Energy Strategy

Most of our energy use is for powering motors in our process equipment or for heating used in those processes. The split between the two uses of energy is (2019 in brackets) 58% (55%) for electrical energy used for process power and 42% (45%) for fuels used for generating heat. Most of the heat energy is used during dyeing processes, along with a substantial part of the electrical energy, which therefore makes this our most energy intensive process. Spinning and twisting, which are very significant users of electrical energy account for most of the remainder, with finishing winding and yarn coating processes and ancillary activities such as warehouses and offices making up the total.

Our targets for the energy pillar are two-fold; to reduce energy usage intensity by 7% by 2022 against our 2018 baseline (compared to a 22% reduction in the six years up to 2018), and to shift the sources of our energy much more towards renewables by 2022. As part of our development of Science Based Targets we will be completing a roadmap for the conversion of our energy to renewable sources. The situation varies from country to country and is also changing rapidly. We are proposing to increase the use of biofuels in our operations and to enter more long-term Power Purchase Agreements (PPAs) for onsite and offsite renewable electricity generation projects.

During 2020 we continued to work on a large number of energy reduction projects, but the impact of the pandemic on our operations did mean that some projects were delayed and had to be postponed to 2021. Up to 2020 our energy usage intensity dropped by 3% against 2018 on a like for like basis, having restated 2018 to remove Crafts NA and to incorporate Gotex, Patrick Yarns and Pharr HP.

Sourcing renewable energy where possible

Our target is to increase our use of renewable energy mainly through projects with suppliers where we contract with them the creation of new renewable generation capacity, through long term purchase commitments. In this way we are able to ensure that the renewable energy we are using is additional new capacity and hence actively contributes to de-carbonising energy supplies. The renewable energy market is developing very rapidly at the moment, and there is some variation in the quality of suppliers, so it is important that we do a lot of due diligence on the partners that we are working with, and that our contractual terms ensure that we have any rights to Renewable Energy Certificates or other equivalent attributes.

7% Reduction In energy intensity (Kwh/Kilo) by 2022

Having an Energy Management System (EnMS) in place is the basic requirement for taking a structured approach to achieving energy efficiencies. We have a programme to progressively implement an EnMS aligned to ISO 50001 in all of our key manufacturing sites over the next 3 years. This programme is based on the work that we have already undertaken in our Romanian plant, which has been developing a comprehensive system over the last 30 months, with considerable success. Through the EnMS and with more meters strategically located in plants, we will identify all the significant energy users in our plants and develop the options for optimising energy use in those processes. At the same time we are continuing to implement the opportunities that were identified from the energy audits that were done in 2018 and 2019. These energy audits were useful in highlighting some opportunities, but are a snapshot assessment and are not as effective as having continuous management of actual energy demands. Our plans to run pilot trials in 2020 in some key sites of a very granular energy metering system that allows for dynamic energy management were delayed due to the pandemic but this project is proceeding in 2021.

Less energy and more efficiency

In 2020, we used 676 million kWh of energy (electricity and fossil fuels) to manufacture our products and run our operations. Due to the drop in production caused by the pandemic this is not comparable with previous years. Our energy intensity (the use per unit of production) has reduced to 8.9 kWh per kg of production, (2018: 9.2 kWh per kg). This is a reduction of over 3% vs 2018.

As for water, we have restated 2018 and 2019 to provide like-for-like comparison with 2020. Full historical data is shown in the data table.

Over the last twelve months we have continued to invest in new technology and processes, and stepped up our focus on energy efficiency, finding ways to improve our productivity whilst reducing our energy use. Over the last 3 years we have undertaken detailed energy audits in most of our key sites. At each of those sites we are have a programme of energy reduction projects, which are being implemented although with some delays caused by the pandemic. These include energy saving opportunities ranging from increasing metering, to equipment replacement to optimise energy savings, to new waste heat recovery processes.

