Automotive News - May 1, 2023 - 28

28 * MAY 1, 2023
CARBON IS THE ENEMY
U.S. industry takes on CO2
Factories, supply chains clamp down on carbon despite no government mandate
Audrey LaForest
alaforest@crain.com
W
ASHINGTON - Automakers
and suppliers for years have
been devising action plans,
collaborating on best practices
and setting ambitious but measurable
targets as they aim to reduce and eventually
eliminate carbon dioxide emissions from
their manufacturing operations and supply
base.
But unlike the eff ort to slash emissions from
vehicles, the U.S. auto industry is working to decarbonize
its factories and overall supply chain
without direct regulation from the federal government
forcing it to do so.
To be sure, a forthcoming rule from the Securities
and Exchange Commission would require
all publicly traded companies to have certain
climate-related disclosures including
greenhouse gas emissions in their registration
statements and periodic reports. Th e rule,
which has not yet been fi nalized, also would require
information on climate-related targets
but still would not mandate carbon emission
reductions.
" Th is is not new to us, "
said Kevin Butt, chair of
Suppliers Partnership for
the Environment,
whose
Thomas: Being
a good citizen
members include global
automakers and their suppliers.
" We've been working
to do the right thing for a
long time, whether it be in
manufacturing or continuing
to improve our tailpipe
emissions. "
President Joe Biden often has leaned on executive
action to address climate issues and reduce
U.S. greenhouse gas emissions broadly.
Th at includes rejoining the Paris Agreement, an
international treaty encouraging nations to reduce
their economywide emissions and, subsequently,
limit the severity of global warming.
Biden has committed the U.S. to reducing
emissions by at least 50 percent below 2005 levels
by 2030, reaching 100 percent carbon pollution-free
electricity by 2035 and achieving
net-zero emissions economywide by 2050. He
has set a nonbinding target for zero-emission
vehicles to make up half of all new-car sales by
2030.
However, neither the Biden administration
nor Congress has mandated that the auto industry
specifi cally reduce its carbon emissions
across its manufacturing sites and supply chain
by a certain percentage, or require carbon neutrality
by a certain date.
Still, Biden's climate-related orders - coupled
with provisions in both the Infl ation Reduction
Act and Infrastructure Investment and
Jobs Act aimed at reducing emissions and supporting
a transition to electrifi cation - provide
some longer-term direction.
" Th ose actions are a signal of where we're
headed, and so we are, of course, responding to
the signals because manufacturing is a very
capital-intensive industry, " said Jennifer Th omas,
vice president of corporate aff airs at American
Honda Motor Co. " We can't turn things on
a dime, so we need as much runway as possible
in order to get to where we need to go. "
Setting targets
Without a direct regulatory force in the U.S.,
automakers such as Honda are setting their
own carbon reduction and neutrality targets,
many of which require their suppliers to track
and identify ways for them to reduce CO2 emissions
as both parties work to achieve the goals.
Biden's goals for
U.S. carbon reduction
 Cut greenhouse gas emissions
economywide 50-52% below 2005
levels by 2030
 Reach 100% carbon pollution-free
electricity by 2035
 Achieve a net-zero-emissions economy
by 2050
 Have zero-emission vehicles account
for 50% of new-vehicle sales by 2030
Source: The White House
and mitigate the impacts of climate change, but
also it's the right thing to do for our business, "
said Ahmed Elganzouri, Magna's sustainability
director. " It reduces risk and makes the business
more resilient. "
Another major motivation? Th e ever-rising
BLOOMBERG
Biden: Nonbinding target for zero-emission vehicles
to make up half of all new-car sales by 2030
Honda has been tracking and reporting on
greenhouse gas emissions for several years as it
works to achieve carbon neutrality for all products
and corporate activities, including its manufacturing
operations and supply chain by
2050.
Th e automaker also wants to achieve 100 percent
utilization of renewable energy and sustainable
materials, referred to as " resource circularity, "
by midcentury.
In North America, Honda has been studying
carbon emissions at all of its plants, procuring
renewable electricity to cover emissions from
electricity usage and engaging with its suppliers
about their own carbon emissions and net-zero
plans.
" We're not doing this in response to any government
action, " Th omas said. " We're doing
this to be a good corporate citizen. Our philosophy
is to be a company that society wants to exist,
and our actions in this area are very much
consistent with that. "
While Honda is not advocating for any particular
policy regarding the regulation of emissions
from stationary sources such as manufacturing
plants, there is a need for " certainty and
consistency, " Th omas said.
" It impedes progress when we see confl icting
policies in place or backtracking on progress, "
she said. " We are constantly relaying the need
for clear and consistent policies in this area. "
2050 target
Ford Motor Co. has committed to carbon
neutrality no later than 2050 for three of its biggest
CO2 emitters: vehicles, buildings and suppliers.
Th
ose commitments - part of the Science
Based Targets
initiative, a partnership that
helps companies set reduction goals in line
with climate science - are much more than
self-regulation, said Mary Wroten, Ford's director
of sustainability and ESG.
