metallurgical plant smoke from chimneys industry drone photography
getty
Inside a pharmaceutical plant, heat is everywhere—and until recently, almost nobody was paying attention to it.
Steam rising from boilers. High-temperature reactions turn raw inputs into finished drugs. Buildings and manufacturing lines are kept at precise temperatures around the clock. For decades, the fuel behind it all was natural gas, cheap enough that nobody questioned it and complex enough that nobody wanted to touch it. Then came Covid. Then, Russia’s invasion of Ukraine. Then the Iran conflict, which sent gas prices surging 60% to 100% and fertilizer costs up 40%, shocks that rippled through supply chains from pharmaceuticals to food to chemicals.
Now, AstraZeneca, working with the supply chain platform Secaro and the sustainability consultancy ERM, is launching a Clean Heat Program designed to do something that’s proven surprisingly hard: systematically decarbonize how heat is produced, not just within the company’s own walls but across its vast supplier network. The goal is not only cleaner operations. It’s a more predictable business.
“The value today isn’t just decarbonization—it’s cost reduction, resilience, and stability,” says Jon Hughes, a partner at ERM who leads on Scope 3 emissions across global supply chains, in a conversation with me. “Doing nothing is not a strategy anymore.”
Industrial heat has long been one of the hardest parts of the energy system to decarbonize—too customized, too embedded in production processes, too expensive to retrofit when natural gas was cheap. What changed was not the technology. It was the geopolitics, and the economics followed.
Industrial heat typically involves generating steam or high-temperature output—ranging from roughly 100°C to 500°C—by burning fossil fuels on-site. Unlike electricity, which can be purchased from an increasingly clean grid, heat is produced at the facility level and is tightly integrated into the processes it powers. That complexity is one reason it has lagged behind every other emissions category.
The other reason was cost. For years, the business case for switching simply wasn’t there. Now it is—and it arrived not from a policy shift or a technological breakthrough, but from geopolitical chaos.
“Even if it’s slightly more expensive, businesses want to lock in long-term pricing and avoid volatility,” says Emily Prior, Chief Growth Officer at Secaro, who has spent the past year building the program with Hughes and AstraZeneca. “Customers are coming to us saying, ‘I don’t care if it costs a little more. I just need to know what it’s going to cost,” she explained to me.
The Data Behind The Opportunity
Net Zero and Carbon Neutral Concepts Net Zero Emissions Goals A climate-neutral long-term strategy Ready to put wooden blocks by hand with green net center icon and green icon on gray background.
getty
When Secaro analyzed supplier data from the pharmaceutical sector, the concentration of the problem became stark. Roughly 80% of supplier facility emissions came from heat. About 60% of that heat was generated by natural gas. Less than 10% of suppliers were using any low-carbon alternatives.
For AstraZeneca, that picture defines the next phase of its sustainability work. The company has already cut its Scope 1 and 2 emissions — those from its own facilities and purchased electricity — by 88% since 2015, through a combination of electric vehicle fleets, renewable electricity purchasing, and replacing fossil gas with biomethane at manufacturing sites in the UK, U.S., Ireland, and China. It is targeting a 98% reduction by the end of 2026.
But like most large companies, the majority of its emissions now sit in Scope 3: its supply chain. “Most of our emissions are in our supply chain,” says Rob Williams, AstraZeneca’s senior director of sustainable procurement, in a talk with me. “So that’s where we have to focus next.”
Scope 3 emissions are the hardest category to address because the company doesn’t directly control them. AstraZeneca works with roughly 3,500 suppliers representing 95% of its supply chain spend—those with annual contracts above $250,000; it requires them to commit to science-based targets and ESG standards.
The Clean Heat Program is a critical tool for achieving this goal and meets suppliers where they are. A supplier starts by submitting a set of data points covering their energy use, the temperatures required by their processes, and their current fuel mix. Secaro’s platform then maps out a pathway, with low-maturity suppliers starting with efficiency measures and more advanced ones moving toward heat pumps, biomass systems, biomethane, or combined heat and power. ERM provides the engineering expertise to select and implement the right solution for each site.
From Pilot Projects To Scalable Solutions
Heating equipment in a boiler room of the large enterprise.
getty
Critically, the program also addresses financing—historically the reason projects stall. Options range from the EU’s billion-euro heat decarbonization fund to private debt and equity partners offering favorable rates, to money seeded by participating companies, including AstraZeneca, that suppliers can draw from and repay through energy savings.
The business case is strengthening rapidly. In Europe, where gas prices are higher, many industrial heat projects are achieving payback periods of 5 to 7 years. In the U.S., the recent price spikes have dramatically improved project economics.
“Historically, these projects were hard to justify,” Hughes says. “Now they’re competing with—and often beating—other uses of capital.”
None of this is simple. Industrial heat systems are highly customized, often decades old, and deeply integrated into production processes. Retrofitting them can be disruptive and expensive. The economics are uneven: a project that pays off in Germany may struggle in countries with low energy costs.
“You have to take a holistic approach — start with efficiency, then move to decarbonized fuels—so the economics work,” says Secaro’s Prior. Some regions are more interested in climate change than others. “We talk about cost-cutting and energy efficiency. They’re very interested in running a tighter ship — and we end up with the same outcome.”
Despite the challenges, momentum is building to decarbonize operations. Yes, economic and environmental pressures act as a catalyst. But so does geopolitics—each global shock exposes the same structural weakness: supply chains built on fossil heat cannot absorb price spikes.
Companies that moved early are now protected. Those that didn’t are absorbing hundreds of millions in unhedged cost exposure.
Oliver Hurrey, founder of Galvanised and chair of the Scope 3 Peer Group, which convenes 178 companies from pharmaceuticals, food, beverages, and other sectors on supply chain decarbonization, puts it plainly to me: “Clean heat is effectively a hedge against geopolitics.”
Investors are watching. Indeed, companies must demonstrate credible plans for operating in a carbon-constrained, volatile energy environment, or the capital markets will penalize them.
Williams frames the imperative in terms of what AstraZeneca ultimately exists to do. “We need consistency in our supply chain to ensure a resilient supply of medicines to patients,” he says. “That’s what really drives us.” The Clean Heat Program, in that sense, is not a sustainability initiative layered on top of the business. It is the business. As for the drug maker, it means having a supply chain that doesn’t break when gas prices double. “To go far, we go together.”
In a world where the next geopolitical shock is always two years away, clean heat isn’t idealism. It’s risk management—and increasingly, a competitive advantage.
SEE ALSO: