Decarbonisation can no longer be ignored

Companies like RMR Process are helping industry move towards more sustainable production practices as our net zero 2050 target approaches.

As Australia’s 2050 Net Zero target continues to approach, companies like RMR Process are helping the industry move towards more sustainable production practices. Adam McCleery writes.

Pressure is mounting to achieve global climate change goals by 2030, in alignment with the legally binding Paris Agreement.

The team at RMR Process, as experts in food process and facility design, can enable food manufacturers to build features into their process or factory design early on, addressing the needs of the industry as they strive to reach these targets, in particular Australia’s Nationally Determined Contribution (NDC) Targets.

Understanding these wider global issues and food industry developments, RMR Process is well placed to assist food manufacturers with the strategic direction of their business and can help future proof their facility and process.

The NDC targets have already started to have an impact on the food and beverage manufacturing sector with timelines in place globally and nationally, meaning manufacturers and producers risk falling behind if they don’t begin implementing changes.

“The Paris Agreement aims to limit global temperature increases below 2C, ideally 1.5C, compared to pre-industrial levels, which means that globally, we need to reach Net Zero in Green House Gas (GHG) emissions by mid-century” said Brendan Giang, project engineer at RMR Process.

“Although this may seem far away, Australia has committed to this Net Zero Emissions target of 2050 [2], and in order to remain within our emissions budget, our emissions should peak no later than 2025, be on a downward trajectory from there and have declined by 43 per cent of 2005 levels by 2030 [1].”

RMR Process recognises that significant changes need to be implemented across the food manufacturing industry to ensure Net Zero by 2050.

The main contributors to Green House Gas (GHG) emissions are categorised as Scope 1, 2 and 3 Emissions.

“In simple terms, Scope One Emissions are what companies directly output. This includes company cars for example,” said Giang.

“Scope Two includes the emissions utilities companies emit to supply energy to users, and Scope Three includes everything else up and down the supply chain: growers, transport and final use, including how consumers need to use the product, such as cooking methods or packaging disposal. Even capital equipment supply and equipment end-of- life are factored into Scope Three.”

This impacts key supply chains which are increasingly being evaluated by their carbon footprint, affecting ingredient suppliers, farmers and logistics providers.

McKinsey reports have shown that the food system accounts for about 34 per cent of global GHG emissions.

“Of particular note to SME food manufacturers, Scope 3 supply chain emissions are estimated to account for over 80 per cent of total GHG from the food system[4],” said Giang.

“Whilst food manufacturing accounts for only a small percentage within the food system, manufacturers need to understand that their Scope One emissions are a Scope Three problem to their customers and suppliers. Companies will ultimately feel the cost and pressures regardless of where they sit in the supply chain.”

“Data capture up and down the supply chain will become increasingly important as investors, regulators and customers become more interested in tracking impact and choosing supply partners based on this data.”

However, RMR Process is actively working towards greater understanding of the requirements of the NDC, and Australian Net Zero goals, to better help clients within the food and beverage manufacturing industry capitalise on the changes whilst limiting impacts to the bottom line.

Peter Taitoko, founder and director of RMR Process, has helped to identify the challenges and opportunities presented to food and beverage manufacturers because of the NDC Scope Three Emission targets.

“What we have found is that many of the larger manufacturers and multinationals are already getting their heads around it and starting to put key initiatives in place,” he said.

“Most of the small to mid-tier businesses seem a long way off from understanding what their Net Zero responsibility means, let alone how to leverage the opportunities to become a stronger part of the supply chain.”

As the larger companies, such as supermarkets and multi-nationals, begin to align more readily with manufacturers moving towards Net Zero targets, the risk increases for businesses to be left behind.

“In time, environmental impact will be a strong differentiating factor for selecting preferred partners in the supply chain, particularly for retailers and grocers who are uniquely positioned to be driving the changes,” said Giang.

RMR Process’s assertion that supermarkets are increasing their alignment with more environmentally friendly products, especially on the back of changing consumer demands, is demonstrated by the ratio of sustainable products versus traditional in the market.

