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Climate change affects all of us. The EU is responding to these changes by creating the Green Deal, which aims to achieve climate neutrality by 2050. To achieve neutrality, it is important to start decarbonisation as soon as possible. And this must be done at national, city, business and energy level. We will talk to Kristina Balogh, Head of Energy Services, about how to kick-start decarbonisation. Specifically, we will focus on the decarbonisation strategies that we at ENGIE create and deliver to our clients.
In the interview, we’ll talk about:
- What is a decarbonisation strategy and who is it for?
- What is its content?
- What does its preparation look like?
- Why is communication so important in the preparation process?
- How is the strategy implemented in our context?
What is a decarbonisation strategy and who is it for?
A decarbonisation strategy is a strategic document that is developed for companies, municipalities or territorial units. It helps customers to develop a timetable and financial plans leading to the achievement of their decarbonisation targets. At the moment, we are seeing the most requests for the development of a strategy from the industrial sector, where, due to EU legislation, there is a need to plan large investments leading to the reduction of greenhouse gas emissions.
As we have been through a challenging period of energy crisis, most of our customers have already missed the cheap solutions. The more expensive ones, on the other hand, can’t be done without having some sort of strategic road map of the steps that will eventually lead us to our goal.
At the outset, it is always necessary to take stock of the existing situation. In order to know what we want to achieve and what we need to achieve it, we need to know where we are now. We need to take stock of emissions, assess proposals that are feasible and finally set ourselves a target. This should also be realistic and feasible. There are different targets for decarbonisation strategies for buildings and different targets for strategies for energy-intensive manufacturing companies.
Are these objectives measurable?
If set well, they are measurable. The emissions inventory we carry out at the beginning is quantified in measurable physical units (tonnes of CO2 equivalent produced per 1 MWh of energy, or per year of plant operation). So we can assess the achievement of the target by, for example, how emissions are falling (as measured by energy consumption). We evaluate CO2 equivalent because each building or plant produces a different mix of greenhouse gases, including particulates, NOx, sulphites, etc. A uniform methodology for the CO2 coefficient has been developed and everything is compared to how it impacts climate change. As a result, we can work very efficiently with the savings, as everything is converted through the coefficients that are determined by the methodology.
What is the content of the decarbonisation strategy itself?
The content of the strategy always depends on the customer. At the moment, we work particularly well with customers in industry, as they have a strong incentive to obtain and follow this strategy document.
The content of the strategy is to a certain extent determined by the client. He alone knows what changes are acceptable in his company and what his plant is ready for.
Part of the content is the aforementioned inventory. We know from experience that often the client does not have complete project documentation of the objects or plant. This can be a problem, especially if we want to propose changes in production technology or HVAC and we need to know what equipment is in the building. In these cases, we then proceed to the actual mapping. We carry out a detailed analysis so that we can isolate – where, for what purpose and how much energy is being consumed. This makes our calculation of how much we can save by making a given change all the more accurate.
The first proposals are then drawn up and a working meeting must be arranged with the customer, where they tell us what they are and are not interested in. There are simply some things that make sense to us, but the plant technologist rejects them on the grounds that, for example, he doesn’t believe in valve actuators and won’t allow us to regulate the flow, even if it saves a lot of energy. He argues that water must always be available in the production process. For our part, then, we have to accept this, because the technologist knows best what damage this could cause them. That is why it is always important to have a team of experts from the plant present at meetings. When setting up a collaboration, sometimes they don’t tell us everything at the beginning, they have their own idea of what the project should look like, and later on we find that they have already dealt with the matter in another place. At that point, we usually agree on the extent to which we will handle it, so that the continuity of the individual activities is maintained. In this way, we filter out what they are interested in and what they are not.
We are lucky enough to go to them with ideas they haven’t heard yet. We then discuss them together and then prepare the first draft. If we have a target, for example a 50% reduction in emissions compared to a reference year, our team will develop a mix of solutions to achieve this. After that, it’s just a question of finance and planning for change on the client’s side.
If we agree on a strategy with the client, we prepare a timetable and proceed to implementation.
At the moment we are talking about strategies for the industrial segment. What other strategies have you created and with what result?
For example, strategies for public administration. In the past, we were lucky enough to be able to prepare decarbonisation strategies for 2 higher territorial units. How is that different? In that there are different areas that are being considered – e.g. buildings, transport, waste, energy… And we were also developing a communication strategy. The VUC has 100 organisations under its umbrella, and these need to be convinced that meeting decarbonisation targets is beneficial to them.
Under one of the strategies, we addressed 516 buildings within the VUC. Thus, we specifically proposed changes and modifications to reduce emissions for these buildings. Part of the strategy was to quantify how much funding the LDC would need to set aside in the future to meet its decarbonisation targets. And also to highlight which solutions will deliver quick savings and which will be long term and therefore need to be planned in advance.
