6 MIN READ

How to decarbonize a donut

5:00

**If it’s your job to convince management, here’s your guide to removing the gas behind the glaze!**

What if every donut you baked came with a price tag for the planet? It actually does, because of fossil fuels. Food production is responsible for 15% of the world’s fossil fuel consumption. Every year. And the question now isn’t if this must change, but how fast. Industrial decarbonization is a critical challenge.

As a manager tasked with figuring out how your factory can electrify food production and decarbonize operations, you might find yourself caught in a tough spot. On one side, there’s pressure from ESG targets and the need to meet sustainability standards; on the other, management expects solutions that won’t compromise profitability. With limited in-house expertise on emerging energy technologies and the complexities of the energy market and no straightforward path forward, you’re left to navigate complex regulatory requirements, high upfront costs, and a steep learning curve.

It’s a challenging position, where every choice has long-term implications for both the environment and the business.

The first question to ask: Do you have to decarbonize?

- It might seem unnecessary to ask whether you have to decarbonize, but it is an eye-opening exercise.

Lars Martinussen, an industry expert from Kyoto Group, says there’s a gap here. A glitch between the competencies needed to actually make a profitable energy transition—and the status quo of most industrial food and beverage producers. In many cases, there’s a gas boiler on the plot, playing its part as the daily energy source.

How to get rid of it? That’s why the question emerges.

- If you answer “yes” to the need for industrial decarbonization, follow up with: What is it going to take? What are the risks and benefits of acting now versus delaying? Is it possible to postpone the question for, say, five years?

- It sounds like the only viable answer is yes—you have to decarbonize now?

- If you continue to use gas, you’ll be confronted with steep CO2 emissions costs. Also, you’re at serious risk of failing to meet ESG demands from customers, investors, and partners. Look at Target, the U.S. retail giant. In 2019, they set a bold goal: 100% renewable electricity by 2030. But they didn't stop there. They're targeting net-zero emissions by 2040 and encouraging suppliers to follow suit. For Target, renewable energy isn't just a goal—it's an expectation.

Their 2030 goal is clear: a 32.5% absolute reduction in supply chain emissions (scope 3). Suppliers who don’t align with these goals risk being left out of future opportunities with Target. To support this transition, Target has partnered with Schneider Electric to launch 'Forward Renew'—a free program that helps suppliers switch to renewable energy, ensuring everyone moves forward together."

- So, the real question quickly becomes: "Do I want to keep supplying Target, and others like them in the future?" And that’s a given. Of course, you do!

Assess in-house expertise or identify knowledge gaps

How it may seem a little off to talk about donuts and decarbonisation in the same breath. After all, you’re a food producer, not an energy company, right?

But the reality is that decarbonization and electrifying production are inevitable steps coming to the food and beverage industry, whether we like it or not. With increasing regulatory pressure and consumer demand for sustainable practices, the industry faces growing scrutiny to reduce its carbon footprint. The EU, for example, has set ambitious targets to cut emissions by at least 55% by 2030, which means all industries will be affected by stricter regulations.

- This all boils down to one thing: do you have sufficient expertise within your company?

Lars Martinussen explains that many in the food and beverage industry believe they have the necessary in-house expertise. However, while they may understand their own energy needs, there’s often a lack of deeper insight into the complexities of the energy market itself.

And that’s exactly where the food company’s project manager or energy manager fits—right between a somewhat vague understanding of the ongoing transition and the challenge of determining how to act..

- Yes, it’s a very difficult position to find yourself in, Lars Martinussen says. - That’s why I stress that the ultimate question comes down to expertise and resources: Do I have enough technical, commercial, and energy market knowledge within my company to make a qualified assessment of what’s actually needed for us to electrify our production process?

- This is something of a grey area for most food and beverage companies. And questions like these are a first step towards being able to fill in the necessary colors.

This all boils down to one thing:

Do you have sufficient expertise within your company?

