An approach to reducing the greenhouse gas footprint in the manufacturing industry: Determinants for an economic assessment of industrial decarbonisation measures

Abstract

A reduction of the greenhouse gas footprint towards net zero emissions can be achieved with the help of a wide variety of measures. There are three principal approaches (categories): first, reducing greenhouse gases by adjusting the way business is done (efficiency and processes); second, substituting what business is done with (sources of energy and material); and third, offsetting the greenhouse gases emitted. Some measures seem simple and obvious, while others appear complex and demanding. The decisive factor is the respective impact on economic efficiency. Therefore, the authors have identified six types of measures that differ in terms of the impact of investment and operating costs on energy and emission costs. In this report, the authors evaluate these types of measures from an economic perspective and address the limitations and advantages and disadvantages of the different types of measures in terms of emerging needs for action and consequences. Since, for example, on-site measures are often more sensible and also the increase or introduction of emission prices in many countries can have significant cost implications (and subsequently affect global supply chains), an adjustment of the traditional approach to economic valuation seems necessary. On this basis, a novel economic valuation approach for decarbonisation measures is proposed. The approach, illustrated by calculation examples and extensions to dynamically rank, score, and adjust to changing circumstance over time, facilitates an optimal selection of measures to support companies in achieving and sustaining their greenhouse gas reduction goals while maintaining economic efficiency.