forum Innovation: SUNdy and OPera
StormGeo: A positive forecast
CSR: A way of business
A magazine from DNV
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DNV SHORT-CUTS TO ENERGY TARGETS Also inside: n Singapore: Asia’s clean power growth frontier n Research concepts Sundy and Opera n The secrets of corporate sustainability success
no 03 2012
Content
03 2012
FORUM 03.2012 PUBLISHED BY Det Norske Veritas as NO-1322 Høvik, Norway Tel: +47 67 57 99 00 Fax: +47 67 57 91 60 Editor Stuart D. Brewer Tel: +47 91522360 Stuart.D.Brewer@dnv.com Design and layout Coor Media coormedia.com media@coorno.com
04 Editorial: Fostering innovation
38 Roundtable talks:
05 News
The secrets of corporate sustainability success
08 DNV short-cuts to energy targets
42 Mark Line: Hungry for change
16 Singapore: Asia’s clean power growth
44 Phoenix Design Aid:
frontier
CSR as a way of business
20 SUNdy: Floating solar field concept
46 NPD Director General Bente Nyland:
24 OPera: Concept for offshore power
Forecasting a long future for Norwegian oil & gas
generation
26 DNV and StormGeo: A positive forecast
50 Arctic focus: DNV acquires Norwegian Petro Services
30 Danish Maritime Authority:
52 Sustainia:
Safety impact of new Wind Farm Service Vessel (WFSV) standards
Solutions for a sustainable future
32 Crisis – what crisis? Interview with Stena’s Carl-Johan Hagman
34 USCG:
56 Stein B. Jensen: The CDM and beyond
58 Last Word: Jon Woodhead on sustainable energy
A fresh look at the U.S. Coast Guard
Cover photo DNV/ Magnus Dorati © Det Norske Veritas as, 2012
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Singapore: Asia’s clean power growth frontier 2 – no 03 2012
26
StormGeo: A positive forecast
Š DNV/ Magnus Dorati
8
38
Roundtable talks: The secrets of sustainability
50
Arctic focus
52
Sustainia: Solutions for the future
+ Editorial
Fostering innovation Learning the lessons of the past and applying them to the future is essential to progressive management wishing to maintain its company at the forefront of international business. Adaptability to change is vital, too, in a world of shifting trends and rapid technology development.
H
owever, though change is continuous, the injection of fresh ideas and new thinking is an essential response to new challenges as they arise – and there are many. The international competition situation is changing rapidly, as is the risk picture. Climate changes, the shortage of resources, demographic changes and technological progress are creating a new, demanding risk reality for businesses. Efficient answers to these challenges cannot be provided by one company alone, but rather require much broader dialogue between industry, the authorities and society. DNV is working with a multitude of stakeholders and I firmly believe that achieving a binding and profound dialogue between political authorities and industry is a prerequisite for more sustainable developments. In addition, innovation created by cooperation between various companies and between companies and political authorities provides new opportunities.
“Fostering innovation and technology foresight capabilities is essential as we pursue sustainable development” Indeed, at this time of rapid change in the markets which we serve, it is appropriate for our DNV Forum pages to reflect how DNV is innovating and applying new technology, expanding its business activities and developing in line with market trends. There is no doubt in my mind that a lot of good things are happening in individual companies and organisations around the globe. But our experience shows it’s better to work together with others than to be alone when trying to solve major challenges. That way, results are achieved quicker. At DNV, we want to contribute knowledge and expertise by creating new technology and networks and learning from each other. Our goal is to find solutions that create value and growth for our customers and reduce the strain on the globe. We are also trying to accelerate the rate of innovation together with our customers. That way, we can help realise DNV’s vision as well as each of our customer’s business goals. We hope you enjoy this issue of DNV Forum, and that its contents will inspire innovation and help you – our clients – to meet the challenges that lie ahead. Henrik O. Madsen DNV Group CEO
4 – no 03 2012
+ News + DNV authorised by the Japanese government DNV has been formally authorised by the Japanese government to carry out surveys on ships flying the Japanese flag.
In accordance with Japanese legislation, DNV has been designated as a Recognised Organisation by the Japanese government and delegated responsibility for statutory surveys and authority to issue statutory certificates. DNV Group CEO Henrik O. Madsen commented: “DNV is proud to secure authorisation from the Japanese government. Close cooperation involving an extensive 18-month technical evaluation by both parties has led us to where we are today. DNV currently provides leading Japanese operators with international classification services through its global network and we’re pleased that these services can now be extended to cover Japanese-flagged ships. We look forward to supporting the growth of the Japanese-flagged fleet.”
Director General of Japan’s Maritime Bureau, Mr Masato Mori, presented the official certificate of registration to DNV Group CEO Henrik O. Madsen.
The expansion of DNV KEMA’s high-power laboratory in Arnhem is due to be finished in 2015.
+ World’s First DNV KEMA will invest about €70m in the expansion of its high-power laboratory in the Netherlands. The laboratory will be the first in the world in the extreme testing segment for the upcoming market for super grids.
Remi Eriksen, CEO of DNV Maritime and Oil & Gas, and Steinar Thon, Associate Director, DNV Maritime and Oil & Gas, presenting the new DNV Recommended Practice for Shale Gas at a press conference in London recently.
Global standard for shale gas risk management DNV has launched a Recommended Practice for the entire life cycle of shale gas extraction based on risk management principles. The Recommended Practice provides a reference document for the independent verification of shale gas projects and applies risk management principles to ensure that threats related to shale gas activities are effectively and efficiently managed in an accurate, balanced, transparent and traceable way. “The overall objective is to establish guidelines and recommendations for the processes required to protect the safety of people and the environment during all phases of shale gas field development and operations,” says Remi Eriksen, CEO of DNV Maritime and Oil & Gas.
The expansion programme of its existing facility in Arnhem, the Netherlands will allow high-power short-circuit testing at the 800kV-plus level. The site is already the world’s largest short-circuit test lab for transmission and distribution networks, but over the next three years DNV KEMA plans to increase the number of short-circuit generators from four to six and extend the available testing space. David Walker, chief executive of DNV KEMA says the new market for long-distance grid connections would be further inflated by a predicted 70% increase in global electricity demand over the next 20 years and the everincreasing role played by decentralised energy. “It is evident that the global demand for electricity will rapidly increase over the next decades,” he says. “According to independent studies, this growth will translate into a strong increase in investments in the global electricity transmission and distribution infrastructure.” no 03 2012 – 5
+ News Best Verifier DNV selected as ‘Best Verifier’ in the 13th annual Environmental Finance and Carbon Finance market survey of environmental markets – for the 3rd year in succession. Environmental Finance and Carbon Finance – two of the leading global publications covering environmental markets – have named DNV as the best verifier in relation to Kyoto Project Credits (CDM and JI) and the EU Emissions Trading Scheme. “On behalf of DNV, we’re delighted to have been chosen as the best verifier for the third year in succession,” said Stein B. Jensen, head of Accredited Climate Services in DNV KEMA. “The award reflects our standing in the market place and our dedication to building trust and confidence in the low-carbon economy. Being chosen as the best verifier requires overall high standards of performance and, as such, is a tribute to all the management and staff in our global network.” Stein B. Jensen, head of Accredited Climate Services in DNV KEMA
This top ranking follows close on the heels of the recent news that DNV was voted best verifier (CDM and EU ETS) in the first Carbon Trading magazine market survey.
Vibecke Hverven joined DNV KEMA on 1 December
Shipping 2020 report DNV has published Shipping 2020 to communicate the results of a comprehensive scenario-studying exercise covering the world fleet up to 2020.
Based on expected market developments, regulatory changes, fuel prices, the cost and availability of new technology and specific shipowner requirements, the model explores the technologies with the best payoff that will also ensure compliance with relevant environmental requirements.
+ New Scandinavia Regional Manager DNV KEMA strengthens its energy business in Scandinavia by appointing Vibecke Hverven.
Vibecke Hverven, who joined DNV KEMA on 1 December, has more than seven years of experience as President of Sweco Norge, a leading multidisciplinary consultancy company in the field of sustainable engineering and design. Prior to her Sweco role, Ms Hverven held senior management positions in Statkraft, a Norwegian renewable energy company. She has also served on various councils and boards in the energy and environmental sectors in Norway. “Scandinavia is a key growth area for DNV KEMA because we can leverage the strength of the DNV brand in DNV’s ‘home’ region together with KEMA’s global expertise in power, transmission and distribution. Ms Hverven’s leadership experience in the energy sector will help establish us as a leader in this vital region,” says DNV KEMA CEO David Walker. “I am delighted to join such a respected organisation and I’m looking forward to working with DNV KEMA’s very experienced and knowledgeable team to deliver on its development goals in this important market. Energy and the sustainable development of societies is definitely my passion, and I feel fortunate that this will be my focus in such a strong and successful company,” says Vibecke Hverven. 6 – no 03 2012
Economic power is shifting to Asia, impacting trade routes and the demand for vessels. Gas and oil prices are expected to decouple, and shale gas is a game changer likely to increase gas availability. Based on these and other market forces, four different future scenarios have been evaluated. “With the world economy in a fragile condition, financial analysts, bankers and policy makers are not the only ones who want to know what the world will look like towards the end of this decade. The shipping community is, quite rightly, asking the same questions,” says Tor E. Svensen, president of DNV Maritime and Oil & Gas. “Predicting the future is a risky business. However, our objective is to share our views on technology uptake towards 2020 and beyond, and to shipping 2020 stimulate both discussion and correct decisionmaking.” DNV report shipping 2020
+ News + New head of DNV Research & Innovation DNV has appointed Rune Torhaug as the new Managing Director of DNV Research & Innovation.
Mr Torhaug brings with him extensive experience, having previously worked in leadership roles in DNV’s energy, maritime and business assurance operations. He has an MSc in Civil Engineering from NTNU and a PhD in structural engineering from Stanford University. He views his new role as an opportunity to build on DNV’s exciting research achievements. “I firmly believe that technology is a vital part of the solution to many of the global challenges facing us today. In addition, research and innovation are two of DNV’s competitive advantages and I look forward to continuing this important work with very competent colleagues who are committed to shaping DNV’s future,” he says. Rune Torhaug has a background in risk and reliability, and a track record of applying risk methodology to critical problems in the industries DNV serves
Sedex Membership DNV Business Assurance is now a member of the Sedex Audit Company Group, the world’s largest collaborative platform for managing ethical supply chain data.
Mr Torhaug’s goals are to ensure that DNV is at the forefront of new technological developments, and to improve DNV’s research capabilities and thought leadership position both nationally and internationally.
Vice president Kjell Eriksson, responsible for DNV KEMA’s business development in the Norwegian and Swedish energy sectors
“This membership allows us to respond to our customers’ diversified supply chain needs. We can now help our customers monitor sustainable performance in the supply chain more effectively and make the results of our audits more visible,” says Luca Crisciotti, the CEO of DNV Business Assurance. Carmel Giblin, Sedex General Manager, says “We’re pleased to welcome DNV Business Assurance to the Sedex Audit Company Group. The Sedex system will enable DNV and its customers to share ethical audit information easily, helping reduce duplication and drive improvements in global business practices.” Sedex is a secure online database where members can share and manage information in four key areas: Labour Standards; Health and Safety; the Environment; and Business Ethics.
+ Supporting the Nordic Power Sector Due to the strong demand for risk management services in Norway’s energy sector, DNV KEMA is aiming to expand its business in this important region. Its expertise in power systems is central to its growth plans.