Investment in renewable energy

Over the past year, in line with our intention to be using renewable energy whenever that is possible, we have continued to both review the opportunities to install renewable energy generation facilities on and off our sites and purchase those Renewable Energy Certificates (RECs).

Just under a third of the energy we use comes from renewable energy sources. Our assessment has shown that we could significantly increase this, and we are evaluating potential targets over the coming months as part of our work on developing Science Based Targets.

We have several rooftop solar arrays now operating on Coats sites and most of these are through long term PPA arrangements. We are finding this to be a very effective way to establish new renewable energy capacity rapidly and are evaluating potential partners in a number of countries, though the energy intensity of our operations means that rooftop arrays will only supply a small proportion of our total energy needs and we therefore have to look at offsite sources.

Reducing our Greenhouse Gas emissions

As a significant user of energy, climate change and our emissions of greenhouse gases (GHGs) are a key concern for us. In 2020, the total carbon footprint of our operations (Scopes 1 and 2) was 232 thousand tonnes. Because of the reduction of industrial activity caused by the pandemic this is not a comparable figure compared to previous years.

Our emissions intensity, measured in kilograms per kilogram of production, is down by 5% compared to 2018; 3.1 kg CO2e per kg compared to 3.2 in 2018. Again, we have restated 2018 to make for a like-for-like comparison.

These calculations are done on a location basis. Our detailed methodology is as follows: We take Scope 1 energy used on each of our sites and for each type of energy source (Gas, Oil, Biomass, LPG, Diesel and Petrol) on that site we convert the kWh of energy used into CO2e using conversion factors supplied each year by the UK Department for Environment, Farming and Rural Affairs (DEFRA). The emissions for each energy source are then summed by site for each site to produce the full Scope 1 emissions from that site. Most of our Scope 2 energy is in the form of electricity sourced from third party suppliers and for this we take the kWh of electricity consumed and apply the location-based country conversion factor as supplied by the International Energy Authority (IEA) each year to convert it into CO2e. In a small number of sites we buy Scope 2 energy in the form of steam for process heating and we convert this to Scope 2 emissions using the same conversion factors as we use for the Scope 1 conversion, depending on the energy source used by our supplier. This methodology gives us the Scopes 1 & 2 emissions by site. We then consolidate this by adding all the sites together. For intensity calculations we use production tonnes of yarns and threads produced in our final process before shipment to customers. While we do also process zips, we have excluded zip despatch volumes from our intensity figures as the significant amount of metal in finished zips distorts the tonnage figures. This exclusion means that our intensity figures are overstated but the impact is minor as zips represent well under 10% of our emissions. Our operational scope for our emissions calculations (and for other data reported for sustainability purposes) includes all Coats operated manufacturing, warehousing and office locations and includes joint venture activities.

We have been progressively eliminating the use of coal in our factories. In 2011 coal accounted for 3% of our direct energy use and for 2019 overall this had been reduced to 0.4%, with coal use being terminated by the end of the year. We used no coal in our operations during 2020.

Optimising Energy Use

Compressed air is used in many of our processes and in many plants we have a bank of compressors operating to provide sufficient air pressure. In our Marion, North Carolina plant, we have 7 compressors that have historically run continuously with the air pressure varying between 100 and 110 psi depending on demand. During 2020 we developed a control system linked up to a demand expander which means that the compressors now start up in sequence to maintain a constant pressure of 95 psi, reacting to the fluctuations of demand at all times. About 90% of the time at least two compressors are now not required to run and sometimes we have 3 or 4 idle. This has allowed us to reduce the energy consumption in compressed air supply by 30% compared to the previous system. The modest cost in the demand expander and control system will be recovered in well under a year. We will be looking to extend this practice across other units in 2021.

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¹Where possible 2018 and 2019 are restated to include HP Pharr which was purchased in January 2020. This is to provide a like for like comparison.

For more information on our historical performance download our full data disclosure.