Thursday, July 23, 2009

Why Green Manufacturing? (Part 2)

Last time we discussed some of the motivators for companies paying attention to green manufacturing - that is, drivers for incorporating green in your business strategy. I have posted, on my lab's website, a set of slides presented recently to an industry group meeting titled "Challenges & Opportunities for Sustainable Manufacturing: Green as a Competitive Advantage" (see http://lmas.berkeley.edu/public/?cat=3 and click on the image in "featured work" for a pdf download). You'll see some familiar material there but this will be useful background for some of our discussions from the last posting, today and future postings on "Why Green Manufacturing?" I will post more material in the future to back up this discussion.

All the data on energy consumption, global temperatures, CO2 levels in the atmosphere, other impacts of industrialization and population growth head up and to the right in the graphs...meaning things are moving toward more challenging conditions. You may or may not fully agree with the predictions but, from the perspective of cost of energy, availability of energy, cost of treatment/disposal of waste products, etc. things will get more expensive. And, as mentioned in the previous posting, legislation marches on. The recent deliberations in the US Congress have a goal to reduce CO2 emissions from utilites, manufacturers and other emitters by 83% by 2050 and envision some form of cap and trade program (see http://www.nytimes.com/2009/06/27/us/politics/27climate.html?hp).

Regardless of your feelings towards the severity of the situation, there are forces moving to make it more and more expensive and difficult to continue "business as usual" with respect to environmental impacts of manufacturing around the world. We should be prepared and use this to our advantage.

Consider where something, say an auto, is manufactured. One can make a simple analysis of energy needed to make an automobile. This is called "embodied energy" and expressed in units of kWh and is a representation of the energy needed to make the car, not to operate it, the so called manufacturing phase not use phase requirements. Then, through the magic of conversions, we can estimate the green house gases (GHG) attributable to that embodied energy by converting from kWh to GHG using factors that are based on the source of the electricity; that is, from coal or other carbon-based energy sources, or hydro, solar or wind and other renewable sources, or nuclear. Carbon based energy has a higher GHG impact than renewable. This allows us to see the impact of where we manufacture something. Interestingly, making the same vehicle in different places (depending on the energy mix) will result in dramatically different GHG output. If you'd like to see the data on this...send me a note...I can send the links.

Let's look at some examples. If I build my "typical auto" in France, which has most of its electrical energy generated in nuclear plants, the GHG impact of manufacturing that auto will be about one seventh that of building it in the US, or less than one tenth that of building it in China. If we zoom in on the US we see great differences between states also. Building a car in California with its mix of renewable energy vs Kentucky with its dependence on coal fired plants means a factor of 4 difference in GHG impact between the same manufacturing process - only based on location. Maybe manufacturing automobiles in California is not such a wild idea!

So why does this matter? Regulations already exist that apply penalties for excessive GHG emission in products during the use phase. For example, if you want to buy an auto in France you will see listed, along with fuel consumption in liters/km, the GHG generated in units of grams of CO2/km traveled. The auto adverts on the web in France are in French (!) but here is one for a Ford site in the UK. CO2 emission is listed in g/km and you can compare performance over a range of engines (http://www.ford.co.uk/Cars/NewFiesta/FueleconomyandCO2emissions). And, if you buy a vehicle with a large engine that emits GHG above a certain level you'll pay more. If you buy one below a certain level, you pay less. Same manufacturer, same quality vehicle, same operation, same manufacturing process - but costs more if it emits more GHG in operation. This will happen in due time for manufacturing based on embedded energy in the product due to manufacture (that is, embedded energy in the materials, water, energy, consumables, etc.)

If your product is a machine tool your customer will worry about (because it may affect the cost) the energy and resources used to build the machine tool. And then, when it is installed in the factory, the customer will be worried about how much energy the machine uses in its "use phase". And then there is the transportation cost from the manufacturing site to the distribution site and customer. We should include those impacts as well.

And so it goes! The smart manufacturer will optimize where to build the product in terms of energy mix and transportation costs to the consumer. We probably need to add availability of water and the energy cost of providing that as well. These kinds of considerations will, in my opinion, greatly influence the location of manufacturing (and, hopefully, offset some of the fascination with low labor costs as the sole determiner of location).

Paraphrasing Lord Kelvin, "If you can't measure what you make, you don't know if you've made it or not." We need to be able to understand and measure the resources used in our products and their use. Then we can make informed decisions about their design, distribution and utilization. This really encourages us to think about the life cycle costs of energy and consumables in the manufacture of a product - an important driver for green manufacturing.

7 comments:

  1. Very interesting and informative article Professor Dornfield. Your point about the "energy use" in the installation & transportation of a machine tool is well taken. The cost and energy required to move some of these heavy stamping presses or dies is exceptionally high. My blog is about the tooling industry (tool & die, metal stamping, mold, machining,etc)and I've added a category about "Green" manufacturing such as wind turbine fabrication and hydropower. http://blog.toolanddieing.com Regards, Joe Brown

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  2. Thanks Joe...transport costs can be a big consideration in a variety of products - including things like solar panels, automobiles, etc. And thanks for the link to your blog. DD

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  3. Professor Dornfeld, so your opinion about transport costs can be used to explain why there are so many companies locate their factories in China, because lower labor cost can offset the increased transport cost . Is this right? And how is this related to "green"?

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  4. Hi- when the economy was booming I think lower labor costs offset transport costs. If a company will have to include transportation related environmental effects (energy, materials, infrastructure, etc.) as part of the "footprint" of their product, specially energy mix, they may find a compelling business argument for manufacturing closer to home. Green manufacturing must take into account all of the life-cycle costs of manufacturing...from ore extraction to distribution, installation and, eventually, recycling. Nothing should be overlooked. In that case, transportation (specially for companies that outsource everything) may be a determiner on where to manufacture. BI am not an economist or MBA...so I cannot speak to the business model. But...I am hearing this when I speak with some folks in the industry.

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