“The Nordic Power sector is heading into a decade of massive investments which are needed to enhance the robustness and reliability of the grid and to enable the integration of new renewable energy sources,” says vice president Kjell Eriksson, who is responsible for DNV KEMA’s business development in the Norwegian and Swedish energy sectors. “By combining DNV’s risk management expertise with KEMA’s world-class skills in power systems, DNV KEMA is well positioned to support the challenging period ahead,” says Mr Eriksson and adds, “We have so far conducted independent assessments of smart meter projects for two Norwegian distribution system operators – Hafslund Nett and Agder Energi. We have also secured two framework contracts and executed several studies for the transmission system operator, Statnett, relating to critical ICT projects and conducted an independent assessment of the conceptual design of overhead power lines. Going forward, we will put significant emphasis on further supporting the Nordic power sector.” no 03 2012 – 7
+ innovation
8 – no 03 2012
DNV shortcuts to energy targets With its enormous components consisting of balls, rods and convoluted insulators, it can appear to be a futuristic art installation. But it is not; it is one of the world’s foremost laboratories for testing and certifying the biggest electrical components of all.
Text & photos: Tore Stensvold
no 03 2012 – 9
+ innovation
B
as Verhoeven shows us around what he claims to be the world’s biggest and best laboratory for testing highvoltage equipment. He is the vice president in charge of the testing, inspection and certification of electrical equipment in DNV KEMA, the company established by DNV and KEMA on 1 March of this year. Good chemistry and common values brought DNV and the independent energy testing and advisory company together this spring. “Here, we can generate the strongest lightning strikes and test whether highvoltage switches work and disconnect as they are supposed to,” says Verhoeven.
I DNV KEMA’s laboratory in Arnhem is in a good location for transport by boat.
Top secret
In other parts of the laboratory, taking photographs is strictly forbidden. Highvoltage components that may have taken several years to develop and build are assembled in the laboratory for testing and certification. “These are top-secret issues. We’re independent and don’t want our customers’ competitors to see the customers’ equipment,” says Verhoeven, and instead shows us the four generators that create the maximum voltage necessary for exposing the customers’ equipment to the heaviest loads. “If we operate the generators together, we can reach a maximum of 10 gigawatts, but only for a few milliseconds. That’s enough to test whether or not a switch opens like it’s supposed to,” says Verhoeven, who underlines that safety is extremely important. 10 GW is equivalent to two-thirds of all the power used each day in the Netherlands. Night work
The laboratory in Arnhem also tests and certifies enormous transformers. Customers send the equipment by ship to DNV KEMA’s assembly site. There the transformers are assembled on barges and 10 – no 03 2012
I A transformer has been installed on a barge and taken into Arnhem for testing. A barge arrives more or less every Friday evening. The installation and connections are carried out on Saturday morning and the test is conducted during Saturday night and the very early hours of Sunday morning. The transformer is disconnected and the barge leaves KEMA’s quay on Sunday. These times have been chosen so as not to disturb the local electricity supply.
towed to the laboratory where they are connected to power. Tests are carried out every weekend. “We’re fully booked and operate most of the test stations 24 hours a day,” says Verhoeven. The voltage and everything else is increasing. “When power is to be generated in, for example, solar cell panels in the Sahara Desert and transmitted to Europe in cables and a high-voltage system, we are talking about distances and dimensions that we have never seen the like of before,” he says. Value base
Verhoeven is positively surprised by DNV and its employees. “We had extremely good personal chemistry right away. We can talk to and understand each other easily, both as a company and in relation to our ideas,” he says. In this, he receives the full support of
DNV employees – Norwegian, Swedish and other nationalities. One of them is DNV’s Group CEO, Henrik O. Madsen from Denmark. He smiles and confides that DNV was preferred over 88 other companies that wanted to take over when the Dutch owners, which were several energy grid owners, wished to sell their stakes in KEMA. DNV looked at KEMA in 2009 but was given the cold shoulder at that time. “The management of KEMA and we in DNV had very good chemistry. That’s why we were preferred, even though we may not have submitted the highest bid,” says Madsen. Another point was that DNV wanted to keep Arnhem in the Netherlands as the base for KEMA and its around 1,800 employees. For Madsen, DNV KEMA is the backbone that will carry DNV to a leading position in the energy sector. “The acquisition of KEMA, which is one of the world’s
Smart solutions
I Vice President Bas Verhoeven in the laboratory where they simulate lightning strikes and the effects these have on the equipment.
leading providers of advisory, testing and certification services to the energy industry, will help us achieve our strategic goal more quickly.” Polishing the diamond
DNV KEMA Energy and Sustainability’s head office is located in a large park in Arnhem. In addition to laboratories, there are modern buildings that house consultants and management. This includes Norwegian Elizabeth Harstad, who is the Chief Innovation & Business Officer in charge of innovation, products and services. She took up this position on 1 March and is enthusiastic about the expertise that exists in KEMA. “It’s almost unbelievable how quickly we got on with each other. We have the same attitudes to work and professional involvement,” she says. DNV is a self-owned foundation that ploughs its profits back into its operations
I “There was good chemistry between DNV and KEMA from day one,” says Chief Innovation & Business Officer Elizabeth Harstad, who now lives in the Netherlands.
for research and growth. KEMA was run independently of its owners and provided advisory, testing and certification services. They take part in several R&D projects – both national ones and EU-financed programmes.
There is currently a great focus on smart energy grids, smart cities and renewable energy. These are all closely connected. More and more energy is coming from renewable sources such as the sun and wind. That means frequent and rapid variations in the power that is to be fed into the grid. These grids are not made to tackle such variations. Cables, transformers, switches and other components become worn and quickly break down. The next issue is households and companies that generate their own electricity. During periods when they produce a surplus, this electricity will also be fed into the grid. “There are many challenges, not only technical ones but also those related to market regulation,” says Harstad. These must be solved in order to create what may eventually be a smart city, i.e. a city that to a large extent generates its own energy and distributes it among the various producers and consumers. Smart products also know where and when to turn themselves on – in order to save the grid from overloading and save consumers money. KEMA has been working on one such project since 2007, and this project started up in 2009. The Power Matching City consists of 25 households that are connected and have installed various types of ‘smart’ equipment. The project’s goal is to demonstrate that a smart system for the energy supply of the future can be built now, based on available technology. Test city
Geert Mannes is retired and interested in the environment and in his sons’ and grandchildren’s future. He volunteered to take part in the demo project, which is partly financed via the EU’s sixth framework programme. A full-scale demo has been established with DNV KEMA in charge and involving several partners in various branches, no 03 2012 – 11
+ innovation
I The ’fuse box’ in the home of Gert Mannes (left) is filled with a micro power station that generates electricity and heats water. Dr Albert van den Noort is the project manager for the Power Matching City.
including the IT and equipment sectors and an energy company. The 25 households are linked together and equipped with a micro combined heat and power station, air-water heat pumps, solar cell panels, smart household appliances and electric cars. Extra power is generated by a wind power station and a gas turbine. In the Netherlands, more or less all heating and cooking is based on gas. So most households have a gas pipe leading into the house in addition to electricity. In the future, the need for electricity will increase significantly, among other things because of electric cars that need to be charged and household appliances which use electricity. One of the demo’s important aims is therefore to find a balance between gas and electricity based on both demand and the price difference. 12 – no 03 2012
Comfort
Mannes lives in a flat in the small town of Hoogkerk, right next to Groeningen. “I don’t notice it much in my everyday life,” says the pensioner, who had a cupboard filled with new equipment to arrange for and control his energy usage and heating. Dr Albert van den Noort, who holds a PhD in engineering and works for DNV KEMA, says that Mannes’ energy bill has not been cut but that it is not any higher either. “His flat can be warmer and more comfortable without this costing him any more. The system is intended to be so simple that the consumer does not have to think about it or control it himself in everyday life,” says van den Noort. In a smart grid system, all the energy units communicate with each other and
software can control when they are activated and disconnected. The aim is to distribute the energy so that the grid is not overloaded. By controlling, for example, the use of washing machines and dishwashers and the charging of electric cars so that this occurs when the demand for electricity is low, the consumer saves money and the grid is not overloaded. “The technology exists. The demo project involving 25 households is promising. Now we are going to scale it up to 40 households,” says van den Noort and adds “Given its success, power matching city acted as an example for another smart energy project led by DNV KEMA, the Smart Energy Collective, which is the largest cross-industry initiative in Europe and involves 2,000 to 3,000 households.”
Research into the energy of the future A group of engineers and researchers have taken over Large parts of the former high-voltage laboratory built in the 1930s.
W
hat do you do with car batteries when they are no longer good enough for vehicles but can still store energy? That is one of many questions to which Craig Savy is trying to find answers. He is in charge of business development in DNV KEMA Energy & Sustainability’s New Technologies team in Arnhem. He takes us into a large open room with high ceilings. However, around us on the floor there are tables full of strange objects. In another part of the room, there are pipes, cylinders and containers linked together. This is a play room for engineers. Savy holds two frames containing membranes. “These were used in a large EU project conducting research into carbon capture and storage (CCS). We developed and tested a membrane that can extract water and CO2 from flue gases. We can test it in this machine,” he says and takes us to an arrangement consisting of transparent pipes and a place to insert the membrane. Sunroof
On a table lies what may become an important local energy source for many buildings and houses. Bitumen-based roofing felt with elastic solar cell panels glued onto it may become normal in new buildings. DNV KEMA is researching into how the solar cells are to be glued onto the bitumen so that the two components can easily be separated later on.
the pores in the fibreglass mould – does not fill where it is supposed to. “If this blade had been installed, it would have broken after a while. This could be dangerous to humans and animals and is expensive for the power station owner,” Savy points out. The solution may be a new sensor that can detect weak areas so that the blades – or other fibreglass or resin-filled components – can be repaired before they are installed. Solar electricity in a battery
I A small sensor is used to check for air bubbles and poor gluing of the wind-turbine blades.
The roofing has a shorter lifetime than the solar cells, which protect the bitumen from UV radiation, thus increasing the lifetime of the entire roof system. “So we must be able to separate them from each other without damaging the solar cell film so that it can be reused,” says Savy. He believes that this has great potential in Europe. Fibreglass doctor
A cross-section of a wind turbine blade is also lying on the table. It is easy to see that resin – the glue that has to fill and seal all
DNV KEMA has a load of various types of used batteries lying around. Now it is going to research into these batteries’ ‘second life’: how the batteries can be used to store renewable energy for houses, companies and maybe even whole cities. “We have a great need to store energy from renewable sources such as the sun and wind. After all, this energy is not just produced when there is a need for it. Batteries that can no longer be used in cars or rechargeable appliances can be given new life as a storage site for renewable energy,” says Savy. “We have to carry out some more research in order to find the best solutions,” he says. He is also concerned about the fact that used batteries are an environmental problem. If they can be used instead, it is more likely that they will not be dumped in nature.
no 03 2012 – 13
+ innovation
Faults in three out of ten It can take two to three years to develop new high-voltage components. A test that takes microseconds reveals faults in around 30% of them.
DNV
KEMA’s laboratory for the testing and certification of high-voltage components is fully booked. There is work going on there 24 hours a day. High-voltage equipment must be prequalified before a manufacturer can start ordinary production. “No one dares to install high-voltage equipment without feeling sure that the equipment works. The consequences of installing equipment that does not work are huge. No one can do that,” says Bas Verhoeven, the vice president in charge of testing, inspection and certification at DNV KEMA. Many of the new components may have taken several years of research and development before they reach the prototype stage. Nonetheless, many of them reveal faults during DNV KEMA’s tests. “The fault rate is surprisingly high, but this also shows how important it is to let the components undergo a thorough test and certification process for reasons of both safety and reliability,” says Verhoeven. He thinks this is the case with all new equipment and has nothing to do with poorer quality preparatory work. Few suppliers
Inside the laboratory site at Arnhem, a high-voltage switch is ready to be tested. It is supposed to cope with 1.2 million volts. “Only 10–15 suppliers can deliver such switches. This is high technology that has taken a long time to develop but which absolutely has to work,” says Verhoeven. The power market is changing and requiring new sizes and capacities. Large areas of developing countries and India 14 – no 03 2012
I Lightning test.
and China must have electricity and this must be transported over longer distances. “Everything is increasing and growing bigger and bigger, so electricity systems have to be upgraded,” he adds. Fully booked
DNV KEMA’s laboratory is commercially run and makes a significant amount of money from testing and certifying all these large components. Several hundred million US dollars have been invested in it over the past few years.