“It’s moving that way already. McKinsey and Company (2020) reports sustainable products are currently outgrowing conventional products by a factor of three to one,” said Giang.

For those manufacturers who take too long, or don’t make the right changes, the operational and market impact will be significant.

“The good news is that there is a large amount of funding and resources available to put towards decarbonisation projects,” said Taitoko.

At the core of RMR Process’s messaging is decentralising the production process where possible. The benefits of this decentralised approach are numerous, from a community standpoint right through to production output and point of sale.

A decentralised economy addresses food security by removing reliance on offshore supply, creates jobs, reduces food wastage, minimises emissions from freight and logistics, and targets low carbon footprint raw materials.

“We strongly believe that a decentralised manufacturing model is the future. That means a supply chain that removes trucks from the roads and shipping containers from the water,” added Taitoko.

Taitoko highlighted the absurdity of an Australian grown ingredient being shipped overseas for part of its production process when the capability lies at home.

“For example, we’re often sending raw produce hundreds or thousands of kilometres to a centralised processing facility when you can do some or most of the value add steps at the source or nearby. In some cases product is sent overseas for value add process steps and then shipped back to Australia.”

“It’s about changing the mind set of obtaining cheap manufacturing or ingredients overseas. Few are asking the right questions about whether it can be done in Australia or why the value added steps must be done in a centralised location in most cases. It’s absolutely possible to achieve a decentralised food system at scale,” said Taitoko.

A key part of evaluating the supply chain is to start talking to supply chain partners about optimising freight, minimising waste, moving to sustainable packaging and decentralising at the source.

“For the supply chain, food manufacturers and retailers, these accepted costs of doing business will start chipping away at their bottom line because operational and product costs will go up due to environmental factors, as well as the added burden of government regulatory requirements,” said Giang.

“Although the government is providing certain funding to gently encourage the changes, as it becomes more urgent, that carrot will turn into a stick.”

“It has been shown that businesses that are low intensity in Scope Three have a better portfolio value performance over time, proving how it pays off.”

“Yet very few businesses currently engage with the supply chain to look at Scope Three emissions.”

So how does RMR Process suggest staying ahead of the curve?

The task of decarbonisation and decentralisation of the production process is still a daunting prospect for many food and beverage manufacturers, which is where RMR Process is able to really shine.

The first step is to start with a practical plan that can be implemented over the coming years, highlighting where the opportunities lay and the “size of the prize”.

The team believes that kick starting the process for many food and beverage manufacturers lies in the ability to make many positive changes without huge capital investment.

Understanding material and energy usage across the business is an easy way to identify where savings can be made.

“By performing a material and energy study, not only can we identify opportunities to minimise wasted energy, but we can also look for future optimisation through the use of new technologies for heat regeneration, installation of more energy efficient equipment such as heat pumps to replace steam boilers and thermal battery storage, solar and off-peak electricity.

“It’s such a daunting task to work out and understand what needs money to solve the problem. We’re gaining a greater understanding of where the quick wins are. There are things you can do that don’t necessarily require new equipment to make these improvements, many of which are net present value positive, where the projected payback outweighs the cost of implementation,” said Giang.

“This can be as simple as understanding and optimising work flows and processing to minimise waste through to rethinking the product and packaging formats, sourcing locally and aligning with low carbon footprint suppliers.”

Many of the larger changes Giang suggests stack up in their own right as cost saving initiatives.

“With energy prices escalating rapidly, it is becoming easier to justify capital spend to reduce usage. The payback often stands up financially, even before you consider the considerable benefits in terms of compliance and preferred supplier status.”

The key messaging from RMR Process, as outlined by some of the examples laid out above, is that to reach Australia’s Net Zero target of 2050, and meet growing changes in customer demands, now is the time to act.

With a partner like RMR Process helping guide the way, a company mitigates the risk of falling behind the competition, and taking a big hit to its bottom line in the future.

RMR Process can also help a client make the right decisions regarding pay back in the future, which in turn will only help the bottom line when thinking long term.

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