Over the last few years, the automotive industry as a whole has adopted several initiatives to reduce carbon, water and energy footprints. These schemes are separate, acting in parallel to innovations being undertaken to ‘green’ the vehicle itself – which have necessitated advancement in powertrain, and the use of lightweight composites to improve fuel economy.
Although in the past, OEMs have stayed stubbornly clear of similar proposals, a driver of this new change in mindset is that – contrary to popular belief – some of the technologies being employed actually help manufacturers reduce operating costs. Consequently, both OEMs and automotive suppliers have realised that being environmentally conscious makes financial sense and is not just merely in vogue, spurring a shift towards leaner operations and greener manufacturing. Advancements in renewable energy and other related clean technologies have meant that OEMs can choose to overhaul facilities, keep a lid on their costs by streamlining operations or, in some rare instances, even use green technologies as an incremental source of revenue.
GM reuses and recycles more waste from its manufacturing facilities than any other OEM in the world. By challenging conventional manufacturing operations, creating efficiencies and cutting scrap, between 2000 and 2010, GM managed to reduce total waste from global operations by 43%, and shrink non-recycled waste by 73%. The company recycled 2.6 million tons of waste in 2012, and recycled or reused nearly 90% of its worldwide manufacturing waste.
The company currently has 105 landfill-free facilities across the globe and plans to make all its 125 facilities landfill-free by 2020. Such sites adhere to a zero waste mandate: all production waste generated at the site is reused, recycled or used to create energy.
The US-based OEM generated US$2.5bn in revenue between 2007 and 2010, through its various recycling initiatives. The company estimates that by-product recycling and reuse revenue now generates an annual revenue of US$1bn.
GM’s eagle-eyed focus on waste reduction is having a tremendous impact on its carbon emissions too. In 2011, GM prevented more than ten million metric tons of CO2 equivalent emissions from entering the atmosphere, as a direct result of the company’s reuse and recycling programs.
In the US alone, 2.1% of GM’s energy consumption comes from renewable sources and the company is also the number one automotive user of solar power in the country. Already boasting 37 MW of rooftop and ground-mounted capacity across the world, GM plans to increase its global solar output to 60 MW by 2015 and renewable energy consumption to 125 MW by 2020.
VW recently implemented the ‘Think Blue. Factory’ philosophy at manufacturing plants across the world, aiming to be more energy, material and water efficient, reducing waste and emissions. The German OEM is aiming for a 25% reduction in environmental impact from its production operations by 2018.
In November 2013, Seat inaugurated the automotive industry’s largest solar plant, at the company’s facilities in Martorell, Spain, intending to generate approximately 15 million kWh per year. The solar farm provides a quarter of the power required to produce the new SEAT Leon, and reduces carbon emissions at the plant by 7,000 tons a year – equivalent to eight and a half times the amount of CO2 absorbed by Central Park in New York City. The quality and efficiency applied in production processes has made the Martorell factory the first Spanish production centre to receive the Automotive Lean Production Award.
Another part of the Think Blue. Factory strategy is VW’s recently completed 9.6 MW solar project at the company’s plant in Chattanooga. As the United States’ largest solar park for an automotive plant, it meets 12.5% of the energy needs of the manufacturing site. The Chattanooga plant received the coveted platinum certification from the US Green Building Council’s Leadership in Energy and Environmental Design (LEED) – the only automotive plant in the world to earn this level of recognition. The company achieved the certification by using energy efficient equipment and machinery, storm water collection and reuse, and renewable power generation.
By 2020, Honda is aiming to reduce CO2 emissions by 30% from its global products, compared to levels in 2000. To achieve this objective, the company has launched a number of initiatives to reduce emissions across all business activities, including production and supply chain.
While most automotive OEMs have focused their renewable energy efforts solely on solar power, Honda has also embraced wind energy. In January 2014, Honda Transmission Manufacturing of America finalised installation of two wind turbines at its plant in Russells Point, Ohio. The combined output from the two wind turbines is estimated at 10,000 MW hours per year, supplying approximately 10% of the plant’s electricity. It is the first automotive plant in the USA to obtain such a substantial amount of electricity directly from wind power.
In 2013, Honda also became the first automotive company in Brazil to begin construction of a wind farm. The wind farm is expected to generate 95,000 MW hours per year, equivalent to the electricity needs of the company’s plant in the country. By using wind energy, the company expects to reduce CO2 emissions by about 2,200 tons per year.
Honda has also launched renewable energy initiatives in the UK, Japan and Turkey. These plans use solar energy to meet the electricity needs of their respective facilities and are expected to reduce CO2 emissions by about 3,250 tons per year in total.
In 2012, Renault completed the installation of solar farms that provide a total power output of 59 MW, at six production facilities in France. The photovoltaic solar panels cover approximately 4.7 million square feet of parking lot shelters, and the annual electricity production is said to be sufficient to meet the power needs of a city of 14,000 inhabitants.
In June 2013, the French OEM, through its Korean subsidiary Renault Samsung Motors, launched a 20 MW solar power generating system in Busan, South Korea. The project cost US$50m and will provide 11% of its electric output to 7,500 local homes. The solar power will also offset 10,600 tons of CO2 emissions annually.
In addition, the company is also looking at its facilities in Slovenia, Morocco, Brazil, Colombia, Chile and Romania for further solar installation opportunities.
The initiatives undertaken by GM, Volkswagen, Honda, Renault and other automotive OEMs around the world are tacit acknowledgement of the benefits accruing from the adoption of green and sustainable manufacturing methods and technologies. The positive impact of such initiatives and actions has far-reaching implications than simply attaining ‘green’ status. OEMs have now successfully identified several clean technologies and strategies that help them streamline their operations, minimise environmental impact and, in some cases, increase profitability.
The depth and variety of manufacturers’ investments reflect the automotive industry’s transition towards building the sustainability concept into manufacturing operations. However, this is only the tip of the solar iceberg and a tremendous amount of untapped potential – both in sustainable manufacturing and in the renewable energy domain – remains to be explored.
To realise this potential, OEMs need to take a holistic approach to manufacturing by updating and, where necessary, overhauling production facilities. They need to define detailed sustainable strategies that are scalable, replicable and financially viable. Simply ‘green-washing’ a facility is not enough. Automotive manufacturers need to consider the environmental impact of their decisions, as well as the operational and economic impact of investments in clean technologies and renewable energy.
If each of the top OEMs were able to generate US$1bn in revenue from recycling and reuse, and reduce carbon emission by several thousand tons, one can only imagine what significant positive change that would have on the overall automotive industry.
Manmeet Malhi is a Senior Analyst at EOS Intelligence.