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Jan-2022

Challenges and opportunities of achieving sustainable operations

Managing the fragile balance of sustainability goals is a considerable challenge, and digital technologies are set to take centre stage during this transition.

Antonio Pietri
Aspen Technology

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Article Summary

Global efforts to improve sustainability and reach carbon-zero targets are increasing as a greater spotlight is put on these issues in the run-up to 2030 and the culmination of the EU’s climate target plan. For organisations across the capital-intensive industries, this upcoming deadline is just one of a whole host of drivers that are coming together to act as a catalyst for change and driving the urgent need for technology that enables sustainability and environmentally efficient operations.

In Europe, we are seeing both national and continent-wide initiatives that are making a positive impact on these issues. The European Green Deal, for example, proposes €1 trillion in sustainable investments over the next decade.1 Moreover, France recently announced plans to spend more than US$8 billion on a decarbonised hydrogen economy through 2030, beginning with a European hydrogen project in 2021.2

Technology will play a big part not only in driving these initiatives but also, on a smaller scale, in enabling sustainability for capital-intensive businesses, where the latest systems and solutions can be used to help organisations reduce energy consumption, deliver energy efficiencies and support the circular economy.  
 
The role of the pandemic
The pandemic has certainly played a role in accelerating the interest in sustainability and the push for technology that enables it. Across the entire EMEA region the challenges brought about by the pandemic since early 2020 have accelerated the process of putting environmental, social and governance (ESG) initiatives at the forefront of decision-making. ESG issues have motivated businesses in the capital-intensive industries for years, but the pandemic has acted as a catalyst for change — and placed these issues firmly at the top of the agenda for organisations across these sectors. Capital-intensive companies today are more committed than ever to meeting their sustainability targets. But why exactly is this?

The societal lockdowns we have seen over the past 18 months have certainly played their part. As people were forced to reduce their movements and stop driving or flying, carbon emissions fell, as did demand for transportation fuels. A psychological barrier was therefore crossed and this has triggered wider change across the energy sector. With the evidence that people’s behaviour can palpably impact global CO2 loading, corporate momentum, across the energy industries shifted perceptibly towards more aggressive sustainability targets.

The drivers of sustainability across the industry extend well beyond Covid, however. Over the years, investors have differentiated their portfolios by offering ESG-conscious funds. These funds now represent a growing proportion of the investment funds in the marketplace, accounting for $51 billion of new money from investors in 2020.3 That ability to access finance is pressuring companies further to embrace ESG to implement and meet sustainability targets. Indeed, investors are being active, demanding oil companies put in place sustainability targets and commitments to deliver on the Paris Agreement for climate change.

We are seeing increasing numbers of oil and gas companies adopting net-zero carbon emission targets by a certain year in the future.4 We are witnessing chemical companies establishing thermal emission targets but now additionally making commitments around plastic waste — an initiative rapidly becoming a priority for governments and regulators across EMEA.

Simultaneously employees and customers expect organisations across these industries to be upstanding citizens and run clean, efficient businesses. The latest generation of workers and customers are demanding greater accountability around sustainability. Organisations know that if they want to protect their brand reputation and attract these people to work for and engage with them, they must build cleaner, safer, and greener businesses that allow them to contribute to creating a world fit for tomorrow.

So, in order to remain profitable and relevant in the marketplace, companies must work to grow the ‘triple bottom line’, and balance the impact of company operations on people, the planet, and profits — the social, environmental and financia trifecta. 

Today, therefore, it is time for the industry to deliver on the promise of ESG. We are seeing many businesses across the capital-intensive industries put strategies in place that are designed to achieve their ESG targets. ARC Strategies recent report, The Sustainability Future for Energy and Chemicals5 revealed that 90% of global energy and chemical companies have sustainability initiatives in place. Definitive action may still be needed by some of these businesses but for all of them sustainability either is, or can be, a driver of digital transformation.

Why digital solutions are a key enabler for sustainability goals
Whereas in the past, investment in digital was often justified based on its potential to deliver enhanced profitability, today this kind of funding is just as commonly signed off based on its ability to deliver a reduction in CO2 emissions. It hits the bottom line, just from a different angle.

Digitalisation is a crucial enabler for companies to meet both business and sustainability objectives. In the ARC survey, 75% of respondents said they believed digital transformation was either extremely important or very important for achieving sustainability goals. The International Energy Agency (IEA) has found that digital solutions can help boost energy efficiency as much as 30% for industrial operations.6 In Europe, the Technology Platform for Sustainable Chemistry has highlighted digitalisation as a key tool to meet sustainability objectives in the chemicals sector.7

Those businesses that had considered adopting more digital technology have recently been forced to dive into digitalisation to make certain of business continuity and to support more efficient operations during highly volatile business conditions. As a result, many are continuing to enthusiastically embrace the innovation that digitalisation provides them in a bid to achieve new levels of operational excellence.

The new generation of digital solutions deployed across the capital-intensive industries provides the visibility, analysis and insight required to address the challenges inherent in the achievement of sustainability targets. Success begins by harnessing the vast volumes of data available from operations —  leveraging new technologies, like artificial intelligence (AI) — to control operations and empower operators to make the decisions that will help attain their core objectives of customer satisfaction, sustainability, and profit.

To achieve energy efficiency, operators must focus on cutting the environmental footprint from resources consumed by their own business activities. That might encompass everything from reducing the use of non-renewable resources, like water for feedstocks or energy generation, through to cutting down their carbon footprint, or lessening environmental emissions generated by business operations.


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