A visual representation of a new manufacturing era focusing on energy efficiency and low carbon emissions.

New era of manufacturing: low-carbon & energy-efficient

How companies are combining digitalization and automation technologies with smart financing to stay ahead.

July 2024

In addition to the agreement to phase out fossil fuels, COP 28 also adopted the world's first 'global stocktake' to strengthen climate action. The aim is to continue pursuing the goal of limiting global warming to 1.5 degrees and achieving net-zero emissions by 2025 – but time is running out faster than expected. According to the latest report by the Global Carbon Project, global fossil CO2 emissions are expected to total 36.8 billion tons in 2023, reaching a new record level that is 1.1% higher than the value of 2022.

Responsible for a quarter of all direct emissions, the industry sector ranks second after the energy sector. If power sector emissions are reallocated to final sectors based on their use of electricity and heat, the contribution of the industry sector increases even to 34%. This is underscored by the fact that the production industry is willing to transition to more sustainable production practices. Four out of five production companies strive towards carbon-neutral operations as per a 2021 study by Boston Consulting Group, commissioned by the World Economic Forum.

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The intersection of technology and financing for sustainable production

The key to achieving more sustainable practices in the industry sector is to accelerate decarbonization, improve energy and resource efficiency, and implement circular economy practices. Fortunately, many of the necessary technologies to drive sustainability are already available. By utilizing cutting-edge automation and digitalization technologies industrial production can become highly flexible, cost-efficient, and more sustainable at the same time.

As you complement this technology know-how with excellent financing expertise, the commissioning of green production technologies is further accelerated. Why? Acquiring and putting new equipment or technology into service require upfront investments that can impact on a company's creditworthiness, cash flow, and balance sheet structure. In addition, manufacturing companies are currently operating in a volatile market environment in which they might consider delaying investments while others struggle to find access to the appropriate financing necessary.

Enhancing energy efficiency at zero cost

Energy-saving automation and digital tools offer enormous potential to significantly improve energy efficiency in manufacturing operations. Intelligent and integrated drive technologies alone can achieve energy savings of up to 30%. Committed to sustainable manufacturing practices, Nippon Electric Glass (NEG) a leading manufacturer of specialty glass, implemented a strategic approach to improve energy consumption. After conducting a comprehensive analysis, energy-intensive NEG installed Siemens Digital Industries' technology, including motors, controllers, and water pumps, resulting in a significant reduction of carbon emissions and operating costs. To finance the investment, NEG utilized a smart financing solution from Siemens Financial Services. The energy performance contracting agreement allowed to spread payments over five years to align with guaranteed savings, making the investment net zero cost.

Investing in minimized resource consumption

Simulation and optimization of physical products and processes via digital twins can not only help improve production quality and reduce throughput times, but as well minimize the use of physical resources. For instance, in Germany, thereby five to eight percent of primary energy emissions from manufacturing processes can be avoided by 2030.

This valuable potential can be doubled with additional automation. The US-based vertical farming leader 80 Acres Farms has already taken advantage of this potential by leveraging Siemens' advanced software and hardware solutions, including intelligent facility and energy management systems and industrial automation technology. A digital twin simulates plant growth and production processes. The result? The optimization of water and land use with significantly higher food yields. Siemens Financial Services is actively supporting the development of future farm infrastructure and technology innovation through equity financing for this innovative project.

A vertical farming setup with multiple layers of plants growing in a controlled environment.

Sustainable manufacturing - a competitive advantage that pays off in every way

Digitalization and automation technologies allow companies to optimize the full lifecycle of production processes, resulting in greater energy and resource efficiency and reduced carbon footprint, making it the fundamental enabler for sustainability. However, the right financing partner can be the game-changer for achieving sustainable manufacturing by providing fast and easy access to smart financing without compromising financial stability.

So, when will you join the sustainable manufacturing revolution to reap the rewards of an eco-friendly future? Because the benefits of going carbon-neutral and energy-efficient go far beyond being environmentally responsible. In the face of an increasingly challenging environment, sustainable manufacturing creates a competitive advantage through lower production costs, employer attractiveness and greater brand recognition.