Climate Innovation: Driving Efficiency
By: Bcg Digital Ventures
Tags: Efficiency, Venture, Insights, Climate, Decarbonization

In order to understand emissions and start implementing more efficient processes, companies first need to have a clear idea of where their emissions are coming from. They should therefore start by implementing a comprehensive monitoring process, using a centralized platform to track emissions.

There are a variety of approaches available here. Plan A, a recent graduate of BCGDV’s Social Ventures Program, helps businesses measure, reduce, and offset their carbon footprint through a software platform that guides them through the process. Companies can use Plan A’s tool to calculate their carbon footprint using company-specific data, spend-based information, or proxy-based measurements, and then reduce or offset their carbon emissions.

For production-based companies, smart sensors and IoT devices will be required to adequately track all usage and get a full and accurate picture of emissions. Platforms like Cognite can contextualize this data, and others, such as SupplyShift, extend to supply chain operations. Companies might also consider building their own solutions here, as these can then later be synchronized with production processes and AI to make efficiency gains; BASF publishes details of its carbon footprint annually — a strong example of the potential for transparency.

After a holistic assessment has been made, there are some practical steps to be followed, including switching to net-zero energy sources, identifying and eliminating leakage, and leveraging new solutions to drive efficiency.

Net-zero energy sources

The biggest impact companies can have on their emissions is moving towards net-zero energy sources. Many companies have already realized this; as part of its plan to reach net-zero emissions by 2030 across all operations and products, Apple is prioritizing bringing its suppliers to renewable energy sources alongside identifying efficiency gains.

According to a BCG study, the production and logistics operations of industrial companies account for more than half of all global carbon dioxide equivalent (CO2e) emissions from fuel combustion, and GHG emissions would have to decrease by 45% relative to the current trend by 2030 to be compatible with the goal of staying under 1.5°c of warming.

The same study noted that due to the energy-intensive process of battery production, the lifetime emissions of electric vehicles, which we will need to reduce light vehicle emissions, are currently almost the same as those of vehicles with an internal combustion engine. This underlines the importance of transitioning to net-zero energy sources in production, with even products that will be integral to a net-zero future still an emissions burden without renewable energy. Volkswagen hopes to achieve carbon-neutral production for its entire fleet by 2050 at the latest, and Daimler wants its entire fleet of passenger cars to be carbon neutral by 2039.

The switch to net-zero sources will not be easy or straightforward for every company. For some, it will require looking to novel solutions, or creative thinking in terms of existing power generation, with on-site renewable power generation providing one avenue for exploration. There is space here for innovation; new solutions that enable companies to power assets with net-zero sources, shifting vehicles away from oil, for example, will be vital.

Optimize processes, eliminate inefficiencies

Everyday company processes often contain unnecessary energy consumption and that can be ironed out. This is a win-win, with emissions savings accompanied by reduced costs.

Any leakages should be eliminated. Oil and gas companies, for example, emit huge amounts of GHG methane through leaks in installations or flaring. Solutions are coming to market enabled by remote sensing and IoT technologies that can pinpoint these leaks and prevent them; Kayrros, for example, offers solutions for methane tracking via satellite and AI technology. For GHG emissions-heavy sectors, preventing these leaks can have a massive impact in emissions reduction.

Supply chain and shipment efficiencies can help greatly reduce emissions while saving costs and time. Ware2Go, an on-demand warehousing, logistics, and fulfilment network built by UPS and BCGDV, offers digital supply chain management tools that help companies optimize inventory distribution and warehouse placement, as well as forecast seasonal demand. This helps companies more accurately understand their shipping processes and demand and thereby ship in a more sustainable way while also being smart about costs.

For companies that use heavy machinery, ensuring that usage is limited to only what is necessary for operations is highly important. BCGDV-built Shell venture MachineMax is an AI- and smart sensor-powered telematics solution that connects with industrial hardware such as construction vehicles, reducing unnecessary idling time in off-road machinery, which results in profit leakage, reduced utilization, wasted fuel, avoidable maintenance costs, and increased emissions. Solutions like MachineMax will be integral to efforts to reduce their emissions while also reducing costs, ironing out inefficiencies in fixed-output resources.

There are many solutions that can be leveraged (or built) to pinpoint and unlock efficiencies. To give just one example, geospatial solution UP42, built by BCGDV and Airbus, can be used for multiple use cases that unlock efficiency, including monitoring pipelines, identifying oil leaks, and optimizing agricultural operations.

There are numerous solutions possible across sectors, and all of these have in common their deployment of technologies such as AI, geodata, and smart sensors to drive efficiency. Companies should look to solutions that leverage these technologies where possible — or seek to create them themselves, opening up new revenue streams in the process in addition to efficiency savings.

Constantly fine tuning processes is vital, particularly in sectors where emissions are inherent to operations. For these sectors, driving efficiency is urgently necessary in the transition to net zero.

Beyond efficiency

These steps require ongoing attention, but once they have been established, companies can move on to consider Scope 2 and Scope 3 reduction targets, where a wealth of opportunities exist for new businesses related to limiting indirect emissions. Ikea is a good example here, in its drive to design products for greater energy efficiency.

As a further step, they might consider how they can create opportunities for carbon reduction through supporting certain processes. For example, agricultural technology companies might think about sequestering carbon in soil through promoting certain farming methods; those in construction might consider how certain building materials can actively bind carbon from the atmosphere rather than releasing it — startup Carbo Culture is one company working in this area.