IKEA (China)

At a Glance

Industry

Retail

Project Type

Clean and Renewable Energy

Year

2016

Location

Shenzhen, China

Summary

Shuyi Li helped green IKEA’s supply chain by recommending alternatives types of energy as a way to reduce suppliers’ reliance on coal.

Goals

IKEA has set an ambitious goal to phase out coal usage throughout its supply chain as a way to reduce emissions and ensure long-term cooperation with suppliers. The multinational corporation enlisted EDF Climate Corps fellow Shuyi Li to track coal use and find alternative energy sources for IKEA’s China-based suppliers. She was tasked with collecting examples of sites that have already begun phasing out coal, as well as performing a before and after calculation of the costs of proposed solutions for suppliers having yet to begin the process.

Solutions

After collecting and analyzing energy use data from all IKEA suppliers, Shuyi, alongside another EDF Climate Corps fellow, identified 60 suppliers using coal in 2015. She presented this group with a plan on how to best move away from this reliance, by suggesting three alternative energy sources: natural gas, biomass and direct purchase of municipal steam. Waste steam, captured after running the electricity turbines and purchased from municipal power plants, was proved to be the most economical and environmental-friendly alternative source.

Although biomass is less expensive than natural gas, some factories must choose natural gas because their manufacturing production processes require it. For suppliers with no access to natural gas, she recommended switching to biomass. To streamline the process, Shuyi linked suppliers with a biomass contract company that invests the fixed costs, takes the responsibility to operate the boiler, deals with regulations and only then sells the steam to the factories. To achieve more energy savings, she recommended factories implement simple energy efficiency projects, such as LED lights installments and reusing waste heat. 

Potential Impact

Each supplier was presented with an alternative energy source based on which makes the most economical and environmental sense, given that government requirements are satisfied. Environmental benefits are huge: overall CO2 reduction is at least 50% on average, with more than 80% reduction in NOx, SO2 and PM. IKEA expects its suppliers to phase out coal in the near future and implement a greater number of energy efficiency projects. 


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