Powering the Green Transition: IoT and Digital Technologies Will Drive Heavy Industries Towards Sustainability

From Compliance to Sustainability: Heavy industries face increasing complexity from Green Regulations

Several major economies around the world are enacting policies and incentives to boost economic growth through green technology manufacturing and clean energy production. This article explores some examples of digital technologies and IoT in helping heavy industries transition to cleaner energy sources and manage their process emissions more efficiently.

Recent policies from large economies include the US Inflation Reduction Act, Japan's Green Transformation Programme and India’s Production Linked Incentive scheme, EU’s Net-Zero Industry Act part of the Green Deal Industrial Plan. The US, EU and Japan have also committed to several 2030 targets and the policies propose several measures to encourage industry to decarbonise power generation and manufacturing processes. Three key aspects of the policies include. ?

1. Investment in green technologies: Public-private investments in renewable energy, carbon capture and storage, Electric vehicles and battery energy storage systems.?
2. Regulations to curb emissions: Regulations on emissions from heavy industries including binding emission reduction targets.?
3. Carbon pricing: Mechanisms to levy costs on industries based on their carbon footprint and imports from countries with weaker climate policies.

The climate change policies enacted by US, EU and Japan will directly impact heavy industries’ cost of domestic production and it will also impact other regional economies that export goods or raw materials to these countries.

Harnessing IoT to Reduce Greenhouse Gas(GHG) Emissions in Heavy Industries

Among Heavy industries Cement, Steel and chemical industries are the top emitters of GHG according to IEA. Several large multinational enterprises in these industries have been implementing digital technologies to help them reduce GHG emissions and transition to more sustainable production processes. Some highlights from IoT implementations in the Cement, Steel and Chemical industries to reduce GHG emissions are as follows.

1) Cement Industry

According to the Global Cement and Concrete Association (GCCA), cement production accounts for approximately 7% of global carbon dioxide (CO2) emissions. GHG emissions from cement plants are generated during the production process through the calcination of limestone and the use of fossil fuels to heat kilns. Large Cement manufacturers have been making efforts to reduce their carbon footprint through the electrification of the cement production process and digital transformation initiatives.

CEMEX, the 3rd largest cement producer in the world, since 2019 has been using IoT sensors to monitor temperature, pressure, and other variables in 3 production plants in Mexico. Using data from these sensors, CEMEX was able to optimize the burning process and reduce its energy usage by 3%. This resulted in a cost savings of $2 million per year and a reduction in GHG emissions of 10,000 tons per year.

This year In February 2023, Cemex announced its partnership with Microsoft Azure to further scale its industrial IoT services and develop IoT applications for its customers in the construction industry that will help builders switch to more sustainable products. (Source: https://customers.microsoft.com/en-au/story/1601901070675086388-thomas-concrete-group-discrete-manufacturing-azure-en-united-states)

2) Steel Industry

According to the World Steel Association, the steel Industry produces nearly 9% of all carbon emissions. Steel manufacturers are not only facing stringent regulations but also witnessing increasing demand from enterprise customers that want to reduce their carbon impact and decarbonise their value chain. For example, In November 2022, Trane Technologies, a global climate innovator, announced a partnership with Nucor Corp to procure low-carbon steel. Trane has pledged to use 50% net-zero steel by 2030 and 100% net-zero steel by 2050.?

ArcelorMittal Dofasco in Canada and Nippon Steel in Japan have been implementing IoT sensors to optimize blast furnace operations, resulting in 5% and 3% GHG emission reductions, respectively. These solutions saved them $6 million and $22 million per year and reduced carbon footprints by 120,000 and 300,000 tons per year, respectively. Nippon Steel has developed NS-IoT, an LPWAN-based IoT sensor utilization platform to gather data from production processes and has been operational in two plants since April 2022, with plans to expand the platform to 4 additional plants by the end of 2023.?

In April 2023, ArcelorMittal Nippon Steel India (AM/NS India), a joint venture between ArcelorMittal and Nippon Steel – two of the world’s leading steelmakers announced a partnership with IBM to drive digital transformation programs to boost its process efficiency and productivity.

3) Chemical Industry

According to the IEA, the chemical industry is responsible for nearly 6% of global greenhouse gas emissions. Several large companies such as Dow Chemical, BASF, and DuPont have pledged to reduce GHG emissions by 30% in 2030 and 100% by 2050 by integrating renewable energy sources, use of low-carbon products and developing circularity in supply chain processes to reduce waste. In the EU, 30,000 companies manufacture chemicals of this 95% are SMEs. The green deal initiative for the Chemical industry addressed by Chemical Strategy for Sustainability recognises the key role of digital technologies in developing sustainable green manufacturing processes.

Dow Chemicals’ announced in its annual report that its use of IoT sensor networks and control systems in the production of polyethene helped increase production rates by 7% while reducing energy consumption and improving product quality.?

BASF claims production facilities in China have 90 digital projects in the pipeline, of which 40 projects are already live. This includes digital transformation projects such as predictive maintenance, energy management, process optimisation and smart logistics.

