Getting to grips with the complexities of industrial decarbonisation using soft systems

On the 12th October I moderated a panel on industrial decarbonisation at the Carbon Forward London conference. Not being a carbon markets specialist I was out of my comfort zone – which is always a good place to learn new stuff and meet new people. Despite not being directly involved in carbon trading obviously my work has touched upon it. The first time I ever reported carbon emission reductions as well as energy saving was 1993 for Strathclyde Regional Council that had several thousand buildings. I just found the report in my archive the other day. Then in 2005 I executed a very early trade on the Emissions Trading Scheme when our client at RWE Solutions, Guinness, closed the Park Royal Brewery, which was of course the wrong kind of decarbonisation.

My panelists at Carbon Forward were: Andrew McDermott, Deputy Chief Executive, British Ceramic Confederation, David Phillips, Head of Capital Markets & New Market Strategy, Aker Carbon Capture, and Trevor Sikorski, Head of Natural Gas and Carbon Research at Energy Aspects. Their expert contributions made me consider the subject and also taught me a lot about the latest developments in carbon capture and storage (CCS).

In my long career in in energy efficiency, interest in the subject has waxed and waned but we are definitely in an up-wave now due to some obvious factors, notably energy price increases and increased focus on energy security, as well as less obvious factors such as growing interest in the subject from institutional investors. Despite that growing interest energy efficiency remains the Cinderella of energy options and the potential for cost-effective improvements remains high. The IEA estimate that 40% of our required reductions in emissions could be achieved through improved energy efficiency. In our work on energy efficiency, including through our ESCO-in-a-box® business model, we see the need to improve the economics of many energy efficiency projects, particularly deep retrofits, and this requires stacking different revenue sources together. This can include adding carbon, biodiversity and even social credits, into the mix for retrofit projects.

Andrew outlined the decarbonisation pathway for the ceramics industry, an energy intensive industry which is geographically dispersed and includes a high proportion of SMEs. Furthermore its carbon emissions are predominantly driven by heat, and particularly high temperature heat processes, typically at 1200 to 1300^oC, but with some specialised processes operating at an incredible 2,800^oC. The pathway to net zero for ceramics includes a mix of technologies: energy efficiency (14% reduction in carbon); on-site generation (1%); grid decarbonisation (3%); hydrogen (36%); electrification (11%); bio-energy (3%); carbon capture (15%); and product adoption (4%); leaving a residual 4%. Hydrogen combustion is being trialled in some sites but of course there are issues of supply and storage. Electrification may sound like an easy option but the different heat transfer pathways, with less emphasis on convection and more on radiation mean that it can be necessary to change stacking patterns to ensure even heating. Electrification is not just a simple switch of heat source.

David talked about Aker’s modular carbon capture technology which is now being applied in Norway and further afield in onshore and offshore applications. With plants ranging from 40,000 tonnes a year to more than 400,000 tonnes a year the technology is now proven and costs are coming down, as carbon prices go up. Aker also offers carbon capture as a service, providing the whole solution including capture, transportation and storage on a price per tonne basis. I must admit this technology is more advanced than I had previously thought and with an increasing carbon price it will become more viable for large single point emitters or CCS hubs.

Trevor talked about the risks of technology and how companies could be incentivised to take those risks. Given the need for speed to address the climate crisis new technologies will need to be developed and adopted quickly, and that is inherently risky. Manufacturing companies are naturally hesitant about adopting unproven new technologies, particularly those that directly impact the process. Getting those kinds of decisions wrong can be terminal.

