Introducing energy efficiency measures, process redesigns, and fuel changes should produce substantial cost savings and 50 percent carbon abatement.
A major brewer with operations on every continent set itself an ambitious target to reduce greenhouse gas emissions from its energy use by 50 percent. The company asked McKinsey to help establish whether this was feasible, develop a strategy to achieve it, and determine what it would cost in capital expenditure and resources.
Our first step was to help the client assess its energy usage at a typical brewery. Mapping the breweries by size and energy intensity enabled us to identify four archetypes with similar characteristics and CO2 emission profiles. For each archetype, the team conducted a two-week deep dive to establish a baseline that the client could use to understand opportunities to reduce energy requirements in all its operating units.
By exploring lean approaches to energy usage, the client uncovered a huge range of carbon abatement levers, numbering 150 in all. More than half were located in the brewhouse itself, with many more in packaging operations such as bottle washing.
We helped the client develop a working model and strategy on energy usage and fossil fuel emissions that could be applied at all its 100 sites worldwide. For each archetype, McKinsey worked with the client to build abatement curves that showed which measures should be implemented immediately and which at a later stage. Eight separate implementation packages were developed, and each plant received its own package with a complete set of customized ready-to-apply solutions.
The final step was to create a five-year roll-out plan addressing management practices, technologies, investment needs, and expected savings. We worked with the client to assess its capabilities and identify gaps that needed to be filled. We also helped it draw up a stakeholder engagement plan to communicate its strategy and initiatives to senior management, regional hubs, and individual sites.
The analysis revealed that it was technically feasible to reach the target of reducing greenhouse gas emissions by 50 percent. Moreover, it was possible to do so through a strategy that created value rather than adding cost in the long run.
Roughly 50 percent of the target could be achieved by applying energy efficiency measures in plant processing and equipment upgrades. A further 10 percent could be met by changes in process design, and another 20 percent by fuel changes including alternative electricity sources and the reuse of waste. The brewer had already reduced its CO2 footprint by 8 percent through energy efficiency and other measures, and the remaining 12 percent would come from the 2020 efficiency windfall created by changes in customer demand and the greening of regional electricity.
Each of these measures would create value individually, and as a package they would pay for themselves within two years. The total potential savings identified by the program exceeded $200 million.