How BMW is embracing sustainable transportation strategies
You might think of BMW as the James Bond car, but these days, the maker of the world's "ultimate driving machine" is driving in a new direction — sustainability.
On my recent trip to Europe, I had the chance to visit BMW in Munich. The leader in luxury automotive boasts a headquarters that includes a BMW Museum, which spans the early days of the automobile up to the next-gen topics like autonomous driving; a high-tech manufacturing plant, smack-dab in the middle of one of the world’s most expensive cities; and BMW Welt, a giant showroom where BMW lovers can take delivery of new models.
It's clear that like all automakers, the company is currently sorting through the challenges that the industry is facing, from changing perceptions of car ownership among millennials to electrification to autonomous driving.
BMW got an early start meeting these tests. It has been an early leader in operational sustainability, seeing it as a foundational way to cut costs and to be a category leader. It also got an early start on electric cars with the i3. Since then, Tesla and other many other automakers have raced ahead on electric cars. The company now feels that battery technology is strong enough to and is poised to accelerate into the electric era, with 12 all-electric models planned by 2025.
I sat down with Jury Witschnig, BMW’s head of sustainability strategy product and production, to talk about what renewable energy, the circular economy and an all-electric rollout mean to the German luxury car giant.
Pete May: Let’s talk about BMW sustainability — past, present and future. First of all, on the operational front, BMW set an objective of 100 percent clean energy by 2020. How has it been working on this goal, and what have you learned along the way?
Jury Witschnig: The target of 2020 was something we had been using internally for the past nine years. So, a long time before we communicated about this target, we were internally discussing why we should do this, and how we'll do that. And for us, it was very important first to understand: why cleaner energy?
If you look at the whole lifecycle of a product, you have large emissions from the product while using this product, but also you have emissions by producing the product. And therefore, we thought, "What can we do in our own activities and our own production?"
And the first thing, of course, is energy efficiency — or producing fewer CO2 emissions. And secondly, it’s asking ourselves, where is the energy coming from? Are we producing energy on your own or buying renewable energy?
In 2011, we were at 15 percent of renewable use in our production at BMW worldwide. Today we have 80 percent, quite a progression. And therefore, we see a path to 100 percent in 2020.
May: Could you define renewables? What are you putting in that bucket worldwide?
Witschnig: That's very important because internationally, we have very different definitions of "renewables." First, when we talk about energy, we talk about energy sources for electricity and heat. And when we talk about renewable energy, 100 percent, we are talking about purchasing 100 percent of the electricity we buy from renewable sources. This could be from a windmill on our own plant, but it could also be, for example, from the market with the quality of green renewable electricity.
May: Including RECs?
Witschnig: For us, we always need a guarantee of origin. It could be a REC. It depends on the market. In China there are different systems, as in Europe or the United States. And when we talk about renewable, we mean wind, water, solar panels. We talk about methane gas, meaning biomethane gas we transform into electricity, or landfill gas, as it’s commonly known in the United States. But there must be a guarantee of origin so we know it’s really renewable energy.
May: Now that you've nearly completed the 100 percent renewable energy target, what was different? What surprised you in the journey?
Witschnig: Our first objective was really to say, "Yes, renewable energy has the potential to be cheaper than fossil energy in its production." Then the idea really was, yes, "BMW invests in producing renewable energy itself." We used our own produced energy. So first to save money and then to reduce, of course, CO2 emissions.
Secondly, we said "OK, this is a large investment, and it will be difficult for us to get this investment done internally. Where should this money come from?" Whatever we could do onsite, on our plants, we tried to do, because there we saw a business case for onsite renewables. But onsite energy production is often not enough energy — it depends on the plant. There’s maybe 10-20 percent you can produce onsite for your own plant. But there's no BMW plant where it can produce onsite 100 percent of renewable electricity for use. We always needed to buy something. And thus the question: purchase or invest?
At the end of the day, we had an internal discussion to say, "Yes, investment is good. But first of all, the return on investment is higher for our products, so let's do the investment for energy from experts outside of BMW and work with them." So, we worked together with utilities to make contracts with them and buy from their investments on renewable energy.
May: BMW was quite early and aggressive in setting carbon emission targets and energy targets within production. Why were you setting those metrics so early?
Witschnig: We have a long history in setting sustainability targets because we saw it as an economical benefit, not just a competitive point against competitors. We said we should do this as a leader, motivating others, other auto OEMS, and of course other suppliers to do the same.
We had a long discussion with our suppliers and many of them have also now committed to 100 percent renewable energy. They saw that we could do it, as a large industrial company, so they could also. So, it's more like a lighthouse project for others.
[Editor's note: Pete May is president and co-founder of GreenBiz Group. This interview is part one of two of GreenBiz's conversation with Jury Witschnig about BMW's sustainability strategy. Watch out for the next one Oct. 4.]