The discussion reminded me of a paper I wrote in 1987¹ based on parts of my PhD work in which I set out a soft systems² analysis of the energy management function within companies. In it I said that when considering options for energy efficiency projects companies needed to make an explicit decision on the level of research, design and development, i.e. technological risk, that they were willing to take on. The model presented divided energy management into four levels: good housekeeping; retrofit; plant replacement projects; and process re-design. These apply equally to decarbonisation. ‘Good housekeeping’ is a dated phrase but really means managing what you have already in a better way, ensuring the existing system is operating at maximum efficiency with minimum waste. In industrial energy systems this means measures like ensuring control systems are operating well, burners are firing efficiently, and steam traps are all operating. This is the basic level of energy management and in many energy intensive industries it is usually fairly well managed. In less intensive industries, and in buildings, it tends to slip over time which is where processes like ISO50001 can be useful as they systematise management processes rather than leaving things to chance. Even in the best run companies there are probably still opportunities to save energy and carbon this way. Although it is different to industry we have had an example of this in the residential market recently where during the energy price crisis it came out that nearly all of the millions of condensing gas boilers, which were sold as being energy saving, were set up to run at high flow temperatures, which mean they weren’t condensing which means that homes were wasting c.6-8% of their gas usage. Adjusting the flow temperatures down reduces energy use without affecting thermal comfort – better housekeeping or energy management.

The retrofit level is all about adding something to a plant or building that improves efficiency, maybe insulation, a control system, or new more efficient burners. The plant replacement level is about things like replacing a production line but using essentially the same process technology. A new plant, or building, will tend to be more efficient than an existing one even with the same basic process technology because of incremental improvements in the efficiency of components such as motors and drives etc.

The final level, process re-design, is clearly the most capital intensive, the most research and development intensive, and the riskiest. In decarbonisation it includes things like switching steel production from iron ore in blast furnaces to direct reduction using hydrogen. It also includes changes in material inputs and process such as switching cement production from clinker made from limestone to alternative feedstocks.

An important aspect of the soft systems model of energy management, which also applies to decarbonisation, is the need for a ‘contextual evaluation’, meaning how does the proposed measure fit with other policies, developments and decisions in the organisation. This may include things like; is there a plan – or even proposal – to re-locate?; where are you in terms of the normal plant replacement cycle?; does this proposed change fit with the product strategy? The interaction between technical evaluation, financial evaluation and contextual evaluation can be an iterative process that itself may lead to new ideas. I said in 1987, ‘to conduct these analyses well requires an ability to think outside the normally accepted boundary of energy management and a high level of communication within the organisation’. This is equally true for decarbonisation – at the end of the day the business is there to perform its primary function and decarbonisation per se is not its objective, but rather a constraint that is driving change. Interactions between proposed solutions, as well as interactions with other aspects of the organisation, need to be fully evaluated.

It is relatively easy to identify a generic decarbonisation pathway for an industry. It is much more complex to translate that pathway into a specific action plan for a particular organisation as the technical, financial and contextual evaluations specific to that organisation – with all of the specific constraints – have to happen, and the interactions between measures and other factors need to be considered. The technological risks involved need to be reviewed and an explicit decision about the level of risk to be taken has to be made. This itself needs to be set against the risks of inaction – financial, commercial and environmental.

The output should be a long-term plan with defined programmes and investment projects with likely timings, identified risks, and evaluation of impact on emissions and other benefits. It will be a living plan that evolves in response to changes in technology and economics. This kind of extensive analysis is difficult in all organisations but particularly in SMEs, where the capacity to make these kinds of evaluations and decisions is more limited and external assistance is likely to be needed. If you need help developing a decarbonisation plan please get in touch with me or ep’s consultancy team.

1. A soft systems model of energy management and checklists for energy managers. Applied Energy 27 (1987) 229-241
2. Soft systems methodology is an organised way of thinking that’s applicable to problematic social situations and the management of change by using action. It was developed at the University of Lancaster, primarily by Peter Checkland. These complex situations are known as “soft problems”. They are usually real-world problems where the goals and purposes of the problem are problematic themselves. Examples of soft problems include: How to improve the delivery of health services? and How to manage homelessness with young people? Soft approaches take as tacit that people’s view of the world will change all the time and their preferences of it will also change. See: Systems Thinking, Systems Practice. 1981. Wiley. ISBN 978-0-471-98606-5