Sustainable practices must move to the top of the food chain
General Manager, ENGIE Solutions KSA
Heightened consumer awareness, increased government action around sustainability and upsurged climate change focus has put industries under increased pressure to adopt sustainable practices.
This development is particularly true of the food and beverages sector, with food production responsible for a quarter of the world’s greenhouse gas emissions.
This figure, if left unchecked, will only rise due to the combined impact of a rising population and the growth of the middle class as wealthier people consume more resource-intensive, animal-based foods.
According to the World Economic Forum, by 2050, the demand for food will be 60 percent greater than it is today.
Therefore, there is an urgent need for the F&B industry to address its carbon footprint. Engie Impact, the sustainability consulting arm of the energy giant Engie Solutions, says only about 15 percent of F&B firms are on track to meet internal sustainability goals.
To address the challenge climate change poses to Saudi Arabia, the country’s leadership has been working to implement various national initiatives aligned with global sustainability goals.
Among the most significant, the Kingdom has pledged to reach net-zero emissions by 2060. Critical to this mission is the large-scale transition to clean energy. Though a major player in oil and gas, Saudi Arabia is working to diversify its economy and end its reliance on heavy fuels by leveraging its infrastructure and expertise to lead the way in the renewable energy sector, including investments in solar, wind and hydrocarbon.
With mounting pressure on energy-intensive sectors in the Kingdom to align with the government’s ambitions for a greener economy, investors are becoming increasingly concerned with meeting the environmental, social and governance principles, driving sustainability high on the agenda of business leaders.
Therefore, the Saudi F&B industry must look to decarbonize end-to-end operations by transitioning to green power options. The local F&B industry is the largest in the Middle East, valued at some $45 billion and accounting for about 10 percent of the country’s gross domestic product.
Renewable clean energy will be essential to the decarbonization of the F&B industry. Securing reliable and green power sources, such as solar thermal solutions and on-site generation, is one option to reduce carbon emissions. Research shows that companies sourcing renewable electricity outperform their rivals financially, ranging from 0.3 to more than 7 percent.
Still, meeting sustainability goals can overwhelm even well-resourced F&B giants, who would instead focus on their core business. Outsourcing energy management services to specialized firms enables food manufacturers to strengthen their economic performance by leaning on third-party providers for reliable energy supply, managing multi-technical projects and strictly controlling operating costs.
Most importantly, energy-management firms can deploy specialized analytical tools to identify areas for improvement, analyze energy consumption trends, advise on purchasing energy, electricity and gas, and optimize energy performance.
An example of such outsourced services includes tailor-made high-tech financed solutions for carbon dioxide footprint reduction. Here, customers only pay for their energy while the energy-services company undertakes the capital expenditure. In addition, all risks related to engineering, procurement, construction and energy performance are transferred to the energy-services provider.
Another sustainable model is on-site energy power generation, particularly solar, which eliminates the need to transport power long distances and significantly reduces costs and energy losses. These services are delivered in conjunction with traditional energy services offerings, including the optimized production and distribution of hot/cold/iced water, compressed air, compressors for steam and industrial gas process utilities such as refrigeration, process environments such as heating, ventilation and air conditioning, heat recovery installations and more.
NADEC 30-MW solar farm in NADEC City, Saudi Arabia
Demonstrating the outsourcing model’s success, Engie developed and closed the first corporate power purchase agreement project in Saudi Arabia and the Middle East: the NADEC solar photovoltaic power project. Engie reduced NADEC’s fuel consumption by 124,000 barrels per year, resulting in a decline of 53,000 tons of annual carbon emissions, in line with Saudi Vision 2030.
Such an innovative framework allows energy-intensive industries and commercial services to procure renewable energies through corporate PPAs.
These projects not only reduce GHGs emissions and contribute to the development of the renewable-energy sector but help drive the competitiveness of solar energy as an alternative to fossil fuel, even for medium-sized photovoltaic power plants. Moreover, they represent what is to come for the future of the energy-hungry industries in Saudi Arabia.
The discussion around climate change is becoming more intense, increasing demands to reduce energy and water consumption and mitigate carbon dioxide emissions. Even the most prominent players in the food industry would struggle to maintain a coherent decarbonization strategy while delivering their core business objectives. These companies ought to start considering bridging this gap by reducing customer energy consumption at far lower costs.