What bottlenecks impede clean industry in low- and middle-income countries? How do partnerships support the implementation of new technology? How do digital industrial tools protect data? How does clean industry align with public health goals? Sophie Meerstadt and Alain Lefevre took the time to answer these questions and more from the participants of a virtual discussion on the clean industrial revolution.
Sophie Meerstadt, Associate Director of the Mission Possible Partnership, and Alain Lefevre is Co-Chair of ASME CATALYZE and Sustainability Strategy Director at Schneider Electric.
What is CATALYZE? At the moment CATALYZE has manifested at Engineering for Change as an ongoing virtual discussion between experts in clean industry. Each month we are exploring themes in the rapid global shift toward the cleaner production of materials and products. These conversations are leading to the ASME CATALYZE Summit June 17-18 at Newlab in Detroit, Michigan. The summit will convene clean industry stakeholders who are building, funding, and scaling sustainable industrial systems. Register now and join us in June!
The questions below are from the live participants in dozens of countries who attended the first webinar in the CATALYZE Series, Engineering the Next Industrial Revolution, as asked of the guests by Iana Aranda, E4C’s President. The text of the questions has been lightly edited and, in some cases, paraphrased for brevity and clarity. These are your questions about the clean industrial revolution underway answered.
E4C: From your work tracking industrial decarbonization, what bottlenecks are most common in low- and middle-income regions? And how can they be addressed without excluding resource-constrained actors?
Sophie Meerstadt: We work in low- and middle-income countries, and what we see is that the high cost of capital is just not comparable with other countries. Political risk and other factors are calculated and they can really break the business case. Getting better access to capital and de-risking some of the investments is essential.
Other challenges can include less developed government policy on clean industry, corruption that can cause delays, and lack of infrastructure.
Also, in some countries clean industries aim initially, at least, to be export oriented. For example, a lot of developers we speak to in the global south really want to export to Europe. So there’s an additional challenge of the uncertainty of whether they’re going to meet European certifications and standards.
One final example I’ll give is in some countries gray industrial products are quite import dependent. An example from one of our programs in Bazil, they import most of their fertilizer, which means they’re dependent on imports and exposed to price shocks. And prices go up and down like crazy. They can produce clean and the business case actually works. But the problem is, one year, they’re very, very in the money, and the other year they could be out of the money.
So, one of the mechanisms we’re thinking about is a CFD—a contract for difference—that, based on the average gray price, would be able to settle the business case. Then in the years where the green developer makes more of a profit because prices globally, even for gray, are going up, we’ll actually pay into the mechanism. Sometimes we have to be a bit creative, especially in global-south economies.
E4C: I’m gonna piggyback off that question and ask how are partnerships across sectors are helping to bridge some of these gaps between innovation and implementation. Any examples?
Sophie Meerstadt: We do see very, very strong partnerships across the whole value chain. The developer is often a focal point, but they work closely with, first of all, feedstock providers. In some cases, depending on the technology, feedstock can be quite complex and limited. That partnership is important, making sure that operations can actually run.
Then there’s the technology providers. They have to work very closely. People who have ever set up a new technology will know that the new bit of technology itself can work really well, but it’s the integration of different elements that can be complex.
Further along the value chain are the off takers. There are sometimes multiple sets of off takers. For example, you could have your ammonia producer, you could have Yara as an off taker, but then you could have PepsiCo as an off taker further down the value chain.
And these partnerships are really powerful, because that’s also where the premium can get diluted a bit.
We see partnerships that involve multiple players across the value chain. You sometimes have opportunities for industries across different sectors, to help each other as well. Co-location, for example, reusing each other’s by products, or getting a critical mass that lowers the cost of infrastructure for each player.
There are very good partnerships going on. And I didn’t even mention the finance community. Almost too many to mention.
E4C: What measures are taken to improve the security of digital platforms used in clean industries?
Alain Lefevre: That’s a great question. And it’s, it’s one that we are constantly bringing to our clients, too. It requires continuous investment.
The way we address it at Schneider is through a cyber security team for our own operations and we employ a cyber security consulting arm. When we go and do these digital transformations, we are looking at how to connect systems, how to leverage and pull that data from the shop floor and how to harden and protect these systems from external bad actors.
There are technologies and systems to make sure that these new, digitally enabled operation systems are secure. It can be done. You just have to make sure that you’re willing to put aside some budget for it.
E4C: You’re getting all this data, what are the most compelling key performance indicators for selling smart manufacturing solutions to your customers? What is it that customers are really excited about?
Alain Lefevre: Return on investment. That’s the KPI that usually gets the most buy in. There are a lot of motors in many industrial processes, whether in discrete manufacturing, light manufacturing, by which I mean like consumer packaged goods, food or pharma, and also in heavy manufacturing, like cement or petrochemical refineries.
Motors require high initial capex (capital expenditure). But the bulk of the cost of the motor comes from the opex (operational expenditure) of running it and maintaining it over its lifetime. Variable speed drives help to increase the range at which motors can run out, so when there’s a lower load on the motor it’s running at a lower setting. Variable speed drives are an offer that have a great payback period because they have great energy efficiency. And so that energy efficiency KPI is one that translates well to hard savings that are easy to count. Those are the ones we generally see customers react positively to.
E4C: How can clean industry and decarbonization efforts better align with public health goals, particularly in communities where energy, water and healthcare systems are closely interconnected? This is the 30,000 foot view. Sophie. What are your thoughts?
Sophie Meerstadt: Very powerful question. The just transition element, and making sure that everyone benefits, is important. Luckily, clean industry is usually cleaner. It produces less local pollution, etc, which is already a big benefit. Secondly, a lot of global south countries don’t have some of these big industries. By building clean industries, there are opportunities to build new wealth and to really lift up communities.
You sometimes see that if there’s, for example, a region with low electricity access, a clean industry project could become an anchor demand for electricity in that region. As part of the industry’s proposed scope of work it could commit to improving energy access in that region.
Luckily, these regions have such high renewable energy potential that it’s not like an either/or. It’s really critical when these projects are set up, that they’re set up with a comprehensive view to wellbeing and prosperity.
So, it’s a really good question, and one that requires a proper roadmap.
Ready for more? Sophie Meerstadt and Alain Lefevre respond to questions about their presentations in the video clips below. See clips from their presentations at Catalyze Series | Engineering the Next Industrial Revolution.
A Q&A with Sophie Meerstadt
How many clean industry projects are needed before you can call it a revolution? How is industry addressing the bottlenecks in advanced manufacturing and clean production? Is China outpacing the world in clean industry? Sophie Meerstadt, Associate Director of the Mission Possible Partnership answers our questions in this webinar video clip.
A Q&A with Alain Lefevre
How do AI and smart tech integrate with advanced manufacturing and clean industry? How can advanced manufacturing careers attract new graduates? How are manufacturers tracking emissions across their entire supply chains?
Alain Lefevre at Schneider Electric, answers our questions in this CATALYZE Series webinar video.
