Interview Sustainable Machine Builder: Rider of the „Green Wave“
The declared goal of the European Green Deal is climate neutrality by 2050. With future-proof technologies and engineering energy-intensive industries can reduce CO2 emissions worldwide by 70 %. Kurtz Ersa Magazine talks about sustainability with Dr. Daniel Kronenwett, Partner of the global Automotive & Manufacturing Industries Practice at the strategy consultancy Oliver Wyman, and Kurtz Managing Director Uwe Rothaug.
What was the Reason for the Cooperation between Oliver Wyman and Kurtz GmbH?
Uwe Rothaug: Our positioning as a pure machine builder was not always as clear as it is now, when our systems are on a par with megatrends such as e-mobility in the automotive industry or recycling and the use of alternative materials in the plastics industry. By working with the strategy consultants from Oliver Wyman, we have defined a sustainable long-term strategy for the future.
What are the Links to the EU´s “Green Deal”?
Dr. Kronenwett: As a political campaign, the Green Deal aims to bring Europe to “net zero” – or zero emissions – by 2050. This declaration of intent was the first step. The second is to provide the necessary funds in the form of subsidies, funding and financing for specific technologies that support the decarbonization goal. To this end, the impressive sum of one trillion Euro is on the table, which will be distributed in Europe for this purpose. A concrete lever for Kurtz Ersa, for example, is the increased shift towards e-mobility and becoming somewhat independent of the combustion engine. Another point of intersection is the “circular economy”, i.e., the recycling of raw materials, the avoidance of plastic, and the question of how biodegradable materials can be used in the production process.
What Efforts are Needed for Industry to Achieve Climate Neutrality by 2050?
Uwe Rothaug: We believe that the 2050 targets defined in 2019 are already outdated. Several major corporations have already publicly committed to being emission-free much sooner. The USA and China are also now investing massively in this more sustainable direction. The goal for the Kurtz Ersa Group is: We want to be CO2-neutral by 2029, in terms of our own production and the entire supply chain!
Dr. Kronenwett: There is an incredible momentum around the Green Deal – far beyond Europe. The will is there but achieving the goals set will be quite a challenge, in my opinion. Many companies are moving forward. But by no means all companies have set themselves correspondingly ambitious targets in the spirit of a “Green Wave”. In our recent joint report with CDP, we found that only 10 % of the largest European companies have set a target along the Paris goals with a maximum warming of well below 1.5 °C. Consequently, huge efforts are still needed.
What Technologies Should Europe Focus on, what Framework Conditions do we Need?
Dr. Kronenwett: This is where politics is called upon to exert a certain steering effect via subsidies, funding, and financing – let´s take high-temperature applications using hydrogen technology as an example, without which genuine decarbonization in industry will be very difficult. Especially for medium-sized companies like the owner-managed family business Kurtz Ersa, it could become difficult to develop corresponding innovations and introduce them to the respective markets without political framework conditions. In the coming years, funding and support for corresponding pilot projects within Europe will certainly be necessary, which will then have an impact beyond the continent.
How do you See the Chances of Europe Becoming the Lead Market for Green Technologies?
Dr. Kronenwett: I see very good opportunities because Europe is home to extremely innovative companies – the industrial SME sector in particular has proved and is proving to be a great driver of innovation here. An excellent example is your radio frequency technology, which won the Bavarian Energy Award and can help to massively reduce energy and steam consumption in the production process. The Europeans were indeed the first to launch a Green Deal – and are now scaling up their technologies for widespread use. Advantage for Europe and an opportunity of the century! Of course, the climate crisis cannot be limited to Europe and can only be tackled on a global scale. Countries like the U.S. are now following suit with major infrastructure programs, many of which are green. The chances are good that Europe will become a supplier to the world in this context. Incidentally, this also requires a strong footprint of European companies on the ground – a pure export business does not work in the case of either China or the USA.
What Should a Sustainable Technology Portfolio look like?
Dr. Kronenwett: This can best be answered at the meta level and, of course, looks different for each individual company in mechanical and plant engineering. Three approaches to the development of a future technology portfolio can be distinguished. First, there are incremental strategies that further optimize existing technologies or make them “smarter” through digital, IIoT-based solutions – for example, in the direction of energy efficiency in the production process or capacity increases in plants for the production of renewable energies. The second approach focuses on breakthrough technologies that first demonstrate their breakthrough power in pilot projects and often need to be subsidized before they scale and develop positive business cases across the board. The third portfolio approach revolves around “Carbon Capture & Storage” technologies and helps to build a technological bridge – against the backdrop of a large number of existing “brownfield” plants and the time until renewable energies are sufficiently developed.
When will the Corona pandemic move to the background and climate protection to the foreground?
Uwe Rothaug: Crisis management has been learned and is continuously adapted to the circumstances. The issue is present at management level, but we have long been working again specifically on the further development of our business areas – with health management as an integral part. We are much more concerned with the green transformation, which we want to ride in the spirit of the “green wave” in order to protect our planet for future generations.
Dr. Kronenwett: From my conversations with many board members and managing directors, you can hear that the questions they are currently dealing with are actually more forward-looking: How do I make my portfolio fit for the future, how do I shape the green transformation, how do I take my team with me into this new world? What skills do I need to do that?
Against the backdrop of increasing political pressure and, incidentally, the capital markets, “lip service” is no longer enough. It is now crucial for companies to define serious goals and develop clear strategies that actually lead to structural changes – in the product portfolio, in their own production process, in the supply chain. The good news is that those who act early have the chance to ride the “green wave” in a positive sense and participate in large, emerging growth markets.