Production and Logistics

By 2018, the Volkswagen Group is aiming to reduce levels of the five key environmental indicators – energy and water consumption, waste for disposal, and CO2 and VOC emissions – per vehicle manufactured by 25%, compared with the 2010 baseline. This target applies to all the Group’s production locations for passenger cars and light commercial vehicles, and builds on the general production process requirements defined in the Group Environmental Principles. We have already made considerable progress towards reducing all five key indicators.

In terms of environmental impact reduction per unit of production (UEP), we were already more than half-way by the end of 2015, having cut production-related environmental impacts by 21.5%. The interim status as at the end of 2015 compared with the 2010 baseline breaks down as follows (2014 figures in brackets):

  • specific energy consumption: –16.3 % (–18.5 %)
  • specific CO2 emissions: –19.1% (–23.2%)
  • specific VOC emissions: –32.5 % (–26.1%)
  • specific water consumption: –8.9% (–6.9%)
  • specific waste for disposal: –30.8% (–21.7%)

The reduction in environmental impacts across the Group is the result of specific environmental programs by the individual brands, including:

  • Think Blue. Factory. – Volkswagen Passenger Cars and Volkswagen Commercial Vehicles
  • ultra-strategy – Audi
  • Green Factory – ŠKODA
  • ECOMOTIVE Factory – SEAT
  • Environmental Factory – Bentley
  • resource-efficient production – Porsche
  • Blue Rating – Scania
  • climate strategy – MAN

We encourage close integration and communication between the brands worldwide in order to create synergies, for example with our Environment Task Force. We record and catalog environmental measures in an IT system and make these available for the Group-wide sharing of best practices.

In the reporting period, more than 1,900 implemented measures relating to energy and the environment were documented in this system, all serving to improve passenger car and light commercial vehicle production processes. As well as being worthwhile from an environmental viewpoint, they also make financial sense, resulting in annual savings of around €65.9 million. These measures are helping us reduce the five key environmental indicators, although additional negative effects meant that the indicators for energy consumption and CO2 emissions did not change significantly.

Although 2015 was the world’s warmest year since climate records began, adverse weather conditions resulted in increased demand for heating. Combined with a drop in production levels and the associated reduction of capacity utilization in our production plants, our energy consumption per vehicle increased. Weather conditions also caused a deterioration in COemission factors associated with the supply of energy to Volkswagen AG’s production locations in Germany.

Energy Consumption and CO2 Emissions

In the reporting period, energy consumption per vehicle rose from 2,062 kilowatt hours in 2014 to 2,108 kilowatt hours in 2015. Absolute volumes also increased due to the larger number of vehicles produced. We fell short of our target by –16.3% (baseline year 2010).

CO2 emissions (Scope 1 and 2) per vehicle rose from 849 kg in 2014 to 886 kg in 2015. Here too, absolute volumes increased due to the larger number of vehicles produced. We fell short of our target by –19.1% (baseline year 2010).

Our strategy for meeting our targets includes improving energy efficiency, replacing coal with gas for our in-house energy production, and purchasing electricity from renewable sources. We now meet around one-third of our global electricity requirements from renewables.

Since 2011, VW Kraftwerk GmbH has been investing in the ongoing development of renewables and the construction of highly efficient combined heat and power (CHP) plants driven by natural gas. In the period to 2015, the company invested around €26 million in renewables such as wind farms and photovoltaic power plants. As part of our fuel conversion strategy, VW Kraftwerk GmbH also invested some €15 million in a cogeneration plant in Braunschweig and some €65 million in a gas and steam turbine (combined cycle) plant in Kassel. Over the next few years, VW Kraftwerk GmbH is planning to invest in a new combined cycle plant in Wolfsburg and in the further development of renewables.

Picture: MAN assembly plant in Pinetown, South Africa
MAN assembly plant in Pinetown, South Africa

Examples of Best Practice

In 2015, two of our sites succeeded in making their production completely carbon-neutral or climate-neutral, thereby contributing to local implementation of the United Nations’ Sustainable Development Goals (SDGs).

