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Stop Doing Stupid Stuff

Prima facie that’s a bit of a head-scratcher. But, as I learned on a cold gray November morning in Cambridge, there is such a thing as “industrial sustainability” and it’s no oxymoron. As director of research at Cambridge University’s Institute for Manufacturing, Evans leads a team of approximately 30 academics and PhDs, advising the UK government and many of the world’s best-known corporations on how to curb their carbon emissions, so that we don’t overheat the planet.

During the span of a two-and-a-half hour interview, Evans explains that it’s no pipe dream to treble industrial output, while halving resource intake and cutting industry’s greenhouse-gas emissions to zero. For starters, a lot of the heavy lifting is ‘Stop Doing Stupid Stuff’: one of Evans’ favorite mantras. Beyond that, legacy business models do need to be reconfigured. (To wit, read my interview with Hugo Spowers, founder of Riversimple, a radical, hydrogen car company turning the conventional auto industry business model inside out.)

Joanne Ooi: What is “industrial sustainability”?

Steve Evans: It’s about living within the limits of the planet based on the assumption that we like the outputs of industry. And I certainly do. When we talk about the industrial system, we’re talking about a system that supplies us with things which make our lives better: medicine, food, cars, for example, and at prices people can afford. But we also have to operate within the limits of the planet.

To stop doing stupid stuff, you have to see it. It’s hard to see energy being wasted because it’s hard to see energy.

JO: What are those limits?

Steve Evans: Sustainability is not the ability of the planet to sustain itself but the ability of the planet to sustain 9 billion people. That being the case, we must preserve certain competencies: the ability to deliver water, fresh air, biodiversity, and arable land, so that we can grow things to consume or use. By 2050, we must reduce our carbon dioxide production from the industrial system 100 percent to zero. We know this from the Intergovernmental Panel on Climate Change (IPCC) reports on climate change. It’s dead simple. That said, industry has to learn how to deliver zero carbon emissions by 2050, while increasing output by three times in order to meet the demands of consumers in the world’s developing nations. That will require industry to halve its resource intake in general. That means, say, mining half the copper we mine now, whilst keeping it in the system, so that we can keep on making TVs and telephones and all the other stuff that needs copper.

JO: Wow, that sounds enormously difficult and unrealistic. What are the challenges of achieving such big reductions in CO2 emissions?

Steve Evans: You often get lock-in from your original decisions which prevents you from choosing the best solution.

Let’s say it’s 1750. You run a steel factory and you accidentally put mercury into the river. You might not notice immediately. But slowly, over time, science improves and it becomes clear that you’re releasing mercury into the river. The government then decides whether or not they’re going to make it illegal, and you must change your production process or put a filter in there to catch the mercury before it goes into the river.

There are three possibilities here: 1. Mercury keeps on going into the river because the government has allowed it (or you cheat); 2. You buy an extra technology; or 3. You replace the originating technology. All three of these are unintended consequences.

When you set out to make steel, you didn’t worry about what was going to go into the river.

We decided to make steel a certain way. We decided to make cars a certain way. Over time, we learn of unintended consequences, yet we rarely go back and change the original process. We’ve already made huge investments in steel mills or factories. So, instead, we try to convince government not to stop us from, say, putting CO2 into the air or we buy a technology which deals with the problem after we’ve created it.

Industry has to learn how to deliver zero carbon emissions by 2050, while increasing output by three times in order to meet the demands of consumers in the world’s developing nations.

JO: How has lock-in affected energy consumption specifically?

Steve Evans: A lot of lock-in is due to decisions made during the Industrial Revolution. During the Industrial Revolution, the cost of energy came down because of improving technology. Consequently, we became lazy about our consumption of energy.

Copper mining is a good example. One hundred years ago, we expanded copper production by mining below the ground. In the past, we had mined it from quite near the earth’s surface. Now, we literally move mountains to mine copper because of its lower density in the earth. The cost of the machinery and energy required to dig a mountain is now cheaper than sending a man down a mineshaft to chip copper away. So, now, we’re eating bigger pieces of the earth to access the same quantity of the element. Paradoxically, the cheaper we’ve made energy, the more energy we use. It’s the consequence of the Jevons paradox.

Too often, our considerations of efficiency are dominated by labor and capital, because the true costs of water, energy and raw materials are too low and don’t include the external costs to society. Imagine: we’re going to have 8 billion workers soon. Why are we trying to be labor efficient?

At a systems level, it’s actually moronic.

Why are we trying to make something that is abundant the focus of our reduction? We should be focusing on non-abundant things, like copper and water. We should be replacing water with people, but for 200 years we’ve been replacing people with other stuff. We need to flip that.

I know how to achieve labor and capital efficiency because I’m a trained production engineer. But I didn’t get a minute’s training about either energy or water efficiency. During the 1970s, that wasn’t considered important. But we are the leaders now—and we have not yet altered our way of thinking.

JO: So how can we achieve sustainability? You’ve laid out a lot of challenges. What are the solutions?

Steve Evans: A lot of energy reduction can come simply: from switching stuff off.

Over the span of 14 years, Toyota reduced its energy use by 8 percent per annum. Those energy savings came from small continuous improvements based on applying Kaizen to energy use. But they also went around doing what I call: “Stop doing stupid stuff!” One of their simple rules was “no production = no energy use.” They had already reduced energy use by 77 percent before arriving at that crude, simple idea!

If all the factories within an industry improved their efficiency to half the level of the leader in their industry, they would achieve 12 percent more profit, 15 percent more jobs and 4.5 percent less GHGG. Those numbers apply across all industrial sectors in the UK (and the world, actually).