Among other things, a quay structure has been built for barges bringing complete transformers to the laboratory to be tested. Transport by road is ruled out due to the weight and dimensions. “We are looking for ways in which to expand,” says Verhoeven. Mobile laboratories
DNV KEMA has five huge trucks with generators and the equipment necessary for testing high-voltage equipment at the site where it will be used.
“These five trucks are sent around the world. Although a component has been tested and certified in Arnhem, something may have happened while it was being transported by the customer or installed.” A tiny error or a forgotten screwdriver, sometimes just a scratch or sand particles is all it takes. “It’s better to find the fault using our mobile equipment than to risk the total black-out of a whole city,” says Verhoeven.
May strengthen Norwegian environments Sintef Energy Research views DNV’s acquisition of KEMA as a way of potentially strengthening the energy research environment in Norway.
Buried cable
Cables and other equipment are also tested over long periods and stressed in all kinds of ways in the laboratory. A highvoltage cable has been buried outside one of the halls. “It was buried and connected up exactly as if this was a permanent job. All this was done in order to certify the cable. It will remain in the ground for a year. The manufacturer has probably spent years making this product. In other words, it takes a very long time for the idea for the product to lead to a fully certified cable,” Verhoeven points out.
DNV KEMA’s lab: Tests and certifies all types of highand intermediate-voltage infrastructure equipment, including cables, cable equipment, insulators, transformers, switches and panels.
“T
his may lead to a strengthening of the Norwegian expertise and energy cluster. On the whole, we are complementary to each other,” says Sintef Energy Research CEO Inge R. Gran. Although Sintef Energy Research also tests and certifies equipment for the energy market, he does not look on DNV KEMA as a competitor. “We focus more on research than DNV KEMA. I think we can further develop our R&D collaboration. We look forward to gaining insight into DNV KEMA’s strategy. We expect to achieve a good dialogue on further cooperation opportunities,” says Gran. Offshore and smart grids
Two of the areas that can benefit a lot from cooperation are the qualification of power equipment for subsea operations and smart solutions for the electrical grid. Both DNV and Sintef are involved in requirements for and the testing of power components for the offshore wind and
oil & gas industries. So far, there are few standards and the regulations have not been properly developed. The electrical grid will face new challenges when more and more renewable energy is linked to it and the voltage in the grid starts to vary a lot. This is a field that Sintef Energy Research sees may provide opportunities for further cooperation with DNV KEMA. Not afraid
The Nefi testing and certification laboratory at Skien does not look on DNV KEMA as a competitor. “DNV KEMA is on a completely different level to us. We use them when we can’t test and certify ourselves,” says Tor Bratsberg, the general manager of Nefi. Nefi was established by ABB, Statnett, Energy Norway and Sintef Energy Research and is accredited to test and certify equipment for the power sector. ABB is the largest owner and user. Nefi is nevertheless regarded as being completely independent and guarantees confidentiality. Møre Trafo is the Nordic region’s only manufacturer of transformers and has to test and certify its equipment. “We know DNV KEMA well but they are more involved in higher voltage equipment. We try to stick to Nefi and Sintef Energy Research, i.e. Norway, if we can,” says Kårstein Longva, the product manager for transformers. no 03 2012 – 15
+ innovation
Singapore: Asia’s clean power growth frontier Global clean energy companies are tapping Singapore’s competitive advantages to develop innovative solutions that will propel their growth in the Asian market
Text: Goh Chee Kiong, Director of Cleantech and Building & Infrastructure Solutions with permission from the Singapore Economic Development Board. photos: JTC Corporation
A
round the world, governments are stepping up efforts to grow their clean energy capacity to address climate change and reduce reliance on fossil fuel sources. The megatrend of rapid urbanisation further underpins the ever-increasing appetite for energy. This confluence of factors has continued to drive investments in sustainability solutions and clean technology which span the areas of solar energy, wind energy, bio-energy, energy efficiency, green buildings, smart grids, carbon services, environment and water. The International Energy Agency (IEA) estimates that the share of renewables in global electricity generation will increase from 20% today to almost a third in 2035. Today, Asia is already a global manufacturing powerhouse in clean energy products. Home to more than half the world’s population, Asia is also regarded as the next major growth frontier for clean energy as Asian countries balance their increasing 16 – no 03 2012
energy demand with tightening supply and carbon constraints. Specifically in solar energy, the region is expected to contribute about 30% of the global solar market by 2015, compared to just over 10% in 2010. China is pushing ahead, with strong government support for solar as well as a range of other renewable energy technologies. In India, favourable government policies are encouraging large-scale solar installations. Growth is also being driven by Japan, Australia, and the South East Asia region. Singapore has a strong role to play here as the leading clean energy hub for the region, by partnering closely with businesses in the development and commercialisation of innovative green solutions to serve global needs for sustainable development. Leveraging research and innovation I Goh Chee Kiong, Director of Cleantech and Building & Infrastructure Solutions.
The country’s strengths in manufacturing sectors such as electronics, precision engineering and chemicals, connectivity
I Serving as a nexus for research, innovation and commercialisation in clean technology, CleanTech Park is the choice location for forward-looking corporations that have embraced environmental sustainability.
with the regional markets, access to skilled international talent, and extensive supplier base put it in good stead to provide value to clean energy companies. Meanwhile, Singapore’s trusted intellectual property protection regime is a key benefit for companies conducting innovation activities. In fact, Singapore has been leveraging research and innovation as a key growth driver thus far. In 2011 alone, Singapore announced new public sector R&D funding to the tune of about S$700 million across the areas of energy, green buildings and water. The R&D funding has been utilised to establish and grow public sector R&D centres in clean energy, one example being the Solar Energy Research Institute of Singapore (SERIS), now regarded as the top solar research centre in Asia outside Japan. The goal of its R&D efforts is to accelerate the cost reduction and efficiency improvements of solar panels, and improve the integration of solar technology with the
grid. SERIS also runs the National Solar Repository, which tracks data from systems around the island in order to optimise solar systems in the tropics. Besides SERIS, Singapore hosts the Energy Research Institute @ NTU (ERI@N) which serves a broader range of energy sectors such as wind, fuel cells, smart grids and green buildings. ERI@N has entered into research collaborations with Bosch, IBM, Philips, Vestas and Gamesa. The Agency for Science Technology & Research (A*STAR) also operates the Experimental Power Grid Centre (EPGC) which houses a 1-megawatt microgrid allowing for research into distributed generation and smart grids. Living laboratory
Extending beyond R&D, Singapore actively positions itself as a ‘living laboratory’ for companies to test-bed and commercialise innovative energy solutions, customised for the urbanised tropics. As a resource-
constraint state, Singapore’s main interest has been holistic energy management and efficiency so as to improve our energy resilience, increase our energy options and reduce our carbon footprint. Given our land constraints, Singapore had been intensifying our competencies around rooftop-mounted solar systems that are optimised for the tropics. Another innovative approach is the ongoing floating photovoltaic pilot project on our reservoirs, as an alternative to rooftops. Solar cooling technology is another example where UWC, an educational campus, is testing the largest solar cooling system in the world today. To cope with the growing clean energy sources on a limited land mass that is subject to rapidly fluctuating weather patterns, Singapore is also researching into highly novel control and optimisation platforms to address the challenge presented by intermittency of solar energy. Singapore is also piloting smart meters, building energy no 03 2012 – 17
© A*STAR
+ innovation
18 – no 03 2012
I The Agency for Science Technology & Research (A*STAR) serves as a symbol of Singapore’s commitment to building a strong research community. Working on multiple research fronts, it also operates the Experimental Power Grid Centre (EPGC) which houses a 1-megawatt microgrid allowing for research into distributed generation and smart grids. Photo: courtesy of A*STAR
management systems, demand response and electric vehicles as part of the overall national testbed in smart grids. Eco-Town
In addition, we recently designated a greenfield public housing area called Punggol, as Singapore’s first Eco-Town, where we will promote sustainable living and demonstrate environmentally-friendly energy solutions. As part of this initiative, Singapore is among the first in the region to pioneer the solar leasing model, now becoming increasingly important as electrons – rather than modules – are sold, the advantage being that it takes away the upfront cost burden on adopters. Power-wheeling is also another innovative business model being explored to catalyze the interest by energy-intensive operations such as data centres to consume clean energy from offsite solar generation. As Singapore is a leading financial centre, we are also focused on positioning Singapore as the leading project development and financing hub for the region. Today, Singapore is home to many international solar companies such as REC, Yingli, Trina Solar, MEMC, Conergy and Phoenix Solar which established their regional or global headquarters and innovation centres here. In the wind sector, we play host to Vestas, Gamesa, Siemens, DNV and Keppel. Panasonic has also set up an energy solutions team in Singapore to develop and trial a new-generation energy system that combines solar systems, energy storage and home energy management systems. Looking ahead, Asia will play an increasingly major role in the global sustainability landscape. Building on its strong competitive advantages, Singapore is already strategically positioned to do its part in driving green growth and helping companies implement such initiatives across Asia.
DNV Clean Technology Centre With ambitions to have a ‘global impact’ on the sustainability agenda, DNV is focusing on the development of green, sustainability-related services for its clients worldwide. It is also leveraging on the rising demand for clean technology (cleantech) innovation and incubation services in Singapore and Asia. It officially opened its Clean Technology Centre (CTC) in Singapore in March 2010. “DNV considers Asia as the world’s fastest developing region, expected to account for one-third of world trade by 2020, and as such it was appropriate for DNV to set up its Clean Technology Centre in Singapore,” says Bjørn Tore Markussen, chief operating officer of DNV KEMA Asia Pacific, the energy and sustainability arm of DNV. “Indeed, we see Asia as a region that will develop rapidly as the population and wealth increase along with higher energy needs and the corresponding strains on resources here.” The CTC is focusing on smart grids, transmission & distribution, gas and renewable energy. “We are working on many fronts, on behalf of clients, to make sure that emerging clean technology solutions are fit for purpose, investment and commercialisation,” says Sanjay Kuttan, managing director of the DNV Clean Technology Centre in Singapore. “In terms of sustainable cities, DNV provides expertise in risk management frameworks for new technology-based solutions, technology assessments for investors, helps build understanding and capacity to effectively seize opportunities related to cities and emission trading, creates renewable energy solutions that are adapted to the urban environment and infrastructure and does material testing for climate neutrality. Recognising that clean technology innovation and commercialisation requires collaborative business models, DNV has previously signed cooperation agreements with the Energy Research Institute at Nanyang Technological University and the National University of Singapore (NUS) as well as the Maritime and Port Authority of Singapore.
no 03 2012 – 19
+ Innovation
DNV unveils its SUNdy floating solar field concept Many countries are turning to solar technology and renewable energy because of a need for alternative energy sources and environmental concerns. To help meet these needs, DNV has developed SUNdy, a large-scale offshore solar field concept which launched at Singapore International Energy Week. Text: Stuart D. Brewer illustration: Designimations/Terry Box
R
esearchers at DNV have developed a dynamic floating offshore solar field concept. Dubbed SUNdy, the core feature of the concept is a hexagonal array which floats on the sea surface. A collection of these arrays, totaling 4,200 solar panels, forms a solar island the size of a large football stadium, capable of generating 2 MW of power. Multiple islands connected together make up a solar field of 50 MW or more, producing enough electricity for 30,000 people. “The renewable energy market is rapidly changing due in main part to climate change, soaring global demand for electricity, and scarcity of fossil fuels. For DNV, technological innovation is a key element in our strategy to help address these concerns and SUNdy, as an example of our research work, can help illustrate future applications for solar power as a truly sustainable resource,” says Bjørn Tore Markussen, Chief Operational Officer for DNV KEMA Asia Pacific. “Indeed, renewable energy is becoming increasingly important in nations across the globe, including Asia, and with such a readily available and 20 – no 03 2012
“Many countries are turning to solar technology and renewable energy because of a need for alternative energy sources and environmental concerns.” Bjørn Tore Markussen, COO of DNV KEMA Asia Pacific
abundant source that is rapidly approaching grid parity levels, it’s solar power that’s attracting a lot of interest in this part of the world.” The SUNdy concept is made possible using thin-film 560 W solar panels which are flexible and lighter than the traditional rigid glass-based modules, allowing them to undulate with the ocean’s surface, explains Sanjay Kuttan, Managing Director of the DNV Clean Technology Centre in Singapore. “The key to creating an oceanbased structure of this size is the use of a tension-only design. Rather like a spider’s web, this dynamic, compliant structure yields to the waves, yet is capable of withstanding considerable external loads acting upon it.” According to Dr Kuttan, separating the solar arrays into prefabricated sections allows for large-scale manufacturing and streamlined assembly offshore. The cable grid provides for maintenance access in the form of floating gangways. Below the surface, the shape of the island is maintained by the tensile forces from the lengthy spread mooring.
