Phinia’s Twin Focus: Efficiency Today and a Carbon-Free Future
Based in Auburn Hills, Mich., Phinia (NYSE: PHIN) is a publicly traded company spun off from BorgWarner in July 2023 that is dedicated to advancing sustainable mobility solutions. It specializes in fuel systems, electrical systems, alternative fuel technologies, and aftermarket products, Phinia aims to enhance fuel efficiency, reduce emissions, and help drive the transition to cleaner, low-carbon fuels. SBN Detroit interviewed Todd Anderson, Phinia’s Chief Technology Officer, to explore the implementation of alternative fuel systems and their real-world applications. Q: Phinia has allocated 78% of its research and development to fuel efficiency and alternative fuel technologies and 30% of that to zero- and low-carbon fuel systems. Can you tell us more about this initiative? A: We are committed to driving efficiencies today while moving toward a carbon-neutral and ultimately carbon-free future. It’s important not to focus solely on future technologies when there is a clear need to improve our current energy systems. By allocating 78% of our budget to fuel efficiency and alternative fuel technologies, we are addressing both immediate and long-term needs. This investment allows us to work on improving the systems that our customers currently use and are ordering while also investing in alternative fuels that will help us achieve decarbonization over time. Our funding applies to all aspects of our business. The research and development aspect, mentioned above, but also investing in other business functions, including manufacturing, supply chain, and quality to ensure that as a business we are ready to move forward into a new era. Q: Describe the different alternative fuel systems and what they are used to power today. A: Each of these fuel systems serves specific purposes and applications, providing a range of options for different vehicle types and needs. Advanced Gasoline Direct Injection (GDi) Systems are primarily used to power lighter vehicles, from passenger cars to medium-duty vehicles. Recently, we released a 500-bar GDi system with this higher pressure, designed to improve fuel economy and reduce emissions for passenger cars and light commercial vehicles. Hydrogen fuel cell technology powers electric vehicles (EVs) using an onboard fuel cell that uses hydrogen as fuel. This system is suitable for a range of vehicles, from lighter passenger cars to medium-duty vehicles, and could be particularly efficient for delivery vehicles in controlled environmental settings. Hydrogen Internal Combustion Engine (ICE) technology is well-suited for heavier applications where high loads, continuous operation, and challenging environments are common, such as heavy commercial vehicles and medium commercial vehicles. Hydrogen ICE provides the power and performance expected from traditional diesel or gasoline systems but without harmful emissions to the environment. Q: How is developing technologies for alternative fuels different from working on traditional combustion engines? A: Interestingly, it’s quite similar in many ways. The ways in which we develop liquid fuel systems for gasoline or diesel engines are directly applicable as we move toward alternative fuels. The basic physical principles, such as combustion and fluid metering, remain the same. The difference lies in adapting and refining the elements of these systems to work with alternative fuels. For example, in a hydrogen internal combustion engine, hydrogen gas is injected into the combustion chamber instead of gasoline. While the core technology remains similar, we need materials that can seal and respond appropriately to hydrogen gas, along with some design refinements. Q: What are the main challenges in creating and adopting alternative fuel technologies? A: The technology to use alternative fuels in vehicles is already well understood and has been proven effective. However, the challenge lies in the ecosystem needed to support these fuels. Take hydrogen internal combustion engines (ICE) as an example. While we have vehicles running effectively with this technology, faster market adoption requires sustainable hydrogen production at a scale that isn’t currently available. The infrastructure to deliver this sustainable alternative fuel to the point of use also needs to be in place. Currently, the cost of hydrogen is higher than will be acceptable for a broad market adoption. In my discussions with government officials in the U.S., Europe, and Asia, my call to action has been clear: ensure sufficient production of renewable hydrogen while developing the infrastructure needed to deliver it. This will help reduce costs and support wider adoption. Q: What do you see as the biggest opportunities for growth and innovation in alternative fuels? A: We see significant growth opportunities in the transportation sector, whether in passenger cars or commercial vehicles. In the shorter term, there is substantial interest in commercial vehicles due to their specific operating conditions. For example, there is great potential with captive fleets operating on fixed routes, where we can achieve significant progress without needing to rely on widespread public infrastructure for hydrogen deployment. This allows us to make meaningful advancements in those areas. Additionally, there is interest in alternative fuels beyond just transportation. We’re seeing opportunities in industrial applications, marine sectors, and stationary power generation. Industries like marine shipping, especially large vessels, are actively exploring alternative fuels. So, while there are significant opportunities in transportation, they extend far beyond that sector. Q: How does Phinia work with partners in the alternative fuel industry? Can you share any recent partnerships? A: Partnerships are critical for us — no company can operate as an island. We partner with government bodies such as the U.S. Department of Energy, the Environmental Protection Agency (EPA), the European Commission, and the UK Transport Authority. We also work closely with our customers to support their vehicle roadmaps and align our innovations to meet their needs. We have close partnerships with universities and educational institutions, which provide access to their innovative and advanced thinking while supporting communities and students alike. In addition, collaboration with our supply chain partners is vital. Q: How does Phinia ensure sustainability is integrated into product design and development, particularly with your “Design for Environment” approach? A: Sustainability is critical in the design process. Our design reviews include considerations like the potential for remanufacturing and the end-of-life designation for products, which are vital elements of a circular