The cement industry is another example. It is the second largest emitter of CO2 and represents 5 percent of global emissions. We found variations of over 50 percent in the day-to-day emissions of European cement factories. We look for variations in excess of +/- 50 percent because that’s a clue that something is happening that we can control in order to achieve performance closer to the best day for that cement factory. It turned out that the variations were due to the types of waste utilized as fuel by the factories. Cement factories don’t pay for waste. Companies bid to send them their waste. Because the cement industry helps other companies dispose of their waste, they consider themselves environmental good guys and don’t scrutinize their own carbon emissions. But we came to the conclusion that it was possible to reduce the CO2 of the cement industry by 20 percent, or 1 percent of total global CO2 emissions, by simply not using crap fuel. Within a year, through a series of really simple actions—very cheap, near zero cost—we could deliver 1 percent of global CO2 reduction. Just like that.

The present state of technology makes it difficult to visualize how we use energy. Compared to energy, capital and labor are easy to see. If my PhD assistant was sitting in this room right now, doing nothing, you would immediately know that that was a wage not being used effectively: “What are we paying them for?” If there was an extra chair in my office, you would ask: “Why did you buy that third chair; no one is using it?” How do we know if the energy efficiency of this room is high or low? We can’t see it. There is a meter for the entire building but not for this room. One of the things that Toyota did was spend money on energy monitors which could be clamped on a cable. All of a sudden, they had data on the factory floor.

The rules of thumb we use to conserve energy at home fall far short when you go into factories. “Turn off all the lights when you leave the room” is good advice for the domestic use of electricity, but the main uses of energy in a factory are not to produce heat or light. There are processes, such as welding, which are evidently energetic and even produce sparks. But can you guess what is the most energy-intensive process in a car factory?

It is painting.

JO: So, can we meet the IPCC targets if industry cuts its energy use enough?

Steve Evans: Energy efficiency alone isn’t enough. Business models need to be innovated and reconfigured.

In 2002, VW launched a car that did 94 miles per gallon based on existing technology. But VW never figured out how to convert the consumer’s fuel savings into economic benefit for itself. The world should be covered with 100 mpg cars because they’re easy to make. But they’re not profitable because of a business model problem. Riversimple’s business model addresses the VW problem: by selling mobility as a service (instead of cars) and keeping the cars it manufactures on its own balance sheet, Riversimple has plenty of incentive to produce extremely fuel-efficient cars.

Another way to drive change is to link the internal narrative of a company to sustainability. Toyota’s narrative, for example, is: “We’re really efficient and we’re the world’s best maker of anything.” The energy managers grabbed that narrative and used it to create a sense of mission within the company. Martin Baker Engineering is another example. They design and make ejection seats. You can see how an internal narrative of ‘we save people’s lives’ could easily be applied to the lives of their own workforce and their neighbors.

The CEO can also make a big difference. If he or she knows that sustainability can be done, because they came from an organization which did it, that’s another type of change. Doing the right thing is also easier when a company’s governance is not beholden to shareholders. In a family company or one led by a founder, the CEO can say, I’m going to do it because I know it’s the right thing. When they start their journey, they may be naïve; they might have agency but not a lot of knowledge, so they may start the journey thinking it’s going to cost them money. But they’re willing to do it because it’s their money.

JO: What upcoming technologies can improve efficiency?

Steve Evans: Modern technology gives us more data, more connectivity, more analysis and more flexible automation. I believe that technology will help us achieve sustainability in three waves.

We’ve talked a lot about the first wave, which is just making things more efficient than they are today.

The second wave is becoming more resilient to disruption. This is a huge shift because, until now, industry has been focused on increasing efficiency. During this phase, industry will have to give up a little bit of efficiency in order to weather difficult or unpredictable trading conditions caused by, say, seasonal change. Rather than ordering 10,000 dozen of something, you could have a factory making the first 6,000 dozen very cheaply and then, for the last 4,000 dozen, you might press a button (or not) to make the rest (if the weather stayed cold). Those last individual units might cost more because your factory would be located closer, in Europe, perhaps, instead of Asia or Africa.

The third wave is business model innovation. This enables remanufacturing, reuse or replacement of your raw materials with other people’s waste. That last model is what we sometimes call a “foraging factory.” One company we’re working with (an eco-detergent company) is thinking to build a plant in Mallorca utilizing plant precursors “foraged” from farms on the island. Using very standard software, they could fly a satellite over the island and be able to predict that, say, Farm A, was going to harvest 4,000 kilos of oranges next week. That harvest would result in a certain amount of plant waste—branches, leaves, etc. They could also ascertain that, within the same period, Farm B would produce similar waste. When their lab in the Netherlands receives this information, they might realize that they can make shampoo, if they have a certain enzyme. They would then make a few pounds of the enzyme and fly it to Mallorca where they could make thousands of gallons of shampoo from the available waste (instead of having to import it). This is information replacing energy and materials.

JO: Wow, that’s an intense concept.

Steve Evans: Yeah. And think about this, eventually, we will be able to put on a pair of glasses and see water and energy flowing in a factory. Combine this with big data and anonymized industry benchmarking and we will recognize that some of the things we are doing are stupid. To stop doing stupid stuff, you have to see it. It’s hard to see energy being wasted because it’s hard to see energy.

→ For more on circular business models, check out “The 11- Horsepower Juggernaut“, first published in Hacking Finance No.1: Movement, pick up your copy

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