In the industrial machinery sector, the pursuit of decarbonization presents a significant challenge, laden with complexities. From strongly decentralized, energy-intensive parts manufacturing processes to intricate global supply chains, the sector grapples with the imperative to curb carbon emissions while meeting market demands for efficiency and performance.

Failure to implement decarbonization strategies poses significant operational risks. These risks include regulatory non-compliance leading to fines and legal actions, declining market demand due to increasing purchaser, buyer and investor emphasis on sustainability, potential disruptions in the supply chain from suppliers adopting greener practices and increased operational costs and reputational damage from being perceived as environmental laggards in the market.

Stakeholders must navigate a landscape where sustainability and competitiveness converge, requiring innovative solutions and collaborative efforts to forge a more decarbonized future.

What Sustainability Challenges Is the Industrial Machinery Industry Facing Today?

Many companies in the industrial machinery industry lack the requisite expertise, technologies, and capital to undergo the necessary transformation at the required speed and scale. As a result, they face formidable sustainability challenges that impede progress toward reducing carbon emissions and enhancing environmental stewardship.

• Limited access to clean energy technologies: Many industrial machinery companies struggle to access and adopt clean energy technologies due to barriers such as high upfront costs, technological complexity, and insufficient expertise.
• Decentralized Company Structure: These structures often lack centralized decision-making authority, making it challenging to coordinate efforts for decarbonization initiatives across departments. This can lead to delays in implementing sustainable practices and hinder the adoption of cleaner technologies due to conflicting priorities and communication barriers.
• Geographical dispersion of parts manufacturing: The strong geographical dispersion of parts manufacturing processes in the machinery sector increases transportation emissions due to longer supply chains and reliance on fossil fuels for shipping. Coordinating sustainability efforts becomes complex as different regions may have varying environmental regulations and standards, hindering cohesive strategies for decarbonization.
• Pressure to comply with Scope 3 requirements: often necessitates extensive data collection and coordination with suppliers and customers. This can be particularly daunting for companies with complex supply chains, requiring significant resources and investment to accurately measure and reduce emissions across the entire value chain.
• Investment constraints and financial risks: Limited access to capital and competing investment priorities present financial barriers to implementing sustainability measures in the industrial machinery sector. Companies may face challenges in securing funding for green technology adoption, energy efficiency improvements, and emissions reduction initiatives, slowing progress toward decarbonization goals.

What Are the Next Steps to Decarbonizing the Industrial Machinery Industry?

Decarbonizing the industrial machinery industry involves a multitude of levers that organizations can tailor to their specific situations. While various approaches exist, certain solutions stand out as particularly beneficial for most organizations looking to reduce their carbon footprint and enhance sustainability.

Next Steps:

1. Invest in energy efficiency upgrades: Implementing energy efficiency upgrades for machinery and manufacturing processes can reduce energy consumption and carbon emissions. This includes retrofitting existing equipment with energy-efficient technologies, optimizing operational processes, and conducting regular maintenance to ensure peak performance. For example, optimized HVAC consumption can lead to important energy savings.
2. Transition to cleaner energy sources: Shifting towards cleaner energy sources such as renewable energy and low-carbon electricity can help industrial machinery organizations decarbonize their operations. This involves investing in on-site renewable energy generation, purchasing renewable energy credits, and collaborating with utility providers to source clean power for manufacturing facilities.
3. Adopt advanced technologies and digital solutions: Embracing advanced technologies and digital solutions, such as predictive maintenance, IoT sensors, and data analytics, can optimize production processes, minimize waste, and improve energy efficiency. Leveraging digital tools and automation enables organizations to monitor energy usage in real time, identify areas for improvement, and make data-driven decisions to drive decarbonization efforts.

Why Partner with ENGIE Impact?

Given the multitude of available solutions and considerations, partnering with a trusted advisor is invaluable in developing and implementing a tailored decarbonization strategy.

• Decarbonization roadmaps: Align stakeholders on a common objective and facilitate decision-making for large-scale programs that allow decarbonizing faster and benefits from economics of scale.
• Renewable electricity sourcing: Manage energy price risk and decarbonizing Scope 2 emissions at scale through high quality solutions that increase brand value.
• Scope 3 decarbonization strategy: Identify opportunities and engage suppliers to reduce their Scope 3 emissions.
• Digital tools: Track carbon footprint of products across their value chain in different geographies.
• Mobility decarbonization: Reduce scope emissions from internal and external transport.
• Onsite Solutions: Support asset-level decarbonization through techno-economic assessments that addresses site-level energy efficiency and fuel transition opportunities.
• Implementation services: Structure and manage global decarbonization programs, supporting decision-making, procurement and on-site implementation and facilitate external off-balance sheet financing where needed.
• Local teams: Ensure compliance with regulations and internal governance as well as managing application for subsidies.