Circular economies and scenario analysis: How Rolls Royce is innovating for zero-carbon operations
EXCLUSIVE: As the UK Government mulls over whether to adopt a 2050 target for net-zero carbon emissions, engineering and aerospace giant Rolls Royce is going beyond the "low-hanging fruit" as it continues on its pathway to zero-carbon operations by 2030.
As a FTSE-100 company which employs more than 55,000 people across 45 countries, Rolls Royce is widely regarded as a leader in innovation across the automotive, engineering and aviation sectors. For several years, it has been using that scale and reputation to champion the low-carbon agenda, investing millions of pounds in clean technologies ranging from onsite solar arrays and ground-source heat pumps for its own operations, to microgrids, energy storage solutions and fuel-efficient combustion engines for customers/
The culmination of the company’s progress in decarbonising to date has been the creation of its new long-term target to bring its direct (Scope 1) and power (Scope 2) emissions down to zero by 2030 – a strengthening of its previous target of a 50% reduction by 2025, against a 2014 baseline. Given that it produces technologies with high carbon manufacturing footprints, long lifespans and sizeable in-use emission potentials, meeting this goal will be no mean feat.
Speaking exclusively to edie ahead of his appearance at edie Live 2019 (scroll down for details), Rolls Royce’s sustainability manager for engineering and design Andrew Clifton gave more insight on how the company will use low-carbon products, services and systems to reach – and, indeed, go beyond – its 2030 target.
He explained that, because the company has already tackled what he calls the “low-hanging fruit” – for, by example, installing energy efficient LED lighting and investing in more efficient building energy management systems – it will now need to focus on low-carbon power and heat, as well as life-cycle emissions, to speed up its low-carbon transition.
On the power and heat aspect, Rolls Royce will seek to replicate the success of its large-scale rooftop solar arrays in Bristol and Singapore across other locations, Clifton explained, and is working to roll out ground and air-source heat pumps across its manufacturing estate.
And as for waste, the company is now working with SMEs and suppliers across its value chain to find, support and scale up circular economy solutions for end-of-life products and manufacturing waste , from metals to machine coolant, as it strives to achieve zero-waste-to-landfill status by the end of 2020.
“When you’re thinking about carbon emissions across the lifecycle of your products, the material used for heavy manufacturing like ours is often the biggest chunk of its footprint,” Clifton said.
“You don’t want to be investing money and emitting carbon over materials you are going to throw away. If we can maintain all the energy that comes from adding value and complexity to materials, the impact on carbon emissions is significant.”
Rolls Royce currently recycles around 20,000 tonnes of high-value metals annually thought its ‘Revert’ scheme, which it claims reduces emissions by 80,000 tonnes of CO2e compared to using virgin materials. Under the scheme, Rolls Royce has commissioned and co-created a string of innovative processes to remove coatings and contamination and separate alloys.
Explaining why Rolls-Royce had chosen not to develop its own circular economy innovations in-house, he added: “We want to support innovation in the SME community and across our supply chain and then buy into their solutions and provide them with access to our knowledge and systems.
“That’s the role that we, and the rest of the sector, can play, as these are often sector-level waste streams with most components in common across various companies.”
A new kind of business case
Rolls Royce notably has a sizeable, ring-fenced budget for low-carbon innovation, having designated between £7m and £11m to R&D annually since 2015. Of this funding, which is managed by the company’s group property department, two-thirds is always put towards improving the efficiency – and therefore energy efficiency – of its products and services.
Nonetheless, all low-carbon projects involving investment in innovation must be run past the company’s board members and energy council, who have, according to Clifton, historically only approved in schemes with a payback period of three years or less.
In light of the company’s new focus on reaching zero carbon, he explained, the board is now moving to green light programmes with payback times of five years – as long as their carbon reduction impacts are “significant” and go beyond “efficiency gains”. Clifton attributes this trend not only to Rolls Royce’s long-term emissions goals but to an increased demand for corporate climate action from investors, policymakers and consumers alike.
“The argument that there is no business case is often not a good one to make, because there are often less tangible aspects than finances to be factored in,” Clifton said.
“There is increasingly this reputational aspect, with external stakeholders expecting – or requiring – you to reduce emissions. While a project may not generate payback within five or more years, it may be the case that you only have a limited number of years to get to a certain level of emissions before you start seeing a runaway effect of investors and customers not wanting to be associated with you.”
In order to get this message across to the board, Clifton explained, Rolls Royce’s sustainability team has been taking the firm’s executive-level staff through climate-related scenario analysis, mapping the company’s likely future performance across a range of global warming trajectories.
This activity was first championed by the Task Force on Climate-related Financial Disclosures (TCFD), which claims that it offers sustainability professionals the chance to strengthen relationships with board members and the finance department through “storytelling”.
While Rolls Royce does not yet produce a TCFD report that would make its scenario analysis publicly available, Clifton claims that scenario analysis as an internal exercise has “really opened [board members’] eyes” to climate impacts.
“Looking at carbon is, at the heart of it, about the long-term sustainability of the business,” Clifton concluded. “For us, it stems from understanding potential scenarios surrounding climate change and carbon, and how our business could function – or cease to function – in these different landscapes.”
Rolls Royce at edie Live
Rolls Royce’s sustainability manager for engineering and design Andrew Clifton will be appearing on the Innovation theatre at edie Live this week (21-22 May 2019), as part of a session exploring how emerging clean technologies can be harnessed to help decarbonise manufacturing. Taking place at 12.30pm on Day One of the event, the panel discussion also features expert insight from independent strategy advisor and social entrepreneur David Bent and E.ON’s strategic programme manager Steven Jeffers.
Rolls Royce’s energy reporting and compliance manager Fiona Worrall will also be speaking during Day One of edie Live 2019, for a panel discussion on the energy data revolution in the Energy Theatre. That session will run from 3.30pm to 4.45pm.
The sessions are two of many taking place across four theatres during the two-day show, which is edie’s biggest of the year and a highlight in the calendar for sustainability, energy and environment professionals. Under the theme of “turning ambition into ACTION”, we will be bringing attendees the inspiration and solutions needed to achieve a low-carbon, resource efficient and profitable future for their organisation.
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