The real economics of sustainable food manufacturing
Shrinking your carbon footprint is harder, and more expensive, than it seemed only a few years ago. Some of the country’s largest producers have had to scale back their original ambitions. While no one has abandoned their sustainability goals or net-zero commitments, what’s changed is how they approach their next steps, with some companies pushing out aggressive deadlines and opting for more time to trial new technologies and roll out at a more measured pace. The push towards sustainability currently resembles more of a gentle nudge in the food space.
Economics drives the timeline, as it always has, with sustainability initiatives needing to prove their value prior to greenlighting. A manufacturer may look to electrify utility equipment because the cost to maintain an aging natural gas system is high enough to justify the capital investment or install solar panels and battery energy storage systems (BESS) to stabilize energy costs. The directives being driven out of corporate sustainability still come with a very large asterisk: reduce emissions, but make sure the project justifies the price tag.
Why Net Zero fell short – for food
In most instances, the economics of food manufacturing doesn’t leave room for expensive experiments. Some industries, such as pharmaceuticals, where margins run higher, can absorb costs if results and impacts don’t match targets. Oil and gas projects come with capital budgets that overlook most food operations, and instead spotlight regulations. Data centers and large technology companies have been so successful in driving their aggressive net-zero goals that their focus is on Scope 3 emissions, those coming from suppliers. But the food and beverage sector operates on thinner margins where every cost faces scrutiny.
Executive sponsors who assumed that net-zero projects would simultaneously reduce costs and emissions found that assumption rarely survived real-world
testing. Promises of lower energy bills were sometimes met with higher capital costs, throwing the capital justification into a tailspin and halting further iterations of the rollout.
In many cases, this may relate to the age and condition of the infrastructure. When food plants that have been running for decades want to update to meet modern sustainability standards they may have to tear into systems that haven’t been altered since installation. This can incur unexpected scope to meet current codes or regulations which weren’t considered when planning the installation. Sometimes these can be expensive surprises.
Additionally, replacing operating equipment such as boilers and piping throughout buildings still in active production means shutting down operations, incurring daily costs and risks if it doesn’t perform as expected. When a seemingly simple project goes south, hesitation to commit to subsequent projects creeps in.
Making progress, not promises
Food manufacturers making real headway aren’t chasing dramatic net-zero declarations. They are paving the path to show how to achieve their goals on a sensible, measured timeline. New facilities can build capability by considering infrastructure to enable sustainability as they grow, but existing facilities face different challenges. Corporate sustainability may see electrification as an overall win for the network, but individual plants may find that the costs outweigh the benefits, at least in the immediate term. In those cases, other strategies could yield more impactful outcomes – with potentially less risk and headaches.
In sites where trucking may be used to move product between facilities and storage locations, there may be obvious savings in both cost and emissions to evaluate operations. In some cases where this is necessary, fleet electrification is an obvious choice. An evaluation of the climate conditions and electric consumption may determine that there are options for solar panels or BESS systems to both reduce costs and reliance on the grid. Considering the unique needs and details of an individual plant can shine a spotlight on larger organizational opportunities.
When a new technology does not provide the benefits hoped for or incurs unexpected costs, a thorough post-mortem exercise needs to accompany future decisions about that technology. In the fast-paced world of food manufacturing, it’s too easy to fall into the trap of generalization: “That didn’t work, we’re never doing it again.” The factors involved in these types of projects are not always repeatable. Without that consideration, we don’t always know if the problem was the technology itself, the existing conditions or some unexpected change in the landscape.
Slowing down to go fast
It’s no secret that the food industry moves quickly. Big decisions in sustainability initiatives still must consider the local level and that requires more thorough consideration. This starts with technical feasibility – understanding the condition of existing equipment, the local resource consumption and emissions. Lining these up with corporate initiatives and priorities are keys to success.
Larger plants will have the advantage where capital justification may be more straightforward; however, smaller plants may have less of an impact. Ultimately, it’s up to producers to decide whether they prefer to prioritize rollouts at a larger facility, where project issues may have larger impacts, or at smaller facilities where the return on investment may not fit typical ROI targets. Understanding these critical dynamics ahead of time will help streamline project decisions and enable early rollouts as opportunities to pilot something with grander, but undefined, expectations.
We must take the time to learn from our past projects. Not just what worked and what didn’t, but why. What conditions were present that enabled the project success that can be shared across the network to enable further project success? When enabling new technologies, the resilience to figure things out and work through issues that arise can have a broader impact than the micro-issues on just one project.
The companies that get that right are building cleaner and more efficient operations, one smart, practical decision at a time.
Carrie Woehler
Carrie Woehler is Black & Veatch Solutions Lead. Black & Veatch helps manufacturers modernize facilities and energy systems with solutions that enhance efficiency, reliability and sustainability. Feeding a growing global population demands more than innovation; it requires a sustainable, forward-thinking approach to the entire food supply chain. To tackle today’s needs and tomorrow’s challenges, Black & Veatch can help bridge the gap between research, engineering and manufacturing, by bringing new food technologies to life or optimizing existing facilities with expert solutions that derisk the journey from concept to execution.