The core feature of the concept is a hexagonal array which floats on the sea surface. A collection of these arrays, totaling 4,200 solar panels, forms a solar island the size of a large football stadium, capable of generating 2 MW of power. Multiple islands connected together make up a solar field of 50 MW or more, producing enough electricity for 30,000 people.
no 03 2012 – 21
+ Innovation
“This dynamic, compliant structure yields to the waves, yet is capable of withstanding considerable external loads acting upon it.” Sanjay Kuttan, Managing Director of the DNV Clean Technology Centre in Singapore “The island has been optimised for solar capability and cabling efficiency,” adds Kevin Smith, Global Segment Director for DNV KEMA’s Renewable Energy Services. “The solar arrays are divided into electrical zones feeding electricity produced into two main switches collecting the power for voltage step up at a central transformer (2MVA 480/34.5kV). From the offshore solar farm’s central island, 30kV electrical transmission lines connect, tying other islands in series to form a close loop and continue to the electrical sub-station onshore for grid connection.” The unveiling of the SUNdy concept 22 – no 03 2012
comes at a time when solar photovoltaics (PV) is experiencing extraordinary market growth. Almost 30GW of operating capacity has been added, increasing total global capacity by 74% to more than 69GW according to the Renewable Energy Policy Network 2012 report. While the EU again dominated the global market, markets are expanding in other regions, and China has rapidly emerged as the dominant player in Asia. Emerging markets, such as South East Asia, are also aiming to grow their renewable energy production with an increased presence in the solar sector. “Many countries are turning to solar
technology and renewable energy because of a need for alternative energy sources and environmental concerns” says Mr Markussen and adds, “This is particularly so in highly populated countries which need more and more energy to supply their booming economies. We firmly believe the SUNdy floating solar field concept offers sound and sustainable development prospects, particularly in Asia and the congested coastal megacities where there’s limited opportunity for rooftop solar power and urban areas which command premium prices for large-scale mounted solar production.”
The sun is the planet’s primary energy source, distributing abundant, clean energy around the globe. Seeking to tap this truly sustainable resource, SUNdy is DNV’s large scale floating offshore solar field concept, bringing clean energy to our future.
Extraordinary market growth The unveiling of the SUNdy concept comes at a time when solar photovoltaics (PV) is experiencing extraordinary market growth. Almost 30 GW of operating capacity has been added, increasing total global capacity by 74% to more than 69 GW according to the Renewable Energy Policy Network 2012 report. While the EU again dominated the global market, markets are expanding in other regions, and China has rapidly emerged as the dominant player in Asia. Emerging markets, such as South East Asia, are also aiming to grow their renewable energy production with an increased presence in the solar sector.
Extraordinary innovation projects DNV invests 6–7% of its revenue in research and innovation every year. While the majority is spent on long-term research and development, DNV also finances a portfolio of extraordinary innovation projects. These address immediate customer and industry needs, and serve as invitations to further collaboration with customers on their specific needs. The SUNdy project is only one of many such extraordinary innovations DNV contributes to the industries it serves.
no 03 2012 – 23
+ Innovation
Opera:
An innovative concept for efficient offshore power generation By centralising the power generation and distributing the power to several offshore production units, DNV is proposing a concept that can reduce both emissions and costs. The OPera (Offshore Power system for a new era) concept serves as an invitation to the oil & gas industry to collaborate.
Text: Kristian Lindøe and Sven-Erik Børresen Illustration: Designimation
A
s oil & gas companies extend their presence to remote and ultra-deep waters, one of their main challenges is to maintain environmentally responsible operations while maximising returns on investment. The increasing demand for offshore power triggered a quest for alternative and cleaner power supplies. With this in mind, DNV came up with a conceptual study to complement existing power hub concepts. The OPera concept was initiated to provide inspiration to the industry and serve as an invitation to collaborate. Cost-efficient
DNV proposes a cost-efficient way to significantly reduce emissions in a cluster of field developments through the use of a shared energy source called OPera, the Offshore Power system for a new era. OPera consists of a power hub and an electrical transmission system, and supplies 24 – no 03 2012
cleaner power to a network of installations. Connected platforms can focus on their main task; optimising oil & gas production. The power hub has a gas-fired combinedcycle power plant that increases power generation efficiency by more than 15% compared with conventional gas turbines alone. The power generation arrangement reduces CO2 emissions by approximately 40%. By consolidating power generation, the power hub also allows equipment to operate at optimal load. This is a major benefit, as it further reduces fuel consumption and overall emissions. The power hub is fuelled by associated gas or some of the export gas produced. Flexible concept
The OPera concept is highly flexible in size and configuration, making it relevant for different types of fields. The power plant consists of modular gas and steam
units of 50 and 100 MW capacities, allowing the combined capacity to be tailored. Depending on the water depth, different platform and hull designs can support the power plant. The power hub can be connected to different numbers and types of installations that are located in different water depths. Extraordinary innovation projects
DNV invests 6–7% of its revenue in research and innovation every year. While most of this is spent on long-term research and development, the head office directly finances a portfolio of extraordinary innovation projects. These projects address immediate customer and industry needs and serve as invitations to customers to further collaborate on their specific needs. The OPera project is only one of many such extraordinary innovations that DNV has contributed to the global oil & gas and maritime industries.
In addition to lower emissions, this concept can free up valuable space on the platforms as they no longer need to generate local power for oil & gas processing. Depending on the characteristics of the oil & gas field and the involved parties’ interests, this space can be used for other value-creating purposes – for example, the installation of redundancy in oil & gas processing, better safety arrangements or preparations for future tie-ins or some other optimisation of the production capacity.
•• Freeing up valuable deck space on connected platforms, for increased oil production, higher redundancy, improved safety, future tie-ins or other value creating use.
•• Improved operational logistics.
•• Additional revenue from natural gas sales through the reduction of gas consumption offshore.
•• 700 MW combined cycle power plant.
•• C an be tailored to specific needs. •• Reduced need for backup power capacity.
•• 132 kV submarine cables in closed loop configuration provide redundant connections.
Case example for ultradeep waters I The main focus of the study is the networking of offshore installations in an electric power system, including the challenges and opportunities for the equipment, the system as a whole, and connected installations. no 03 2012 – 25
+ StormGeo
DNV and StormGeo – a positive forecast Founded in Bergen, a city known for its rain and as the actual birthplace of modern meteorology, StormGeo was built on first-hand experience of and enthusiasm for weather. Through a new strategic partnership with DNV, its employees feel better prepared than ever to take on the world’s most challenging weather conditions. Text: hanne christiansen
26 – no 03 2012
© Getty Images
no 03 2012 – 27
+ StormGeo
“At the end of the day, the most important principle that we share with DNV is that no matter where we are in the world, we will never compromise on safety.” Erik LangakeR chairman of the board, stormgeo
In
collaboration with TV2, Norway’s largest commercial broadcaster, meteorologist and presenter Siri Kalvig started StormGeo in 1997 as a spin-off of the channel’s popular weather services. With its groundbreaking use of graphic animations and a bright, youthful approach to presenting even the gloomiest of forecasts, TV2’s weather services became a strong contender to the statesubsidised Meteorological Institution in the 1990s. “Although TV and media represent less than 10% of our revenue, we definitely still have a lot of that TV approach in us,” says chairman of the board Erik Langaker. “It has always been deeply ingrained in StormGeo that the only way to sell services that competitors give away for free is to offer fresh and innovative products developed by people with a genuine fascination for weather and climatic conditions.” Mr Langaker speaks with apposite enthusiasm about the commitment to 28 – no 03 2012
research and development that has helped take StormGeo from a national weather services provider to a global company with 12 offices in nine countries. “Over the past ten years, we have invested more than 25% of our gross annual revenue back into R&D – well aware that every penny might not pay off, but convinced that it will help create products that differentiate us,” he says. Expanding services
Originally providing weather forecasts for the media, StormGeo soon expanded to include services for the hydropower and oil & gas industries. Spotting a niche market in delivering not just forecasts but also analyses of the weather’s effect on business, StormGeo gradually began developing meteorology systems with a unique understanding of the performance of each individual entity. ”We spent nearly three years preparing for international expansion by gradually
shifting our focus towards products and services that can be sold anywhere in the world,” Mr Langaker says. “But in order to achieve that, we realised that we needed a new ownership structure that supported our growth and globalisation ambitions.” Strategic partnerships
In 2008, Mr Langaker’s company Idekapital AS acquired a 42.5% stake in StormGeo, entering into a strategic partnership with TV2 Invest and Kalvig to focus on internationalisation. Three years down the line, after StormGeo had established offices in the rest of Scandinavia, the UK and the US (and acquired Seaware AB, a leading provider of onboard ship routing solutions, in the process), private equity fund Reiten & Co Capital Partners became a principal shareholder by buying 67.7% of the equity. Mr Langaker says StormGeo finally reached its ownership ambitions in the spring of this year, when DNV acquired
I Erik Langaker, chairman of the board, StormGeo
the right to purchase 22.7% of StormGeo’s shares through a mutually convertible capital issue.
we feel we can deliver more to our customers if we act together.” DNB Company of the Year
Shared ambitions
“We are really proud to have DNV on board,” says Kent Zehetner, the CEO of StormGeo. “Our organisations share core values and ambitions when it comes to research, innovation and technical expertise. DNV has always been a role model for us, particularly due to its success in creating a strong global presence.” DNV’s Chief Technology and Sustainability Officer, Bjørn K. Haugland, joined StormGeo’s board of directors as part of the agreement, which will see the two companies sharing networks and expertise around the world. “StormGeo’s activities are highly complementary to DNV’s existing business within the maritime, oil & gas and renewable energy sectors,” he says. “We have already identified cases within all our business areas where
In a recent testimony to its commercial success, StormGeo was awarded the 2012 Company of the Year prize by Norway’s largest bank, DNB. The jury emphasised strong performances by young and visionary employees and a culture that has dared to challenge the markets through continuous investment in R&D and competence development. “We were always attracted to this entrepreneurial spirit that we find throughout the StormGeo organisation,” says Mr Haugland. Future forecasts
Together with DNV, StormGeo will continue to focus on its four main business areas: offshore, shipping, renewable energies and media. Mr Langaker and Mr Zehetner both emphasise that DNV’s
world-leading experience in risk management and certification will be particularly valuable as these industries become increasingly subject to new requirements as a result of climate change. “This partnership will enable us to think in a much more long-term perspective, especially in terms of product development in a rapidly changing market,” says Mr Langaker. “At the end of the day, the most important principle that we share with DNV is that no matter where we are in the world, we will never compromise on safety.” Mr Haugland agrees: “As the world struggles to reduce CO2 emissions, we see the need for effective and risk-based adaptation to climate change. This trend will increasingly call on best-practice meteorology systems, and StormGeo’s core competence and ability to communicate complex issues in a simple and elegant way will be very useful to DNV and its customers.”
no 03 2012 – 29
+ Safety at Sea
PIONEERING SAFETY LEVELS IN THE NORTH SEA As a result of the expansion of the wind power industry in the North Sea in recent years, there has been an increase of specialist high speed service craft transporting personnel and equipment between wind turbines and coastlines. This activity calls for new safety standards, and DNV is spearheading the development. Text: Hanne Christiansen
As
wind farms have been built further away from coastlines and harbours, transit times for Wind Farm Service Vessels (WFSV) have increased and new high speed craft have been developed to provide regional services. Today these cover distances off the coast which are beyond 20 nautical miles and can operate in more than one regulatory jurisdiction – introducing new safety risks and challenges exceeding domestic workboat standards developed before offshore wind.
