Industrial data will matter more than ever in the wake of COP28

REBECCA AHRENS

From AVEVA studios, this is Our Industrial Life, the podcast that brings you stories from the essential industries and investigates how data and technology are shaping the future of the connected industrial economy.

Today on the show, we’re going to be checking in again with Lisa Wee, the Vice President of Sustainability at AVEVA. Lisa recently got back from attending COP28¹, so I wanted to talk to her about the outcomes of this year’s COP—and in particular, what role the industrial sector will play in helping countries achieve the ambitious targets we will need to achieve if we’re going to get ahead of the worst effects of global warming.

During our interview, Lisa mentioned a statistic that I found really startling: only roughly 30% of industrial companies have gone through a successful digital transformation. Which means that there’s a huge number of companies and organizations out there that are still relying on some number of manual processes, are still not gathering the right data, are still not tracking the metrics that the industrial sector in particular will need to track if we’re going to make any progress here.

The industrial sector is where the rubber truly meets the road when it comes to achieving any sustainability targets countries might set for themselves. And more than ever, industrial data is going to play a key role in determining success. Increasing energy efficiency, decarbonizing industries, transitioning the power grid to run primarily on renewables: these things are just not possible without the proper use and exchange of data. And when I say, “exchange,” I mean within companies—but even between different companies and different industries.

So, without further ado, here’s my conversation with Lisa.

Well, thank you for coming back on the podcast. It's great to talk to you again.

LISA WEE

Likewise.

REBECCA

This one has been a pretty significant COP for a variety of reasons, which we'll get into. But I thought I would just start off by hearing—I'd love to hear your reaction to the agreement² that was released. What is just kind of your general impression of some of the big-ticket items in that agreement?

LISA

Sure. Happy to talk through that.

You know, I think first of all, I think it really is a historic agreement. It is a recognition that there's global solidarity around climate science and the fact that we need to transition away from fossil fuels if we are serious about fighting climate change, and in particular, avoiding the worst irreversible impacts from that. I think that, while it is a landmark agreement, obviously, there will be still a lot that has to be fleshed out further. But words do matter. And it is a very important signal.

And at this COP more than any COP, you saw that there were very much real economy actors or representatives from finance, from the business sector, that were there. And, you know, deals and decision making will be influenced by this COP.

You know, this was the first global stock-take, so that was a look at where, globally, we are—an assessment of all the commitments that have been made by countries so far. And it was very clear from that process that we are tracking towards temperature increases, that would have devastating effects for large portions of the population, for biodiversity. And so that's where, again, the effort to get back on track by doubling efficiency and tripling renewables by 2030, those are some of the measures that are mentioned. But of course, there's still also a lot to be really done.

So I think I was hugely relieved, you know, excited that we had gotten to this point, but also, you know, realistic that there's still so much work to be done to put this into practice.

REBECCA

Yeah, I mean, so there was a lot of pressure, in a way, going into this year’s COP in particular. Like you mentioned, it was—there was this kind of framework of there being a stock-take: where do we stand with respect to goals that have been set out previously? It's looking very likely that this is going to be the hottest year on record, so far. Global temperatures have already risen. I think the last statistic I saw was like 1.2 degrees Celsius above pre-industrial level. So we're getting quite close to that 1.5 degrees Celsius limit that was laid out in the Paris Accords.³

So given that pressure and that context, I'm curious what differences you might have noticed in kind of the mood and the conversations, particularly on the business side of things. Because I know COP is interesting, in that it brings together a lot of different perspectives and representatives from different communities, right. I mean, ultimately, it's sort of a governmental effort among different countries, but it's in the business side where the rubber kind of meets the road in terms of achieving or not achieving anything that that a government might lay out as a target.

So what was your experience of that zeitgeist on the business side this year that might have been different or interesting as compared to say, like, the last couple of years?

LISA

Yeah, what was really interesting about this COP was—normally when I get ready for these trips, expectations are so high about what we're going to be able to achieve—and then with this COP, it was it was almost the reverse, right? There was so much skepticism, so many questions being asked about the host nation, about the presidency, that it was interesting to see it play out because actually there was huge desire by the hosts to make sure that there was meaningful progress and that there was accountability around outcomes.