To summarise, IoT solutions provide heavy industries with real-time data, improve efficiency, reduce energy consumption, and help transition to cleaner energy sources efficiently. Based on the various IoT applications that have been trialled and implemented in heavy industries, vertical applications can be broadly categorised into these 4 broad use cases:?

1. Energy Management:?Using sensor devices for real-time monitoring of Kilns in cement plants, Furnaces in steel plants allow for precise control of heating processes and reduce energy use. In chemical plants, sensor devices are used to monitor and optimise chemical production processes to reduce energy consumption and emissions. Sensors and advanced analytics can help plants optimize energy consumption at manufacturing plants by providing real-time data on energy usage at the machine and process level, to identify areas where energy can be saved, and reduce energy wastage.
2. Emissions Monitoring: The cement, steel and chemical industry is a significant emitter of greenhouse gases, according to IEA estimates contributing up to 1/4th of global greenhouse gas emissions. Most heavy industries will already have Continuous Emission Monitoring Systems(CEMS) to adhere to regional regulations. However, as environmental regulations become more stringent, heavy industries are under pressure to reduce their environmental impact and comply with emissions standards. To address this challenge, Cloud-based CEMS are becoming more affordable, easy to implement and scale, enabling heavy industries to monitor their emissions in real-time, analyze data, and generate insights to reduce GHG emissions.
3. Renewable Energy Integration: Heavy industries have high energy demands, and integration of renewable energy sources requires significant upfront investments in infrastructure upgrades such as transmission lines and battery energy storage systems to ensure a stable power supply from renewable energy sources. Furthermore, the Integration of renewable energy can be time-consuming, and complex and new installations can potentially disrupt ongoing production processes.?IoT can help manage the integration of renewable energy into production by monitoring energy usage, switching between energy sources based on availability, and storing excess energy in batteries for later use. ?
4. Supply Chain Visibility: Heavy industries have complex supply chains involving raw materials, transport, and storage. Digital visibility solutions have several implementation challenges due to the complexity of the supplier ecosystem spread across multiple regions. IoT can help manage the supply chain by tracking products and materials in real-time, monitoring their location, temperature, and humidity, and ensuring they are transported and stored correctly. This can help reduce waste, improve product quality, and optimize resource utilization.

Analyst View: Regulatory compliance will make emission monitoring and control a key entry point for broader digital transformation in heavy Industries.

Among the above-mentioned applications, emission monitoring and control systems will witness early adoption in heavy industries driven by regulatory compliance that is increasingly complex and stringent.

GHG emissions from Heavy industries are governed by several regulations including Industrial Emissions Directive (IED) and Integrated Pollution Prevention and Control (IPPC), EU Emissions Trading System (EU ETS) and National Emission Ceilings Directive (NECD). Industrial Emission Directive is the main regulation that covers nearly 52,000 installations that collectively account for 40% of GHG emissions in the EU.

Manufacturing plants covered by these regulations typically require continuous or periodic monitoring of emissions depending on the pollutants and processes. However, reporting of emission data typically is on an annual basis or in for some regulations every few years as determined by the regulatory body.?

However, recently proposed revisions to the IED directive published in March 2023 lays down stringent rules to monitor and reduce emissions by 2030 that align with EU climate and pollution ambitions as presented in the European green deal. The proposal also suggests industrial plant operators will require to submit installation-specific transformation plans by 2030 providing details on a roadmap to transform production processes to become more sustainable and climate neutral by 2030-50.

In light of these regulatory changes, compliance will become more stringent, detailed and complex for heavy industries in the EU. Heavy industries that typically operate on thin margins are increasingly faced with the challenge of drastically reducing their emissions while maintaining profitability. Companies will have to invest in technology and innovative new processes. Typically, the hardware and implementation costs of CEMS for single pollutants can vary from $20,000 to $50,000 but a more complex system that monitors multiple pollutants can cost upwards of $100,000 or more.?

This is a significant pain point for heavy industries that can be addressed by emerging cloud-based CEMS. Transition to Cloud-based CEMS will benefit heavy industries from the ease of implementation, lower TCO, scalability to multiple plants, real-time data access, automated data reporting and analytics capabilities such as early warning systems, and predictive maintenance. Cloud-based CEMS from Siemens, Honeywell, Emerson, ABB and others will witness the most traction in this segment from growth in new installations and as heavy industries upgrade their traditional CEMS. Many of these heavy industries are also part of a global supply chain and suppliers outside of the EU may be required to meet EU standards for emission reductions and decarbonisation.?

In the short term, for heavy industries located in the EU, investments in CEMS to monitor and control emissions to meet regulatory requirements will be the cost to do business. However, the longer-term benefits for businesses will improve their efficiency, reduce waste, and cut energy costs. The adoption of cloud-based CEMS will also pave the way for broader digital transformation in heavy industries. These platforms will lay the foundation for the integration of other digital technologies that will help heavy industries improve overall production efficiency, sustainability and competitiveness.?

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