DNV UK & Ireland’s Manager of Classification, Martin Crawford-Brunt, says: “We realised we had to find a commonality of approach between the different member states, without taking away from each individual state’s sovereign right to decide in their territorial waters. By creating a certain minimum safety level, we felt we could significantly raise the regional bar for safety.” High Speed Light Craft
Initial talks
Given the challenges of operating WFSV in the North Sea, DNV initiated the development of a standard that could enhance safety of these vessels in a cost-effective way. In 2010, talks commenced between DNV experts and seven flag states in the North Sea basin, as well as designers, operators and regulators. The aim was to create a viable regional standard that reflects the true operating profile of these smaller non-convention vessels. Danish Maritime Authority
Per Sønderstrup is Responsible for Regulatory Development at the Danish Maritime Authority, and was involved in the talks from the outset. 30 – no 03 2012
I DNV’s Martin Crawford-Brunt (left) and Claus Graugaard (right) have been pivotal in developing the WFSV standard along with DMA’s Per Sønderstrup.
“We had a very fruitful discussion at the time,” he says. “Traditionally in Denmark, standard passenger safety rules have generally been applied to any transport of people of sea, including windmill craft. There was, however, a lot of confusion around these rules in relation to regional WFSV operations and the differences between member states’ domestic legislation.”
The High Speed Light Craft rule set was revised in January 2012. Crawford-Brunt says it has been positively received by the industry, with over 70 vessels ordered to the standard so far. Sønderstrup agrees with Crawford-Brunt on the value of a minimum safety policy, and says the idea has, in DMA’s experience, worked well: “We have already built a number of small craft according to this standard for vessels carrying up to twelve passengers.” He also adds that there is an advantage to having an industry benchmark for flag states to relate to: “One of the main benefits we have seen is that all the member states in the North Sea basin and beyond now have a regional yardstick for comparing our individual standards.”
I The “Seacat Endeavour” owned by Seacat Services was recently accepted for operation in Danish waters, after port state control inspection, on the basis that the vessel is classed by DNV in accordance with the new standard.
Regional challenge
Both Sønderstrup and Crawford-Brunt say the different framework and approaches between member states pose a challenge to creating an all-encompassing, statutory standard. Sønderstrup, however, points out that DNV WSFV provides flag states with a robust standard on which to add individual national requirements. These are typically related to safety equipment and operating requirements only. “DMA has just completed a gap analysis with a list of ten requirements which we will consider in addition to the standard,” he says. “The advantage is that as long as we know the ship is classed according to the DNV standard, we know exactly which few remaining points we require. This makes the approval process fairly easy.” Driving innovation
In addition to facilitating smoother operational transfer between jurisdictions in
the North Sea, the DNV standard also has the potential of driving innovation and improving industry conditions. “The standard opens up for DNVcertified WFSV to be constructed in different areas and from more yards, which in itself drives innovation,” Crawford-Brunt says. “Also, because DNV certificates are recognised globally by insurance and finance institutions, building and operating vessels to this standard can add significantly to longevity and second-hand value, all at a comparably low cost.” Sønderstrup says there is also a wider opportunity for the industry to promote agreeable working conditions through adopting a regional construction standard for WFSV. “While the first priority is always to ensure safety, you have to also make sure that the people being transported on these boats find it comfortable and like going to work every day,” he says.
Industry benefit
Several flag states have expressed gratitude to DNV for instigating the initiative, which was completed without funding requests from member states. Crawford-Brunt says he is grateful for the contributions made by industry partners, which included designers, builders and equipment manufacturers, in the development of the standard. “We have managed to develop an innovative and cost-effective solution which will contribute towards improved safety in this industry,” he says. Sønderstrup agrees: “The core concern for the DMA is that if we have other countries’ ships in Danish waters, we need to know they meet sufficient safety levels. Ultimately, it does not matter which Flag the ship and passengers come from – DMA wants the same safety levels regardless of flags. As such, a trusted standard like DNV WFSV saves us a lot of work.” no 03 2012 – 31
+ Stena
Crisis – what crisis? “Crisis – what crisis? We are the winners. We have been instrumental in bringing this world further,” says Carl-Johan Hagman, CEO of Stena Shipping, Drilling and Ferries. Text: Per Wiggo Richardsen photos: Lars Adrians
NO
, he has not overslept, nor does he have a hangover from the good old days. He has probably been more awake and sober than the rest of us over the past twenty years. And he is certainly not ignoring the major problems facing the shipping industry these days. His intention is simply to put the actual situation into a wider context – to evaluate how shipping fits into global developments. He continues: “As representatives of the shipping industry, we’ve been part of an amazing development over the past 20 years. We have been and still are part of the main solution: globalisation. Through globalisation, hundreds of millions of people have been lifted out of poverty to a higher quality of life. In 2012, more people than ever before have a higher standard of living.”
First steps
Since its founder Sten A Olsson took the first steps to form the company in 1939, Stena has developed into an international group of companies with 22,000 employees and business activities all over the world. Its current activities are spread over several areas: ferries, shipping, offshore drilling, property, finance, recycling, environmental services and trade. Today, Stena is by far Sweden’s largest shipping company, and Carl-Johan Hagman is the CEO of Shipping, Drilling and Ferries. To use his own words: “Everything floating and their facilities.”
“Sometimes, I simply have to stop and reflect. Are we too efficient?”
But still some 25,000 children die every day – mostly due to poverty and disease?
“Yes, I know, and there is absolutely a lot left to do to solve the essential problems facing this world. But I’m convinced that globalisation is part of the solution. The demand for products in one part of the world can be met by another part far away, and who is in between? Our industry. The shipping industry – such as Stena.” 32 – no 03 2012
If he could have an overview of the seven seas, he would see a lot of vessels and units decorated with the characteristic Stena logo. Its around 35 ferries make Stena Line one of the world’s largest ferry companies and it operates one of Europe’s most comprehensive route networks. In addition, Stena Bulk has a fleet of 80 tankers, Stena RoRo has RoRo (roll on/
roll off) and RoPax (roll on/roll off passenger) vessels, while Stena Drilling has four newly built ultra-deepwater drillships and four semisubmersible drilling rigs. In the summer of 2011, Stena also moved into the LNG carrier market when it purchased three LNG tankers. Efficient or too efficient
“I’m humble about being a part of this really interesting and important industry. It’s not only a question of moving goods from one part of the globe to another. As already mentioned, it’s also a question of people’s living conditions and quality of life. This industry has developed tremendously over the past few decades. Sometimes, I simply have to stop and reflect. Are we too efficient? When I upgraded my own garden, I was looking for granite – pavement granite. The famous Skåne (Swedish) granite is quarried not far from the same garden. My granite was delivered from China.” Mr Hagman leaves the question he raised himself partly unanswered. We leave it to the reader to reflect on this issue. This interview is being conducted in Mr Hagman’s office at the Stena terminal in Gothenburg harbour. Outside his windows, the Stena Danica is loading trucks, cars and passengers for another voyage to
I “Shipping is part of the main solution: globalisation. Through globalisation, hundreds of millions of people have been lifted out of poverty,” says Carl-Johan Hagman, CEO of Stena Shipping, Drilling and Ferries
Fredrikshavn in Denmark. Looking out of the same windows and shifting the focus from all of shipping’s positive achievements, he looks at the flip side of the coin too – the challenges that the shipping industry has been facing over the past few years. Lifetime view
“Some ten years ago, when this city was hosting the EU summit and the protests and riots connected to that summit made headlines in all the world’s media, the price of ship fuel was USD 100 a ton. Today it is USD 700. Seven times higher! You don’t need to be a financial manager to realise that the shipping industry is facing tough times. Reducing fuel consumption is on everyone’s agenda these days – Stena included. “But we’re a technology-driven company and great believers in technology developments. We have Stena Teknik, an in-house
technology department and a continuous focus on improvements, innovation and high quality. We’re convinced that understanding the overall challenges we are facing, developing our own skills and cooperating with technically competent resources, such as DNV, is the correct focus for a long-lasting future. We take a lifetime view.” And Stena does have a long track record of innovative new solutions. Its V-max ship design for tankers has, by making relatively small changes, increased the cargo intake by 20-40% compared with conventional VLCCs. Stena’s latest drillship is ice-classed and prepared for safe operations in harsh conditions in ultra-deep Arctic waters. Stena was also the first shipowner to sign a contract for Triple-E, an environmental and energyefficient system developed by DNV. And in a very long list of innovations, the Stena EMAX air concept can be mentioned as moving the tanker fleet one step further towards sustainable shipping. Away from dirty fuel
Although Mr Hagman has a positive approach to all the topics raised and discussed – at least during this interview – he looks really worried when talking about problems to be solved within the environ-
mentally controlled areas (ECAs). “When new road-transport regulations have been introduced, cars whose lifetime is some 50% of a ship’s have been given ten years to adapt. The shipping industry was given three years to prepare for new and very strict regulations within the ECAs. This could have been done in smaller steps with an overall equal environmental impact. As a consequence – but hopefully temporarily – cargo will be moved from sea to roads. It should have been the opposite way around.” But you have been quoted as saying that; “shipping is in need of a leap” – is it possible that the very high fuel prices and stricter regulations are a combination that can lead to this leap occurring?
“Sometime – and sooner rather than later – shipping has to move away from heavy fuel oil. We have been burning the lowest quality and dirtiest fuel product in the whole refinery chain. This creates significant emissions of nitrogen, sulphur and particles – and also carbon dioxide. In the short term, we will most likely have to burn cleaner fuel. In the long term, we have to develop and prepare for alternative fuel. Gas is one interesting alternative. “There are pros and cons for everything – even high fuel prices,” he says. no 03 2012 – 33
+ USCG
A Fresh Look at the U.S. Coast Guard Do You Really Know the U.S. Coast Guard? Vice Admiral Robert Parker, USCG, Describes Some of its Key Missions and the Global Benefits. Text: Blaine E. Collins
U.S.
