What are carbon value chains (CVCs)?
Carbon value chains are methods for taking carbon and turning it into valuable products. Given the need to capture and store carbon dioxide, entrepreneurs around the world are inventing ways to turn various forms of carbon into valuable commodities.
The main stages of the value chain are:
- Design – Innovating new products
- Marketing – Introducing the product to the market
- Distribution – Getting the product to its customers
- Customer Support – Making improvements and keeping customers happy
An example of a carbon value chain: Repreve takes used plastic bottles and turns them into synthetic cloth that can be used for everything from handbags to clothing. They sell their material wholesale to brands that use it as a raw material for their clothes.
Value Chain vs. Supply Chain: Is a Value Chain the Same as a Supply Chain?
While value chains and supply chains both involve processes that ultimately get a product or service to the end user, they have different definitions and goals.
A value chain is the process by which a company adds value to a product or service in order to gain competitive advantage.
A supply chain is all operations that lead to getting the product into a customer’s hands, including production, storage, distribution, and sale.
Key Differences: Value Chain vs. Supply Chain
A value chain is not the same as a supply chain. The two terms focus on different priorities, even if the areas of their function, such as the manufacturing of a product, overlap.
The main goal of a value chain is adding more value to a product or service so that customers want to buy it or get more use out of it. The idea of “value” can have many meanings with a value chain; adding value may mean turning a raw material into a finished product, or it can mean making a service or product more convenient for customers to use. In a value chain, any input is transformed into an output with a higher value. This is meant to provide the company with a competitive advantage.
Take the example of a lumber retailer, a company that buys lumber from companies that cut down trees and resells it to customers who are building houses. They add value to the product, lumber, by picking it up from the supplier, repackaging it into smaller portions, and then marketing and selling it to customers. This makes it more convenient for customers to buy wood in smaller amounts, and thus adds value. Another example of part of a value chain that adds value for customers is companies that offer services to the customer after purchase and during product use, such as many household appliance companies that install the appliance for you or offer repairs.
The main goal of a supply chain is getting a product from its original state to customers. Supply chains focus on the operations of this process and include a wide network of actors, including suppliers, manufacturers, warehouses, distributors, and retailers. For example, the supply chain of a lumber company would include cutting down trees to get raw materials, processing the lumber, possibly storing it, transporting it, and selling it. Importantly, supply chains do not include activities taken during a product’s use after sale (often referred to as “downstream”), while value chains often do (for example, customer service or repairs).
Many people wonder whether a value chain is the same as a supply chain because the terms do overlap in many areas, such as transportation or manufacturing. For example, both supply chains and value chains include the step of turning raw material into a product. However, supply chains are more concerned with the logistics of how a product reaches consumers, rather than how each step along the chain adds value. Making strategic decisions about your supply chain involves ensuring that the product physically gets where it needs to go, and is made with high quality. Making strategic decisions about your value chain involves ensuring that the activities you take to add value will ultimately increase profits or decrease costs.
Improving the Sustainability of Value Chains
The largest portion of a company’s carbon emissions comes from the value chain. In order to get a sense of a company’s environmental impact, measures of a company’s carbon footprint must evaluate a company’s value chain as a whole, including all steps of the supply chain in addition to downstream activities such as product use or product disposal. Carbon emissions in the value chain are often referred to as Scope 3 emissions.
Read more: How to Reduce Scope 3 Emissions: What They Are and How Companies Can Address Them
Main Types of Carbon Value Chains
CO2 Capture & Storage