Decarbonizing Industry: Strategies for a Greener Future

In this special episode of the Climate Confident Podcast sponsored by Siemens, I sit down with Constantin Ginet, Global Head of Energy Performance Services at Siemens, to explore the intricacies of industrial decarbonisation. We discuss the significant challenges industries face, from the urgency of reducing emissions to the complexities of scope one, two, and three emissions.

Constantin shares Siemens’ innovative approach, emphasising the role of digitalisation and the use of digital energy twins in creating precise energy models. We delve into the importance of scalable solutions, the need for comprehensive data transparency, and the critical role of smart electrification and renewable integration.

We also touch on how sectors like automotive and food and beverage are leading the way in decarbonisation efforts, and the necessity of looking at sustainability holistically. For those just starting their sustainability journey, Constantin offers valuable advice on setting clear goals, embracing digital solutions, and considering financing models.

This episode is a must-listen for anyone interested in the future of industrial sustainability and the practical steps we can take to achieve a greener future. Tune in for a deep dive into the strategies that are shaping a more sustainable world.

 Links to more info:

1. Siemens Smart Infrastructure web page
2. Siemens Infrastructure LinkedIn page
3. The video version of this episode

If you want to catch-up with Constantin, or any of the Siemens team at the Smarter E event, you'll find them at the Siemens stand in Hall B3, booth 110 from 19-21 June.

Transcript

Constantin Ginet: 0:03

The other topic that is very important is for me looking holistically at the sustainability within buildings. We spend 70 to 80 percent of our time within building. So I think more and more, the topic of decarbonization and energy is coupled with quality of living within a building. So how do we make sure that we have more and more integrated solution where health, security, and energy decarb is, looked at holistically?

Tom Raftery: 0:32

Good morning, good afternoon, or good evening, wherever you are in the world. This is the Climate Confident podcast, the number one podcast showcasing best practices in climate emission reductions and removals. And I'm your host, Tom Raftery. Don't forget to click follow on this podcast in your podcast app of choice to be sure you don't miss any episodes. Hi everyone. And welcome to episode 173 of the Climate Confident podcast. My name is Tom Raftery and we have a special edition of the podcast today. This episode is sponsored by Siemens and it's in association with their appearance at the Smarter E event in Munich, which is taking place on June 19th to 21st. With me on the show today, I have my special guest Constantin. Constantin welcome to the podcast. Would you like to introduce yourself?

Constantin Ginet: 1:23

hi, Tom. Hi, everyone. And thanks for welcoming me to this podcasts. So I'm Constantin Ginet, Global Head of Energy Performance Services, which is basically a smart retrofit business for building an infrastructure. And you know, maybe two words about myself. I've worked in the last 20 years in the energy sector, power generation, grids, micro grids, and now in the building sector. And I've worked in different parts of the world, so I could see very much different market realities, you know, in India, in Europe countries, US and South America.

Tom Raftery: 1:56

Great. And we should also say that part of the reason for this episode is that the Smarter E event is coming up later this month of June in Munich. And Siemens are going to be presenting there. And are you going to be at that event, Constantin?

Constantin Ginet: 2:12

Yeah, I'm going to be at that event and I do think, by the way, this is a great event where we look at, you know, the, the energy chain more holistically, you know, this is not only building, this is not only grid. This is really an integrated view of, of the energy systems, which for me is very much needed today

Tom Raftery: 2:28

And it's a big event, right?

Constantin Ginet: 2:31

It's, it's quite big events. You're going to have, I mean, we can post the details on number of guests and speakers and so on, but it's a very big event, very lively. And obviously there, there's Siemens is very present there, but a lot of other companies, obviously.

Tom Raftery: 2:45

Okay. And I mean, we're talking today a lot. We're going to be talking today a lot about industrial decarbonization. So can you tell people listening what you think are the biggest challenges industries face when they are trying to decarbonize?