Coast Guard Vice Admiral Robert Parker, Atlantic Area Commander, is an interesting man in many ways. First, you notice his unbridled enthusiasm for the U.S. Coast Guard. You may say “of course”, he is a U.S. Coast Guard admiral, but then he is sure to catch your attention when he adds that many of the USCG missions are equally important and beneficial for many nations. Finally, as he ticks off some facts and figures for the U.S. Coast Guard Atlantic Area (see next spread), you are immediately struck by his huge geographic and operational responsibilities. USCG Mission
VADM Parker’s zest for the U.S. Coast Guard is undoubtedly connected with its main mission: To ensure the safety, security and stewardships of the Nation’s waters; or, more simply: • To protect those on the sea • To protect the nation from threats delivered by sea • To protect the sea itself “Throughout my career, I have seen the number, size and complexity of ships and port operations increase dramatically. 34 – no 03 2012
Ships may be bigger and crews smaller; however, safety is even more important. On the other hand, a typical cruise ship carries more than 3,000 passengers, so in either case, our job to protect those on the sea has become even bigger,” notes VADM Parker, adding “and we protect those of any nation in U.S. waters.” Protecting the sea itself needs a little more explanation. “It is partly realising that the sea has become more important to the United States, and many other nations, for the resources it contains. And so, we need to balance our commercial interests, whether for energy, minerals or food, with responsible management and preservation,” says Admiral Parker. “Let me add that this uncovers a need for various nations to work together to ensure the long-term health of the world’s oceans. We do that through the International Maritime Organisation, the North Pacific and Atlantic Coast Guard forums and various regional fishery management councils.” Global Benefits
VADM Parker’s keen insight that the U.S. Coast Guard also benefits many other countries is particularly thought-provoking. As Admiral Parker explains, “The U.S. Coast Guard has 11 missions (see next spread)
and we perform all of those in the Atlantic Area. I never lose sight that I am in the U.S. Coast Guard, but I am acutely aware that many of our missions are important, and beneficial, for other nations, too. As I see it, our focus is their interest. “For example, our people are trained to rescue those in distress without any prequalification other than danger. “We maintain an extensive network of aids to navigation for U.S. interests, to be sure, but we also recognise that everyone using our ports and waterways relies on these for safe navigation. “Our security responsibilities now extend to maintaining the global supply chain, of which the U.S. is important to me and the USCG, but we also realise that the U.S. is part of the larger global shipping community. In fact, with all of our work, one of our key success factors has been our ability to work with our partners at the international, federal, state, local and tribal level. “Fisheries are another example of the U.S. Coast Guard’s dual role for the U.S. and other nations. When the Magnuson Stevens Fishery Conservation and Management Act was passed in 1976, it specifically assigned, in order of priority, three priorities for the U.S. Coast Guard:
© Scanpix
I US Coast Guards patrolling on January 23, 2010 the main harbor of Haiti’s capital Port-au-Prince, devastated by the January 12 earthquake. no 03 2012 – 35
+ USCG
• Protect the U.S. exclusive economic zone (EEZ) – all waters within 200 miles of the U.S. shoreline from foreign encroachment; • Enforce U.S. domestic fisheries laws, which we do in partnership with the National Marine Fisheries Service; and • Enforce international fisheries agreements to protect the species that don’t typically stop at national boundaries.” Vice Admiral Parker points out that the U.S. Coast Guard operates in other counties, too. USCG teams train the maritime forces of developing countries in law enforcement, port and vessel security and safety, and how to protect their own waters. Leadership Practices
Interesting people like Vice Admiral Parker also have a sharp focus on leadership and have honed impressive skills to guide their people. VADM Parker shares a few of his.
“My job is to remove barriers that prevent our people from focusing on their missions, professionalism and teamwork. So, I have charged my staff to support our operational units by finding ‘the stupid’ and killing it. When we do this, we help them perform to their true potential. “Next, a large part of my job is to explain the ‘why’. To the extent I can do this well, I build understanding and confidence in our missions – and then our people really excel. “Third, I have developed awareness for the balance of stress and tension. Some stress, we know, is good. It increases our concentration and attention. It helps us set priorities. So, I work to balance stress and minimise the tension that can result in the failure of individuals and teams to work together.” In conclusion, it may seem that Vice Admiral Parker is doing an extraordinary job in leading the Atlantic Area – and he is. However, VADM Parker deflects any
compliments with a few astute comments: “I still lie awake during hurricane season, wondering what else we can do to be ready to respond. Then, I recognise that new challenges are just around the corner, such as cyber security, for the U.S. Coast Guard. Finally, I realise that I am sitting on the shoulders of many who came before me, – officers, enlisted, civilians and the auxiliary. There is a vast amount of knowledge and experience throughout the U.S. Coast Guard’s long history and more knowledge is acquired each day. So, knowledge management is becoming critical for the U.S. Coast Guard to avoid solving the same problem twice and to better train and equip our people.” So, it is the U.S. Coast Guard, but its reach and the benefits extend worldwide. And Vice Admiral Parker represents the best of the U.S. Coast Guard.
Atlantic area glance Nearly 26,000 active duty and reserve forces and over 23,000 auxiliary personnel are located in the Atlantic area. Roles and Missions ■■ Search and Rescue ■■ Marine Safety ■■ Aids to Navigation ■■ Ice Operations ■■ Illegal Drug Interdiction ■■ Migrant Interdiction ■■ Law Enforcement ■■ Ports/Waterways/Coastal Security ■■ Defense Readiness ■■ Marine Environmental Protection ■■ Living Marine Resources
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Average Annual Statistics ■■ Respond to over 20,200 search and rescue cases ■■ Save over 3,900 lives ■■ Save over $84 million worth of property ■■ Maintain more than 34,000 federal aids to navigation ■■ Respond to over 4,200 oil or chemical spills ■■ Interdict over 3,700 illegal migrants ■■ Stop the flow of over 47 metric tons of illegal drugs ■■ Board over 4,729 fishing vessels ■■ Inspect over 35,977 U.S. flag vessels ■■ Examine over 16,000 foreign-flag vessels
Complete over 100 international engagements to evaluate the port security of maritime partners ■■ Respond to over 7,900 marine casualties ■■ Inspect over 5,600 facilities ■■ Patrol and safeguard 46 major U.S. ports against terrorist threats ■■
What does a response look like? When Hurricane Katrina struck the Gulf, the USCG led a massive search, rescue and environmental response effort involving more than 5,600 USCG personnel, who saved more than 33,000 lives and responded to 700 storm-related pollution cases.
photo: Petty Officer Walter Shinn, USCG
When the 7.0 magnitude earthquake struck Haiti in January 2010, the USCG was the first U.S. agency on the scene with its aircraft, cutters and patrol boats. Over 800 Coast Guard men and women were involved in response and humanitarian efforts, which included evacuation of injured personnel, delivery of aid, assessment of port facilities, recovery of port operations and the transfer of critical supplies from relief ships. On 11 March 2011, when a 9.0 magnitude undersea earthquake off Japan generated a devastating tsunami and destroyed much of the Fukushima Daiichi Nuclear Power Plant, the USCG immediately coordinated port evacuations on the West Coast. The USCG coordinated with other national intelligence agencies to track vessels that may have been exposed to radiation so that as these vessels arrived in U.S. ports, the Coast Guard and its port partners were able to minimise disruption of commerce and calm public concerns.
no 03 2012 – 37
+ Corporate Sustainability
The secrets of corporate sustainability success The value of corporate sustainability strategies is being increasingly recognised by customers and stakeholders, but for many organisations significant challenges remain as they attempt to deliver on the ambitious environmental goals they have set.
Text: Excerpt from Roundtable report by BusinessGreen photos: nina E. rangøy
B
usinessGreen and DNV Two Tomorrows assembled a roundtable of industry experts and sustainability professionals recently to discuss the latest research on the topic and identify what businesses can learn from the sector’s leading lights. The proliferation of sustainability strategies shows business leaders are taking notice of climate change and environmental threats, such as disrupted supply chains, dwindling resources, or fuel price spikes. But the quality and reach of those strategies varies wildly – even among companies identified as green leaders in their sector. The ninth edition of DNV Two Tomorrows’ annual Tomorrow’s Value Research (TVR) provides a unique insight into just how wide the gap is between the leaders and the laggards, drawing on data from the 25 largest companies in each of Asia, Europe and the Middle East, and 38 – no 03 2012
North America, as well as the 19 firms the Dow Jones Sustainability Index (DJSI) identified as “supersector leaders” last year. The report shows these global corporate giants are increasingly aware of sustainability issues and actively integrating sustainability into core business strategy and decision-making. In addition, the vast majority of firms are setting sustainability targets and monitoring progress against them, while stakeholders are increasingly engaged. So why is it that around two thirds of the world’s largest companies failed to reach the 70% score deemed as a “leadership benchmark” by DNV Two Tomorrows? Mark Line, DNV Two Tomorrows’ executive chairman, explained many businesses are “losing sight of the bigger sustainability picture” when developing environmental strategies and targets. He pointed to the dichotomy between companies reporting
I Bjørn K. Haugland, DNV Group Chief Technology & Sustainability Officer, here addressing industry experts and sustainability professionals at the recent roundtable in London. no 03 2012 – 39
+ Corporate Sustainability
I Mark Line
I Gary Marshall
a decreasing environmental impact and the fact that most indicators show the global environmental picture is rapidly deteriorating. “On the planet’s big issues there are few signs of improvement, yet when you look at sustainability reports you could be forgiven for thinking the problem’s sorted and serious progress is being made,” he said.
I James Murray
think that if you want to be credible in the long-term and build your reputation and maintain the faith of consumers, you’ve got to be watching this.” Companies that do seek to fundamentally transform their business models often find they are able to build trust with consumers and shareholders by having a more honest conversation about sustainability
“A lot of sustainability challenges are pushed down the supply chain and the responsibility for them is not shared” Anand Punja, Timber Trade Federation Missing the target
Corporations may be reporting they are performing well, but in fact they are merely “optimising a flawed model”, suggested Simon Tuff, principal technologist of the green broadcasting group at the BBC. He pointed out how some companies producing ever larger and more energy-intensive TVs can still be deemed to have a strong sustainability programme by virtue of hitting environmental targets that do little to move them towards a genuinely sustainable business model. Line agreed this failure to tackle inherent flaws in business models and consumption patterns is the sustainability profession’s “elephant in the room”, adding that without more ambitious action the problem is only likely to worsen as the reach of consumer electronics expands. “This is an example of an issue that is lost in sustainability reports,” he said. “We 40 – no 03 2012
challenges and opportunities, he added. However, the “introspective sustainability reports” highlighted by the TVR show companies are too often failing to go far enough and in many cases are simply handing the responsibility for tackling sustainability challenges down to their supply chains, said Anand Punja, sustainability executive at the Timber Trade Federation. In contrast, a high level of collaboration with suppliers is one way the leading organisations identified in the TVR differentiate themselves from their competitors, according to Samantha Parsons, a consultant at DNV Two Tomorrows. “The best companies are supporting diverse suppliers because they realise the risks – if they don’t help their supply chain, climate change is going to have a negative impact and wipe out their suppliers,” she said. Line added examples of companies
I Bettina Reinboth
working really closely with their suppliers to tackle sustainability problems were hard to find, although some of the best practices were being pioneered in the extractive industries’ engagement with local communities. “The best are not just doing all the good things in terms of strategy and performance, they’re also looking outside and measuring the success of their collaborations and setting targets for the impacts of those collaborations,” he said. Reporting sustainability
Integrated reporting of sustainability metrics alongside standard financial data is another activity seen as crucial for companies’ efforts to improve their sustainability performance. This form of reporting goes far beyond simply reporting carbon emissions to working out how to account for environmental impacts all the way along the value chain. But while some pioneers are making inroads, such as the environmental profit and loss accounts Puma produced earlier this year, most companies are still trying to get to grips with how to marry qualitative sustainability data with quantitative figures. “Most of the time what people call an integrated report is a sustainability section in the annual report,” admitted Anne Euler, a senior consultant at DNV Two Tomorrows. Panasonic was identified as one company trying to get to grips with the problem by setting smart sustainability targets across most areas of its business and providing very detailed data showing how it performs against those goals. The company also has a target for the proportion of sales coming from eco-products, demonstrating the
I Anand Punja
I Anne Euler
extent to which it is trying to drive green innovation into its core business model. However, many companies struggle to get meaningful sustainability data, and even when it can be obtained, a range of different reporting mechanisms are used, making comparisons with peers difficult. “There’s very little consensus about what the future shape of integrated reporting will be,” Line said. “We are a very, very long way from enumerating sustainability impacts at the moment.” A consistent and trusted verification process will be needed before sustainability strategies can be evaluated properly. It is a significant oversight, according to DNV Two Tomorrows, given failure to properly verify environmental data could leave companies facing penalties under new environmental legislation and lead to severe reputational damage. A clearer picture
But increased transparency is inevitable, according to Bjørn K. Haugland, chief technology & sustainability officer of DNV, who argued modern communications technology was driving companies to be more and more accountable to their customers and shareholders. “I think ten years from now consumers and other stakeholders will be the most important verifiers of company performance including sustainability,” he said. “The quality of that verification will be much more precise than what an auditing company can ever do.” Companies can help themselves further by focusing their sustainability reporting on exciting, cutting-edge developments,
I Simon Tuff
“Corporations are merely optimising a flawed model” Simon Tuff, BBC such as new technologies or green employee engagement programmes that rarely get mentioned, said roundtable chair and editor of BusinessGreen James Murray. “Too many of these programmes are undersold – they’re exciting, they’re transformational, they’re based on great technology and then they’re hidden in boring reports that all look the same,” he said. Of course, as Gary Marshall, group risk manager at Polestar UK, pointed out, these snazzy technologies are out of reach for many companies, a large number of which are simply struggling to find the funds to invest in sustainability. “If you are less than cash rich then unfortunately it’s putting an immense brake on what you want to do,” he said. On the other hand, perhaps straightened times will result in great leaps forward for sustainability programmes – as long as executives know where to look for that crucial innovation. “A lot of innovation may take place in areas which we don’t see – in small companies or start-ups where people are innovating as they don’t have any other alternative,” argued Jahn Henry Løvaas, country manager of DNV in the UK and Ireland. “We look at the big companies as leaders, but maybe things happen in areas we don’t see that often.”