So, it was different from the past COP. But it was also—what I saw on the ground play out was the presidency able to build on what has been happening as a general trend with COPs, including on business involvement. So I think that we really saw starting in COP26, in Glasgow, with the breakthrough agenda, this emphasis on bringing business to the table. There's a group in particular called the high-level champions whose job is to actually engage and mobilize and coordinate non-state parties around achieving net zero, and they really kicked into gear around COP26. That continued with COP27, even though it was a smaller COP.

They focus not only, I think, on bringing business to the table, but also bringing local governments. And also very involved in not just the climate mitigation discussion—how we reduce emissions—but also how we adapt to changes in climate and make sure the right infrastructure is in place. And I think this COP built on both of those. You saw much, much bigger focus on business because of the momentum that had built because of the engagement. And you felt it.

You felt that there was emphasis on innovation, there was an emphasis around adaptation on really humanizing this COP and looking at health and looking at agriculture, some of the sectors that will be most impacted by what we're seeing in terms of rising temperature and humidity. Very quickly, you saw announcements around methane, and again, commitments coming from the oil and gas sector, and there had been a lot of controversy about their involvement. So there were a lot of bigger announcements than we've seen previously. Again, part of that was coordinated, because there was more formal invitations to business, to local government, as in mayors, to participate. There was the business and philanthropy forum, in particular, that was new this year, that was targeting those, getting those key leaders to the table at the same time as world leaders were present to help again create a more cohesive agenda. And it was very successful.

REBECCA

You know, there’s sort of like the overarching agreements, like we've just been referring to this language about transitioning away from fossil fuels and energy systems, which was unprecedented, right? This is the first time that we've seen the language specifically about fossil fuels and transitioning away. So that's great.

But then there's even, you know, these specific commitments that I that I saw. For example, I think it was like at least 50 oil companies were pledging to cut the methane emissions, as you were referring to, by 80 to 90%. Some nations, I think, committing to tripling renewable energy. I think I saw something as well about Aramco⁴ pledging to drive down the emissions from their refining process, right.

So there was a lot of sense of energy on the private sector, the business side, and specificity around what they are going to do to contribute to some of these larger goals. And I'm wondering—I mean, we know the role that industrial data is going to play in this—but I'm wondering if you could just kind of lay it out in a general sense. Because a lot of these projects really aren't possible without the right technology. So what is that, in your view, going to look like?

LISA

Yeah, it's huge. I think it ended up being over 120 countries, you know, pledging on tripling renewables and doubling efficiency by 2030. Again, because that's seen as is one of the most tangible, practical ways to use technologies that are available today to get us back on track. And I think, I think, wow, that's really exciting. I think a lot of the discussions that I was able to participate in focused on the fact that, you know, for every dollar you invest in renewables, you actually need to be investing $1 in the grid, to really be strengthening that grid to make sure that it can deal with the intermittency issues, that it can deal with just the volumes of data that are going to come in now, by having to have multiple sources of still backup energy as well, as we've talked about before, just the distributed nature of renewables themselves. The fact that you're going to have data coming in.

It's so different from a conventional power plant: you might have one source versus a wind farm, you know, with hundreds of individual turbines running, each with their own data set to be optimized. Or the example of solar Noor, and the largest thermal solar power plant where they've got 2 million mirrors, right? I mean, just the amount of data that needs to be managed and calibrated and optimized is tremendous.

So again, I think that this is where you're really going to see the acceleration of the connected industrial economy. And, you know, I guess what I mean by the connected industrial economy is the fact not only that we have this data, but that we are able to share that data across what historically has been industries that are quite siloed. But you know, sharing data outside the four walls of the plant, really getting the right information to the right person at the right time.

And, again, just taking the wind example: it's not just the operator of the wind turbines. Increasingly, you know, when we're looking at even building these facilities, now, it's understanding carbon emissions that might be built into the turbine itself. It's also, as part of the push towards greater circularity, the materials themselves, you know, the equipment might need to be reused.

