Industrial products industry lags in reaching climate change targets, but progress is being made

The industrial products industry remains large contributors of greenhouse gases. While the industry has undertaken initiatives to reduce its carbon footprint, a new PwC report has found overall commitment lags far behind what’s needed to reach the Copenhagen Accord’s emissions targets.

The reduction in carbon intensity agreed to under the Copenhagen Accord averages two percent a year to 2020, compared to the 3.4 percent PwC estimates as necessary to stay on a low carbon pathway to 2050.

Although significant improvement is needed to reach the two percent target, a variety of industries have made some progress by employing different strategies to reduce emissions.

Standing out from other industrial products segments is the aerospace and defence (A&D) sector, which has shown significant progress in taking proactive steps to reduce greenhouse gas emissions and improve fuel efficiency, PwC says. For example, today’s jets are 70 percent more fuel efficient than those produced 40 years ago and further improvement is planned. Moreover, a collective commitment developed by The International Civil Aviation Organization (ICAO) also mandates that the international aviation industry adhere to: a cap on CO2 emissions starting in 2010 (carbon-neutral growth); an average improvement in fuel efficiency of 1.5 percent per year from 2009 to 2020; and a reduction in CO2 emissions of 50 percent by 2050 relative to 2005 levels. Many efforts are also being made in the A&D sector to better employ technology and aircraft operations to improve fuel efficiency, such as retrofitting existing aircraft wings with new winglets to reduce drag, as well as improving flight planning accuracy and weight reduction strategies.

The chemicals and industrial manufacturing sectors are taking a two-fold approach to climate change by employing strategies that reduce their internal emissions at the plant or factory level, while researching and developing product offerings that help their customers reduce their own carbon footprint. Moreover, the sectors are also focusing their attention on improving technical processes in production, enhancing the use of renewable raw materials and promoting recycling as a means of lessoning carbon emissions. Strengthening the current patchwork of emissions regulations will have a significant financial impact for global metals companies. Metals companies will either have to invest in new technologies or bear the cost of participating in one of the various emission trading systems.

However, a consistent barrier in reducing emissions for most industry segments lies in the distribution of their products. To help overcome the carbon footprint of their transportation and logistics processes and to green their supply chain, many sectors are shifting to transport modes with lower emissions like ship or rail, downsizing products and packaging, and upgrading to truck fleets that are more fuel efficient or use bio-fuels. To lower emissions, transportation and logistics companies will need to collaborate more with their customers. This may lead their customers to consider how to optimize their inventory locations and distribution centres, and closely examine the transportation services they employ.

For more information on these sectors or to download the report, visit: http://www.pwc.com/gr/en/publications/different-shades-of-green-outlook.jhtml.