Deloitte's Clean Energy Transition Message to Manufacturers

Animesh Arora, principal, Deloitte Consulting LLP
Deloitte’s report ‘Energy Transition: The Road to Scale’ gives manufacturers a sustainable strategy to speed up their clean energy transition

While industries are making significant inroads with sustainability, research from Deloitte’s latest report ‘Energy Transition: The Road to Scale’ shows that manufacturers must speed up to make net zero by 2050 a reality. 

According to Deloitte’s analysis, reaching this goal within that time frame will require change at four times the pace of the Industrial Revolution.

Manufacturers must balance overarching challenges like the digital skills gap with implementing transformative technologies if they are to achieve their sustainability ambitions, the report says. 

"Smart manufacturing and digital factories are revolutionising the industrial sector,” says Animesh Arora, principal at Deloitte Consulting LLP. 

“We are at a pivotal moment as the future of manufacturing is being rapidly shaped by technological advancements like AI and automation, which are key to boosting industrial manufacturing capacity.”

Youtube Placeholder

Reaching net zero is both an environmental and financial imperative that will grow more difficult to achieve the longer companies wait, the report adds.

Deloitte’s analysis found that capturing one million metric tonnes per annum (mmtpa) of carbon by 2050 is equivalent to capturing only 0.35 mmtpa today. The consultancy also found that each year of delay in reducing carbon emissions can result in as much as US$150bn in incremental costs.

The report has a dedicated chapter for manufacturers that outlines the benefits of a holistic approach that prioritises sustainability across all operational fields.

"To fully realise the potential of the 'sustainable factory of the future', strategic collaborations across an ecosystem of assets and the creation of interdependent ecosystems across industries are crucial,” Animesh said. 

The manufacturing chapter provides a three-phase approach for effective energy transition, to help manufacturers achieve net zero. Deloitte identifies manufacturers, specifically industrial manufacturers, as the essential drivers and agents of change for global sustainability efforts. Considering this, other industries may want to take the sector's lead and follow a similar three-phase strategy. 

The State Of Manufacturing's Clean Energy Transition

On a positive note, the report highlights the efforts manufacturers have made so far to enhance sustainability. Companies have worked to tackle carbon footprints, reduce waste and emissions and integrate energy management systems. 

Global solar photovoltaic manufacturing capacity is set to hit nearly 1,000 gigawatts by 2024, surpassing the 2030 target of 650 gigawatts for a net-zero trajectory. In addition, clean energy manufacturing investment has grown four-fold, and reached approximately US$80bn in 2022.

Youtube Placeholder

Manufacturers have already exceeded 2030 clean energy requirements in several major areas. But they have been slowed by wage inflation, supply chain vulnerabilities and decreased demand, as they work to digitise and enhance operations.

It does not help that clean energy projects are notoriously slow and regulation-heavy. Implementing net-zero strategies is a drawn-out process for most industries, as they manage lengthy lead times and approval processes. Deloitte, conscious of this reality in the manufacturing sector, provides a tri-phased scaling strategy for the clean energy transition. 

Phase 1: Use technological innovation and integrate processes to elevate efficiency 

A John Deere Electric Forklift (Image credit: Truck1EU)

This first phase focuses on transforming and strengthening foundational infrastructure.

  • Fueling agility with data integration and a smart factory approach

Manufacturers can gain real-time insights into equipment performance, resource utilisation and production metrics by creating a data ecosystem that connects people, processes and machines. 

This visibility will enable them to quickly identify and resolve production challenges, optimise resource use and implement predictive maintenance. 

The report states that the smart factory, powered by real-time data, will enable autonomous and optimised production processes that will massively advance performance.

Benefits manufacturers will see include a 30% enhancement in product quality, significant reductions in energy consumption and as much as a 20% increase in asset efficiency. These benefits overall will reduce operation costs.

  • Accelerating production with agile manufacturing and optimised designs

According to the report, Agile manufacturing must be adopted to minimise waste, optimise component design and accelerate production.

This approach allows for the rapid adaptation of technological and market changes.

3D printing also facilitates efficient small-batch production and quick prototyping, with its capacity to create intricate lightweight parts on-site and on demand.

As a manufacturing method, it minimises exposure to supply chain or procurement risks.

  • Boosting manufacturing efficiency through energy optimisation and renewable energy utilisation 

The electrification of manufacturing fleets, including electric forklifts alongside clean energy and efficient equipment contributes positively towards carbon footprint reduction.

Onsite renewable energy generation, like wind turbines, solar panels and contracts with renewable energy suppliers are also part of this process.

Phase 2: To penetrate the market and enhance protections, foster strategic collaborations across an ecosystem of assets

ABB has partnered with Coolbrook

This phrase is about creating collaborative networks of communities, suppliers, customers and manufacturers to address scope 3 emissions. 

  • Committing to reducing emissions in the supply chain

Supply chain emissions are, on average, 7.7 times higher than direct operations. Reducing this is imperative, and can be done according to the report through an integrated supply chain management approach.

