The Drive for Industrial Decarbonization and Impacts on Site Selection and Economic Development

Site selection decisions for manufacturers have historically been guided by traditional factors such as access to skilled labor, logistics infrastructure, and competitively priced utilities. Today at SDG, we see a shift among our heavy industrial clients taking a broader view of energy inputs and prioritizing sites and regions that provide pathways for industrial decarbonization. This shift toward more environmentally conscious operations by our clients requires an evolution in the way we evaluate site priorities for manufacturers.

Site Selection/Economic Development Considerations

The industrial sector is responsible for an annual 1,410 million metric tons of energy-related carbon dioxide emissions or approximately 30% of total U.S. carbon dioxide emissions.[1] This is not lost on our manufacturing clientele (or their investors in the case of publicly traded companies). We are seeing first-hand how a site’s ability to provide decarbonization optionality is becoming a key must-factor in many capital-intensive manufacturing location decisions.

Pathways to industrial decarbonization vary by geographic region. Whether it is the presence of commercial-scale low-carbon intensity hydrogen, the availability of grid-level renewable electricity, or opportunities for carbon capture and underground storage (CCUS), here are a few of the high-level site selection trends we’re seeing today:

Prevalence of projects seeking end-of-life material as feedstock in lieu of virgin material.

Projects utilizing end-of-life materials as inputs in lieu of virgin feedstock create fewer emissions by reducing waste materials and, often, utilize a less energy-intensive process. Whether it’s projects led by the SDG or others, we expect this trend will continue as new technologies supporting the reuse of end-of-life materials continue to reach commercial scale.

Near and long-term availability of low carbon fuels and feedstock (AKA the Hydrogen “rainbow”)

It’s still early days for commercial scale low-carbon hydrogen (primarily blue and green[2]). As a result, we see an imbalance of supply compared to demand as industry rapidly seeks low-carbon hydrogen (both as a fuel source and feedstock) and producers race to bring new green and blue hydrogen projects online. Sites and regions near to proposed commercial-scale blue and green hydrogen projects (or with pipeline access to those projects) will be prized.

When it comes to the potential for CCUS, not all regions of the country are equal.

The decarbonization dreams for many manufactures are based upon the potential for permanent underground CO2 storage. However, there are both geologic and regulatory hurdles to overcome. In terms of geology, there are certain criteria that must be met in order to support a viable underground injection well for the permanent storage of CO2. Assuming the geology checks out, there is still the matter of regulatory approvals. Today only two federally permitted Class VI injection wells exist, both operated by Archer Daniels Midland Company in Illinois[3]. The EPA has a backlog of permit applications, and it is uncertain when they will begin granting new permits. States pursuing Class VI primacy (state-level jurisdiction to permit new Class VI injection wells) or those that have already been granted primacy (like North Dakota and Wyoming) appear to be most well-positioned to implement CCUS projects in the near-term.

Taking advantage of pathways for renewable (and carbon-neutral) electricity.

Perhaps the most prevalent trend among manufacturing projects we have observed over the last 5 years is a need for 100% renewable (or carbon-neutral) energy. There are varying perspectives on preferred pathways to renewable power. Whether that be in front of or behind-the-meter solutions, renewable energy credits, or renewable additionality through power purchase agreements.

The bottom line is that manufacturing projects today are more reliant than ever on electrification and are simultaneously moving away from combustible energy sources. Couple this with decarbonization goals, and the availability of competitively priced renewable power becomes a critical criterion.

We see sites that can provide multiple pathways to 100% competitively priced, renewable power as very well positioned to attract manufacturing projects in the years ahead.

Final Thoughts

To be sure, site selectors are on the frontlines of a broader industrial energy transition. Sites and communities that recognize this change and position themselves to best support industrial decarbonization will be well-positioned to compete for and win meaningful capital investment and job creation projects into the future.

[1] U.S. Energy Information Administration’s 2022 Annual Energy Outlook report, https://www.eia.gov/outlooks/aeo/

[2] https://www.weforum.org/agenda/2021/07/clean-energy-green-hydrogen/

[3] https://www.epa.gov/uic/class-vi-wells-permitted-epa

Mac Farr

Consultant

Mac Farr joined Strategic Development Group in 2017 as a project consultant and works closely with the Company’s senior team on activities related to incentive negotiation and site location analysis. In addition, he undertakes demographics and workforce analysis for SDG’s clients.

Prior to joining SDG, Mac worked in the commercial development industry and, in his time with a boutique development firm, led a diverse team to undertake all aspects of the development process, including project budgeting, site selection, pre-construction due diligence and construction management. He is a licensed real estate broker.

