Capital Equipment Sector Paves the Way to Decarbonization
Earth day consistently serves as a reminder to reflect on the most impactful approaches to sustainability. This year is no exception given society’s recovery from a pandemic that has made us focus on building a better future, and an acceleration towards net-zero carbon commitments from businesses and communities worldwide. New strides are being made in the circular economy and how it applies to different sectors, including capital equipment – high-value products designed, built, and acquired to last. Ranging from MRI machines to wind turbines to data servers, the range of industries and products represented in the sector are as diverse as the sustainability opportunities surrounding it.
Circularity in capital equipment or heavy industry plays a crucial role in decarbonization efforts or the reduction of greenhouse gas (GHG) emissions to sustainable levels. While 6.5% of global emissions and over half the world’s ore production can be attributed directly to capital equipment itself, economically it contributes 13% of value added to the global economy, demonstrating a key circular economy principle of producing more value with less resources. Capital equipment manufacturers and users are building on this to realize the tremendous decarbonization and resource conservation opportunity for manufacturers and users of capital equipment.
The capital equipment sector is already taking important steps to advance decarbonization in heavy industry. To help accelerate this transformation, the U.S. Chamber of Commerce Foundation partnered with Philips and the Platform for Accelerating the Circular Economy (PACE) in February to launch the Capital Equipment Coalition North America. This Coalition collaboratively identifies challenges and opportunities, shares best practices, and develops solutions to drive change towards a circular economy for capital equipment.
This Earth Day, hear from the Coalition’s founding members on how they are using the circular economy to decarbonize across industries.
At Microsoft, we see incredible economic and environmental benefits of taking a circular approach to materials management, which reduces waste and carbon emissions significantly. We’ve committed to change our operations, drive innovation, and invest in solutions that accelerate the transition to a circular economy.
We committed to reuse 90% of servers and components within our Cloud infrastructure by 2025. In 2020, we announced our first-of-its kind approach to repurpose and reuse Cloud hardware through Microsoft Circular Centers, which will be located on every new major datacenter campus. Using intelligent scheduling via Dynamics 365, these centers will process servers on-site through a variety of reuse routes working in close collaboration with key suppliers and partners.
At Philips, we collaborate closely with our customers, suppliers, peer groups, governmental and non-governmental organizations and other stakeholders to accelerate the adoption of “circular” thinking.
For example, we have reduced our operational carbon footprint by over 40% since 2007 and became carbon-neutral in our operations at the end of 2020. We are also closing the loop by trading in and repurposing large medical equipment such as MRI, CT and X-ray systems at the end of their use cycle and are extending these practices across all our medical products. By 2025, we want 25% of our revenue to come from circular products and services.
Industrial data empowers companies to tackle tough problems such as decarbonization, energy transitions, and accelerating the circular economy. Looking at our systems in new ways, GE Digital has helped industrial organizations embrace lean manufacturing while also digitizing their operations. Some of the results include reducing furnace emissions by 80%, decreasing waste by 90%, cutting inventory storage space requirements by 80%, and improving energy usage by 15% year over year for $10 million in savings over five years. We have enabled our customers to monitor capital equipment operations and identify areas to reduce water and energy use; track materials, parts and products through value chains with virtual technology; and apply learning algorithms to redesign operations and reduce emissions.
Leasing and financing options tailored to asset utilization and lifecycle can aid companies in transitioning to a more sustainable and responsible business model that embraces the circular economy. For example, DLL’s Life Cycle Asset Management (LCAM) program proactively aligns the repair and maintenance, refurbishment and remanufacturing skills of our manufacturing partners with the flexibility of recurring payments for the end-user customer. By keeping products, components or materials in a closed-loop supply chain as long as possible, raw material use, energy usage and emissions can all be significantly reduced.
To fully enable circular transition in the capital equipment sector, the entire ecosystem must work together – from procurement to financing to equipment maintenance. The Coalition is currently accepting additional capital equipment manufacturers and operators to join the effort. To learn more, please email the U.S. Chamber Foundation’s Sustainability and Circular Economy team at firstname.lastname@example.org.