Digitisation has become increasingly valuable for industrial gas. With relatively little risk, advanced technologies can optimise key segments of operations for companies involved in the sector.
According to research by McKinsey, about half of leaders of industrial gas companies surveyed have expressed interest in developments in Industry 4.0.
These sentiments have been echoed for decentralisation, as evidenced by the proliferation of interest by companies in ensuring the constant availability and security of supply in an increasingly volatile energy landscape.
Joined by guests Matt Christensen, President at Distributor Data Solutions and Christopher Carson, Founder and Principal Director of Carbonic Solutions, gasworld’s latest webinar, Industrial Gases: Driving on in Digitisation & Diversification aims to explore both the nascent technologies surrounding digtitisation and the latest attempts to shift towards a decentralised energy supply chain.
E-commerce for industrial gases and its challenges
Discussing the potential for e-commerce in the industrial gas business, Christensen delved into inherent challenges and how to overcome them.
“The potential of e-commerce in this industry is huge,” he said. “I think in terms of efficiency gains, customer retention, overall customer experience, people want more of a digital experience. We’re pushing that in this industry and we’re starting to see a lot of success.”
“We want to give customers a method to shop the way they want.”
Admitting that the company plays a small role in digitisation, Christensen revealed that the company handles the data and the exchange of data from manufacturers to distributors.
Giving advice to the e-commerce industry, he said, “Get started. Those who have started are seeing great success.”
“It’s going to take time, good people, and money, I think the people and time is a challenge right now for every type of company.”
Long overdue?
E-commerce has been a long time coming for industrial gases, but is it a slow burn or is it a misconception?
“Probably both, honestly,” said Christensen. “It always seems slow to us but we’re very impatient.”
Although the company is the data provider, it also works with partners such as Computers Unlimited and ES Tech Group. By working together, he believes that companies can share best practices and accelerate e-commerce.
“Typically it’s one or two distributors working together or everyone’s competing, but this is very different industry where they’re working together. They’re sharing ideas.”
Behind the scenes, distributors are seeing a lot of success. According to Christensen, DDS has a $20m distributor in the Midwest US on track to do 50% of their business online in the first year, a huge percentage of its business.
Speaking about companies that are moving to online, he said “Some companies are absolutely killing it, but it’s been a little slow starting.”
Given the current state of technology, Christensen explained that companies starting out now or even a couple of years ago are some of the most successful.
Due to the lack of technological innovation present eight to ten years ago, older companies are having to change what they’re doing, providing newcomers with a potential head-start on established industry.
Accelerated by the Covid-19 pandemic
According to Christensen, effects of the pandemic has advanced the e-commerce industry by five years.
“We’re hearing that some companies predict that it’s pushed the industry and e-commerce ahead by five years.”
“The efficiencies that are being gained with technology and e-commerce… it’s rapidly expanding.”
Decentralisation and CO2 shortages
Over the past few months, the US market has been afflicted by ongoing CO2 shortages caused mainly by gas contamination. But how can decentralisation help in such a volatile area of industry?
In addition to his work as a CO2 consulting expert with Carbonic Solutions, Christopher Carson is also Managing Director of CO2 startup BioCarbonics.
Having established a new supply chain model for the UK CO2 industry, BioCarbonics focuses on security of supply through developing a network of multiple small CO2 sources instead of one or two large, complex plants.
“The message that I’ve been trying to deliver is that the traditional large CO2 sources are drying up,” revealed Carson. “So when we look at that need to really understand the dynamics, the drive for decarbonisation and what that means to large CO2 sources and the need to get that it out of the atmosphere.”
Admitting that the model used within industry is ‘failing us’, Carson revealed that the first shocks started in 2006, getting gradually worse since then. At this point in time, shortages are happening three or four times a year across the UK, the US and Mexico, which has struggled for a stable CO2 supply.
“It’s spreading, it’s moving across the globe to other regions.”
“We need to realise that it’s the way things are structured and the trends going on in the world today are causing that and it’s not going to go away.”
To overcome these challenges, he proposes the understanding of better models, such as building a network of smaller sources so that industry is not so dependent on one or two large sources to serve the market.
Future shortages by avoiding decentralisation?
By avoiding decentralisation, Carson admitted that the industry is leaving itself in a ‘very vulnerable’ situation.
With the increase in carbon capture and storage (CCS) projects, companies are targeting large volumes of CO2 that also serve the industry, having been cleaned up, liquefied and supplied to users.
Referring to the companies looking to decarbonise their processes, Carson explained that those companies are getting a lot of pressure from governments and the customer base to lower their carbon footprint.
“When they see an opportunity to go underground, even though it can serve our market, they see an opportunity to get the government off their back and be able to market their product as a more green product.”
These trends, along with carbon offsetting and carbon credits are unlikely to stop, forcing industry to develop smaller altnerative sources and new networks.
UK CO2 shortage
Earlier this week it was announced that the Billingham ammonia plant is set to temporarily close due to rising natural gas prices. This closure has caused widespread concerns over potential CO2 shortages in the UK.
At the same time, Yara – the largest ammonia producer in Europe – revealed that it will lower its capacity to 35%, heavily curtailing its production of ammonia and significantly impacting CO2 production.
“On top of that, there’s an unexpected maintenance stoppage of the large bioethanol plant in the Tesside area at Avensis.”
“We talked about the perfect storm several years, ago this is the perfect storm for the UK.”
Stating that he’s starting to receive more and more telephone calls from customers looking for alternative CO2 supplies, Carson ominously revealed that he thinks this particular shortage is going be a tough one.
“I’m trying to get my head around it as we speak, but this looks big and it looks serious for the UK.”
Overcoming these challenges
Despite the doom and gloom of the current market, more companies are starting to explore diversification of supply by expressing interesting in CO2 from biogas sources, something that companies have typically been reluctant to do due to purity concerns.
“We’ve got a good customer base with buyers in the UK that have already done that and we’ve worked with them on a regular basis with plan audits to make sure that we’re conducting ourselves and have the systems in place from a quality and food safety perspective.”
The Billingham source has the capacity to produce between 250,000 and 300,000 tonnes of CO2 per year, creating an opportunity for companies to replace that capacity with smaller, alternative sources.
Emphasising that this isn’t a gold rush, Carson advised companies to focus on developing sources and building long term.