Carbon footprint transparency in early product development is crucial for a manufacturing industry aiming to reduce environmental impact and meet regulatory requirements. By leveraging carbon calculation software, companies can gain valuable insights into their carbon emissions throughout the product lifecycle, allowing for informed decision-making, optimized product design, and improved supplier negotiations.
As global awareness of climate change intensifies, the manufacturing industry faces increasing pressure from environmental concerns and governmental regulations to accurately measure and report their greenhouse gas (GHG) emissions. But how can companies effectively estimate their carbon footprint while ensuring transparency and accuracy?
The key lies in addressing this challenge early in the product development process. By integrating carbon footprint estimations into the early stages of design and planning, manufacturers can gain valuable insights that inform decision-making, optimize product sustainability, and ensure compliance with evolving regulations.
Greenhouse gases (GHG) are at the heart of climate change discussions. These gases trap heat in the Earth's atmosphere, contributing to the greenhouse effect. As human activities continue to increase GHG emissions, the need for the manufacturing industry to understand and measure their impact on global warming and climate change has never been more important than it is today.
To standardize this process, the World Resources Institute and the World Business Council for Sustainable Development introduced the Greenhouse Gas (GHG) Protocol. This protocol established a global framework for measuring and managing GHG emissions, introducing three distinct scopes that manufacturers must consider to reduce their environmental impact.
Let's break down these emission scopes and what they mean for manufacturers.
Direct emissions refer to direct greenhouse gas (GHG) emissions that a manufacturer produces through its own operations and assets. These emissions are directly owned or controlled by the organization. Common sources of Scope 1 emissions include:
• Fuel combustion in company-owned or controlled boilers, furnaces, and vehicles
• Chemical production in owned or controlled process equipment
• Fugitive emissions from owned or controlled equipment and processes
These emissions are the most straightforward for the manufacturing industry to measure and manage, as they have direct control over the sources.
Indirect emissions include GHG emissions that occur at the facilities where the energy is generated, rather than at the manufacturer’s own premises. Common sources of Scope 2 emissions are:
• Purchases electricity
• Purchased heating and cooling
• Purchased steam
Despite being indirect, Scope 2 emissions are still considered the responsibility of the company consuming the energy. By reducing energy usage or switching to renewable energy sources, companies can effectively lower their indirect emissions and, as a result, their overall carbon footprint.
Scope 3 includes all indirect GHG emissions occurring in the manufacturing industry value chain; these emissions are connected to the company's business operations despite not being directly produced or controlled by the company. Scope 3 emissions can be either upstream or downstream:
• Upstream emissions: Emissions related to purchased or acquired goods and services. Some examples include emissions from raw materials and components, transportation of purchased goods, business travel, waste generated in operations, etc.
• Downstream emissions: Emissions related to sold goods and services, occurring after they leave the company's ownership or control. Examples could include the distribution and transportation of sold products, investments, franchises, etc.
These emissions often represent the largest source of a company's GHG emissions and present significant opportunities for reducing environmental impact.
Meeting diverse reporting requirements, such as the GHG Protocol and CBAM, poses significant challenges. Companies must navigate complex regulations while ensuring data quality and methodology verification across their supply chain.
Gathering accurate, timely data across complex supply chains is a significant hurdle. Manufacturers often struggle with incomplete or inconsistent information, especially for Scope 3 emissions.
The manufacturing industry faces unique challenges in estimating future emissions for products still in development. Accurate projections are important but difficult to achieve because of evolving technologies and market conditions.
Many companies lack the appropriate software for analyzing, storing, and reporting carbon emissions data.
Having defined the different emission scopes, a crucial question emerges: how can we accurately estimate these emissions before it's too late? The answer lies in estimating carbon footprint emissions at the early stage of the product lifecycle. There are several reasons why this is the best strategy to follow.
Carbon emission regulations like the EU's Carbon Border Adjustment Mechanism (CBAM) aim to put a fair price on carbon emitted during the production of carbon-intensive goods entering the EU. By estimating your carbon footprint early, you can better prepare for these regulations and avoid potential financial risks.
Early-stage carbon footprint estimation is most beneficial before production begins. At this point, you can still make significant changes to your product design. Tools for carbon and cost calculation, like Tset, are especially useful in these early stages of the product lifecycle, as they provide accurate estimations and allow for quick iterations. Carbon calculation software allows you to simulate different scenarios and immediately see the impact of design changes on your carbon footprint.
Early carbon footprint estimation also plays a crucial role in finding the best targets, sourcing strategies, and supplier negotiations. This process involves two types of calculations: greenfield calculations and brownfield calculations. While greenfield calculations are estimates by cost engineers based on best-case, best-practices scenarios, brownfield calculations are more accurate figures based on “real-world data”. Cost and value engineers leverage these calculations to optimize designs and negotiate with suppliers, continuously refining carbon footprint estimates throughout the development process.
Early carbon footprint estimation creates transparency. Transparency in carbon footprint estimation provides strategic advantages beyond regulatory compliance. It enables informed decision-making, allowing companies to make sustainable and economical choices from the outset and gain a competitive edge in markets where sustainability is key.
Early-stage cost and carbon footprint estimation is crucial for a manufacturing industry aiming to reduce its environmental impact and meet regulatory requirements. By leveraging software like Tset, manufacturers can gain valuable insights into their cost estimations and carbon emissions throughout the product lifecycle, enabling informed decision-making and more sustainable product development without losing money.
For more information about cost and CO₂ engineering, read our whitepaper: "Carbon reduction in automotive supply chains". Explore the urgency of climate action and business resilience in more detail.
As European sustainability regulations tighten, multinational companies must adapt quickly to stay compliant and profitable. Tset supports businesses by integrating carbon and cost factors into key processes, helping to align target costs with emission goals. With tools to manage the EU's Carbon Border Adjustment Mechanism (CBAM) and simulate supply chain impacts, Tset ensures companies can navigate regulatory challenges while optimising costs.
Reconciling sustainability and economic interests is becoming increasingly important for many investors. They are investing in companies and funds that combine these two components.
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