Industry Focus

Left： Bill Wang
Middle： JrJung Lyu
Right： William Liao

Held

Orientation of“Smart Manufacturingand Carbon Reduction Guidance Program
for the Metal Industry"
Industry"

Article by Dean Tseng, Fastener World
Copyright owned by Fastener World

With the upcoming implementation of carbon reduction regulations
in Europe and the U.S., the Taiwanese fastener industry is increasingly
concerned about the latest development on issues pertaining to carbon
inventory. As soon as CBAM came out on the media, Fastener Worldinquired mainstream Taiwanese fastener owners about their views andresponse strategies. We have published a series of articles tracking theprogress of carbon tax regulations in EU and Taiwan.
Given the trial run of CBAM coming up in October, attention to carbon
reduction has reached new heights for Taiwanese fasteners and relatedindustries. Fastener World held the "Orientation of Smart Manufacturingand Carbon Reduction Guidance Program for the Metal Industry" on August
23rd, 2023, where William Liao (General Manager of Fastener World) madean opening remark, and invited Mr. JrJung Lyu (Director of Research Centerfor Quality and Innovation of National Cheng Kung University), as well as
Bill Wang (General manager of Hu Pao Industries) to share their experiences
and knowledge of carbon inventory and carbon reduction.

Bill Wang, General Manager of Hu Pao Industries:
Establish Cross-Department Carbon Emission
Teams to Work on Structure, Process and System
The orientation started with Bill Wang sharing how Hu Pao Industries
pushed for net-zero transformation and carbon inventory. His company
began carbon inventory last February, and became the first among 1,800
Taiwanese fastener companies to pass the latest ISO 14064-1 carbon
inventory certification. Bill reminded that net-zero transformation cannot
just count on top managers of an enterprise, but rather, it will involvethe entire corporate structure, and can only be implemented with thecooperation of all employees. There are three motives for companies to takeon net-zero transformation. The first being the regulatory requirements(e.g. CBAM); the second being the need to meet customer requirements;
the third being an active action to support ESG initiatives. Hu Pao
Industries is driven by the third motive. Bill picked up the trend indevelopment before the regulations were formally put on the table, and helaid out the net-zero transformation in advance. Recently, some Taiwanesesuppliers have received requests for carbon inventories from overseas

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Fastener World no.202/2023 惠達雜誌

clients. He suggested making "support for ESG initiatives"
the primary motivation towards net-zero transformation,
not just to meet regulations or clients’ requirements. It
will make things much smoother for business owners andemployees alike.
As an owner with past experiences, he explainedthat if a company's monthly electricity bill exceeds
NTD$1 million, it is recommended to prioritize
the introduction of ISO 50001 certification (energymanagement) to obtain a company's "maximum
coefficient of electricity consumption," which is used
to target the most energy-consuming equipment(electricity consumption rate up to 60% to 80%) andreduce electricity consumption. This is followed by
ISO 14064-1 certification to conduct greenhouse gas
emissions inventory for the whole organization, muchof the data for which are available from ISO 50001.
Finally, an ISO 14067 (product-specific) carbon
footprint inventory can be performed, and the data canbe used on an ongoing basis.
The challenges brought to enterprises by the net-zerochallenge are: increased labor costs, increased burdenof inventory operations, lack of ESG professionals (mostof them need to learn by doing), lack of digital tools(paperwork is still done in Word/Excel; invoices generated
by companies such as car refueling invoices need to beverified with auditors; calculating carbon emissions fromemployees' travel distance to work; calculating emissions
from septic ta n ks, outsou rced tra nspor tation a ndprocessing, etc.). He also reminded that auditors may notinclude ERP data as part of the audit due to the possibilityof fake data, so all the paperwork has to be scannedand documented for verification. External challenges
include: government agencies offering a wide range ofcarbon reduction options without the ability to identify
applicability and therefore requiring personnel to acquire
knowledge; unclear customer requirements which leave anorganization less motivated to work for.

Industry Focus

Hu Pao Industries
has responde d byestablishing a crossdepartment net zeroteam and cultivating
trainees to learn
the cer t i f ic at ion sand regulatory
requirements, implementing carbon inventory throughestablishing inventory procedures, collecting activity
data, and managing data quality. Bill also shared that Hu
Pao Industries will continue to push for ESG and net-zerosustainability development by building a smart power grid,purchasing green electricity, selecting low-carbon raw materials,
and promoting green purchase and resource reuse.

Director JrJung Lyu of National Cheng
Kung University: Carbon Reduction Always
Precedes Carbon Inventory
JrJung made it straight that time has come for a shift
from ESG (a soft requirement) to CBAM (a compulsory
requirement based on the bill passed by EU). Don't wait until
your customers demand it. The source is not your customers. It’sfrom EU.
"Carbon-reducing capability will precede cost reduction
by 2030!” said JrJung. Not to mention the fact that EU has taken
the first shot, and the U.S., China, and many other countries
around the world will also introduce carbon taxes. He continued:"Don't be mistaken to think that you will not be affected because
you are only engaged in domestic sales. The impact will extend
from the export industry to the domestic sales industry, so theTaiwanese government has invested NTD 11 billion this year
to cope with this.” He pointed out that ISO 14064 comes with astandardized calculation equation, and that EU will designate
specific auditors to do the verification. Bear in mind that carbon
reduction always precedes carbon inventory.

CBAM is Coming up and Time is Ripe forCarbon Reduction
Bill and JrJung shared a lot of tips and details in theorientation which cannot be summarized fully in this article.
However, from the audience's active response, it is clear thatcarbon reduction and carbon tax is a major issue that Taiwan
fastener industry is taking on. CBAM is impacting Taiwan's
fastener business opportunity which is worth NTD 200 billion,
and if the Taiwanese companies don't act now, the big loopholefor mass expenditure will be their own carbon emissions!
惠達雜誌 Fastener World no.202/2023

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