  • Lamborghini: New combined cooling, heat and power (CCHP) and district heating plants, coupled with a 17,000 m2 photovoltaic system on the roof of the central production shop at the Sant’Agata site in Italy, were the main factors contributing the brand’s certification as a carbon-neutral manufacturer. Lamborghini is the first company in the world to be certified by DNV GL (Det Norske Veritas Germanischer Lloyd) under their “Carbon Neutrality” program. DNV GL is one of the world’s leading service-providers in the classification, verification and management of environmental risks. Annual CO2 emissions at the Lamborghini site have been cut by around 820 t. By the end of 2017, the CCHP plant will run on biogas, thereby reducing CO2 emissions still further to just 5,600 t per annum.
  • MAN: In Pinetown, South Africa, we have installed a 6,300 m2 photovoltaic system, making it the MAN brand’s first climate-neutral facility and South Africa’s first carbon-neutral production site. With over 300 days of sun a year, we are able to generate 810 MWh and thus not only cover the plant’s full electricity needs, but also feed the surplus power into the public grid.

A number of other examples illustrate our success in saving energy and reducing CO2 emissions:

  • In 2015, MAN set up a heat recovery system at the ship engine test facility at its site in Frederikshavn, Denmark. In the reporting period, we recovered over 3,160 MWh of thermal energy which was supplied to the municipal district heating system, lowering our CO2 emissions by 835 t.
  • The natural gas-driven combined heat and power (CHP) plant that came on stream in Zwickau in 2014 is also helping reduce our greenhouse gas emissions. In 2015, it generated 36% of the site’s energy requirements. By generating our own energy, we reduced CO2 emissions by around 19,100 t and saved roughly €8.9 million.
  • VW: We use energy value stream analysis to identify suitable measures for reducing our energy KPI. This technique was trialed at our Bratislava location and others in 2014, reducing annual energy consumption by 12,916 MWh with annual savings of more than €900,000. This methodology has since been rolled out to other sites.
  • VW: One important lever for reducing energy consumption is on-demand operation of all facilities. At our Hanover plant, for example, our decision to switch two paint dryers to load-dependent operation reduced our annual energy consumption by around 8,000 MWh, equivalent to the annual energy consumption of 470 average households. This has resulted in annual savings of around €200,000 and 1,700 t of CO2.
Picture: Volkswagen AG plant in Bratislava, Slovakia
Volkswagen AG plant in Bratislava, Slovakia

Blue-Building

In our quest for improved environmental performance, the Volkswagen Group does not limit its efforts to the internal workings of our production facilities. We also keep a close eye on our buildings and real estate. With our Blue Building standard and internal “Blue Building” award for energy-efficient, sustainable construction, we aim to reduce CO2 emissions from our properties while ensuring that they are built and continue to operate sustainably. We aim to significantly undercut statutory energy consumption thresholds. The first building to be constructed to these standards was our Logistics Optimization Center in Harvesse near Braunschweig, which was a finalist in the Logix Awards 2015 due to its sustainable construction and fittings.

Furthermore, at the end of 2015, one of the most sustainable car showrooms to wear the Volkswagen brand was completed and certified as a “Blue Building” in Hanover. In the course of this project, the former building was demolished, reprocessed on site and then reused as part of the foundations for the new building and its outdoor facilities. Recycled waste glass was used as insulation underneath the building. All lighting in the building is provided by LEDs, while heat and power are supplied by a photovoltaic system and a CHP unit (manufactured by Lichtblick). This cuts CO2 emissions by up to 58 t per year.

A ventilation and cooling system delivers a steady supply of fresh air, improving the overall quality of life within the building as well as the wellbeing of employees. At night, special louvered windows are used to cool down the showroom by purely natural means.

Material Flow Management

Volkswagen uses material flow management as a tool for analyzing and evaluating material flows in production and the associated environmental impacts.

Material flows are resources and energy which flow within specified system limits and can be allocated to production processes by originator. Material flow analysis allows us to depict processes more transparently, making it easier to recommend actions for reducing environmental impacts and cutting production costs.

