Industrial companies can strengthen their competitive advantage through decarbonisation, electrification and energy efficiency, says a new paper from Danfoss titled “Competitive decarbonisation: Powering the industries of tomorrow”. 

 

Electrification of energy demand in industry is critical for driving competitiveness in Mena. The industrial sector accounts for 37% of global energy use, roughly 65% of which still stems directly from fossil fuels. 

 

Decarbonisation is industry’s greatest growth opportunity. Optimising motor efficiency in the EU alone could save €9.5-10.7 billion ($10.26-11.55 billion) in electricity costs annually, while avoiding the equivalent annual CO2-emissions of up to two million European citizens.

 

Core pillars

Industry has a unique role to play in the battle against climate change, as many of the essential goods it produces – such as critical minerals, electric vehicles, and sustainable building materials – are core pillars of the green transition. 

 

By embracing the innovative solutions and technologies that already exist today, industry can turn the greatest challenge of our time into its greatest growth opportunity. The new Danfoss Impact paper asserts that “competitive decarbonisation” holds the key to unlocking market competitiveness, enabling industries to simultaneously reduce their environmental footprint and enhance their competitive edge.

 

“The paper tackles already existing products and solutions which can be applied immediately across Mena industry to limit energy waste, promote electrification and boost competitiveness, especially in energy-intensive industries,” said Ziad Al Bawaliz, Regional President at Danfoss Türkiye, Middle East and Africa.

 

Electric motors

Electric motors power many essential industrial technologies such as fans, pumps, compressors, and conveyor belts, and account for more than two-thirds of industrial electricity consumption. For example, the optimisation of motor efficiency in the EU alone could save €9.5-10.7 billion in electricity costs annually while avoiding 12.5-14.1 million tonnes of CO2-emissions – equivalent to the annual footprint of up to two million European citizens.

 

Meanwhile in the EU, only around one third of the energy mix comes from electricity, yet it is necessary for industries to electrify wherever possible or risk piling on to an energy grid which is already at maximum capacity. The paper calls for the Electrification Action Plan to also include clear targets for demand side electrification.

 

Kim Fausing, President and CEO, Danfoss says: “I remain a stubborn optimist when it comes to Europe’s future, but we need to reestablish the growth mindset of the past. Mario Draghi’s report on EU competitiveness has crucially identified many areas in which Europe can improve including our elevating energy bills as a case for a massive overhaul of how Europe does business. Lowering energy consumption, cutting emissions and driving down the energy bills through energy efficient and cost-competitive electrification solutions could very well be European industry’s greatest growth opportunity.”

 

Clear guide

“Our Danfoss Impact paper takes this a step further by outlining a clear guide for immediately taking action to harvest the lowest hanging fruits in industry to limit energy waste, promote greater rates of electrification and boost competitiveness, especially in energy-intensive industries. Rather than dismissing decarbonisation in the pursuit for greater productivity, our research shows that decarbonising industries is critical for making them more resilient and increasing economic competitiveness,” added Fausing.

 

The Danfoss Impact paper reveals that by adopting energy efficiency and decarbonisation measures, manufacturing industries could save significantly on energy bills while increasing the gross value added. The cost-efficient measures can both prepare the industry for deep electrification, and free up vital funds needed for investments in R&D and innovation – two key areas where Europe is falling behind.

 

This impacts industrial production costs, and thereby also competitiveness, and emphasises the need to lower energy consumption while maintaining, and even increasing, the industrial output.

 

Some of the most energy-intensive processes are related to heat generation, mostly generated by combustion of fossil fuels. As such, electrifying industrial heat can play a major role in reducing this outsized energy demand, while at the same time lowering companies’ carbon footprints and energy costs.

 

Heat pumps

Heat pumps can be a key lever in decarbonising process heat in industry. Delivering industrial process heat in the EU with heat pumps can lead to reductions of 146 million tonnes of CO2 emissions, equivalent to 22% of Germany’s net CO2 emissions in 2021.

 

“When we think about boosting competitiveness, we also need to look at some of the most sensible and logical solutions for industry which save companies energy and money,” says Fausing. “A recent pilot project we ran at our production facilities in Slovenia showed that 80% of the machines could be switched off when not in use. Importantly this had absolutely no impact on our productivity, but it did lead to a 30% reduction in energy consumption. That equates to an annual financial saving of between €3- 5 million for Danfoss if the initiative is fully rolled out to all production facilities, which we can instead redirect to our R&D operations. This is an unbelievably simple but effective approach, but it does require a change in attitude and mindset. All industrial companies can and should look to similar decarbonisation solutions as a way to boost competitiveness.”

 

Business leaders and policymakers are be convening at Sønderborg, Denmark from October 28 to 29 for the Powering European Industry event jointly hosted by Danish Industry, Danfoss, the International Energy Agency and BusinessEurope.--TradeArabia News Service