So you're tracking data over time, it's going back to the original equipment developers. It's quite—it's quite complex.

REBECCA

Right? It needs to be that complex, because addressing climate change isn't going to require one thing—it's going to require a coordinated effort. And so there's going to need to be a greater exchange of information and data, when you're talking about balancing a grid, like you mentioned, that's going to have a distributed range of sources of energy, that's going to require a huge amount of collaboration and coordination between those different data sources, is going to require, you know, maybe even communicating with smart buildings, having a better understanding of what the load is going to be as well. Because that's going to fluctuate a lot more, especially with electric vehicles coming online. And those, you know, all plugging in at the same time, say at the end of the workday. So it's complex, but it needs to be complex in order to solve the challenge.

And I also see, it's like you kind of have the role of data and industrial data and how you capture it and what you do with it, and how you share it, it enters in at so many levels, right? I was watching a recording from one of these side presentations, and there was a woman from this company—I think it's just like a small battery company called FREYR Battery, a Norwegian battery company—and she was mentioning that, partially because of the incentives coming out of the infrastructure bill, that they're planning to create a gigafactory in the US somewhere to increase their battery production. And I was thinking to myself, there are going to be a lot of opportunities, like greenfield opportunities for creating new types of materials—batteries—and increased demand for, like, production of solar panels and wind turbines and this kind of thing.

And there's a role for industrial data in that engineering part as well, right? Like making sure that these new buildings and factories that we're going to build to support these efforts, themselves can run efficiently. It permeates everything really.

LISA

Absolutely. And that's even where in the legislation, it's requiring that if you're going to build these gigafactories, you've actually looked at selecting suppliers that are low carbon. So you actually need to understand, you know, the carbon footprint of your steel producer and your manufacturer. You also even need to be comparing the design. We're seeing, you know, comparison of, okay, I could build, I could modularize the build and build some of it offshore, but then I'd have emissions associated with transportation that I have to factor in versus building some of it closer to site. I mean, all of this is being calculated now. And it is expected to be calculated in part as part of receiving funding for programs, incentive programs, like the IRA.

REBECCA

So I want to turn to a subset of this conversation about industrial technology and industrial data, and that's AI. Everybody's had AI on the brain recently, partially because of the release of things like ChatGPT and these other large language models in the past year. But there's also a kind of a version of AI that I think usually gets less media attention. And that's how AI functions in the industrial space.

And there was a lot of talk this year at COP about the role of AI and helping businesses achieve some of these sustainability goals. Can you talk a little bit about that as well?

LISA

Yeah, absolutely. I think what we have seen is definitely a lot of opportunity to build on experiences that we already have with optimizing industrial plants and making sure that we're using the historical data that we collect, using that real-time data to build the right algorithms to optimize their production. And you're seeing that, I mean, we're seeing that that's something I think that our customers have been using actually, largely in the energy sector.

There has been already this focus on these algorithms and advanced, you know, machine learning models. It's really about helping energy providers to decarbonize what's existing by optimizing how they're running their operations—is one example really looking at optimizing for throughput profitability, but also carbon footprint and carbon emissions now, but also the acceleration.

So again, what are the technologies that are commercially viable now? The renewables, the advanced biofuels? And again, how can we make sure that real-time data is being used to optimize production? Because we know that, for example, in the wind sector, you'd have data coming in at ten-minute intervals. But with real-time data coming in by seconds, that just opens up a whole new world of AI opportunities for optimization.

I think we're still at a phase—just to manage expectations—where, you know, first of all, AI is only as good as the data that it's trained on. So it's very important to have really good underlying data. But the other piece here is that it's going to accelerate what we can do. It's going to speed up. It's going to take away some of the very manual activities and free up engineers to focus on much more high-value work.

It's not going to solve the climate crisis alone. But it's a very important accelerator. Because even there in the future, we know that to actually have the option to have ChatGPT capabilities advise them on recommended optimization strategies, that's something that we're pretty close to seeing already. And I think that'll be sort of the, again, the next evolution of where industrial AI goes.