" You actually have to submit data to this organization,
and they formally approve your targets
and your glide paths, " she said. " Once
stakeholders see that we set these aggressive
targets, they also hold us accountable. "
Magna International, a major global auto
supplier, is setting aggressive targets as it strives
for carbon neutrality in its global operations by
2030.
" It's not just the right thing to do from an environmental
perspective and to really alleviate
cost of energy, said Butt, who also is senior director
of environmental sustainability at Toyota
Motor North America.
Toyota aims to make all corporate and manufacturing
sites carbon neutral by 2035 and to
eliminate CO2 emissions from energy use at
those sites by 2050.
" It makes business sense, " Butt told Automotive
News, adding that despite these commitments
by automakers and suppliers to achieve
carbon neutrality, getting there will be
" really, really diffi cult. "
" Th ere's no magic widget out there,
so we have to be very creative and innovative
in trying to achieve this, " he
said. " Nobody has put a gun to our
head and said, 'You've got to do this by
X date.' We're doing this because it's the
right thing to do. "
Education is key
Groups such as Suppliers Partnership
for the Environment are helping
automakers and their suppliers navigate
this space by sharing industry-backed
guidance documents and
best practices for tracking, reporting
and reducing emissions.
" Th e education piece is so important, "
Butt said.
" Some of them are really big suppliers,
said Aaron Mason, Manufacture 2030's
head of automotive.
" We jumped from a couple thousand ... to
8,000 to 10,000 supplier locations that are now
being included, " Mason said.
" It's in 65 diff erent countries, from an automotive
perspective. "
Supply chain owners pay an annual fee -
usually " tens of thousands of dollars, " Chilcott
said - and each supplier pays less than $1,000
per site annually.
Of the shared-cost model, Mason said it
speaks to the level of collaboration required as
companies seek to decarbonize their supply
chains.
" Instead of it being 'I'm mandating something,
you have to do it as a cost of doing business,'
it is more 'We're investing alongside you in
the decarbonization of this entire value chain,' "
Mason said. " Th at is a much rosier picture. "
Federal efforts
Meanwhile, several voluntary initiatives from
the federal government seek to encourage automakers
and their suppliers to reduce emissions
from manufacturing operations.
Th rough its Energy Star industrial program,
for example, the EPA has been working with automakers
to reduce emissions associated with
energy use at their plants.
GM, Nissan and Honda all had manufacturing
plants that earned the agency's
2022 Energy Star certifi cation, a designation
reserved for sites in the top 25
percent of energy effi ciency in their
sector.
While the EPA regulates greenhouse
gas emissions from vehicles, it has not
Fream: " Work
together. "
" promulgated regulations directly limiting
[greenhouse gas emissions] from
automotive manufacturing facilities or
their materials and parts suppliers, " an
EPA spokesperson said.
At the Department of Energy, eff orts
ers - very mature - and understand a
lot of this, but there are others that are
new to the game. "
In January, MEMA established the Center for
Chilcott: Data
aids efforts.
Sustainability to help educate and support its
more than 1,000 members throughout their
sustainability journeys.
" Th e goal is for our members ... to work together
and to fi nd solutions for cleaner manufacturing, "
said Julie Fream, CEO of MEMA's
Original Equipment Suppliers group. " We continue
to push for that, and the suppliers recognize
they need to do that as well. "
Several automakers and Tier 1 suppliers have
joined Manufacture 2030, a software-as-a-service
platform that enables companies to measure,
manage and reduce carbon emissions with
their customers at each manufacturing site.
" It's not just a platform that captures the carbon
footprint, creating visibility for reporting
purposes so you can use our data for reporting, "
Manufacture 2030 CEO Martin Chilcott
said. " It's all really focused on how do you generate
the right sort of data to enable you to
make targeted interventions to accelerate reductions? "
Five
vehicle manufacturers - Ford, General
Motors, Honda, Oshkosh Corp. and Toyota -
have joined the platform as supply chain ownare
underway to develop technologies
so automakers and companies in other
industries have options as they aim to
decarbonize their total footprint. Th at
includes " technologies that reduce
emissions not just from the use of the
vehicle but from steel, plastics, batteries
and other components used in
manufacturing, " said Michael Berube,
deputy assistant secretary for sustainable
transportation.
" Th e auto industry leadership recognizes the
need to decarbonize, " Berube said. " Our job is
to help them get there. "
Th e Energy Department's Better Buildings/
Better Plants initiative and Better Climate Challenge
- voluntary partnerships with specifi c
reduction targets - are examples of working
with the auto industry to meet energy effi ciency
and carbon reduction goals.
" Th ere are a lot of challenges, but I feel there's
a real cooperative sense across industry and
government to identify the challenges and address
them together, " Berube said.
Butt, of Suppliers Partnership for the Environment
and Toyota, also pointed to the industry's
collaborative relationship with the federal government
as it balances manufacturing costs,
product aff ordability and environmental concerns.
" We're
already making a tremendous impact
across industry in moving in that direction
without being regulated into it. ... If at some
point we're not getting there, then who knows
where that might end up, " he said. " But right
now, we're moving, and we're moving at a pretty
good pace. " n
Automotive News - May 1, 2023

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