In the area of transport, for example, we have built on the high-quality mobility plans that the LDCs commissioned in 2008. In this case, it was important to prepare the strategy in such a way as to maintain continuity with the proposed solutions of the past. So we have adopted many of the solutions and they are now gradually being implemented and are proving to be beneficial.
In addition to public administration, I can also mention solutions for the private sector, such as hotels. This is usually a challenge for us, because the proposed decarbonisation solutions must be implemented with a view to maintaining the comfort of the guests staying there, which is not always easy.
What I am saying is that each area and segment for which we are addressing decarbonisation strategies is specific and must be approached individually.
It is clear from the above that strategy development is a complex process. What is important in its preparation?
The quality of the input information is very important. We cannot work without input information. That is why the cooperation of the sponsor is important in the preparation of the strategy. As these projects are mostly long-term, the client also has to assemble a team of people on their side who will be dedicated to them in the company for the long term. Strategies are about communication, collaboration, delivery of documents and information. Time and capacity need to be set aside for this.
How is the communication between the ENGIE team and the customer handled? And is it really that important?
It is absolutely key. It takes place in regular working meetings. In the industrial segment, we have meetings with the plant management, which has decision-making powers. However, in parallel, there is communication with the technologists, with whom we agree on the next steps in the strategy.
It is a bit different with the VUC. We have worked with a different working group for each sector. Our task then was to make the whole strategy for the LDCs comprehensive and continuous. To build on current activities and also to build one sector on another.
As I mentioned earlier, it was also important to develop a communication strategy for the VUC. Its aim was to motivate the people working in the different organisations. Because if people are not motivated to follow the proposed strategy, especially in the area of buildings, decarbonisation will not happen. Because if they don’t understand its benefits, they are not willing to accept the changes it brings and change their behaviour.
The preparation of the strategy is followed by its implementation. Is it also important to think about the sequence of steps in strategy development? Maybe in terms of time management, financial coverage, human resources…
It’s true. The schedule is certainly an important part of any strategy. The EU, too, is currently drawing up such strategies up to 2030, with a view to 2050. So it is not a short-term thing. In addition, by 2050, we foresee that new advanced technologies may come onto the market which we cannot currently include in the strategy and which may change the overall set-up. That is also why strategies are regularly revised over time.
Within the schedule, it is important to set out what needs to be done first and what will follow later. Short-term solutions such as active energy management and GES (Guaranteed Energy Service) can save money right away. However, especially in the industrial segment, these short-term solutions do not bring significant savings.
The first step in decarbonisation is to manage our energy in an environmentally friendly way, so that we do not spend more than we have to. This is followed by good project preparation. And when we do project preparation, we need to already know what we want to achieve. And it is usually these investment-intensive measures that cannot be implemented in one go.
That is why it is necessary to maintain the correct sequence of steps. For example, it is necessary to insulate the building before installing heat pumps, as these are designed for low-temperature heating. The heating system then needs to be adapted to the new installation.
As part of the strategy, we often recommend the installation of additional meters. Usually, the company is only interested in the billing meter, which measures the energy they spend. However, we work with multiple metering as part of the strategy. And if the sub-meters are absent in the plant, we estimate the additional measurements. The reason for their additional installation is the quality of the data, its collection and processing. Because the better quality data we have, the better we can design the whole project.
Also, the better the quality of the project preparation, the fewer complications there are in the implementation and, consequently, in the operation. It is therefore important to allocate sufficient time for preparation and, of course, sufficient time for implementation. In the case of a production plant, it is important to ensure that the implementation of the strategy itself does not disrupt the production process.
Strategy planning is therefore very important. Each phase has a more detailed timetable. The client should know what to expect in each phase and be able to prepare for it financially and time-wise.
So how long does it take to prepare a decarbonisation strategy?
It very much depends on the scope. Preparing a strategy for a smaller plant can take 2 months, for example, for a larger plant it can take up to 6 months. The length of preparation is related to the mapping of the plant. For a larger plant it takes longer to map all energy flows in detail. When we want to propose solutions, we have to make sure that someone in Slovakia will deliver them to the client. And for that we need time – time to get technical documents from manufacturers, price calculations… Our goal is to estimate the investment responsibly.
What comes after the handover of the strategy?
Ideally, it will be started immediately. Especially in industry, it is not the case in practice that a developed strategy is put aside because there is a strong intrinsic motivation to achieve decarbonisation goals. The rule of thumb is that whoever does not reduce their emissions in the future will not have a business.
Finally, decarbonisation today is not just about industry, but about all sectors. Decarbonisation strategies will thus become more and more important for a growing range of clients.