REBECCA

Yeah, and I think I just want to highlight again something you said, because I think it's an important note. I mean, a lot of what I think AI can contribute is freeing up time, right? You mentioned more high value contributions, right?

So it can do things like processing this huge amount of data that you might be receiving at like a very high pace, and looking for patterns and making recommendations for interventions, right. It could be something like predictive maintenance. If you've got a ton of turbines on a wind farm, and you want to understand when one of them might be approaching failure, catching that before the failure actually happens, right? Or, across any sector, really, if you have machinery that's operating less efficiently than it might be, you can use an AI to sort of analyze the operations data that you're getting from the machines and alert you to those inefficiencies that you can then go and intervene. And that, you know, all of those sort of small, they seem like small adjustments, right? But in the aggregate, it can really make a huge difference in reducing the total amount of energy that your plant requires to run. Because you've made sure that each little piece is operating to its maximum capacity.

And when you don't have people going through manual processes to suss out that information, or maybe it takes too long and you have a massive failure of some asset, then that brainpower and time is freed up for, like you're saying, higher impact, larger ideas, things they can do that they wouldn't have otherwise had time for.

LISA

Yes, that's exactly how we saw ENEL using it⁵ as part of their renewables fleet. It was extremely manual before, with engineers having to sift through reams of data coming in from sensors to identify abnormalities. And being able to move towards leveraging AI and catch, you know—I think it was 220 incidents—just by having that ability to maximize and unlock value from the data that they had and free up those resources to, again, focus on bigger challenges is really key.

REBECCA

That's actually a good transition into my last question, which is about customer examples. We love to tell stories primarily on this podcast. And I'm wondering if you have any stories that you've heard from our customers that are some of your favorites, or are particularly striking, where they're using software, collecting industrial data, and using it to pursue sustainability goals either kind of tangentially through optimizing a particular process or something that is sort of more directly related to sustainability. So like producing renewable energy, that kind of thing.

LISA

One of the stories when I was sitting down with CEMEX, was really powerful, because again, they are one of the world's largest producers of cement. And, it's a very—they're a huge energy producer—not always easy to understand how they're going to decarbonize. And when we were talking to them about their digital journey that they have been on, it was, it was fascinating. Because again, what they said is, early on, their digital solutions were, of course, looking at how to optimize their own operations and be able to transition, switch out different fuel sources, but also run their plants more optimally. And there again, digital solutions played a key role.⁶

But they could also only go so far in the process. Because what they found was that their ability to actually produce the low carbon cement—even though the technology was there to enable them to do that—would vary by regulation in geography. So for example, they could produce cement that was significantly lower carbon—you know, 40% lower—in the EU. But because of the standards in the U.S., they couldn't.

And so that was a really interesting discussion, because it leads to—actually a lot of the technologies are already available, there is a lot of progress that can be made. But we also need the right policy frameworks in place. And this was part of a discussion that we were having with policy makers. And it was a good reminder of why events like COP are so key. Because you need those three groups to be sharing experiences and to make some of these commitments really real. Nobody knows the decarbonization pathway for cement better than CEMEX, right?

REBECCA

This is a slightly different story. But I know we have one story, at least, of a power distributor in the U.S. who was using some of our software to communicate transparently with their purchasers where the power was coming from, right? So they had clients that wanted to know, what was the percentage makeup of renewable energy sources when they were buying power from this company. And they're using data, and the cloud in particular, to share that information and create transparency with customers and kind of show what they're doing.

LISA

Yes, Dominion. I love that example.

REBECCA

It's a great story, because I think it gets back to something that you were talking about earlier in this conversation as well. With the importance of, you mentioned, the connected industrial economy, data sharing—these things are going to become more and more important and necessary to achieve goals, right?

And this is a good example of that process at work. How can you—like we're not talking about just free-wheeling access to a company's data. Obviously, nobody wants that. But how do you share the right data, like the data that people actually need, and share it in a way that's secure and just with the correct people?