Constantin Ginet: 3:01

Yeah, and maybe let's start with the macro picture and then really deep dive into industry in particular. I think really, you know, now there is, whether that's industry or other customer segments, there is a high sense of urgency that starts to be perceived. We all know that we have on one side to protect the planet, but also our consumers are changing their behaviors. And that means our, you know, the industry in particular have to change. But not again. Industry is one segment. There are other other examples that that are also, you know, in universities, in campuses and infrastructure where things are moving forward. And I think for the industry in particular, and we as Siemens, we are the first, you know, we eat our own food dog, as we say. We want to, we want to basically test those things ourselves and be the role model there. So on one side, I have to say, you know, we have to look at scope one and scope two emissions, and that's already a big challenge because, you know, with electrification, integration of renewables and smart technologies, which one do you choose? And how do you actually scale it throughout your facilities? So the scaling and the speed is one of the key challenge, how to get the speed that is, that is necessary. And then the other thing is looking at scope three, to be honest, because I mean, very often 70 to 80 percent of your emissions come from scope three. So how do you, ensure that on one side you have scaling solutions on your scope one and two, and how do you ensure that you put the right support perhaps, or guidelines, or even select your suppliers in order to meet your scope three emissions targets. And by the way, just as a side note, and I find it interesting for for industries it's interesting to see that we have actually a lot of companies that committed to, you know, net zero targets or carbon neutral targets. I think we have 60 percent of Fortune 500 companies that, committed to targets by at least 2050. And this number is probably growing every day. So today might be 64 tomorrow, 65. But 20 percent of those companies are on track. So again, back to the topic of speed, that is extremely important. How do we speed up the process and how do we make sure that those commitments are more than commitments and nice say, but become reality.

Tom Raftery: 5:26

Okay, and how are companies decarbonizing? What are you seeing them doing there? What are kind of best practices?

Constantin Ginet: 5:37

Yeah. So for me, I mean, we, we have very different, very different type of industries that we are supporting for decarbonization. And once again, I'll start with Siemens because it's always about, you know, how do we do it ourselves? Yeah. We take a big company like us starting with again, our scope one and two. We have very different facilities. I mean, we have on one side offices on the other side, campuses, and manufacturing. And if you say this is almost three segments within one, one company. And there are very different ways to approach the decarbonization for those three subsegments. And by the way, that's going to apply as well to other other customers. The basics of the basic is remove gas consumption on the outside or any type of fuel consumption that you have on your facilities, because if you electrify, you have the optionality of basically buying renewable energy. But if you consume gas and fuel on site, then you really have local emissions. So this is for sure bottleneck that you have to remove. Oh, it could be simple. It could be just I remove, you know, I replace my boiler to an electrical you know, an electrical boiler and or heat pumps and everything is okay. But I, but very often you have to optimize the whole systems while you do that. So first, very much looking at the process electrification as a first layer. But again, I would call it smart electrification to do it to do it faster. The other thing is for me, digitalization, because I think most of the time, I mean, and I mean this digitalization in two ways. Most of the time, this digitalization is linked to a reactive way to, to, manage your facilities. It's looking at, you know, How is the temperature? How is the flow? How is the ventilation? And by the way, ventilation and heat and cool is, you know, maybe 70, 80 of the consumption. And basically you try to optimize that with different factors. But more and more digitalization helps us to have new use cases. The use case that we have exemplified with University of Birmingham is actually also applicable to offices and campuses of Siemens and our companies. And this is a use case that is around space management. And I give just this this example just to give a flavor of what digitalization helps us to achieve. In that case, this is trying to utilize user centric data in order to decide how to steer a building. So it's not only I'm looking at temperature, flow, and typical physics of the building, but I'm looking at how the user is utilizing the building and taking data of the user. So understanding how the user is behaving in these buildings. I can also decide to heat, cold, close down part of the buildings, or actually utilize it differently. So space utilization is important, has an impact. And of course, then you can make smart decisions on how do you steer, your workforce or your employees into your, into your facility. And then the last piece of obviously is also renewables, making sure that, you know, you integrate renewables as much as possible. It seems simple, you know, you have a roof, you should put a PV on the roof, but then how do you manage the roof? And how do you understand that this is also integrating and affecting the grid. And is there things you can play to actually benefit from costs, a better cost position, but also make the grid benefit from the way you consume and the way you operate. So these are the three elements I would say, basic. There are more of course, but I just put in, you know, on purpose, three main blocks and that's scope one and two. When it comes to scope three, once again, that's, for me, the very first challenge for scope three is have the right data transparency. Auditable data transparency, understand first of all, where is the emission coming from and how is it generated by whom? So already that is already, is already a first element where digitalization helps as well quite a bit. But then on top of that there is the topic of helping our, our own suppliers to decarbonize and at Siemens, that's what we do as well. So we propose our product services, not only in my specific space of energy performance services, but also on the industry space on the broader smart infrastructure space, we ensure that actually we can support with our own knowledge our supply chain, but this journey as I said is is a longer is a longer one to to go through.