The informative value of a material flow analysis depends on the data available. Incoming and outgoing material flows in processes must be measured both qualitatively and quantitatively, by reference to both internal environmental information systems and external databases. Any missing data is obtained from in-process measurements.

Material flow analyses are useful to a variety of players. They can assist with the planning of new, more resource-efficient plants, or act as decision-making aids for the implementation of measures and sensitization of employees to the resource-efficient handling of process materials.

Emissions Trading

The procedure for allocating CO2 emissions certificates under the European Union’s Emissions Trading System changed fundamentally in 2013, at the start of the third trading period (2013–2020). As of 2013, emissions allowances for electricity providers are auctioned. For the manufacturing industry and certain types of power plant (e.g. CHP plants), a proportion of the certificates were initially allocated free of charge. However, over the course of the trading period, the number of such certificates will steadily decline; providers requiring additional certificates must purchase them at auction.

In certain industry (sub)sectors, there is a risk that production will be transferred to countries outside Europe now that the amended provisions governing emissions trading have come into force (a phenomenon known as “carbon leakage”). Based on pan-EU benchmarks, a set number of certificates will be allocated free of charge over the 2013-2020 trading period. The automotive industry was included in the new carbon leakage list that came into effect in 2015.

A total of 30 Volkswagen Group locations are affected by the European Emissions Trading System. For 2015, 1,226,187 emissions certificates were allocated to the Volkswagen Group free of charge (122,295 more than in the previous year).

As well as the European Union, other countries in which the Volkswagen Group has production sites are also considering the introduction of emissions trading. Seven pilot projects have been launched in China, for example, although they have not yet affected the Volkswagen Group. The Chinese government plans to expand these pilot projects to form a national emissions trading system.

Solvents

In 2015, VOC emissions per vehicle were reduced from 3.04 kg in 2014 to 2.79 kg. In absolute terms, emission levels fell despite the larger number of vehicles produced and the associated increase in paintshop work. We fell short of our target by –32.5% (compared with the 2010 baseline).

Examples of Best Practice

  • A new application technology has been introduced at our paintshop in Martorell, Spain, and should help save materials. The new technology will enable us to reduce solvent emissions by 80 g per vehicle and achieve annual cost savings of €951,000.

Water

In 2015, water consumption per vehicle was reduced from 4.27 3 in 2014 to 4.14 m3. Despite the growing number of vehicles produced, freshwater consumption per vehicle has steadily fallen since 2010 thanks to a raft of recycling measures and the introduction of manufacturing techniques that use minimal water

Alongside climate protection, conserving our planet’s freshwater reserves is one of the pivotal requirements for preserving the basic necessities of life. Water resources are already scarce in many regions of the world, and access to clean drinking water is an increasingly pressing problem for large sections of the global population. This prompted us to adopt water as a focus topic for 2014. Within our sphere of influence, we also support the United Nations’ Sustainable Development Goals (SDGs) adopted in September 2015. 

Drawing on the comprehensive data collated in our life cycle assessments, we published a pioneering analysis of our water footprint in 2013, in which we identified those processes that consume the most water over the life cycle of a representative selection of Volkswagen-branded models. In 2015, we worked with the Technical University of Berlin to further refine the in-house methodology used to calculate our water footprint.

The water footprint analysis showed that the use phase plays only a minor role. Much of the water consumed is due to the fuel production process. Another significant water consumer is the supply chain for the extraction or creation of raw materials, over which we have no direct influence. Consequently, we are focusing our attention on areas where we can directly influence water consumption: our production sites. We are also making efforts to continuously reduce our water consumption by further improving our vehicles’ fuel consumption and using more secondary materials, such as recycled materials, in production. The review carried out in 2014 indicated that 58% of our entire freshwater consumption – approximately 24 million m3 – is attributable to sites located in regions where groundwater resources are at risk, especially our plants in Mexico, Spain, South Africa, India and China. In these regions in particular, we have made minimizing water use an even higher priority. We adapt our water use to the varying regional availability of water resources worldwide. At the same time, we support a wide range of projects in which the protection or development of water resources is a key or even the primary objective. The same approach also characterizes the water management strategy adopted by the Corporate Environmental & Energy Steering Group in 2014, which defines four action areas: 

