Integral Logistics Management — Operations Management and Supply Chain Management Within and Across Companies

3.3.3 Energy-intensive Industries — Using Waste From Other Industries: Economic Opportunities for Environmental Commitment of Sustainable Supply Chains

Intended learning outcomes: Produce an overview on energy-intensive industries. Disclose examples of using alternative fuels and raw materials in order to decrease the carbon footprint and the amount of fossil fuels required in the cement industry.

While the regulatory landscape is changing and forcing firms to do environ­mentally responsible business, research and practice is showing that measures can be taken that improve environmental and economic performance at the same time. However, identifying viable improvement opportunities to increase energy efficiency remains a challenge in daily business. For one, energy is still (in 2010) relatively low priced. In the conventional manufacturing industry, energy cost can make up 2 to 3% of operating costs. For another, for investment decisions, the opportunities and risks that may be caused by regulations, prices, and markets are difficult to estimate: The core competencies and priorities of most companies are not in the field of energy saving (and buying know-how from the outside is also connected with costs). Clearly, for energy-intensive industries, such as chemicals and petrochemicals, iron and steel, cement, and pulp and paper, the situation is different than for the conventional manufacturing industries.

Energy-intensive industries (EIIs) are industries where energy costs make up a significant part of the operating costs (possibly up to 60%) and thus represent a major competitive factor.

As the fuels are regularly mostly fossil fuels, EIIs emit a considerable amount of CO2, which makes them vulnerable to carbon footprint regulation. EIIs made significant improvements in the past, especially the chemical and petrochemical industry. The following example from the cement industry may be taken for illustration: The cement industry requires a conside­rable amount of energy for the clinkering process (the chemical process transforming limestone into clinker, a basic element of cement). Fuel makes up to 30 to 40% of the total operating costs. At the same time, the chemical reaction produces COas a by-product (worldwide, the cement industry is responsible for more than 5% of the man-made COemissions). Figure shows actions that were taken to reduce both costs and CO2.

Fig.        Example of using alternative fuels and raw materials in order to decrease the carbon footprint and the amount of fossil fuels required in the cement industry [ScVo10].

By using by-products (or waste) from other industries, it becomes possible to both reduce the amount of fossil fuel and the amount of clinker required for the production of cement. Such an approach on the subject of circular economy is called co-processing, and it is an important way to approach the challenges in the cement indus­try. However, a general criticism may be that using wastes in incineration (as fuel) can lead to toxic emissions and promote more production of waste. Life cycle considerations and pollution prevention need to be taken into account before deciding whether measures are suitable and, because of the complex economy and business activities, a challenging undertaking.

Continuation in next subsection (3.3.3b).

Course section 3.3: Subsections and their intended learning outcomes