Facing the carbon credit crunch

British industry was dealt a blow in 2019 when the European Union (EU) decided not to provide UK companies with their usual carbon credits, under its carbon emissions trading scheme (EU ETS). For industrial businesses, this blow directly affects the bottom line - and it's only set to continue as the UK leaves the EU. Here, George Walker, managing director of industrial energy software company Novotek UK and Ireland, explains how industrial companies can manage this carbon credit crunch and set up for long-term savings in 2020.

Whether a business is mining and forging materials, manufacturing automotive components or processing raw ingredients into safe food items, one thing remains constant across industrial scale companies: the energy consumption is high, and the associated emissions typically are too.


For the last few decades, UK businesses have covered these costs using carbon credits, which are effectively emissions permits provided by the EU to offset carbon emission costs. However, as the great Brexit debacle rolled on throughout April 2019, many businesses didn't notice that the EU had not granted new permits to UK companies. Because the permits usually cover the previous year's carbon emissions, this left many companies with a big bill to pay out of pocket.

This crackdown on carbon credits was brought to the attention of many businesses when British Steel approached UK Government asking for an urgent £100m loan to cover its carbon costs for 2018. But these loans should only be a temporary short-term solution to a larger problem, as this problem will only continue in the years ahead.

Although loopholes have since been identified, this whole issue has highlighted the risks of relying on carbon credit initiatives. The only real fix is for UK industry to reduce its carbon emissions and energy usage, and the first step to achieving this is by properly monitoring and managing the processes and operations leading to these elevated emissions.

Tackling energy usage
UK industry accounts for almost one-fifth - 17 per cent - of the country's total final energy consumption, according to statistics presented by the Department for Business, Energy and Industrial Strategy (DBEIS) in 2018.

However, Novotek UK and Ireland's work with businesses in this sector has highlighted that many are reliant on inefficient legacy equipment. On top of this, the topology of the company's operational technology is often highly complex, making it difficult to identify inefficiencies throughout a plant.

If you're a plant manager, you're probably thinking that the solution to this is simple. All you need to do is have an energy management system in place to monitor usage on your equipment, and then you'll have all the information you need to address problems, right?

Theoretically, this would work. However, this approach fails to take into account the complexity of energy usage in operations. It's not just about how much energy is used, but how much energy is used in relation to output and operational effectiveness. Most energy management software doesn't have this depth of information, and so can only present a two-dimensional perspective.

Put simply, business leaders and plant managers need to look at the energy intensity of their operations, much in the same way that the UK Government measures greenhouse gas emissions intensity - calculated by the level of emissions per unit of economic output. You effectively want to minimise the non-valuable energy used to ensure your energy and emissions bill can be considered an investment in productivity rather than a production cost.

An operational answer
To achieve this we need to look at the operational technology that is controlling and monitoring performance data of industrial systems, such as the HMI/SCADA, and production tracking systems in a plant. These systems can be the sources for all the key information needed to measure energy intensity, provided that a business is using a modern historian software to supplement them.

To this end, GE Digital's Historian can serve as the heart of an resource intensity system. The system quickly gathers, validates, archives and analyses industrial process data in real time, providing plant managers and engineers with an accurate snapshot of usage. The calculations that the Historian uses to collate this data can be configured to cross-reference energy usage with production output, so managers can easily identify problem areas.

This serves as the first step to reducing energy usage. When the problem areas are identified, plant managers can act accordingly, whether that is adjusting the operational parameters of a motor to reduce speed without effecting throughput, amending the maintenance schedule of an older piece of machinery or even replacing older equipment all together. In some cases, even changing product design may be appropriate - we know of one dairy products producer that slightly reduced the thickness of one yoghurt product as a means of re-balancing energy and water costs!

In certain cases, the Historian analysis might even identify factors that engineers would otherwise never consider. For example, the effectiveness of equipment used on outdoor sites may be impacted by weather conditions, reducing its efficiency. If the Historian software is integrated into a company's enterprise resource planning (ERP) system, or connected to devices designed to monitor ambient weather conditions, this link can be made and explored.

Energy usage reduction and efficiency improvement is no simple process, so the ability to pinpoint areas in industrial operations where improvements can be made is invaluable. Although it might not always directly fix the problem, it allows engineers to address problems intelligently and strategically.

Although the loss of carbon credits for UK businesses is unquestionably negative, it does accelerate the adoption of greener, more energy efficient operations and processes by businesses. And although it is bittersweet, the loss of the safety net that was the EU ETS allows industry to begin optimising operations for leaner, cleaner success.

There will be some short-term costs, but we must use this as a gateway to long-term improvement.

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