Danone’s energy plan to cut emissions and build resilience: ‘We don’t want to be dependent on fossil fuels’
Danone has launched Re-Fuel, a programme that aims to transform its energy footprint and reduce scope 1 and 2 emissions. With it come some new targets that Kristiyana Nikolova, Danone’s Positive Impact Operations Director, describes as ‘ambitious’, ‘bold’, and an integral part of the group's 1.5 degrees roadmap.
The company has said it will improve its energy efficiency by 30% between 2022 and 2025. The French dairy giant will also shift gears in its transition towards renewable energy usage. By 2030, more than half of the energy Danone will use will be renewable, and all its electricity will come from renewable sources, up from 68.5% today.
The ‘biggest challenge’ in Danone’s new ambition comes in the form of incremental gains the company plans to deliver to reduce its scope 1 and 2 emissions, Nikolova told FoodNavigator. Between 2015 and 2021, the company cut direct emissions and indirect emissions from purchased energy by 48.5%. By 2030, it wants to reduce this by a ‘minimum’ of a further 42%.
'There is no low hanging fruit': Danone remains confident on energy transition
Nikolova is under no illusions that the path towards these 2030 goals will be an easy one – but she is ‘confident’ the company will deliver against its ‘bold’ and ‘ambitious’ targets. “It is really challenging because we don't have low hanging fruit anymore. But we are not starting from zero… We have learnings. We know what works and doesn't, so we feel confident.”
Part of what gives her this confidence is the success Danone has seen at trailblazing projects around the world. Today, the group has six factories independently certified as carbon neutral and, over the past two decades, Danone has reduced its energy usage by 46%. “These successful cases are usually how I start every presentation I do. Because the decisions we took [to improve our energy footprint] before [the climate crisis] was in all the newspapers are today showing it was the only way to go.”
In particular, Danone believes the adoption of digital and real time management tools can improve energy efficiency. These tools have been developed by engineers at Danone and are already live in sites including Wexford in Ireland and Opole in Poland, which was recently recognised by the World Economic Forum for its innovative use of digital technology such as robotics and AI at scale. The proprietary tools allow for real time identification and analysis of areas of energy inefficiency, the company revealed.
But Nikolova is keen to stress that Danone’s people lie at the heart of its success. “Digital tools are helping to identify where we are inefficient in energy use. Many of these things are not rocket science. Digital tools allow us to know exactly what is happening in our factory, measure it, have a clear dashboard,” she revealed. “The digital tools are helping us to have a clear overview of what is happening in our factories but digital tools without people don't bring anything. They give us an overview of where the challenges are and the people in the field act on it.”
The company is also betting on technology in the form of investments in biomass and biogas capacity, alongside solar thermal and hydrogen. This energy mix is already used for heat treatments, sterilization and sanitization of equipment, as well as internal temperature control and space heating.
Next steps will also see Danone shift to local sources to improve energy resilience. One such project can be seen in action in Indonesia, where Danone works with local communities to use rice husks to produce energy, returning the ash to the farmers to use as organic fertiliser. Elsewhere, Danone has announced the commissioning of a new biomass boiler at its spray drying plant located at Balcutha, in the Otago region in New Zealand’s South Island. Combined with the use of 100% renewable electricity at the plant, CO2 emissions will be reduced by 95%, the company revealed last week. The company already has onsite solar panels at 12 factories and 2023 this figure will double to 24.
“Renewable is what will make the transformation. We have in the pipeline 20 more projects and everyday a new one is coming,” Nikolova enthused.
Energy independence for resilience and cost
Heightened ambition does, of course, come at a higher cost. Declining to put ‘an exact figure’ on the planned expenditure associated with Re-Fuel, Danone will increase the amount it is investing to transition the energy footprint of its operations ‘significantly’, Nikolova told us.
“The investment is drastically more than what we [have previously invested] and we will start in 2023. What we don't want is to make commitments and wait until 2029 to be in a position to deliver. We want to be ahead of the curve. Either you wait or you lead. We want to lead,” the operations expert stressed. To an extent, this even means ‘front loading’ the programme and ‘doing more in the beginning’ to drive progress at pace.
At a time of unprecedented cost pressures, is this increased investment a difficult case to make? In some ways, Nikolova concedes it can be. "We are a business, not an NGO," she noted. However, the nature of the current energy crisis has given the need to increase energy self-sufficiency additional impetus, she suggested.
“We have an energy crisis that we haven't seen for many years, especially in Europe. Costs are increasing and this helps to make the case. But it is even more about the resilience of our operation. We are seeking independence in energy. We don't want to be dependent on fossil fuels,” Nikolova elaborated. “We want to be more sustainable, more independent, more local and more resilient. And of course, more cost efficient.”
These are medium-term gains that the company expects to benefit from. How does Nikolova balance this against the current cost squeeze that is placing manufacturer margins under pressure and pushing up food prices at the tills today? “With strong conviction it is the right thing for the company. Of course, without conviction you don't do this. We are always combining purpose and performance - but it is medium term, so conviction is also part of it.”