The European Union significantly raised the decarbonization bar with the Fit for 55 targets it introduced last year. Not only has the newly adjusted target of a 55% decrease in emissions by 2030 compared to 1990 levels moved the goalposts threefold, but many free allowances in the Emissions Trading System (ETS) will also be gradually phased out.
For some businesses, this may mean investing in energy-efficient technologies, improving supply chain efficiency, or switching to renewable energy sources. For others, it may involve transitioning to low-carbon options or implementing carbon capture technologies. Whatever the strategy, the time to act is now. With only seven years remaining, effective analysis using the right metrics has never been more important – and smart metering can prove essential in achieving the goal.
Improving supply chain efficiency
The majority of a company's carbon footprint comes from its supply chain – known as Scope 3 emissions. Scope 3 emissions account for a staggering 11.4 times greater amount of emissions than Scope 1 and 2 combined. The pressure is then mounting for supply chain and logistics professionals as they have a critical role to play in reducing greenhouse gas emissions across all sectors.
To build a sustainable supply chain, companies can follow three stages:
● Identifying and assessing their suppliers' environmental impact;
● engaging and collaborating with suppliers to drive change;
● monitoring progress and transparent reporting.
The main issue is that Scope 3 emissions are the hardest to trace. But smart metering can help: if each point throughout the entire supply chain – factories, distribution centres and logistics services, etc – recorded and logged their data clearly, the weak points and carbon leaks could be accounted for and reduced. With data comes action. Companies can conduct a thorough energy audit and work with energy monitoring companies such as Rhino to identify areas of improvement. By taking a targeted and comprehensive approach, companies can achieve significant, lasting reductions in carbon emissions while also avoiding the pitfalls of greenwashing.
Transitioning to a cleaner future the right way
Carbon offsetting is one approach to mitigating the impact of greenhouse gas emissions. However, it can be a costly and controversial solution and may not always be the most ethical choice. For instance, the EU's pledge to plant three billion trees is criticized by some experts as "greenwashing", or misleading consumers by overemphasizing the role of planting trees in achieving net zero emissions.
Offshoring environmental problems can also have serious long-term consequences, as we’ve learnt from the automotive industry's shift towards electrification. The Financial Times has dubbed this "green-botching" - implementing environmentally-friendly initiatives without adequate infrastructure and support systems. To achieve meaningful and sustainable reductions in carbon emissions, it is essential to identify the specific areas where you can reduce your usage, both in the short and long term. To accomplish this, it's important to have a clear understanding of your current usage patterns and how they contribute to your carbon footprint.
Investing in energy efficiency improvements to reduce your carbon footprint is one of the most cost-effective steps you can take. One way to do this is through improving your energy infrastructure with more efficient products. Replacing your lighting with energy-efficient LED lighting is an example of a low-cost investment with high energy reduction results. Measuring the utility consumption of your facilities is essential for pinpointing the best areas for improvement. Smart metering solutions are a low-cost-high-reward investment for companies which help to identify both consumption patterns and energy-inefficient areas, making sure you improve sustainability and reduce costs at the same time.
Bottlenecks in the sustainability supply chain
The transition to renewable energy and increasing demand for electrification technologies are driving changes in the energy supply chain, but there are potential bottlenecks that could hinder the transition. McKinsey & Company predicts an undersupply as high as 50 to 60 percent in recycled materials for energy solutions by 2030, leading to significant price spikes. To avoid shortages, it's essential to invest wisely in the right areas to improve ESG.
According to the same study, if Europe is to meet the fit for 55 target and deliver on REPowerEU it needs to seriously accelerate the solar PV installation rate. The plan mandates the installation of around 320 gigawatts of new solar photovoltaics by 2025 and 600 gigawatts by 2030, requiring a three- to five-fold increase. And then there will also be an increased demand for battery units, heat pumps for buildings and charging units – all of which will add pressure throughout the entire supply network, from the extraction of raw materials to the delivery of the finished products.
To mitigate risk from these bottlenecks and ensure your business is Fit for 55 ready, it’s important to know precisely what your needs are. Businesses must take fast and decisive action to strengthen their supply chains and invest judiciously in sustainable change. Failure to do so increases the risk of falling behind in achieving important energy goals or missing out on opportunities entirely.
How smart metering can ensure your fit for 55 ready
Smart metering allows businesses to monitor their energy usage more effectively, making it easier to identify areas of inefficiency and high usage. By capturing and processing emissions data across all locations, from factories to distribution centres and logistics services, companies can gain a better understanding of their emissions and develop strategies to reduce their carbon footprint.
Smart metering can also help companies identify opportunities to reduce energy usage and emissions within their own operations. By analysing energy usage data, businesses can identify areas of inefficiency, such as equipment that is left on overnight or HVAC systems that are not properly maintained. In addition, smart metering can help companies track their progress towards their carbon reduction goals. By monitoring energy usage and emissions data over time, businesses can track the impact of their sustainability initiatives and identify areas for further improvement.
To find out how Rhino can help ensure your business is on track to meet the Fit for 55 target and overcome the potential supply chain challenges, you can speak with a member of the team here.