  • Safe and reliable water supply and sewerage. We aim to protect groundwater reserves against pollution, and to avoid production downtimes caused by water shortages.
  • Efficient water use throughout the life cycle. By using water as economically and efficiently as possible during the production process, and by recycling as much water as possible, we aim to reduce total water consumption to the great possible extent.
  • Social and environmental initiatives. Particularly through our biodiversity projects, we help protect water resources and promote public environmental awareness.
  • Transparency. We communicate our goals and activities to the public. In 2013 Volkswagen became the world’s first automaker to commit to the United Nations CEO Water Mandate. Also, since 2011, we have been providing extensive disclosure of our water management practices and progress, by completing the very detailed CDP water management questionnaire. In 2015, we withdrew our responses in the light of the diesel issue.

2016 – "Year of Water" in China

As part of the Group Environmental Strategy, 2016 has been designated the “Year of Water” in China. Given the high production volume in China, the country’s share of Group-wide water consumption is comparatively high. Teams of experts at all Volkswagen production sites in China will analyze and implement water management optimization measures in order to save even more water per vehicle produced. We have already achieved water savings of around 14.1% in China between 2010 and 2015.

Examples of Best Practice

  • We use recycling facilities at some of the Group’s locations. These use a membrane process to prepare biologically precleaned waste water for reuse, thereby reducing freshwater consumption levels. In 2015, we brought a recycling facility on stream at our Salzgitter plant. This facility processes half the plant’s wastewater into recycled water and uses it to feed the central cooling tower. As a result of this measure, we save around 75,000 m3 of freshwater annually, equivalent to around a quarter of the plant’s needs.
  •  Our Uitenhage plant in South Africa has managed to reduce its water consumption per vehicle by more than 50% (from 6.2 to 2.7 m³/vehicle). In 2015, this achievement so impressed the jury of the annual Greening the Future Awards competition that the plant won the national prize in the “Water Efficiency & Management” category.

In total, the Group saved 3,265,221 m³ of freshwater in 2015 compared with the previous year, thanks to a raft of individual measures and optimizations. However, factors beyond our control, such as fluctuating weather conditions, also influence freshwater consumption. With water prices ranging from around €0.3 – €1.0 per m³, this translates into water supply cost savings of approximately €1.4 million in the reporting period.

In order to permanently implement water-saving processes within the Group, a new internal White Paper defines key requirements for the various processes in the production sequence.

Waste

In 2015, waste for disposal per vehicle was reduced from 17.0 kg in 2014 to 16.1 kg. We fell short of our target by -30.8% (compared with baseline year 2010).

In line with our Environmental Strategy, our aim is to use materials and products as resource-efficiently as possible, and reduce the volume of waste per unit manufactured.

In order to achieve this goal, we have adopted a three-stage waste strategy:

  1. Prioritizing waste recycling and reducing waste for disposal
  2. Reducing waste volumes via waste treatment
  3.  Reducing waste volumes by optimizing production and ancillary processes.

Wherever possible, we use standardized software to optimize our waste management in all divisions. These systems are already used to control waste management processes in all German factories run by the Volkswagen, Volkswagen Commercial Vehicles, Porsche, Audi and MAN brands, and for state-monitored disposal of hazardous waste in particular (Electronic Government). The aim is to roll out these systems in Europe and thereafter across regions around the world ŠKODA plants in the Czech Republic and Volkswagen in Slovakia also use waste management systems, and their implementation in the VW and SEAT plants in Spain, Portugal and Poland was at the pre-planning stage in 2015.

