
Market conditions need to support these investments. ”
Vincent Mégret, SKF
*Border carbon adjustment mechanism. This scheme limits “carbon leakage” by aligning the carbon price paid for products imported into the EU with the carbon price paid for EU products.
It’s clear that the ecological transition goes beyond our factories.
It is part of a regional dynamic that requires the cohesion of the entire local economic fabric.
The region’s commitment to decarbonization and the support provided by public authorities can prove to be real strategic assets in terms of attractiveness, as demonstrated by Li-Cycle.
“We have chosen France because it is the European country at the forefront of the fight against climate change, with a very strong political will to support the ecological and industrial transition. This market has very strong local potential, thanks to the various gigafactories in the pipeline. That’s why the Hauts-de-France region is so strategic for us, and the location of Harnes particularly advantageous. “
Alessandro Tripoli, Li-Cycle Sales Director, Southern Europe
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