Mac earned a Bachelor of Business Administration from the Darla Moore School of Business at the University of South Carolina with a focus on Real Estate and Marketing. Mac lives in Columbia and when he is not working he enjoys exploring the mountains of western North Carolina.

Danielle Campolo

Senior Principal

As Strategic Development Group’s Senior Principal, Danielle Campolo works closely with clients to conduct site evaluation, site selection, and incentive negotiation projects for major US and multi-national corporations in automotive, aerospace, chemical, rubber, healthcare, energy, and nutraceutical industries. She enjoys working with corporate decision makers to select the optimal site for their business ventures, while considering operational, logistical, labor, and other business related costs.

From providing in-depth analysis related to specific business locational cost comparisons, to incentive negotiation strategies facilitating successful site location, Danielle collaborates with decision makers on projects of all sizes to maximize the value of economic benefits and to ensure incentives offered are on time and as stated.

Danielle has been instrumental in the successful completion of numerous site location projects for large global corporations, including JTEKT / Koyo Corporation, Nutramax Laboratories, LKQ Corporation, BP Chemical, and Bridgestone / Firestone. Her most successful projects are due, in large part, to her specialized service and attention at every level. And when it comes to public sector work, Danielle continues to offer strategic planning, goal setting, marketing studies, site evaluation and certification, best practices analysis, and organizational evaluations to numerous county, regional and state economic development programs across the country.

Danielle has a joint degree in Marketing and Small Business Management, as well as a Master’s Degree in Business Administration from the University of South Carolina’s Moore School of Business.

Jeannette Goldsmith

Vice President

Jeannette Goldsmith is Vice President of Strategic Development Group, where she specializes in site selection and incentive negotiations for clients worldwide. Jeannette’s background spans more than 20 years in site location consulting, incentive negotiations, and economic development consulting with McCallum Sweeney and then with her own company, Goldsmith Strategy. Her specific experience includes a heavy focus on manufacturing (specifically, aerospace, logistics, advanced materials and automotive sectors), as well as office sectors. Recent clients include Suntory, Boeing, Nissan North America, Suncoke Energy and Vought Aircraft. Among Jeannette’s most notable projects, are Nissan North America’s headquarter relocation from Los Angeles to Nashville, the Boeing 7E7 Final Assembly siting project and the Vought Aircraft / Alenia Aeronautica 7E7 supplier site project. Her most recent economic development assignments include evaluating automotive assembly sites for NCRR and developing and implementing a site certification program for Mississippi Power Company. In addition, she recently completed an economic development strategic plan for Transylvania County, NC and Citrus County, FL. Jeannette has designed several site certification programs, including the South Carolina Department of Commerce Certified Site Program, the Mississippi Power Certified Site Program and the site evaluation program for Duke Energy. Jeannette achieved a Masters of Public Policy from Duke University and earned her Bachelor of Arts degree in Government from Smith College. She was honored with the Graduate Student of the Year Award from the Terry Sanford Institute in 1995 and is a proud member of the Site Selectors Guild, South Carolina Economic Developers Association, as well as the International Economic Development Council.

Mark Williams

President

As Founder and President of Strategic Development Group, Mark Williams specializes in manufacturing and office facility site selection and negotiation for mid- to large-size US and multinational corporations in automotive, distribution, life science, steel and chemical sectors. From strategic planning to marketing studies, Mark also provides a variety of economic development consulting services to state, regional and local economic development organizations across the US.

Prior to founding Strategic Development Group, Mark served as Chief Development Officer for the South Carolina Department of Commerce, where he directed South Carolina’s domestic and global business recruitment activities, including the operation of Commerce’s international offices in Frankfurt and Tokyo. He has served as an advisor to US governors, mayors, legislators and directors of state development agencies in matters related to business retention, strategic planning and target marketing initiatives.

Nationally recognized as an expert economic developer, Mark has earned the professional designations of Certified Economic Developer (CED) and Certified Economic Development Finance Professional (EDFP). He chaired the former American Economic Development Council’s Certification Board, which certified professional economic developers in the US and Canada, and was President of the South Carolina Economic Developers Association.

Mark is currently an active member and Chairman of the Site Selectors Guild, a professional association comprised of the world’s most respected site selection consultants, and is a frequent US and international speaker on site selection trends. Other recognitions include being named “One of the Top 10 Site Consultants that know the South Best” and “One of the Top 3 Site Consultants in South Carolina” by Southern Business and Development magazine. Mark has also received the Order of the Palmetto, the highest honor that can be given to a South Carolina citizen, for his success in business recruiting.