Tom Raftery: 10:17

Interesting. From your perspective, Constantin, are there any sectors that are currently leading the way in decarbonization and what are they doing right?

Constantin Ginet: 10:28

Yeah. Let me, let me start, you know, with a, with the macro picture on that, on that one. I was mentioning before briefly universities with the partnership we are doing with University of Birmingham. I do think first, Universities is a very important, I mean, higher ed, higher education is a very important segment to focus on. They are part of the ecosystem. They help us innovate and that's very important to go faster. And in particular, when it is about, you know, having a living lab, and seeing really how, how the things are really working and in advance before applying that to industries. And again, we have good partnerships in, you know, running with universities. One of them which is a highlight from my perspective is University of Birmingham. When we worked in particular on the IOT technologies, including the space management type of topics I was mentioning before. So they are part of the ecosystem as I was saying ecosystem key to actually accelerate. When we go now to, to industries, we certainly see a lot of industries moving forward right now. I would just highlight out of experience food and Bev and automotive, because we see a movement. I would not say that they are the first, but they are very much moving very fast right now. Food and Bev, I mean, obviously, because they have a direct relationship to customers gets also the consumer behavior changing. And so they have to do something and it starts with transparency on their, on their carbon emission. But it's also a question of, you know, decarbonizing, decarbonizing themselves, their own operation. And of course, there again, the topic of scope three is important. So we do see great references. I was mentioning in other, in other panels recently, the topic of Heineken that has been basically announced for the first time in the WEF World Economic Forum in January. It's basically a partnership that we have been again, I'm talking about partnerships. So this is a customer, but we work together as partners to decarbonize their facilities. And so here we talk about 200 sites. We take care of a portion of it, but we definitely give advices for the entire, for the entire scope. And that's for me, one of the visible example of what food and bed is experiencing right now. The topic of automotive that I was mentioning before, same reason, also a very high visibility of activities, so reputation extremely important. They first all go into electrification, which is, by the way, one of the things we partnered with them because we support the electrification infrastructure. But on the other side on the other side, they decarbonize their industries and facilities. And the interesting part of it is, obviously, we have customers that are really expert in their own domain. So the way we approach it is not telling them exactly how to do everything. We really have to understand how the process works, how the, how the manufacturing process works, what is important so that we actually can manage the energy in the right way and then, provide some tangible benefits. And by the way, a side note on that. We can, we really help accelerate that not only with technology, as I was explaining before, but the topic of business models is also very important. We do provide outcome based guaranteed performance, which in many cases help to have an OPEX driven business model rather than a CAPEX. Which very often for some industries or even, general customers, you don't always have the capex to electrify, to go fast into your investment of decarbonization. And I think this is also something where we, you know, we provide an extra value. Once again, supporting an OPEX model, which is more digestible than a full CAPEX.

Tom Raftery: 15:37

Nice. Nice. Very nice. there any particular challenges in the automotive sector or the brewing sector in Heineken's case that these companies had that you help them overcome?

