Green means business - energy choices that help lower carbon and costs
The Food and Drink Federation’s Ambition 2025 pledge states a clear goal for the industry to achieve a 55% absolute reduction in CO2 emissions by 2025. Out of all industries, this sector is well versed in meeting the challenge of building sustainability across all parts of the supply chain, while keeping costs to a minimum.
To deliver their product, food and drink manufacturers procure multiple services and commodities. Energy is just one of these and how you choose and manage energy will have a major impact on your costs, carbon footprint and effectiveness as a business. We’ll look at some of the options out there - but first, a summary of why carbon reduction and the shift to greener energy options is so important.
Protecting the planet and your profits
The energy choices made by our largest energy consumers have a direct impact on the environment. Increased levels of greenhouse gases in the atmosphere could have severe consequences for our world. To keep the warming around 1.5ºC, global emissions must fall by 55% by 2030 and reach net zero by 2050. For this reason, the Committee on Climate Change (CCC) has advised the UK government to legislate for net zero.
The Food and Drink industry is the fourth largest user of energy in the UK, and responsible for 18% of total UK energy use. Food and drink manufacturers will therefore be among those who are most affected by new legislation aimed at carbon savings. Globally, the food industry causes a quarter of all green- house gas emissions, with growing populations and increased food production pushing CO2 emissions upwards. This means that food and drink producers can be major players in our transition to a better energy future.
Greener energy choices also impact business profitability and resilience. Efficiency measures reduce energy costs as well as carbon footprint, while sustainable choices can improve customer loyalty and supply chain appeal. Many large retailers insist on green credentials right across their supply chain, while our 2018 consumer survey revealed that three quarters (73%) of consumers are more inclined to choose a manufacturer or retailer that uses renewable energy.
The work of the Climate Group also demonstrates the power of business energy choices: through its RE100 initiative, high profile businesses are taking the lead by making a commitment to renewable energy. And the 175 businesses already signed up to RE100 consistently outperform their peers financially, across every sector.
A profitable and competitive food industry in the UK depends on a range of factors, but reliable, affordable and sustainable energy is a crucial one. In turn, if larger numbers of manufacturers commit to a low carbon energy strategy, our nation is more likely to achieve a successful transition to a sustainable, affordable and reliable energy infrastructure. By working together, we can achieve a better energy future.
Building your sustainable energy strategy
Increased reliance on automation is pushing up energy requirements, and with energy costs for manufacturers rising by more than a third over the last five years, many food and drink businesses are already rethinking their energy management strategy.
With CO2 emissions also under scrutiny, the pressure to cut carbon as well as costs comes hand in hand with tight production schedules, limited shutdown windows and narrow profit margins to consider. Powering complex plants to be not only affordable and reliable, but also environmentally sustainable, can seem daunting. However, there is much benefit to be gained in the current energy environment and the following options can form a sound, sustainable energy strategy.
You know your energy needs better than anyone. However, your energy supplier should work with you as a partner, to solve problems and explore options. Many Ørsted clients are benefitting from our Energy Advisory service which provides access to a wide range of services and technologies, to build a bespoke energy solution for each individual business. Driving energy efficiency, decarbonisation and energy cost reduction is the aim, so that businesses can achieve their sustainability goals. Your supplier should also help you manage energy costs and mitigate risks. Making the “green energy transition” will have undeniably positive, sustainable outcomes for us all; but during our transformation, energy remains a volatile commodity.
At Ørsted we offer “one stop shop” for trading services, where our expert team of traders can work with you to build customised risk management strategies based on your business needs, risk tolerance and internal policies.
Renewable electricity: Choosing 100% renewable electricity is an easy first step towards carbon reduction. Ideally, your supplier should guarantee power which is fully traceable back to the generating asset, so that you can report lower carbon emissions.
As a longer-term option, we also offer Corporate Power Purchase Agreements (Corporate PPAs). A Corporate PPA helps businesses to secure long term fixed prices, protecting them from price risk for the entire duration of their contract. Contracts can begin at four years, but businesses often choose a 10-year contract, to benefit from price protection over more time.
Green gas: As with many manufacturers, a reliance on gas for energy is a characteristic of the food industry. While the ideal long-term solution would be electrification of some industrial processes, right now this simply isn’t a practical solution for many. On a national scale, there is value in decarbonising our existing gas network and assets. Heat currently creates 45% of the UK’s energy demand, the vast majority of which still comes from natural gas, while heating our buildings accounts for 20% of UK green gas emissions.
Decarbonising gas supply is possible, with biogas as the cleanest option and carbon neutral products also available. Carbon neutral usually means that the carbon associated with a business’ gas consumption is offset through investment in carbon reduction projects such as reforestation, renewable energy and waste-water initiatives in developing countries. Many food manufactures source raw materials in some of these regions, so may be able to choose projects local to their suppliers. The best and most credible carbon neutral gas products are completely transparent and Gold Standard certified.
Smarter energy management: Looking beyond low carbon energy choices, manufacturers have much to gain by maximising on savings opportunities and getting ‘clued up’ about the latest tools for smarter energy management. Coupled with an increased availability of data, smart tools and technology allow food manufacturers to understand where and how energy is being used across their plants, so driving efficiencies is becoming easier. A more flexible approach to consumption can help avoid peak prices and unlock new revenue streams. With the energy landscape changing so fast, specialist advice is invaluable here. The right expertise can help businesses who are stuck in an energy rut, or have older sites and less flexible assets, to find new options and fit together all the pieces of the puzzle.
At Ørsted, we believe in taking an approach that is smart, sustainable and for the duration. We understand that each of our customers has a unique set of needs, and develop products and solutions adapted to those needs. A thriving food industry is essential to the health of society and the economy. All three are dependent upon a healthy planet. With low carbon energy so crucial to the future of our planet, it’s easy to see why more sustainable energy choices should be made a priority, right across the food and drink industry. As the world’s most sustainable energy company, we’ll continue to help more businesses make those better energy choices, to build a resilient, green future for us all.