Sustainability boosts innovation
Sustainability and climate protection | Environmentalist meets technology chief
Professor Hans Joachim Schellnhuber, Director of the Potsdam Institute for Climate Impact Research PIK and one of the world’s most renowned climatologists, and Dr. Reinhold Achatz, Chief Technology Officer at thyssenkrupp AG discuss industry in the 21st century. The location: the Telegraphenberg hill in the city of Potsdam. In the mid-nineteenth century the Prussian king ordered the building of observatories here, and later on the hill became a station in the semaphore system between Berlin and Koblenz. The Einstein Tower recalls Albert Einstein, who worked here. Today a number of institutions continue to research and operate on the Telegraphenberg, including the PIK – making this an ideal location for a discussion between on the opportunities which sustainability offers the business sector.
What opportunities does the linking of sustainability and business offer?
Schellnhuber: Firstly, sustainability means offering future generations the option of being at least as well off as we ourselves. Everyone can really subscribe to that. From the perspective of science, however, specific boundaries and limits need to be observed to achieve this: The raw materials on our planet are finite, after all. These boundaries should also provide guidance for the business sector – on how it can function and develop. I am sure that those who recognize our planet’s limits in good time will also do better business going forward. If I can recognize what is necessary and turn it into opportunities, then as a company I have interpreted sustainability correctly.
Achatz: We also say that if our products and solutions are not sustainable, the company will not survive in the long term. On the topic of raw materials, companies such as thyssenkrupp are relying increasingly on circulatory processes with multiple use and recycling.
Schellnhuber: A form of development is certainly needed that really thinks processes through. For instance, if I think about cycles, then alongside the sources and the raw materials I also have to consider the sinks, of course. Everything points in particular to the fact that we have only a finite carbon budget: our whole civilization may emit a maximum of some 1,000 billion tons of CO2 if we wish to restrict global warming to no more than two degrees Celsius. The question therefore needs to be asked: how quickly can major emitters such as thyssenkrupp reduce their CO2 emissions?
Achatz: We look at the entire life cycle of our products, equipment, and services, including from the angle of what can be recycled from the intermediate stages and from the finished product. If a company does that, this is also very attractive from the point of view of economic viability. Here is an example of our activities: At the Leuna site we are working on creating from renewable – and also inedible – raw materials the basis for biodegradable plastics, which decompose “by themselves” in a relatively short period into natural substances. In addition, we have the issue of energy efficiency, which we as thyssenkrupp are also promoting very intensively. Energy efficiency is reducing our electricity consumption and CO2 emissions, firstly. At the same time, energy efficiency measures are increasing total efficiency in many processes, cutting costs in turn: and there we have again the link between sustainability and cost-effectiveness.
Schellnhuber: For an advanced economy in particular, it is a question of whether you see yourself as part of a race to the bottom or a race to the top. Again and again we hear the argument: if we factor too much sustainability into our production costs, it is our much more polluting rivals who gain. But this is the question we should be putting: Would I not rather be part of the economy of tomorrow, even if this means that initially and here and now I have to sacrifice some of my cost-effectiveness? As part of the new economy I will make much bigger profits sometime – because thanks to my forward-looking, sustainable focus I will still be around long after the others have disappeared from the market.
Achatz: The exciting aspect is the transition. How do I move from the present world to the future world? How we shape this transition is a question of creativity. From my perspective, it is about creating new systemic relationships and optimizing these systems holistically. We are trying to do this right now with the PLANCK project. Our idea – together with the Max Planck Society and other partners from the chemical and energy sectors – is to view a steel mill as part of a chemical chain. A steel mill produces both steel and steel mill gases that contain CO2, CO and hydrogen, methane or even nitrogen. These are raw materials, including the CO2! Not in the steel sector, of course. But from hydrogen and nitrogen you can produce ammonia and from that fertilizers, for example. The production of artificial fuels is also possible. For that we need more hydrogen than is actually generated from steel production. It could be produced through electrolysis, for which we plan to obtain the required electricity from renewable sources. With the technologies we are developing with PLANCK, in principle all the CO2 from steel mill gases could be converted.
Schellnhuber: Such approaches are indeed fascinating. System solutions are very exciting and have a lot of potential.
Are you already registering a response on the capital markets?
Achatz: At the last shareholders’ meeting several potential innovations were mentioned, one of which was the recycling of steel mill gases, with biodegradable plastics being another. The number of investors who are interested in and guided by sustainability criteria is growing and growing.
Schellnhuber: There are an increasing number of investors who just like civil society are becoming more and more interested in “green” criteria. At the same time, any ordinary bank customer can, of course, ask: Where are you actually investing my money? Sooner or later it will enhance the reputation of companies in the eyes of private investors if they invest and operate sustainably. This is not a top-down but an inside-out process: Does a company see itself as part of the problem or part of the solution?
Achatz: I think the process is already more advanced than you are describing. We have had sustainability reporting at thyssenkrupp as an essential part of our overall reporting system for a long time now. And there is also demand for this.
Where do the markets for sustainable solutions lie right now or in the near future?
Achatz: I have formulated a sentence for us: We must produce sustainable solutions for our customers sustainably. Our customers will demand sustainability in products, services, and solutions.
Schellnhuber: To some degree the sustainable markets still need to be created as well: Potential customers must perhaps first be convinced that they need a thing that has been of no importance to them hitherto. This is also pioneering work – look at Berlin, for instance, which is seeking to develop into a climate-neutral city by 2050, leaving a carbon-based energy industry behind.
Let us return to the topic of reduction: thyssenkrupp has an extensive energy efficiency program…
Achatz: Yes, that is right. We are in the process of setting targets for 2020.
Schellnhuber: And what will they be?
Achatz: Within the program we studied individual companies and facilities across the Group over a six-month period. In a further step we have defined the potential savings in the technology groups specified. From this we will determine an efficiently measurable figure for the whole Group. This figure will then form the basis of informed management decision-making.
What about the political framework in Germany?
Achatz: We are talking here about investment decisions with a horizon of eight or ten years. At the present time it is unclear in very many areas what conditions we will be living under in a few years’ time. We therefore need clear commitments from the government.
Schellnhuber: The EU is seeking to cut CO2 emissions by 40 percent by the year 2030 compared with the 1990 level, which for Germany will probably mean 50 percent. This is the message being sent out. In my view, the drive for decarbonization will then proceed very quickly. Industrial history teaches us that you simply cannot operate two different systems in parallel in the long term.
Achatz: Where decarbonization does not mean using no carbon anymore, but recycling it.
Schellnhuber: That can be one approach. It is important to complete the withdrawal from emissions by the middle of the century. Let me reiterate that time is actually running out as far as our climate is concerned. If we do not get to grips with climate change issues, there will be no sustainable management on this planet either. I am very familiar with the debates going on in the business community: they are happy to join in provided that everyone worldwide is subject to the same competitive conditions. But that cannot and will never happen. Countries such as Germany can set a good example, nonetheless, even if other countries still have weaker regulations for now.
Achatz: Let us not forget one thing: thyssenkrupp operates not only in Germany, but also in the USA, in China, and South America. We want our sustainability technologies to gain ground across the entire world. Duisburg is not the only place where thyssenkrupp has steel mills, for example. We see the recycling of steel mill gases as a business opportunity for the global steel industry. This also serves as an example of how we can generate more business if we have sustainable offerings.