Powering a greener future: How smarter manufacturing boosts business profits and saves the planet

Australia’s manufacturing sector contributes 10 percent of the nation’s greenhouse gases and is facing increasing pressure to reduce its carbon footprint as the nation moves towards net-zero emissions by 2050. As NSW Decarbonisation Hub CEO Scientia Professor Deo Prasad and NSW Smart Sensing Network Net Zero Theme Lead Laura Earl discuss, there are simple steps businesses can take to get started on their carbon reduction transition.

With global markets demanding greener supply chains and the Australian government tightening regulations on carbon emissions, manufacturers must take proactive steps to reduce their environmental impact.

Small and medium-sized enterprises (SME), which make up a significant portion of the manufacturing sector, often face challenges such as limited resources, outdated processes, and uncertainty about where to start.

However emerging digital technologies and sensor-based monitoring can provide immediate insights and long-term benefits for businesses often repaying the initial investment within six months.

This allows for ongoing savings, reduced labour requirements and opening supply chain opportunities with companies within Australia and abroad.

But why does decarbonisation even matter?

NSW Smart Sensing Network Net Zero Theme Lead Laura Earl (left) and NSW Decarbonisation Hub CEO Scientia Professor Deo Prasad

Decarbonisation defined

Decarbonisation refers to the process of reducing or eliminating carbon dioxide (CO₂) emissions by transitioning to cleaner energy sources, improving energy efficiency, and adopting sustainable business practices.

The largest emitter (around 24 percent) since 1995 remains energy use (electricity, gas, water).

While CO₂ emissions related to manufacturing have reduced since its peak in 2008, it still contributes 10% of Australia’s greenhouse gases.

Climate disclosure standards introduced by Treasury commenced this year require businesses to disclose their carbon footprint and sustainability measures.

This makes decarbonisation essential for compliance and long-term viability.

Although initial reporting is required for large organisations (>$50m revenue, >$25m gross assets, >100 employees), SMEs wishing to be incorporated in supply chains will need to contribute their data as part of procurement requirements.

Additionally, from 2026 the European Union has introduced the European Carbon Border Adjustment Mechanism (CBAM).

This is essentially a tax on carbon emissions for imported goods, which could significantly impact Australian exporters.

As global markets tighten environmental regulations, businesses that fail to decarbonise risk losing access to key trade partners.

The reporting requirements will trickle down to SMEs if they wish to be considered in supply chains.

Taking a positive approach to reporting regulations and leveraging their benefits can help manufacturers tackle key challenges like skills shortages, resource scarcity, and rising energy costs—all while boosting the bottom line.

How can technology help?

The introduction of digital technologies such as computer aided design, digital twins, real-time data, and robotics is fuelling business growth.

Developing a digital version of your product, manufacturing production line, and building schematics can provide true insights and scenarios to explore where there are opportunities to introduce efficiencies, different design techniques or transition to different materials or suppliers.

Savings will create savings, and as seen in Toyota’s lean manufacturing transition of the nineties, can often lead to a better product and therefore larger market share.

Digital tools and flexible manufacturing can also shorten the distance between customer’s bespoke needs and a fit-for-purpose product. 

Progressive manufacturers in healthcare products such as Equinox Medical, can produce products that fit to individual patient needs – like orthopaedic implants – at the speed required for trauma patients.

Digital technologies such as digital twins are fuelling business growth.

Digitisation and sensor instrumentation also enables predictive maintenance, which reduces equipment downtime and extends the lifespan of machinery.

Staffing requirements and inventory management can be optimised to maintain production outputs delivering guarantees to clients.

Developing these digital technologies, can have additional benefits such as identifying repetitive tasks of employees, or where there are hazards or risks, enabling a safer and more appealing workplace.

Staying up to date with new and emerging technologies allows Australia’s businesses to remain at the cutting edge of service delivery.

The role of sensors in cutting emissions

Sensor technology is a game-changer for manufacturers looking to reduce their carbon footprint.

Sensors can monitor everything from energy use and air quality to machine efficiency and material wastage.

These insights help SMEs make data-driven decisions to optimise their production processes.

Manufacturers can track real-time energy consumption and identify inefficiencies with smart meter sensors and data analytics software.

Making energy usage visible will have the most impact on your balance sheet and the environment.

Many businesses lack a clear picture of where their highest energy costs come from.

By installing smart meter sensors and data analytics software, manufacturers can track real-time energy consumption and identify inefficiencies, such as machinery operating outside of production hours or excessive energy use during peak periods.

For instance, IoT-enabled temperature and humidity sensors can ensure optimal operating conditions for machinery, reducing unnecessary energy expenditure.

Similarly, sensors in heating ventilation and air conditioning systems can regulate airflow based on occupancy levels, minimising heating and cooling costs.

One of the most impactful applications of sensors is in supply chain optimisation.

By tracking raw materials and finished products in real time, businesses can reduce waste, improve logistics efficiency, and lower emissions from transportation.

Advanced monitoring systems can also detect leaks in compressed air systems—often an overlooked source of energy waste in factories.

Addressing the skills gap with digital tools

A major challenge facing the manufacturing sector is the growing skills gap, with an ageing workforce and a shortage of skilled technicians.

Digitisation and sensors can help bridge this gap by automating routine tasks and providing real-time insights that simplify complex processes.

For example, AI-powered analytics platforms can guide workers through troubleshooting procedures, reducing the need for extensive experience to diagnose and resolve machinery issues.

Augmented reality applications can also provide step-by-step instructions for maintenance tasks, allowing less-experienced employees to perform critical operations efficiently.

Furthermore, digital twin technology—virtual simulations of physical assets—enables workers to test different production scenarios without disrupting operations.

This technology not only enhances training for new employees but also improves decision-making for existing staff by providing accurate predictive insights.

Decarbonisation may seem like a challenge, but with smart, data-driven solutions, SMEs can turn it into a business advantage.

The time to act is now — investing in digital transformation today will ensure a greener, more profitable tomorrow for Australian manufacturing.

The Western Sydney Manufacturers Forum: Building profits on the path to sustainability will focus on empowering Western Sydney’s industrial transformation to achieve net zero emissions by 2050.

The event – hosted by the NSW Smart Sensing Network and the NSW Decarbonisation Innovation Hub and supported by the Advanced Manufacturing Readiness Facility – will discuss the major challenges and opportunities facing Australia manufacturing and production.  

Demonstrations of research and technology that can support the transition to Net Zero will be on display, and businesses will learn how to accurately report and represent their carbon reduction, leading to pathways and transparency for increased business.

Register now.