I Charles Hansard
The rise of regulation
Ultimately, a combination of regulations and investor responses will determine whether those firms that have developed ambitious and innovative approaches to address sustainability challenges will get their just reward. Across the world, governments are bringing in tighter restrictions on environmental impacts and forcing companies to up their sustainability efforts, which in turn forces shareholders to pay attention. “Stakeholders are beginning to identify that those who are going beyond the marker are the ones that are going to have a greater value in the future,” said Charles Hansard, director of Hansard Consulting. “And investors are becoming much more conscious about where they are putting their money.” It is this recognition of commercial necessity that is perhaps the defining feature of the most successful sustainability programmes and reports. After all, as Haugland argued, the vacuum left by a lack of international agreements to tackle sustainability issues leaves the private sector with responsibility for securing the long-term future of the economy and wider society. “Business cannot succeed in a society that fails,” he said. “We cannot rely on governments, businesses need to take the lead. “When you are able to embed sustainability into the core company culture through the value system and consistently enforce that value system, I think you will see a tremendous potential for innovation – and tremendous potential for attracting the right investors.” no 03 2012 – 41
+ Food Supply
Hungry for
change
Text: Mark Line photo: scanpix
42 – no 03 2012
The food industry must act fast if we are to create a sustainable food system, says DNV Two Tomorrows executive chairman Mark Line
If
we don’t get to grips with the issue of creating a sustainable food system, we’re in big trouble. Think of the impact of the e.coli outbreak in Germany last year. And, on an infinitely larger scale, the famine in Somalia. That’s why the debate about creating a more sustainable food supply system is so critical. Consumer demand
Recent research from The Futures Company showed that the proportion of people who say they’ve made it a priority to live a more environmentally conscious lifestyle appears to be on the wane in Western Europe, North America and Asia. And in the food and beverage market, social and environmental issues come way down the list of factors that affect purchasing decisions. Ingredients, quality and price are of far more importance. Though there is an interesting sub-plot. According to The Futures Company’s study, consumers worldwide are increasingly likely to stop buying from companies they feel are damaging the environment. So even if sustainability issues aren’t core factors for most decisions, there are increasing perils for those who are seen to transgress. Even so, what the research tells us about current consumer demand hardly amounts to a compelling case for sustainable sourcing. Nevertheless, that shouldn’t deter us. Limits to growth
The really big driver is this planet’s limits to growth. By 2040, there could be as many as nine billion people on earth – a tripling of the population in just eighty years. Already, nearly a billion people are malnourished – and half of that bottom billion are farmers.
Meanwhile, most of the rest of the world’s population is getting more affluent. This is leading to a rapid increase in consumption. The results are devastating: climate change, water scarcity, biodiversity loss, deforestation. Limits to growth are the primary reason some of the leaders in the food industry are taking this issue so seriously. They know if they don’t act now, their business models are in jeopardy. Leading players respond
As brand owners like Nestlé and Kraft – and the big retailers – have engaged with sustainability, they’ve realised they can only achieve meaningful results through their supply chains. They demand that their tier-one and tier-two suppliers – often giant multinationals in their own right – reach certain standards. It becomes a stark commercial matter for many of the food supply companies. There’s also a ‘keeping up with the Joneses’ effect. As the biggest brand owners take radical action to secure supply in years ahead, smaller players realise they need to follow suit. If not, they risk terminal disadvantage. The standout example of a leading player is Unilever. The consumer products giant has signed up to some audacious goals, including halving the environmental impact of its products and sourcing 100% of agricultural raw materials sustainably – all while doubling the size of the business. There’s a subset of the leading brand owners and retailers I’d call exposed players. Some of them have suffered real damage when on the wrong end of a damaging news story or NGO campaign. Think of the controversies Nestlé has been dealing with. Other companies are learning from what the exposed players are going through. They take note of how awkward things can get, and see the wisdom of preventative action. In the UK, Cadbury is an instructive case. In 2006, its Dairy Milk brand – the country’s best-selling chocolate bar – was in
trouble after a production line was contaminated by salmonella. Since then, Cadbury has put in a lot of hard work to recover its reputation based on a commitment to sustainability. Dairy Milk is now Fairtrade certified. In parallel, Cadbury has set up the Cadbury Cocoa Partnership. This provides £45 million of direct financial support to cocoa farmers. It’s by working directly with those at the start of the value chain that big companies can really make an impact. What we get with the activity of these leaders – exposed or otherwise – is a business-to-business pull that is far stronger than the current consumer-to-business pull. Certification schemes
Many of the leading players are also signing up to certification schemes. The Roundtable on Sustainable Palm Oil is probably the most significant scheme in the food industry given the size of the market and the issues at stake. Cargill, General Mills, Nestlé, Mars and Carrefour are all big names who’ve recently pledged to source 100% of their palm oil from RSPOcertified sources. Meanwhile, Fairtrade and Rainforest Alliance have made big inroads in fruit, chocolate, coffee and tea. However, the proliferation of schemes makes for a confusing picture for consumers – and for producers, brands and retailers. Awareness of schemes remains very low, even in a relatively switched-on market like the UK. The Marine Stewardship Council scheme has been around for well over a decade, and yet our oceans are chronically over-fished and the picture is getting worse. Room for optimism
While it is probably unrealistic to expect a complete dismantling of the current food system, or an end to our appetite for resource-intensive meat, there are signs of hope. We are seeing progressive activity in the industry – whether companies are acting independently, with NGOs or as part of wider industry moves towards certification. Against what the ‘dismal science’ of demographics tells us, these initiatives give us some room for optimism. no 03 2012 – 43
+ Corporate Social Responsibility
CSR as a way of business Sustainability in every link at Phoenix Design Aid To the graphic design agency Phoenix Design Aid in Denmark, Corporate Social Responsibility (CSR) is not an activity but a way of business.
Text: Brit Ingvild HolmeM photo: Phoenix Design Aid
P
hoenix Design Aid was founded in 2005 by Dennis Nielsen, CEO and Managing Director. The company draws upon more than 20 years of experience within design and printing processes. A strong environmental commitment has always been a main focus in the way they do business. “Environmental sustainability is the core value of everything we do, and we demand the same of our customers and partners as well,” says Nielsen.
trust an extensive network of 26 collaboration partners globally to support the delivery of printing, translations, distribution and more. All suppliers must be able to document CSR compliance. “We only work with customers and suppliers who comply with the UN Global Compact principles, as well as our own code of conduct. We need to be able to confirm that all services are ethically delivered,” Nielsen explains.
Certification of social responsibility People, Planet and Profit
Documented CSR compliance
Phoenix Design Aid is a small, yet international company. The head office, located in the town of Randers, in the north-east of the Danish mainland Jylland, has eight full-time employees. The company also has offices in Copenhagen, New York, Dublin, Geneva and Mumbai. Phoenix Design Aid provides graphic services to organisations internationally, mainly non-governmental organisations (NGOs). As the head office is rather small, they 44 – no 03 2012
ment system to relevant ISO standards. “Phoenix Design Aid has worked with DNV, now DNV Business Assurance, since 2006, and has been certified to the management system standards for quality, environment and occupational health and safety – ISO 9001, ISO 14001 and ISO 18001. DNV has been our accredited certification body and a support on our certification journey in these years.”
Phoenix Design Aid run what they call a triple bottom line, with three main pillars: People, Planet and Profit. “This means that all our actions must benefit our people, including employees, clients and partners. Our actions must also benefit the planet, as well as supporting a healthy business,” Nielsen says. To ensure and confirm that they work continuously in compliance with best-practices on quality, ethics and occupational safety, they have certified their manage-
When the Danish national standard for corporate social responsibility, DS 49001, was introduced in Denmark a couple of years ago, Phoenix Design Aid found it to be a perfect match for their environmentally and sustainably focused graphic agency. “It was easy to decide that we wanted to certify to this standard,” Nielsen says. DS 49001 is based on the ISO 26000 guideline for social responsibility. Certification to DS 49001 for companies based in Denmark confirms an organisa-
I Dennis Nielsen, founder and CEO of Phoenix Design Aid, puts CSR first.
tion’s commitment to social responsibility, including factors such as management, human rights, environment, community involvement and consumer issues. “We were the first graphic agency in the world to be CSR certified. Combined, the four management systems standards we are certified to are integrated into our daily operations, and constitute our way of business,” says Nielsen. “Integrating management system standard principles as a way of business also ensures continuous improvement.” According to Nielsen, it took one year from when they decided to go ahead with the DS 49001 certification, until the certificate was issued by DNV Business
Assurance. The road to CSR certification was comprehensive and required thorough preparations. However, the fact that they were already certified to management system standards within quality, environment and safety simplified the process. “As I see it, both Phoenix Design Aid and our customers benefit from CSR. One factor is of course that it contributes to a better reputation. With the CSR certification, we are able to document our CSR efforts. Additionally, we see that it’s a market differentiator. We have a consistent supply chain that we know comply with ethical principles, and we can prove this to our customers. Having a global network of CSR compliant suppliers enables us to reduce
our own and the customers’ costs, no matter where they are located,” Nielsen explains. Best practice example
Their dedicated CSR efforts have also made an impression on the United Nations. The UN Environment Programme (UNEP) has used Phoenix Design Aid as a best practice example during the climate change conferences COP 16 and COP 17. ”We are members of UN Global Compact and the UNEP lead Climate Neutral Network. We are very pleased to be able to inspire others and enable them to benefit from our positive experiences,” Nielsen concludes.