Quick take: Decarbonizing food production

Identify your needs: decarbonizing isn’t optional—it’s inevitable. The food and beverage industry is a major carbon emitter. Ask yourself: Do we have to decarbonize now, or can we afford to wait?
Assess your expertise: do you have the in-house knowledge to navigate this shift? Many food producers lack the technical and energy expertise required for an effective transition.
Evaluate commitment: is your management on board with sustainability goals beyond idealistic targets? Real change needs real backing.
Build the business case: decarbonizing is financially smart. The costs of waiting add up, impacting both finances and reputation.

Act now or risk waiting: time is of the essence

There’s another factor making this situation even more pressing: time is ticking. The iceberg of green transition looms on the horizon, and the world is on a direct course toward it. But is there still time to steer the ship around?
Put simply: Do we need to transition away from fossil fuels right now, or can we afford to wait?

- In the sustainability report, it’s all laid out in nice fonts and colors, right? But when it comes to taking the right actions to actually make it happen, that’s where things fall short. How easy is it for a food producer to know whom to reach out to for help? It takes quite a bit to know what you don’t know.

And as for waiting a few years to see how things play out, Lars is clear.

- Delaying action on inevitable changes rarely pays off. And the transition is already well underway. The question to ask when you have assessed your company’s expertise—is this: Is management fully committed?

Or as Lars points out: Are these goals truly backed by those with the final say?

Here’s something else to consider: Two independent studies, carried out by Laurent Blaisonneau, Luc Payen and Ilyas Gain-Nachi, presented by ALLICE, reveal that between 45,000 and 50,000 European companies will need to decarbonize their process heat in the coming years. Both studies highlight thermal storage as a critical solution to achieve this.

Even if we assume some companies will adopt alternative processes or go out of business, let’s conservatively estimate that 40,000 will still need to act.

Now, here’s the bottleneck: there are, at most, 20 companies currently able to supply thermal storage solutions. This means that, over the next decade, these suppliers will need to deliver roughly 200 systems per year to meet the demand.

Or in other words: Will there be a solution available to you, when you’re done waiting?

Ensure management is committed to real action

Because, let’s face it: there’s a big difference between the talk in polished ESG reports, as Lars Martinussen points out, and the genuine actions needed for a green transition. For management, truly understanding these goals and being willing to act on them is something else entirely.

- One aspect of this is ideological—our commitment to the climate, and that’s something we can all agree on. We know the stakes are high, and climate action isn’t optional. But, on the other hand, this is also an economic question. As CFO, CEO or board member, is it responsible to wait five years, just treading water to see how things unfold? When I’m measured on shareholder value and bottom-line results, can I justify waiting?

- Can you wait?

- Well, you shouldn’t. The financial implications are just as pressing as the sustainability ones. Decarbonizing your food production is a savvy business decision that could keep you ahead of the game. Immediate shareholder value might seem like the top priority, but waiting comes with costs that only grow over time. If you decide to wait, do the exercise of calculating the financial and reputational impacts. With ESG reporting requirements and customer expectations intensifying, decarbonizing now isn’t just a choice; it’s an increasingly urgent necessity to avoid greater financial and reputational risks down the line, Lars says, before adding:

- Money talks. We have to face it: the endgame is speaking the language management understands. Taking them on an idealistic journey alone just won’t cut it. Skip the fluff—what they need is a no-nonsense blueprint they can trust.

Decarbonizing your food producion

is a savvy business decision

that could keep you ahead of the game.

A 4-step recipe to decarbonize your donuts a.k.a. food production:

Step 1: Find out if emission cuts are on track

Set expectations accordingly. Review your ESG reports and compare your current emissions with targets. Identify if there are shortfalls and adjust timelines or goals if needed to set realistic expectations for decarbonising your company.

Do I have sufficient competence in-house?

Assess the expertise level within the company. If internal knowledge gaps exist in energy management or decarbonization, this is a good point to decide if you’ll need to outsource certain roles or hire a dedicated energy manager. If the assessment reveals insufficient knowledge, explore hiring external consultants or a permanent energy manager.

