The Sustainability of “Re-Sourcing”: The Beneficial Environmental Impacts of the Peer-to-Peer Sourcing Model

The question of how the energy industry can not only decarbonize but also shift towards more sustainable sourcing models weighs heavily on the minds of major industry players. Many options exist for incorporating more sustainable sourcing practices but finding one that saves time and reduces costs is more complicated. ARS Global's peer-to-peer sourcing model allows the energy industry to acquire assets that would have otherwise gone unused or sent for scrap. By collecting and redistributing ready-to-use materials to customers, ARS Global facilitates “re-sourcing” to decarbonize pipeline construction.

ESG, Sustainability & the Energy Industry

Now more than ever, investors are considering sustainability and Environmental, Social, and Governance (ESG) implications when making investment decisions. According to a report published by NYU’s Stern Center for Sustainable Business, there is “a positive relationship between ESG and financial performance” for a majority (58%) of businesses.

Sustainability reports are no longer minorly important annual reports – investors and stakeholders now look to them to define shareholder value creation. Several oil and gas companies have already faced very real pressure to improve ESG ratings and sustainability practices from outside investors. This shift in priorities shows how ESG ratings can have a major impact on the investment of capital into businesses.?The key question is how the energy industry can improve ESG ratings, especially when pipeline projects are commonly villainized in the public eye.

Sustainability Obstacles in Carbon-Intensive Steel Manufacturing

A major sustainability challenge in the energy industry, specifically concerning pipeline construction, is the carbon-intensive processes for manufacturing project assets. The manufacturing and construction industry produces the third highest amount of greenhouse gas (GHG) emissions in the world. The iron and steel industry accounts for 11% of all carbon dioxide emissions and produces more GHG emissions than other production processes worldwide, including cement and plastic/rubber.?

The need to minimize the carbon footprint of steel production has long been a global concern, but the manufacturing process used by many manufacturers is highly carbon-intensive. Coal is the primary fuel source used by the industry to generate the high heat required to smelt raw materials for steel products. However, coal is one of the highest emitters of carbon dioxide, producing twice as much carbon dioxide per unit of energy as natural gas.

Accounting for Transportation Emissions

Purchasing newly manufactured steel products also typically necessitates transporting steel across the globe, especially considering that most of our steel is produced in China. International shipping accounts for about 3% of global emissions currently, producing close to 1,000 million tons of CO2 emissions in 2020. “Re-sourcing” materials locally could drastically reduce the emissions associated with purchasing or selling unused pipeline assets, depending on where your pipeline project is located.

“Re-Sourcing” Tackles Carbon Emissions Concerns

Without the option for “re-sourcing”, customers looking for a more environmentally conscious process for sourcing steel products might purchase steel products made by combining scrap metal and raw materials in a blast furnace. However, this smelting process is still notorious for belching massive amounts of CO2 even if it does reuse materials. Likewise, if an owner-operator is looking to divest unused steel assets—such as from a canceled pipeline project—it might think the only option is to sell it as scrap metal. From both sides, the companies would be negatively affected by an increased carbon footprint in their sustainability reports.

The alternative is “re-sourcing.” Already manufactured steel products, such as line pipe, valves, and fittings, can be bought and resold through peer-to-peer sourcing. This alternative model bypasses the smelting that would be required with selling scrap metal or buying newly manufactured materials, effectively lengthening the product lifecycle of steel and reducing the environmental impact of the project at hand.?

Getting Started with ARS Global

When the energy industry is under a microscope for how it will incorporate more sustainable business practices, “re-sourcing” project materials is not only sustainable but also cost-effective and time-saving. Usually, sustainability investments come with a cost premium. “Re-sourcing “using ARS Global’s peer-to-peer sourcing model cuts out GHG-emitting problem areas (i.e manufacturing plants) of the typical buy-and-sell exchange for unused pipeline materials. At the same time, operators can acquire immediately available, high-quality, unused materials that expedite project timelines and reduces project costs.

As a midstream partner taking advantage of the “re-sourcing” value chain, customers realize triple-bottom-line benefits with one easy-to-implement solution.