LISA

Yeah, so no, it's a great example. And Dominion Energy—what I love about that one, too, is that it's an example of the fact that you're seeing business-model transformation⁷. So, by having that real-time data, they were able to create an entirely new value stream by being able to validate that the energy is clean, where it's coming from. And that is the direction, because we're moving towards this new era of 24/7 clean power. So, companies that are making really progressive commitments, they're not just saying, I'm going to make a broad commitment to 100% renewable electricity for all my facilities and office—I actually want to know that I'm getting 24/7 clean power to power those facilities, which, you know, then needs to be backed up with timestamped data. So, you know, that's the direction that we're going and it's a good example of a company that was positioned for growth and to take advantage of that opportunity. Because I think that was another just kind of key reminder and key message coming out of COP—and why it is important for business to be at the table.

Of course, there is regulatory pressure. And of course, there is a moral obligation that, you know, many of us feel to be addressing this issue. But there's also a huge competitive advantage for companies that understand where the market is going and are positioned to take advantage of that. And Dominion is a great example.

And another one that’s again, different—but because we've talked about operations on the engineering side—is the example of Aker Carbon Capture,⁸ where in the beginning, it wasn't clear that, you know, they were aspiring to develop carbon capture units, but they just were not commercially viable until, again, they use the digital engineering suite that really allowed them—it was a cloud-based solution—that allowed them to connect to their engineers across the company that were experts in these areas, and to really come up with a model for carbon capture—a modular approach—and to scope it down, and to make it replicable. Because so often with carbon capture, it's going to be a tailored project that we developed by, you know, maybe an EPC that could run over time and budget. But if they could just modularize the business, and they would be able to make it bring down costs. And when they took that approach, they actually did bring down costs over 80%, compared to their historic model. And they increased their size to market—their time to market, excuse me—by 50%.

And the reason that's so important is, again, because they brought down costs, they were able to show this as viable: we have a business line and new business line, we can we can scale this. But the time to market piece is also key because climate change really does remain a very urgent issue. And so we need to be developing these solutions now so that we can really have them ready to scale as soon as possible.

So I think it's another very different example, but of a company that really leveraged data and the capabilities to create a new future for their business—and one that is going to grow with the energy transition that we're seeing.

REBECCA

It's kind of a collaboration story, right, like using digital tools to help people within a company work together better to find solutions. Which, in one sense, you could say it's part of the punch line of this year's COP, right: looking for ways to create better coordination and better collaboration, both between different industries, with one company and another company that might not have historically collaborated with one another, between local governments and national governments, between local governments and industry. That's a really important piece of this. And it's really not possible without that level of collaboration. There are digital tools out there that can help with that, help facilitate collaboration.

LISA

I think that's right. I think business was there to convey the message that we wanted a strong agreement, but also that we wanted to make sure that our expertise can contribute to continuing to help sectors accelerate, especially in the technology area, where there's so much that can be done already by leveraging data. Of course there’s much more to do. But huge opportunities. When you think of—one statistic that stayed with me—that only 30% of industries have done digitalization at scale successfully. We just have to change that.

REBECCA

It's mind boggling. Yeah.

LISA

Yes.

REBECCA

I mean, I think it—one of the things I kept thinking about kind of reading through and watching the media coverage of this COP was that you can't manage what you don't measure, right? That's sort of the impetus behind digitalization. If people aren't measuring things in a digital way, there's just, there's no way that you can make the necessary interventions. So, I think you're right, like they have to start there at the very least. And if we're only at 30% Then we've got some work to do.

LISA

Huge opportunity.

REBECCA

Well, thank you again for coming on the show and I hope to see you next time on Our Industrial Life to talk about these things again.

LISA

That'll be great. Post Baku.⁹

REBECCA

Yes.

That’s our show for today. You can find more information about any of the topics we talked about in this show or any of our other shows online at our website at AVEVA.com, and if you enjoy the show, we appreciate it if you would give us a rating or a thumbs up if you happen to be on YouTube, and subscribe so you never miss an episode.

Next year, we’re going to be experimenting with several different kinds of episodes. So, stay tuned for that. This is Our Industrial Life.