Constantin Ginet: 15:53

Yeah, with, this, this is also, I mean, you will have different types of challenges. I mean, if you have a global company, let me, let me take Heineken and it would be very similar conclusions for, for automotive. We also, by the way, announced some partnerships recently on automotive, but for me, there is global company multisites and they have a certain type of challenges and then you have more the local ones. So let me compare the local brewers with the large multi sites brewery that you have like an Heineken. But if you, if you take a global company, from my perspective, you can come with a great strategy and a great plan to decarbonize. That doesn't mean that your facilities and that your sites will follow you. Each site has its own organization, its own operation, and own priorities, very, very often economic priorities and finance priorities. So how do you make sure that your targets becomes reality within your own organization? So it, you know, it's not a technological challenge, but the first challenge for me is very much great to have a CEO decision. Great to have, you know, a strategic plan on how to decarbonize. But then when you hit the reality of what does that mean for the business on the multi sites? And that's, once again, is valid in food and bev and others. So how do we make sure that we don't disrupt any operation while decarbonizing at speed? And how do we make sure that the stakeholders are in it and they really, are part of the decarbonization program. And there, I do think that in those global companies, we really work I would say from bottom to top and top to bottom, I would even say boiler to board and board to boiler so that basically we can talk at different levels in the organization to make the different level understand having the right language to explain what is it that we're doing. So I would put this challenge in particular, the other challenge for the smaller ones I mentioned before the topic of the business model, you know, the finance. Again, industry, we talk a lot about those big names, but there is a lot of industries, which are small, medium sized enterprise that also need to decarbonize and they deliver goods and products to larger ones. And there I do think that on top of really having the right solution and scalable and fast, they also need ways to finance it. Otherwise they are not fast enough in the investment. So I do think that all those models like as a service models, or, finance models, are very important. And for me, this is one of the levels we have to utilize much more. There is, equity funds available focusing exactly on the topic of decarbonization, which, you know, we have to use. And, you know, Siemens are the first one. We are the first one to help SFS Siemens Financial Services. We have this capability also to help our customers with finance models, whether that's debt. Or in certain cases, equity. So again, question of culture, question of convincing all the organization, question of finding fast and the right solution, and finally making sure that, you know, you have a finance topic that is considered from the beginning. So this for me are, are some challenges that we encounter and we work with our customers, partners to try to improve the situation there and accelerate, once again.

Tom Raftery: 19:27

Sure, sure. And you mentioned digitalization. Are there any aspects of that that you'd like to highlight that are important?

Constantin Ginet: 19:35

Yeah, I mean, first of all, there is a lot of aspects, you know, that with new regulations, a lot of things are very critical on data. So who, who owns the data? Who can, how can we utilize the data? Is very, is very important. Once again, we don't touch in industry and really the secrets of the production. We really look at the, in our case, decarbonization energy utilities. So what, you know, what is the energy provided? But data privacy is a first very important topic. Second, the way we approach the topic in industries is with digital energy twin. So it's not connecting. I get all your data and then I, I will tell you something with, we start with simulating, predicting different scenarios with virtual models of your systems. That helps us to overcome the topic of, hey, get me all your data. We first model your systems in, you know, disconnected from your facilities. And then we really work together on different scenarios, but the model is always the same. Once you really create the model, you really have different ways to play with it before implementing anything on the reality. So, data privacy, very important, data access, very, very critical, but really the way to overcome that and go faster. It's to utilize digital energy twin and make sure that the virtual representation of a factory helps us to basically, have different scenarios and work on that. And then the second topic is that we let in certain cases the whole model and all data being managed by the customer. So that's also possible. So that actually we don't interfere with that, but I have to say we are always in a challenge because if we can gather more data, we can learn more, we can learn faster and we, we really have to discuss on what are the data that we want to make public and what are the data we cannot make public it's more than a technical discussion, definitely. But when it comes to sustainability, and again, with the urgency, of decarbonization. I do think that we need, a certain layer of data being shared so that we can, learn better and faster. So that's, that's one part of it. And then the other part of it is, of course, all the new applications that we can think of. We have a lot of applications that are data driven up to AI. So up to, you know, artificial intelligence that supports faster deployment of of applications, software in particular. But all of this still comes with a lot of questions and guardrail that we need to respect. And regulation is changing very, very fast. So we need to, we need to always observe that. Just as an example with AI. If a program is self generated, who owns the IP? Who owns the program itself? That's just one of the questions we have to look at. So data, data privacy, data access, but also with AI, a lot of new questions also coming that we need to answer.

Tom Raftery: 22:36

All right. Very good. Very good. When you talk about digital energy twins kind of brings to mind movies like Avatar or Iron Man, where, you know, digital replicas play a crucial role. How are they used in real life industries to achieve decarbonization goals, and do you see any parallels to the kind of sci fi portrayals?