Reducing Carbon Footprint Across Global Operations
BorgWarner is a global automotive supplier that delivers mobility products to the market including turbochargers, electric transmissions, lithium iron phosphate (LFP) batteries, thermal management solutions, and more. Headquartered in Auburn Hills, Mich., BorgWarner operates in 21 countries with 82 locations and 40,000 employees. We interviewed Dr. Volker Wang, BorgWarner’s president and general manager of Turbos and Thermal Technologies, about the company’s work to reduce the company’s carbon footprint across several initiatives. Q: Given the sheer magnitude of your operations, how are sustainability practices translated and executed toward the goal of a 35% reduction in Energy Intensity? A: To be clear, BorgWarner doesn’t have an energy intensity reduction goal set. We have absolute GHG reduction goals. We’ve set specific sustainability goals to become carbon neutral by 2035 for Scope 1 and 2 emissions. We aim for an 85% reduction by 2030, based on our 2021 baseline, and a 25% reduction for Scope 3 emissions, based on our 2021 baseline. There are several initiatives in place to achieve this. First, we’ve developed a decarbonization toolbox that provides tailored recommendations to our facility leaders on reducing CO2 emissions. This toolbox is adaptable to different regions and processes, helping reduce energy use and identify opportunities for renewable energy generation. We’ve implemented smart metering across our facilities to measure real-time consumption of natural gas and electricity. This allows us to track energy usage more accurately and make necessary adjustments to meet our goals. We’ve integrated CO2 reduction and sustainability targets into our bonus and incentive system. To gauge our sustainability performance, BorgWarner conducts materiality assessments based on feedback from various stakeholders and aligns its efforts with global ESG reporting initiatives, such as those from the AIAG (Automotive Industry Action Group). The company operates in a decentralized manner, empowering its global locations to make decisions and act on sustainability priorities that align with local needs. Q: What are the biggest challenges? A: The company has set clear sustainability targets and has mechanisms in place to support the achievement of those targets. However, even with the best-laid plans and intentions, we cannot predict or control the future. Many variables in play could alter circumstances, all around the world. That’s why it’s imperative to remain agile and flexible. Q: How do you measure and manage your supply chain’s carbon footprint and ensure compliance regarding their efforts around sustainability? A: In March we partnered with Manufacture 2030 – a decarbonization software provider. We use M2030 to track and manage our supplier’s CO2 emissions. Our suppliers use the software to report their emissions to us and gain access to best practices on how to reduce emissions. This tool is essential for monitoring and managing our suppliers’ progress. We incentivize our suppliers to set emissions reduction targets for themselves and their supply base by assigning points on our supplier scorecard, which is a major factor in deciding which suppliers are awarded business. Q: How does sustainability impact product design? A: This is an important question. There is so much related to product design. We are using software to show in real time to our designers what the CO2 footprint outcome will look like. This helps at the earliest stages to optimize the products. Our Design for Sustainability workstream is actively working to build processes into our design protocols to ensure maximum use of green materials, where feasible. Circularity is a big topic for us when it comes to battery packs and other materials. We look for second-life options in different applications. In short, we are utilizing engineering-driven initiatives that help to reduce CO2 from our product designs. Q: How is water management approached? A: We approach it at the local level. We conducted risk assessments in all of our facilities, and 14 are in the high or extremely high usage categories which is roughly 17% of our facilities worldwide, so we are putting initiatives in place where needed. For example, one of our facilities in New York has implemented a reverse osmosis process to treat wastewater instead of using soft water. This change is expected to decrease water discharge by approximately 7,500 gallons per day. Q: Are electric and hybrid vehicle sales growing at a pace that’s aligned with decarbonization goals? A: It’s not a secret the industry’s transition to electric vehicles is not trending at the rate expected. The industry is undergoing an unprecedented time of change. We provide a range of engines—combustion, hybrid, and electric—to meet our customers’ evolving needs during this transition. In 2023, 87% of our revenue was generated from EV and emissions-reducing combustion and hybrid products, including $2 billion in eProduct sales, marking a strong step forward toward decarbonization, though there’s still more ground to cover. Q: What are best practices you think other automotive suppliers can employ? A: It all starts with a mindset — focusing on doing what is right and addressing urgent challenges head-on. Taking real, tangible actions that drive improvements is far more impactful than simply producing reports. One key tool for us has been the Decarbonization Toolbox, which offers practical strategies that have been instrumental in helping our facilities start their sustainability journey. I think it’s critical to implement the same improvements within operations that are expected from suppliers. It has not been difficult to motivate our teams to participate. I think people want to be involved in this and they want to do the right thing. Seeing positive outcomes has motivated our employees to do more at a local level as well. Be sure to subscribe to our newsletter for regular updates on sustainable business practices in and around Detroit.