Production facilities in Spain and the new Volkswagen Commercial Vehicles factory in Września, Poland will be the first to be equipped with waste management systems in 2016. In order to review our waste management processes and recycling, in 2015 we introduced audits of waste disposal processes as a key control mechanism at many of our sites. This reflects our duty of care to ensure controlled, environmentally friendly waste disposal and avoid the improper handling of waste and resulting environmental contamination by our contractual partners.

In Germany, a standardized procedure for these audits was developed in collaboration with other OEMs and major suppliers, and in 2015, audits were carried out across a number of sites and brands. In order to set a common benchmark for the quality of disposal services that is not limited to our German sites, we have also trained potential auditors at a number of eastern European sites, giving them the skills to carry out quality-assured audits. Based on these positive experiences, other sites will soon follow their lead.
 
Optimal systems are in place for the recycling of production waste, packaging materials and waste from workshops and the Technical Development department. For recyclable production waste with a resale value, such as paper, wood and metal, our Purchasing department has rolled out a Group-wide system to improve the efficiency of the entire process. The focus here is not only on revenue generation, but also on optimized preparation of the waste for efficient transportation.

Examples of Best Practice

  • New smelter in Hanover: Modernizing part of the smelter at Hanover site is enabling us to save around €3 million in annual energy and material costs, and reduce CO2 emissions by around 7,000 t per year. Reduced oxide formation will reduce our use of materials by 70%, hence also the amount of waste for recycling.
  • At our Sao José dos Pinhais/Curitiba site in Brazil, we recycle sewage sludge. Combined with other materials, the sludge is used both as a fuel in the furnaces of a cement factory, and added to the base material in cement production. This has reduced waste for disposal by 70%.
  • Until 2015, almost all forklift trucks at our Chattanooga site in the USA ran on lead-acid batteries. In 162 of the trucks, we will be replacing these battery systems with fuel-cell drives, aiming to reduce lead by 159,732 kg, sulphuric acid by 17,496 kg, CO2 emissions by 968 t, and forklift truck maintenance costs – as well as saving space.
  • In Pamplona, Spain, implementation of a staff suggestion in 2015 will save 5,568 kg of plastic film each year. With an annual production output of 275,000 vehicles, this translates into a yearly saving of €64,350.
  • Our Uitenhage location in South Africa has implemented a raft of optimization measures which succeeded in cutting waste volumes by 60% between 2010 and 2015.
  • In 2015, we held a big competition for waste processors at our Mladá Boleslav factory. One of the key criteria was competitors’ ability to reutilize waste. As a result of this competition, ŠKODA expects to reduce the amount of waste sent for landfill per vehicle manufactured by 56% at this factory and 35% across the company as a whole.

Green Logistics

Logistics is part of the Volkswagen Group’s environmental focus. For example, we are optimizing CO2 emissions along the entire transport chain. The aim is to avoid transportation completely or else shift to more environmentally friendly modes of transport, and to reduce fuel consumption. We are working on measures and areas of action for optimizing the logistics processes across the brands.

In 2012, the Corporate Green Logistics Steering Group was given responsibility for coordinating and standardizing the content of this approach across the Group as a whole. The Steering Group defines and continuously optimizes work packages for specific measures, accounting practices, communication, training and methods for achieving internal targets.

The choice of transport mode is a key starting point for reducing CO2 emissions. Maritime transport is one of the most efficient options. Hence the Volkswagen Group is now involved in the Clean Shipping Network (CSN), an association of marine cargo owners, and is represented on its management board. Members of CSN can use the Clean Shipping Index rating tool to compare environmental efficiency figures such as the emissions of individual ships on particular routes. This is useful for analyzing the environmental impact of maritime transport. At the request of Volkswagen AG and others, soot particles have now been included in the index, alongside CO2, NOX, SOX, water and chemicals.

Volkswagen Group Logistics is continuously expanding the number of CSI-listed vessels in its own transport network. The figure is regularly updated and considered whenever the Group offers new transport services to tender.