Constantin Ginet: 22:59

Yeah. And just to be, to be clear, I mean, as an energy engineer of education, for me, this is like Avatar. is. I mean, I know that not for everybody, but for me, this is really, you know, a marvelous world, but let's be clear as well on what it is. It's definitely not a full 3d representations of your factory where you, float around and see everything. Although we can do that, but when we talk about digital energy twin, we really talk about a digital representation of your energy assets, model of, consumption, transmission, energy efficiency factors of your systems, but very precise on your energy assets. And this is more, you know, a scheme. I mean, if you look at it, that looks really like a scheme and different functions and different graphs that helps you really, first see how, how your system works. How does that work exactly? I mean, once again, once you have established the first model, you take historical data of a particular day or particular months, and you run your simulation. And that's something that you can do manually or automatically. So you can really see different configurations and get an optimal situation. And what it gives you is essentially as an outcome. Let's look at that as an outcome. It gives you how much costs you're going to have. If you want to change your planning of your factory, you want to, I don't know, produce a new car, or you want to have two shifts instead of one shift. How much more energy are you going to utilize? Is your infrastructure, transformer, grid, allowing you to go to that level of peak of energy? Is your price or cost of energy being, somehow higher, lower, and can you manage it in a smarter way? And by the way, we talk a lot about storage, but certain cases, it's not only about storage, it's about planning in the right way, planning and optimizing your assets. So you can come with also ideas in the virtual world on we should control the assets differently or we should change certain elements even hardware of your systems will help you. It's a role of a fixed speed you go for variable speed something that really fits to the exact energy need that you that you have. So all of this helps you very concretely to number one predict in advance how your energy carbon costs are going to look like. But number two, it gives you indication on operation strategies, control strategies, or, different assets and replacements, different retrofit that you can do on your facility so that you can improve the outcome of it. And through that, you really have a very strong advisory tool, that is something that we share and something that we co-build in certain cases with our customers so that we really have something that fits their need, and defines different scenarios. And then we really, can say, what is it that we want to do? And you know, I talked about the case of Heineken before. If you utilize a digital twin and you look at all the 200 sites, it might well be that you say it's better to implement the same small digital solution everywhere instead of doing a thorough net zero factory one after the other. In terms of speed, sometimes you really can drive a different strategy because you understand better on the floor how this is working. So, that's something that helps you also to strategize on your implementation plan, not only just a strategy plan for decarb, but how do you implement it? And what do you take as a first priorities?

Tom Raftery: 26:39

Fair. Okay. Looking ahead, where do you see business opportunities in sustainability over the next five, let's say years?

Constantin Ginet: 26:48

Yeah, fortunately or unfortunately, sustainability is from my perspective for sure it's going to be a big opportunity continuing going forward again for the same topic. The sense of urgency is, is there. I think they're going to be different, different developments. And again, there I will, different people, even in Siemens would answer differently this question. I personally think that there's going to be strong areas of developments on one side. You know, the grid interaction topic, we are not, we're not at the end of the story of how does the building behind the meter can interact in a smarter way with the grid, which, as we know, by the way, I do some advertisement for your other podcast with Sabine that explain, you know, all the grid situation, the bottlenecks and everything that, that you have around that. So how do we make sure that we have more and more solutions that are looking holistically at the energy systems. And not only coming with large storage as the solution or hydrogen. The other topic that is very important is for me looking holistically at the sustainability within buildings We spend 70 to 80 percent of our time within building. It's a global view. Of course, you would not have the same answer in Africa and South America, et cetera, but we'd spend a lot of time in buildings. So I think more and more, the topic of decarbonization and energy is coupled with quality of living within a building. So how do we make sure that we have more and more integrated solution where health, security, and energy decarb is, looked at holistically? So this is another, you know, this is another one. And then I mentioned before artificial intelligence. I think we're going to have more and more cases where you know, we utilize either data analytics or one step further artificial intelligence to go faster. We have some cases very simple, but also more complex, but a simple I could, I could share is for example, in a customer that has hundreds of facilities. The analysis of utility bills. In the past, you had an engineer combining everything, data analytics, et cetera. Today, you can say you upload everything to, a chat GPT type of basically tool and you ask questions. And you get directly answers on trends on things that you were not that you were not seeing, obviously, in the past in a more traditional way. So that's just a little case, very pragmatic, very simple, but it's actually, it's actually helping a lot. And then the other topic, which we are doing is more on the control side. As an example in data center, the cooling of data center is a huge energy consumer. And of course it drives a lot of energy and because of that, a lot of carbon, if at least you don't rely only on renewable energy. So the way we cool data centers move much more from the more reactive mode, once again, I measure and I decide to something that is more data analytics and purely data analytics and artificial intelligence tools decide what to do and does it very efficiently, but without a predictive model anymore. And so this, these are some trends. So grid integration, holistic view, energy and decarb, and then finally the topic of you know, artificial intelligence. So data analytics, large data, big data and, artificial intelligence for me, these are large topics of, I would say, decarb sustainability that is, that is really moving forward. And we were going to need that because once again, we are pretty late in in the transformation.

