Supply chain energy efficiency critical to reducing carbon footprint

Companies that want to reduce their carbon footprint need to pay attention to the energy they use as well as the energy used by links in their supply chains, according to a new report.

The University of Minnesota Institute on the Environment’s NorthStar Initiative for Sustainable Enterprise, along with the Environmental Defense Fund, provide suggestions on why and how to reduce energy consumption in a new report, Supply Chain Energy Efficiency: Engaging Small & Medium Entities in Global Production Systems.

Based on a two-day workshop tapping the brains of 31 representatives of energy service companies, financers, retailers, nongovernmental organi­zations, government and academia from around the world, the report provides a look into thinking about industrial energy efficiency within the system of a supply chain, and highlights opportunities for corresponding cost-, reputation- and energy-saving improvements.

“The industrial sector consumes nearly one-third of all global primary energy and the opportunities for improving energy efficiency in the industrial sector are vast,” said symposium organizer and researcher Jennifer Schmitt.

To realize these opportunities we must manage energy across organizations, industry sectors, supply chains and regions, which will require significant new and increasingly more transparent data, common metrics and analytics. Public and private collaboration will be crucial to reduce the transaction costs of implementing supply chain energy efficiency, particularly with regard to credit enhancement, technology provider accreditation and governmental policies.

The report highlights four recommendations coming out of the symposium that span across the many actors involved in saving a kilowatt hour:

1. Engage leading companies to identify high-quality suppliers for pilot supply chain energy efficiency improvements.

2. Create one or more sector-based collaborations for improving supply chain energy efficiency by assembling groups of peer manufacturers within a supply chain and using benchmarking, process capability analysis and best practice sharing to identify and improve energy efficiency and industry competitiveness.

3. Increase transparency and standardization of energy use, audits and supply chain information.

4. Create finance and credit risk approaches and models for portfolio-level energy efficiency and energy management projects.

“These recommendations, coming out of our discussions at the symposium, provide an unprecedented ability to characterize and benchmark sector-level and facility-level energy savings opportunities, share knowledge in ways that allow for the flexible application of technological and organizational information in a supply chain environment, and coordinate resources across regions and across public and private actors,” Schmitt said. “Approaching energy efficiency through the supply chain holds great potential for both carbon and financial savings.”

Click here to view and download a copy of the report.