Continuous improvements in the efficiency of our container management is also helping cut emissions. Volkswagen has one of Europe’s largest pools of load boards – for pallets or containers, for example. The Group’s container management team is continuously working to improve the packing density, weight and folded volume of new load boards, and to optimize transport routes for empty container shipping. We even strive to use recyclable materials in the design and manufacture of new load boards. One new feature is the use of renewable raw materials in the manufacturing of plastic small load boards. This helps minimize resource consumption in both manufacturing and recycling. And in a system known as logistics process partner management, we are working with freight forwarders and suppliers to improve pickup processes with respect to cooperation, efficiency and capacity utilization across our transport network.

Last but not least, noise pollution is also a key consideration when analyzing logistics processes. In 2015, among other things, rail wagons supplied by TOUAX were incorporated into the Volkswagen rail network. These use modern technology – composite brake pads in particular – to reduce braking noise by more than 75%.

Examples of Best Practice

  • NILE (New Inbound Logistics): At Scania, our ambition is to lead the transition to a sustainable transport system. Our own project NILE, aimed at creating more efficient inbound logistics and thereby reducing carbon emissions as well as overall supply chain waste, shows how significant improvements can be achieved on a system level. Since 2013, this transformative program has spearheaded a change of mindset within logistics, and was finalized in early 2015. As a result of the transformation, Scania has benefited from improved sustainability, but also utilized assets more effectively and successfully reduced stock levels by aligning deliveries more precisely and predictably with production timetables.
  • CNG Truck – ŠKODA AUTO and ŠKODA AUTO Logistics have been carefully monitoring the impacts of their activities on the environment.
  • Optimizing the truck loading process – Since 2010, ŠKODA AUTO’s logistics team has been carefully, systematically and regularly monitoring the full loading of direct transport. This is just one of the many CSR activities forming part of ŠKODA AUTO’s Green Logistics strategy. 

Biodiversity

Biodiversity signifies the variety of life on our planet, encapsulating the variety of species, the genetic differences within species, and the diversity of ecosystems. We rely on it as the basis for our continued existence: healthy food, clean water, fertile soils and a balanced climate. Protecting biological diversity is one of the greatest societal challenges of our time. The United Nations has therefore declared the current decade to be the “UN Decade on Biodiversity”.

Volkswagen has been committed to protecting biodiversity since 2007 and is a founder member of the Biodiversity in Good Company e.V. Initiative. In our mission statement, we promise to support the protection of species at all locations. We primarily contribute to achieving the targets of the UN Convention on Biological Diversity by reducing greenhouse gas emissions and utilizing materials and resources as efficiently as possible. As a consequence of the diesel issue, we are putting our membership of the Biodiversity in Good Company e.V. initiative on hold for the time being.

Biodiversity is a component of our environmental management. We have, among other things, appointed a biodiversity officer and commissioned external expert assessments of the risks for water, the soil and biodiversity at 32 locations belonging to the Volkswagen Passenger Cars, Porsche and MAN brands.
One of the projects we jointly implemented with Naturschutzbund Deutschland e.V. (NABU) was a moorland conservation project in Germany. NABU additionally established an International Peatland Conservation Fund in 2015 with a donation from Volkswagen Financial Services AG. Volkswagen and NABU also worked together as partners on their joint wolf conservation initiative (“Willkommen Wolf!”) in 2015.

Our longstanding cooperation agreement with NABU expired on December 31, 2015. Following the suspension of negotiations to extend this agreement as a consequence of the diesel and CO2 issue, we are working hard to satisfy the requirements for the continuation of this strategic partnership.

At our international sites, we collaborate with a range of partners to support the protection of nature and biodiversity. This means we can contribute to local implementation of the United Nations’ Sustainable Development Goals (SDGs). We also fund biodiversity research at our Urumqi site in the Chinese province of Xinjiang. Since 2011, we have also been supporting the Dyer Island Conservation Trust in South Africa. Through our work with the Trust, we have been involved in the protection of penguins, dolphins, whales, seabirds and sharks, and also conduct research, education and training programs to strengthen environmental awareness. During the reporting period, the Trust opened a local seabird sanctuary.

Other nature conservation projects are described here.