Tom Raftery: 30:34

Yeah, we only have five years, five and a half years to get to 2030. So yeah, that's hence the five year question. What advice, Constantin, would you give to companies that are just starting out on their sustainability journey?

Constantin Ginet: 30:47

Again, I think it's, it's a lot of questions, you know, we, we should look at it from very different angles. I would not undermine the topic of organization, mindset, culture, because whatever, no matter where we are sharing a common goal and purpose is, is a, is a huge opportunity first for a company, for their own employees and for the own employees engagement. It's a huge opportunity as well to position yourself in the markets. So for me, I'll start with this. And once again, as a, as an energy engineer, I would have had the tendency to look at technology first, but I have to say here, it starts with that clear goal, clear commitment, clear purpose. And I think that's, that's a key. And when we have that. It goes so fast, even complex problems. It goes very, very fast. So leadership culture is a first pillar. The second is look really holistically at your systems and and really don't forget scope three. So really look at holistically and where is it that we make the maximum impact the quickest? And there are a lot of companies that help. Also for, for this broad, broad consulting to, to look at it more holistically. And then the last thing is of course come to Siemens and I would say, you know, we, we at least could really look together at your, at your systems. And I do believe that the topic of digital and digital twin in particular is a key. It's a key element to go fast because you understand better concretely how it works. You can, thanks to that, you can convince different parts of your hierarchy and organization. So this is for me, a very key elements of the transformation.

Tom Raftery: 32:25

Okay. Makes sense. We're coming towards the end of the podcast now, Constantin. Is there any question I haven't asked that you wish I had or any aspect of this we haven't touched on that you think it's important for people to think about?

Constantin Ginet: 32:39

Yeah, I mean, so many questions, first of all that you could have asked. But, if there is one that is, that is critical, I think especially when it comes to, exchanging to together for me, it's about, what's the real challenge we have on the product side. So really pulling, we put a lot of products in our solution and, you know, how do we make sure. we touched upon that, but how do we make sure that we really, work on our products in a better way with a circularity as part of it? And that's for me, you know, one of the topics that is, that is clear and very important that we look at end to end, including recycling in our solution. Even if our business or my business in my case is very focused on decarbonization and energy scope one, scope two, there is no way out. Looking at the entire, the entire chain. So this is for me, really one, one of the topics we, we, we could deep dive or take another, another podcast on that one.

Tom Raftery: 33:39

Good, good, good. Constantin, if people would like to know more about yourself or any of the things we discussed in the podcast today, where would you have me direct them?

Constantin Ginet: 33:49

Yeah. For me, the best the best approach is to utilize LinkedIn. I'm on LinkedIn, quite reactive on that. And if, you know, if they reach out to me with specific questions, I or the communication team can also support answering, answering those questions, with pleasure.

Tom Raftery: 34:06

And go to the Smarter E Event in Munich.

Constantin Ginet: 34:10

That's absolutely true. I forgot that one. But that's by the way, absolutely correct. So if we have if I have requests before, definitely, that's, that's a great opportunity to meet people.

Tom Raftery: 34:21

Great. Super. Constantin, that's been great. Thanks a million for coming on the podcast today.

Constantin Ginet: 34:26

Thanks. Appreciate it.

Tom Raftery: 34:28

Okay, we've come to the end of the show. Thanks everyone for listening. If you'd like to know more about the Climate Confident podcast, feel free to drop me an email to tomraftery at outlook. com or message me on LinkedIn or Twitter. If you like the show, please don't forget to click follow on it in your podcast application of choice to get new episodes as soon as they're published. Also, please don't forget to rate and review the podcast. It really does help new people to find the show. Thanks. Catch you all next time.