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Energy & Carbon

Our ambitious global targets, approved by the Science Based Targets initiative in 2017, are in line with the latest climate science to limit global warming to 1.5˚C.

In 2020, the Carlsberg Group joined other leading companies in urging governments to ensure their COVID-19 recovery efforts align with the Paris Agreement’s 1.5˚C goal and calling for European Union leaders to embrace a 55% carbon emissions reduction target by 2030. In doing so, we are also guided by the Carlsberg Group’s participation in the Task Force for Climate Related Financial Disclosures (TCFD) and the Intergovernmental Panel on Climate Change (IPCC).

Globally, we are making progress on our 2022 targets to switch to renewable electricity, eliminate use of coal and halve carbon emissions at our breweries as we drive progress towards ZERO carbon brewing by 2030. Eliminating emissions from our breweries will help us cut our value chain footprint from raw material to the end-product consumers enjoy – what we call beer-in-hand emissions – as much as 30% by 2030 from 2015 levels.

For the Malaysia operations, the Supply Chain Director, management team and functional heads oversee the implementation of our carbon emission reduction roadmap. We remain committed to annual targets based on the Group’s ultimate ambition of ZERO carbon emissions at our brewery in Shah Alam, which approaches its five-decade milestone since commissioning.

Targets

We aim to achieve total energy usage of 28.6 kilowatt hours of per hectolitre (kWh/hl) and carbon emissions of 9.5 kg CO2/hl by 2022.

In line with our capabilities on carbon emission reductions, Carlsberg Malaysia Group targets a 5% reduction in thermal and electricity usage year-on-year, where we have already exceeded our year-on-year target in 2020 by 6.9% versus 2019.

By 2022, we aim to reduce our carbon emissions to 9.5 kg CO2/hl, which requires a further 5.4% reduction compared to our 2020 performance of 10.0 kg CO2/hl. We are on track to achieve a 15% reduction in beer-in-hand carbon footprint by 2022 with a target of 2% year-on-year versus the 2015 restated benchmark.

Progress to completely replace R22 – a high-climate-impact refrigerant gas – by the year 2022 was stalled in the 2020 pandemic year. Replacement in stages has been prioritised with a dedicated budget from 2021 to facilitate complete replacement by 2023.

BEER-IN-HAND CARBON EMISSIONS

In 2020, the Carlsberg Group presented market-specific findings for ZERO Carbon Footprint progress for 2019, compared against an updated 2015 baseline which improves upon primary data quality with an updated guidance and methodology.

The updated 2015 baseline, which is actually 14% higher than previously stated at the start of our Together Towards ZERO journey, was approved and advised by Carbon Trust and covers direct carbon emissions, purchased energy for own use, and indirect inputs and outputs such as packaging, transportation and distribution, raw material, and refrigeration within the total beer-in-hand emissions scope.

Malaysia’s beer-in-hand carbon footprint has seen a reduction of 0.83% compared to the 2015 baseline, an improvement of 0.13% on top of the Group’s average, albeit from a higher starting point. By absolute numbers, Carlsberg Malaysia Group ranks 13th in terms of total emissions within 29 Group markets studied.

Our focus remains on energy efficiency in brewing (14%), an area we directly control and maintain within our ISO 14001:2015 certification.

To this end, we commit to ongoing equipment optimisation, product innovation, research and development (R&D) and increasing operational and production efficiencies within our capacity.

Beyond our own operations, we continue to work with partners who supply our ingredients, packaging, logistics and refrigeration, actively seeking lower carbon alternatives where feasible and in line with business sustainability.

We continue to study measures to reduce carbon footprint impact, such as increasing recycled content in cans and shrink wrap,  optimising packaging mix, and material sourcing.

These measures add to our previous innovations such as wax emulsion coating on returnable glass bottles to extend their lifespans and “light-weighting” recyclable aluminium cans with thinner-gauge walls since 2016, utilising less raw material while maintaining structural integrity.

Other measures we continue to explore:

• Agriculture & processing: sourcing raw brewing material with a lower carbon intensity
• Transportation & cooling: increased sea transport and optimised routes-to-market
• Cooling: investment in energy-efficient
refrigeration in transportation and point-of-sales and the complete phasing-out of R22 refrigerant

Thermal Energy

In 2020, brewing operations used 20.7 kilowatt hours of thermal energy per hectolitre (kWh/hl) compared to 21.7 kWh/hl in 2019. This represents a 5% reduction in line with our year-on-year target. This came from decreases in natural gas usage of 17.0 kWh/hl for 2020 compared to 17.2 kWh/hl in 2019, and renewable biogas usage of 3.8 kWh/hl versus 4.5 kWh/hl in the previous reporting period.

Our thermal energy consumption continued its positive downward trend, improving on efficiency year-on-year, partly due to efforts in optimising heat consumption in the brewery operation processes whilst reducing heat losses in key machinery, which together contributed to improved energy key performance indicators.

While overall thermal energy usage decreased, our thermal energy mix still saw a decrease in the ratio of biogas (renewable) versus natural gas (non-renewable) of 18.1% from 20.7% in 2019 previously.

Natural gas reliance increased during the year due to inconsistent energy demand as brewery operations were suspended during the first seven weeks of the MCO and lower overall brewery output and corresponding efficiency due to lower-than-average production volumes.

For 2022, we aim to achieve total thermal energy usage of 19.8 kWh/hl with an estimated 80:20 mix of natural gas vs. biogas usage ratio.

Electricity

In 2020, electricity consumption continued to be measured by the unit of kilowatt hours of thermal energy per hectolitre produced (kWh/hl) as a consistent yardstick for brewery operations.

In 2020, electricity usage for supply chain operations only – excluding administration and other support operations – saw an increase to 9.5 kWh/hl compared with a consistent 9.2 kWh/hl in 2018 to 2019 previously. Likewise, total electrical usage across all functions increased to 10.2 kWh/hl, compared to 10.0 kWh/hl in 2019.

The main reason for the decrease in electrical efficiency was the increase in overall electrical usage per hectolitre produced, mainly due to the need to maintain base electrical load during the COVID-19 national lockdown period from March to May 2020 with no brewery output while maintaining ‘operational idle’, which had a negative impact in overall electricity efficiency.

While production has since resumed, production levels remain lowered with a drop in brewery volume consistent with the reduced sales forecasts for the remainder of 2020. A detailed action plan is currently being drafted to mitigate the impact within 2021 operations.

For the next milestone in 2022, we aim to achieve a total of 8.80 kWh/hl in total electricity consumption and a corresponding 8.45 kWh/hl in electricity usage for production only.

Globally, the Carlsberg Group’s goal is 100% electricity usage from renewable sources in all breweries. As the Shah Alam brewery relies on the local electricity provider (the sole source for Peninsular Malaysia) for its grid supply, our electricity provenance still depends on the power generation mix of said provider which still relies on a large percentage of non-renewable sources for the foreseeable future.

Feasibility studies have been conducted from proposals submitted from third-party vendors of solar power generation, spurred by government incentives for green technology. Initial estimates based on the placement of solar panels on existing structures indicate only potential single-digit offsets of our current electricity usage which is insufficient to drive long-term transformation.

Therefore, our current priority remains reducing energy wastage while increasing efficiency for both our brewing and operational electricity requirements, which include capital expenditure (CAPEX) investments in more efficient equipment and power-saving measures.