Mitigating risks from climate events will depend on the strategic collaborations forged between distributors and suppliers.

  • Enhancing systemic efficiency by integrating suppliers into the manufacturing ecosystem

Boosting systemic efficiency is dependent, according to the report, on the integration of suppliers into the manufacturing ecosystem. The global supply chain is expected to grow from US$7.83tr in 2023 to US$11.93tr by 2032 and plays a pivotal role in industrial manufacturing. 

By utilising comprehensive partnerships spanning across the product life cycle, from engineering to post-sales support, manufacturers can seamlessly coordinate. This will enhance sustainability, and scalability and make products more innovative.

The report highlights how in the engineering and design phase OEMs can collaborate with electronic manufacturing services (EMS) providers to leverage expertise in areas including testing, building, design and delivery, providing support in the aftermarket for electronic parts.

A key example of this is the work of Jabil, an EMS in the turbine-manufacturing space to foster superior wind turbine development, allowing for superior efficiency and innovation across the field.

The report explores how EMS companies are helping to advance electronics manufacturing in industries like renewable energy, solar energy, electric vehicles and smart lighting.

The global EMS market for energy applications is projected to grow at a compound annual growth rate of 6.4% from 2023 to 2030.

  • Empowering a sustainable future through customer decarbonisation

Manufacturers can directly enable customer decarbonisation, according to the report. This is by engaging with them to meet sustainability needs and by offering a clean, electrified product slate. 

Integrating clean energy solutions into customer operations requires products to be tailored to consumer demands for energy efficiency and lower-carbon materials. 

The report highlights ABB’s partnership with Coolbrook to develop innovative technologies involving the chemical and cement industries to reduce emissions and energy consumption.

Phase 3: Creating an interconnected ecosystem across industries

Ford and DTE partnership, image credit: Ford

By collaborating across various industries and forging strategic partnerships, manufacturers can enhance their production capabilities, penetrate global markets and critically, enhance their sustainability.

  • Developing multi-OEM collaborations using complementary forces for market expansion

The report stresses that OEMs from different segments, including those beyond renewable energy need to collaborate to develop integrated solutions that provide better user experiences and higher efficiency whilst addressing market needs. 

Siemens is a manufacturer already doing this, working with Desert Technologies to form Capton Energy, a joint venture focusing on solar photovoltaic projects to electrify markets in the Middle East, Asia and Africa.

  • Forging cross-sector collaborations for sustainable manufacturing: 

The report details how partnerships between tech companies and OEMs can lead to the development of more advanced, energy-efficient manufacturing equipment.

This is through the integration of IoT technologies, AI and other digital innovations, which allow for superior predictive maintenance, energy savings and operational efficiency.

Examples of this include Ballard Power Systems, Caterpillar and Microsoft, who have collaborated to showcase hydrogen fuel cells as a sustainable backup power solution for data centres. Collaborations with utility companies and energy providers will also help better integrate clean energy into manufacturing, minimising the sector’s carbon footprint and bolstering the grid’s resilience.

The report uses Ford’s recent purchase of carbon-free electricity through DTE’s MIGreenPower program in Michigan as an example of this, discussing how the manufacturer has avoided as much as 600,000 tons of carbon dioxide emissions annually.

  • Harnessing academic partnerships for innovative manufacturing solutions

The final part of phase three is for manufacturers to deepen their relationships with research bodies and academia. These partnerships will provide access to co-developing advanced materials, innovative methodologies and cutting-edge technologies.

They in the long term will lead to the development of next-generation renewable energy sources, improving the sustainability of manufacturing processes. 

The report highlights the NExT initiative, which involves Penn State, NETL and a host of wind turbine manufacturers. The initiative aims to enhance US manufacturing with new design methods by developing a modern turbine.

The tri-phased scaling strategy discussed in the report will help manufacturers more effectively address the clean energy transition. The full report goes even further into the actions and considerations manufacturers can make that will help decarbonisation across their value chain.
"If manufacturers take a collaborative approach, we have the potential to create manufacturing capacities that are not only resilient but will also help in rapidly scaling our collective energy transition goals,” says Animesh. 


Make sure you check out the latest edition of Sustainability Magazine and also sign up to our global conference series - Sustainability LIVE 2024


Sustainability Magazine is a BizClik brand



Featured Articles

Sustainability LIVE heads to Chicago in 2025

Sustainability LIVE expands its in-person events to the US with Sustainability LIVE Chicago in 2025, co-located with P&SC LIVE and Manufacturing LIVE

Packet Power Sustainably Meets AI's Demand for More Power

Achieve greater power density for AI and improve sustainability with wireless monitoring

Electriq Power Bankruptcy: Moecker Auctions Liquidate US$18m

Moecker Auctions, Inc. has been selected by Trustee Robert Furr to liquidate more than US$18 Million in assets from Electriq Power Holdings Ch.7 Bankruptcy

SAVE THE DATE – Sustainability LIVE Malta 2024


Tech Leadership in Sustainability: CGG Rebrands as Viridien


COMING SOON – Top 250 Companies in Sustainability 2024