Find out to what extent management is invested in meeting carbon-cutting goals

Gauge management’s real commitment by discussing the resource and time investments required for decarbonization.

Use ESG reporting as a benchmark or goal

Use the company’s ESG report not just as a goal statement, but as a working document to track progress against defined targets. This keeps efforts grounded.

KPI's

Most managers are measured purely on fiscal KPIs, not green ones. Time to change? Are there any KPIs reflecting emission reductions?

What if we wait?

Run the exercise of calculating the financial and reputational impact if you wait to get started with the energy transition. This question is crucial to sensitize management and force them to understand that yes, sustainability costs more, but there’s no way around it.
Conduct a risk assessment comparing immediate decarbonization versus deferring action. Highlight risks like increased costs, potential penalties, long lead-times and reputational impacts of delaying, investor impact.

Step 2: Test first-hand technical assumptions

Technical assessment of necessary equipment and new installations. In simple terms: Will new energy equipment fit physically–and are you allowed to do it, or alter what you already have?

Determine the demand for heat

Conduct an analysis of your current heat usage to better understand production requirements and to properly size new heating solutions.

Conduct an energy audit

Review current energy consumption patterns for inefficiencies. An energy audit will help determine if energy use can be optimized before investing in new technology.

Compare possible solutions

Compare possible solutions by evaluating various technological options, such as electric boilers, thermal batteries, and hot water systems. Explore renewable energy sources like solar, wind, or geothermal to electrify food production and identify the best fit for your facility.
Can the production process be altered to remove steam and, implicitly, gas?

Permits needed

Look into any required permits, especially if noise, regulatory or environmental impact assessments are needed for installation.

How much space do you have available onsite, for new installations?

Check if there is sufficient room at your facility for new equipment, like thermal storage systems or electric boilers, which may require designated physical space.

Decarbonize:

It's now...

...or later

Step 3: Reinforce the business case with an engineering and commercial study

Validate or disprove assumptions of the previous step. Based on your initial assumptions, order an engineering study to establish whether they can be confirmed or need to be challenged in order to make the energy transition feasible.

Engineering study

Conduct an engineering study that covers technical feasibility, ensuring all planned equipment and technology solutions are viable in your specific setting.

Financial study

Create a financial projection for the proposed decarbonization steps. Include potential cost savings, anticipated ROI, and how these investments will affect the bottom line over time.

Explore funding

Look into available grants, subsidies, or funding options that could offset the upfront costs of decarbonization projects. In some regions, these can cover a significant portion of the expense.

Step 4: Decarbonize: It’s now or later

Decision gate for management. That’s right, it’s time for management to decide if they want to go ahead with decarbonization now—or wait. Outline implications for each choice.

Consequences short-, mid- and long-term

Clearly outline the consequences of delaying industrial decarbonization, including rising costs, financial penalties, and the risk of falling behind competitors. Address short-, mid-, and long-term impacts on market positioning, regulatory compliance, and the growing financial burden of inaction

Costs of waiting, costs of acting

Detail the estimated costs for each approach and weigh them against potential cost increases (e.g., rising gas prices or CO2 taxes) associated with waiting.

Position in market

Highlight how early decarbonization can enhance your market position by meeting customer and investor expectations for sustainability, compared to the risk of falling behind.

Gas prices now—and later on

Consider current and projected gas prices in the analysis, as fossil fuels become increasingly volatile and expensive.

CO2 taxes are not going down

Factor in the likelihood of rising CO2 taxes, which would make traditional fuel sources progressively more expensive, providing an economic argument for timely decarbonization.

Buy heat-as-a-service (HaaS)

As an alternative to fully investing in decarbonization technologies, consider HaaS. This model allows you to meet green goals by outsourcing heat production, providing flexibility without the need for large upfront costs.

Ready to make your decarbonization goals a reality?

Decarbonizing is no longer an option—it’s a financial and reputational necessity. The steps are clear, but only you can decide when to begin.

Connect with Lars Martinussen, Commercial Director Northern Europe at Kyoto Group, to discover how to turn your decarbonization ambitions into concrete action.