When sources of greenhouse gases are analyzed, manufacturing is the largest contributor on a world- wide basis. In 2007, manufacturing industries accounted for an estimated 40 percent of total CO2 emissions.
Because of the magnitude of greenhouse gas emissions (GHG) from manufacturing, carbon management and reduction have become issues of concern for this sector, and there is significant motivation to induce manufacturers to produce clean energy products.
In support of a carbon-free economy financial incentives are being introduced, and in the U.S., government programs to support the building and equipping of new or expanded factories, are being put in place.
Several Initiatives to Cut Greenhouse Gas Emissions
One of the U.S. initiatives which has been implemented by the Obama administration is the Advanced Energy Manufacturing Tax Credit, and in the U. K., industrial leaders recently slashed the carbon emissions and energy costs of manufacturers by up to one-third, and are working with the Carbon Trust to support its Industrial Energy Efficiency Accelerator (IEEA) initiative. This program is designed to cut carbon emissions, reduce costs, and make manufacturing more competitive. The Carbon Trust will identify and demonstrate new lower-carbon solutions, particularly those that can be replicated across all manufacturing sectors.
Globally, several organizations are looking to the manufacturing sector to test new GHG protocols and provide feedback. The World Resources Institute (WRI) and the World Business Council for Sustainable Development (WBCSD) have invited corporations around the world to participate in these initiatives. The objective of this program is to achieve a global framework and methodology which will account for the emissions associated with individual products across their life cycles.
Supply Chain Contributes to GHG Emissions
Increased coupling with the supply chain has resulted in additional GHG challenges and to address these challenges manufacturers are compelled to inspect their supply chain for opportunities to manage carbon emissions effectively. This evaluation must begin with sourcing and continue through to production, distribution and product after life; otherwise, it will not be possible to understand the carbon footprint associated with manufacturing.
Both retailers and manufacturers have worked in concert to achieve a consistent approach to packaging consumer goods. The Consumer Goods Forum, which was established to bring together executives and senior managers from each sector, in 70 countries, has a program. This program will bring together major players in manufacturing, retailing, service providers, and suppliers, as well as other stakeholders, to develop packaging solutions and achieve agreed-upon sustainability goals.
Focusing on the Business Side of Carbon Management
There is also a growing trend among manufacturers to focus on the business side of carbon management. For example, an interest in performance management systems focused on sustainability, including carbon management, to identify carbon indicators that correlate with business performance factors, such as: profitability, sales, customer retention and satisfaction, and brand image.
The carbon management market offers a number of prospects for software and services vendors, particularly in manufacturing, the largest industry sector overall. Most of the requirement is for assistance in putting programs in place to manage and reduce an organization’s GHG emissions.
Pike Research is forecasting an increase in demand in the coming years, which will be reflected in spending on carbon management software and services in the manufacturing sector which will grow from $124 million in 2010 to $742 million in 2017, a compound annual growth rate (CAGR) from 2009 to 2017 of over 33 percent.
Managing GHG Emissions in North America and Europe
Western Europe will be the best market for software and services throughout this year, but North America will become the most promising market thereafter with a strong CAGR of almost 35 percent. Asia Pacific is also becoming a good market for suppliers of software and services, as large global manufacturers implement carbon management initiatives in the region, and global retail conglomerates like Walmart are forcing suppliers to manage their GHG emissions. Manufacturing companies are also being pressured by regulatory requirements to measure, monitor, and report on their carbon output by their large retail customers, and they also want to protect their businesses.
Carbon Footprint and Reduction Labeling
What is at stake is the brand image of manufacturing companies, because investors and consumers are paying more and more attention to carbon emission characteristics of products. The footprint and reduction labeling scheme which has been implemented by the United Kingdom, France, Australia, and Japan, is one initiative that is catching on.
Several dozen Japanese companies have voluntarily started to display carbon footprint labels on food packaging, drinks, and other products, and in the U.S. California is the first state to legislate carbon labeling, under the Carbon Labeling Act, a voluntary program which assists consumer product companies to obtain a carbon footprint label.
The Carbon Trust in the United Kingdom has been at the forefront of this practice, as it has helped manufacturers demonstrate their commitment to managing their carbon emissions through its subsidiary, the Carbon Label Company.
The impact of the supply chain on decisions and actions taken by manufacturers with respect to their carbon management strategy and practices, is significant. Large global manufacturers with operations across the globe have to factor both carbon emissions and energy costs into their sourcing decisions. In the past, the supply chain has only affected decisions and trade-offs about cost, service, and quality, but this situation is changing, and in today's marketplace, carbon management is one other factor which needs to be addressed.
Duane Sharp - I am a retired professional engineer (electronics), with over 40 years of writing experience in technology topics, with a focus on the IT ...
