Asset management has long relied on capital expenditures (CAPEX) and operating costs (OPEX) to ensure the satisfactory production capacity of a piece of equipment. While this accounting exercise remains an indispensable part of the equation, the life cycle of a physical asset is no longer simply an economic issue. A physical asset is manufactured, delivered, operated, and used up, and then becomes a reject if it is replaced. Beside the costs associated with each of these stages, it is increasingly clear that the asset also creates an impact on the social and environmental spheres. Increasingly, we talk about corporate social responsibility, i.e., the willingness of companies to conduct their business while considering the impact of their decisions on the environment and the communities around them. ESG criteria measure the effectiveness of CSR initiatives on the environment, society and governance. With the palpable reality of climate change and a better understanding of the causes, major decision-makers are placing greater emphasis on the issue of environmental impact. In fact, leading investment funds have adopted environmental criteria as part of their evaluation parameters and are investing heavily in initiatives that are community friendly and that move towards a significant reduction in emissions and carbon footprint (net zero). The management of physical assets is no exception and it is now possible to confirm the impact of sound management and even the extension of the life of assets on the carbon footprint.
To achieve a level of management aimed at extending the life of an asset, be it a building, bridge, rotating assets or rolling stock, an analysis based on operational and maintenance data as well as observations and history of failures and signs of aging must be performed by experts in asset integrity and reliability. This management model, based on asset sustainability, seeks not only to extend the life of the asset, but also to operate it safely, efficiently and sustainably.
Asset analyses should be broken down into 4 subcategories:
- Audits and inspections: Assessment of the severity of the existing defects and diagnosis of the overall state of health of the assets of industrial sites, infrastructures, or buildings.
- Degradation and aging studies: Prediction of the health status of an asset including predefined interventions over time.
- Fitness for Service (FFS) assessments: Diagnostics to determine the ability of an asset to return to service reliably and safely for operators and the environment.
- Integrity and reliability activities: Targeted repairs, innovative solutions to extend the life of an asset under set conditions, calculations of the integrity and reliability of an asset.
And how does extending the life of an asset have an environmental impact? In addition to extending the financial depreciation period of assets, extending the life of an asset reduces the GHG emissions associated with the replacement of equipment or infrastructure, while considering the environmental impact of producing a new asset, transporting it to the site, installing it, and dismantling and disposing of the obsolete asset. With the knowledge of an asset sustainability expert, it is possible to extend the life of an asset, while significantly reducing the risk of failures that have social or environmental consequences and providing a safe working environment.
A real case, a measurable environmental gain
Here is the case of a primary processing plant that has been prioritizing intelligent asset management for over 10 years. Every four years, an aging study of the plant’s assets is conducted. The exercise allows to re-evaluate the remaining life of the assets and to propose targeted and efficient interventions to maintain, improve or extend the performance of the plant’s assets. This approach to asset management extends the life of assets by an average of 20 % (Figure 1). This increase in longevity allows us to space out the replacement of equipment and thus avoid GHG emissions belonging to “Scope 3” of the GHG Protocol. In the long term, 37 % of the GHG emissions related to the replacement of the plant’s assets will be avoided over 60 years (Figure 2).
By referring to known standards for equipment in this industry, it is possible to compare the life cycle of existing plant equipment to the typical life cycle. Figure 1 shows the gap between the observed life and the average life of these types of equipment within the industry. On average, the actual asset life is 20 % longer than the typical life. While some assets have had their lives extended by more than 60 %, others have had to be replaced within their typical life, in line with the overall asset management strategy. Indeed, extending the life of an asset should never be at the expense of its integrity. For example, the strategy may dictate the preventive replacement of an asset to avoid environmentally damaging leaks due to improper design or material selection during its manufacturing.
Asset sustainability experts estimate that the complete replacement of 20 pieces of equipment can emit more than 1,100 tons of CO2 equivalent. This estimate includes emissions related to raw material production, transportation, construction, equipment installation and disposal of obsolete equipment. Projecting the plant’s asset replacement cycles over time and associating them with the CO2-equivalent emissions associated with equipment renewals shows that the strategy to extend the life of assets will reduce these emissions by 37 % over 60 years (Figure 2).
Towards a sustainable future
Recent trends in engineering lead us to believe that manufacturing methods, from mineral extraction to metallurgical processes, will improve significantly over the next few years, aiming for carbon neutrality themselves. Thus, by extending the life of equipment and delaying its replacement with new equipment, a company will be able to further reduce its carbon footprint.