SIEMENS

In 1972 the Club of Rome — a think tank that was founded in 1968 and is still very active in the world of international politics — published its influential report The Limits to Growth, in which renowned economists and thinkers such as Dr. Dennis L. Meadows pondered the future of the world economy. Their conclusion was that if the world population’s continued to grow at the same rate, and along with it industrialization, environmental pollution, food production, and the exploitation of natural resources, then the absolute limits to growth on earth would be reached within the following 100 years.

Criticism of their position soon followed from all quarters. Noted economist Dr. Thomas Sowell, for example, labeled the report as perhaps the most celebrated false prognosis of recent history. Yet today, almost 40 years after the appearance of The Limits to Growth, the claims it makes, and those of subsequent publications, are more relevant than ever.

To begin with, the evidence for climate change already tells us that our energy policy is anything but sustainable. Many figures from the worlds of business and politics have now taken on this challenge — as is evident in, for example, the current boom in renewable energy, particularly wind power. Here the priority must be to increase power yields by means of intelligent engineering and likewise to automate the production of wind parks and thus make them more cost-effective (see article “Wind Swords: Fighting for a Longer Life”).

At the same time, engineers are working to improve the efficiency of power plants fired by fossil fuels such as coal and gas, and thereby to reduce our consumption of these resources. The world efficiency record in this field is currently held by a combined cycle facility in Irsching, Bavaria, which became the first power plant ever to convert 60.75 percent of the energy in gas into electricity (see article “Record-Setting power Plant”).

Thanks to special development tools and analytic methods, which combine maximum environmental compatibility with high economic performance, it is now possible to design large and complex industrial plants in such a way that they require less and less electricity. The result is lower and lower levels of harmful emissions (see article “When is Green Really Green”, “A Benchmark for Efficiency”).

An additional example of such efforts can be found in the construction industry, where improved thermal insulation and the use of heat pumps can dramatically reduce the energy required for heating purposes. The aim of such efforts is not only to minimize carbon dioxide emissions but also to reduce the use of raw materials. The impending shortage of natural resources, and an associated increase in prices — whether for oil, gas, coal, or metals — was one of the Club of Rome’s predictions that now threatens to become reality.

In 2010 the European Union identified as critical the issue of access to 14 minerals and metals (including antimony, beryllium, cobalt, and certain rare earths) that are crucial for the manufacture of both high-tech and everyday consumer products.

Three Times Today’s Demand by 2050? Will a scarcity of resources strangle growth? At present, growth appears unchecked. The United Nations Environmental Program (UNEP) warns that annual consumption of minerals, ores, fossil fuels, and biomass is set to rise to 140 billion tons by 2050, nearly three times as much as today (see article “Decoupling Raw Materials Consumption from Economic Growth”). Behind this increase is projected growth of 2.3 billion in the world’s population and a rising middle class in many former emerging economies. This development will generate huge demand for computers, cars, clothing, and energy.

Furthermore, as Dr. Mathis Wackernagel, President of the Global Footprint Network, an international think tank based in Oakland, California, points out in an interview (see article “Why We Are Destroying Wealth Faster than We Can Create It”), the human race is already living beyond its means. “Although technological advances have increased biocapacity, this expansion has been much slower than the rise in human demand for resources,” he says. “We estimate that we’re now using nature 50 percent faster than the speed at which it can regenerate.”

“The question is therefore whether the massive increase in new goods and services will result in ecological collapse or can be guided into a sustainable future,” wrote Ralf Fücks, President of the Heinrich Böll Foundation, in a recent article in the German weekly Die Zeit. Ultimately, therefore, the issue is whether economic growth can be weaned off its dependence on non-renewable resources, thereby enabling the economy to grow in a manner that is as sustainable as possible. Achieving this, according to Fücks, will require, on the one hand, politically-defined “ecological guardrails that are based on the maximum tolerable loads of the various ecosystems” and, on the other, action on the part of the corporate sector to develop the technological solutions and the environmentally-compatible processes that are required to minimize dependency on increasingly-scarce and more-and-more costly raw materials.

Siemens, for instance, has been doing this for years, especially with the products and systems from its Environmental Portfolio. These extend from the field of renewable energy to intelligent power networks, energy-saving railroad systems, industrial plants, and household appliances, all of which help customers operate in a sustainable way. At the same time, the company is scrupulous about minimizing the resources used by its own businesses. Take, for instance, the activities of researchers in the field of materials and manufacturing at Siemens Corporate Technology (CT). One member of the group is Dr. Thomas Scheiter, who heads the Material Substitution and Recycling global technology field .

“As soon as the availability of a raw material becomes critical, it’s our job to develop technological alternatives,” says Scheiter (see article “Alternatives in the Making”). “This includes the development of totally new recycling methods for the recovery of materials such as rare earths and tungsten.” In addition, efficiency experts are continually identifying potential for improving existing technologies. This includes, for instance, ideas for using high-performance magnets in wind turbines, for producing electric cars without the need for rare earths, for substituting cheaper aluminum for expensive copper, and for replacing conventional raw materials with renewable biopolymers without sacrificing quality or performance.

While researchers at CT have set themselves the goal of protecting Siemens as much as possible from future shortages of raw materials, the job of the people in the company’s supply chain management business is to avoid price increases and bottlenecks among the company’s approximately 90,000 suppliers worldwide.

“Market monitoring is a crucial tool here,” says Barbara Kux, a member of the Managing Board of Siemens AG and Chief Sustainability Officer. Kux is also responsible for supply chain management at Siemens. “We have a department that produces market analyses and forecasts, and we are thus constantly in touch with the latest market developments. That helps us plan ahead and secure and identify supply and production volumes well in advance of any price increases,” she says. In order to avoid supply bottlenecks, Siemens also builds consortiums with other companies in order to be able to negotiate raw material rights from a position of strength. “We recently completed talks with mining companies in Australia that will ensure us access to rare earths,” says Kux.

Bringing Suppliers on Board. Other measures designed to enhance business sustainability include helping suppliers improve their own efficiency. “By striving to help our suppliers carry out some of their operations more efficiently, we also help them cut their production costs and therefore our purchasing costs,” Kux explains.

Siemens is already using its Energy Efficiency Program for Suppliers (EEP4S) to identify and exploit energy-saving potential (see article “Green Prescription for Suppliers”). Now, however, the company is aiming to streamline production along the entire value chain with the help of a program called SPS@Suppliers (see article “Supporting Suppliers”). Each year the Sustainability Office presents sustainability awards to especially efficient suppliers. This practice also has the side benefit of motivating them to sign up for the two programs.

“The nature of the programs themselves should be motivation enough to take part,” says Kux. For in the final analysis, if suppliers can save energy, reduce throughput times, and simultaneously improve quality, productivity, and sustainability, this not only enhances their green credentials but also lowers their production costs and therefore makes them more competitive.

“In fact, for companies such as Siemens, raw materials shortage are both a challenge and an opportunity,” Kux concludes. This is because shortages are creating a major incentive to develop solutions that not only reduce the impact of supply bottlenecks and price increases on the company but also benefit the environment by making business operations more efficient and significantly lowering the consumption of natural resources. And in a world that is gradually reaching the limits to growth, such solutions translate into a competitive advantage that should not be underestimated. Ultimately, in order to fully suspend the limits to growth, it would be necessary to establish a sophisticated recycling-based economy. Trains that are as much as 95 percent recyclable — like the ones being built by Siemens in Vienna (see article “Fast track to Second Life”) — are a spectacular example of how such an economy might one day become a reality.