ISO 26000 and DS 49001 ISO 26000 is a guideline for social responsibility, published by the International Organisation for Standardisation (ISO). The guideline is intended to assist organisations in contributing to sustainable development. DS 49001 is a Danish, national social responsibility certification scheme, published by Danish Standards (Dansk Standard). It is based on the ISO 26000 guide.
no 03 2012 – 45
+ Oil & Gas
Forecasts a long future for Norwegian oil & gas The level of production on the Norwegian continental shelf remains high. In 2010, Norway was the seventh-largest exporter of oil and the second-largest exporter of natural gas in the world. However, the amount of oil produced has decreased since the peak in 2001 and is expected to fall even further. The volume of gas produced is increasing, but the total production on the continental shelf has fallen since 2004. So what will the Norwegian continental shelf’s production level be like in 40 years? Bente Nyland, Director General of the Norwegian Petroleum Directorate (NPD), predicts that oil & gas will continue to be produced in the North Sea, Norwegian Sea and Barents Sea in 2050. Text: Eva Halvorsen photo: Stig Jarnes
T
he Norwegian Petroleum Directorate (NPD) is 40 years old this year. According to its Director General, Bente Nyland, it is a 40-year-old that likes its job and believes its work is important. “Having an independent, professionally strong NPD has been crucial for the first 40 years and will continue to be so for the next 40,” she says. “Oil & gas represent a large part of Norway’s economy and the NPD plays a key role in producing the oil & gas efficiently and on time.” In 1972, there were few who could envisage the Norwegian oil fairy-tale and very few could imagine what the situation would be like today. Even in the NPD, there were many who believed it would be over in the 1990s. “When I took over as Director General five years ago, I sometimes got the feeling that I was the last one. That I would be the person to put the lights out. But the mood has changed following the recent large finds in the North Sea and Barents Sea. We’re now experiencing enormous optimism,” she says. 46 – no 03 2012
Ms Nyland is a geologist and was reviously exploration manager in the p management team of her predecessor, Gunnar Berge. The NPD is an administrative body under the Norwegian Ministry of Petroleum and Energy and acts as a professional adviser to the ministry. The NPD has just over 200 employees, most of whom are highly qualified professionals. The right thing at the right time
Ms Nyland wants the right things to happen at the right time. She has always been interested in increasing the amounts recovered from the Norwegian continental shelf and keeping the production volumes as high as possible. The latest government oil report underlines the industry’s longterm prospects. The main points are clear – there is to be a greater focus on fields in operation, finds must be put into production, there must be more exploration in areas that are already heavily explored, and conditions must be made suitable for the opening of new areas.
“The volume of oil produced has fallen, but we have kept production high for longer than originally planned. The large fields have now been producing for 1.5 times the lifetime they were designed for. That gives us reason to ask whether we are too conservative in our planning,” she says. Technological developments have made it possible to drill new wells and connect them to main fields and thus increase production. “The companies are making efforts to augment their long-term earnings by increasing their production levels. However, we are not satisfied. Even though the large fields have produced for a long time, they still contain a lot of resources. More than half of the original oil will remain in them when they are closed down – according to current plans. That means it is highly likely that the recovery level can be increased. But that requires the ability and willingness to make the necessary investments. One of our most important tasks is to follow up the industry to help ensure that profitable resources
I “Drilling wells is the most important way of maintaining and increasing production on the Norwegian continental shelf, but the companies are drilling fewer wells than planned. The cost level on the Norwegian continental shelf is one reason why it is challenging to do this job,� says Bente Nyland, Director General of the Norwegian Petroleum Directorate. no 03 2012 – 47
+ Oil & Gas
I Snøhvit LNG Export Terminal, Melkøya Island, Norway.
in producing fields are not lost,” says Ms Nyland. She can see that these efforts are worthwhile. Demanding cost level
Ms Nyland realises it is difficult to achieve the annual production targets for several of the fields. “Drilling wells is the most important way of maintaining and increasing production, but the companies are drilling fewer wells than planned. The cost level on the Norwegian continental shelf is one reason why it is challenging to do this job,” she says. Good cost control, new drilling methods and new drilling technology may 48 – no 03 2012
make it possible to produce more, and Ms Nyland is monitoring developments closely. Costs are also important when new finds are to be developed. Small finds often require access to process and transport facilities in order for the development to be profitable. In mature areas, such finds are usually developed by being connected to independent fields. This also helps extend the lifetime of existing fields. Large finds that are being developed may also depend on spare infrastructure capacity. The coordinated development of several finds across exploration licences may reduce the unit costs and make profitable finds even more profitable or lead to the
development of finds that, on their own, would have been marginally profitable. “The coordinated development of several finds is not necessarily something the oil companies want, but in connection with new field developments it is our job to look for solutions that may produce coordination gains,” she says. New areas
Limiting the fall in production is a political goal requiring efforts to increase production from existing fields, development of discoveries, more exploration in open areas and opening of new areas. According to the NPD, almost 40% of the petroleum
© Helge Hansen/Statoil
produced on the Norwegian continental shelf in 2030 will come from finds that have not yet been made. The number and size of the finds will determine the future production level. Although considerable finds have recently been made in both mature and immature areas, the chances of making a large find are probably greater in some of the unopened areas than in already open areas. As regards Lofoten, she is cautious. “Our job is to state the importance of the resources in a long-term production picture – in a future production profile. The question of drilling in Lofoten is a political issue. Technically, it is manageable.”
When the limitation line between Russia and Norway was established in 2011, it became the NPD’s job to map the resources in this area. Bente Nyland is very engaged in the Barents Sea. “For a geologist who has worked on the Barents Sea for a long time, it is good to see the great interest that the latest oil finds have created. This area may play an important role in maintaining production in the long term while also ensuring Norway’s status as a significant and reliable oil & gas exporter,” she says. However, she does not think it is easy to forecast what the production level on the Norwegian continental shelf will be like in 40
years. “There will no doubt be oil & gas produced in the North Sea, Norwegian Sea and Barents Sea in 2050. Probably also in the new area in the south-eastern part of the Barents Sea. We will most likely have started exploration in the northern part of the Barents Sea too. Maybe there are other forms of oil & gas on the Norwegian continental shelf that proves to be of economic interest, such as gas hydrates and oil shale? I do know one thing, and that is that I will try to ensure that an independent and professionally strong NPD will continue to be important in the future, so that our experience and knowledge can be used to recover these oil & gas resources for the benefit of society,” she concludes. no 03 2012 – 49
+ Arctic
DNV increases its Arctic focus and acquires oil-spill preparedness company NPS
Text: Svein Inge Leirgulen and Linn Marie Pickard photo: DNV/ HĂĽvard Nyseth
50 – no 03 2012
The Arctic has large oil & gas resources, and operations in this sensitive and harsh area will require efficient oil-spill preparedness solutions. “The acquisition of Norwegian Petro Services (NPS) in Norway and its recognised expertise will play an important role in our activities in this field,” says Knut Ørbeck-Nilssen, the COO of DNV’s Division Norway, Russia and Finland.
Oil & gas operations in the northern areas introduce several new risk elements; the distances are greater, the climate is cold, it is dark for a lot of the year and there may be no infrastructure. It is important that the safety level here is at least as good as in the conventional areas. Therefore, the Arctic conditions will require improved technology and new knowledge to reduce the likelihood of an accidental oil spill. In addition, efficient oil-spill preparedness solutions that reduce the consequences of a potential accident must be put in place. “Both the industry and society focus heavily on reducing the environmental effects of operations in Arctic areas such as the Barents Sea. DNV wants to contribute to this, and the acquisition of NPS is an important strategic move in that sense. We are now combining DNV’s environmental
risk and oil-spill preparedness analyses with NPS’ specialist expertise in planning and organising oil-spill preparedness. This provides a complete service portfolio for our customers,” says Ørbeck-Nilssen. NPS – a DNV company
“NPS, which consists of five professionals, will give us operational expertise that is important to the oil companies when planning and training for oil-spill preparedness. We will now establish a robust local organisation in the north of Norway, based in Harstad. In addition to the new portfolio of oil-spill preparedness advisory services, DNV will provide advisory and verification services to the oil & gas industry. The new office will supplement our existing maritime industry activities in Harstad,” says ØrbeckNilssen.
Stein Thorbjørnsen, the general manager of NPS, established the company in 2006. “We’ve found a niche in the coastal and shoreline preparedness sector and have specialist expertise in planning and organising preparedness in addition to strategy and technology development. Our group of experts has also developed methods for analysing needs and creating user-friendly operational emergency plans. These are used by many of the Norwegian and international oil & gas operators,” he explains. “NPS will now be part of DNV and we can achieve a lot more together, including internationally where DNV is established in 100 countries. We also share the values of quality, independence and expertise development,” says Thorbjørnsen.
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+ Sustainia
Solutions for a sustainable future are here What if the sceptics are wrong? What if the solutions, know-how and innovation for sustainable societies are already available?
Text: Marie louise gørvild and Stuart D. Brewer photos: Sustainia
F
ormer California Governor Arnold Schwarzenegger arrived in Copenhagen recently with this exact message. The occasion was a new global award, the Sustainia Award, initiated by the sustainability initiative Sustainia and its global partners – including DNV. Mr Schwarzenegger is honorary chair of the award committee. With the nominees representing best practices from all key sectors of society, the Sustainia Award honours the many readily available, sustainable solutions across the globe. In front of an audience of more than 1,100 guests at Copenhagen’s Royal Theatre, Mr Schwarzenegger presented British Azuri Technologies as the first winner of the Sustainia Award for its Indigo Pay-As-You-Go Solar Solution – a solar system targeting off-grid communities in developing countries. “Congratulations to the Sustainia Award winner for being a true action hero and for proving to the sceptics and the naysayers that solutions already exist to meet the challenges our planet’s environment is facing,” said Arnold Schwarzenegger. One hundred solutions from around the world were carefully selected to form 52 – no 03 2012
a list of nominees: the Sustainia100 list. Mr Schwarzenegger expressed excitement about the nominated projects, stating that the diversity of the nominees “… tells a powerful story about fantastic sustainable solutions that are happening right now across different industries and regions of the world. These solutions are transforming our homes, reshaping our cities and bringing new ideas to entire communities. By sharing what is already working and pushing for new innovations, we will ensure sustainable growth and job growth at the same time.” To make the list, solutions must be ready and available, scalable, collaborative, transformative, cost-effective, have a positive environmental impact and improve quality of life. Lighting up the developing world fossil-free
The winning Indigo technology allows residents to install small solar panels paid for with scratch-cards. The pay-as-you-go business model has a promising potential for supplying poor families throughout the developing world with clean, low-cost electricity. Six thousand families in Kenya,
Malawi, Zambia and South Sudan have already deployed the solar solution. The concept enables families to avoid the big up-front cost of installing solar power. Instead, they pay as they go with scratch-cards. In Kenya, a scratch-card costs $1.40 and allows eight hours of fossil-free lighting for two rooms and mobile phone charging for a week. The low-priced technology can actually cut a family’s weekly energy expenses by 50%. Indigo is already having a transformative impact on both people and communities across Africa, where the solar panels have improved health, economic opportunities and the environment. “We are thrilled to be the first winner of the Sustainia Award. This award and the remarkable work associated with it will raise awareness of our technology and the great impact the solar panels have on people who’s only alternative is kerosene which creates unhealthy smoke,” says Simon Bransfield-Garth, the CEO of Azuri Technologies and developer of Indigo Pay-As-You-Go Solar. Over the next year, Sustainia and its partners will help the winner penetrate new markets and scale its solution through
TELL SUSTAINIA ABOUT GREAT SOLUTIONS Are you part of an outstanding sustainable project, or do you know of such a project? Sustainia is taking nominations for the Sustainia100 list for 2013. Learn more at Sustainia.me
I The Indigo technology is already having a transformative impact on both people and communities across Africa, where the solar panels have improved health, economic opportunities and the environment.
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+ Sustainia
I DNV’s Bjørn K. Haugland and honorary chair of the award committee, Arnold Schwarzenegger.
I Honoring the Community and Sustainia Award 2012 winners. Executives from the Azuri Technologies and U.S. Steel and Skidmore, seen here on stage with the sustainia award committee and key partners.
investor match-making, media outreach and keynote speeches at international conferences. Furthermore, the Nobel Sustainability Trust will grant the winner the right to use the title ‘Nobel Sustainability supported Clean Tech company 2012’, an exclusive label granted only to the most outstanding companies and initiatives within the field of clean technology and sustainable energy.
Health, Resources, Energy, Education, IT, Fashion, Food, City Planning, Transportation and Buildings. Of the Sustainia100 solutions, ten are selected as finalists for the annual Sustainia Award. The winner is selected by Sustainia’s award committee, which consists of former California Governor Arnold Schwarzenegger, the Chair of the Nobel Sustainability Trust Gustaf Nobel, former Norwegian Prime Minister Gro Harlem Brundtland, the Chair of the UN climate panel Dr Rajendra Pachauri and the EU Commissioner for Climate Action Connie Hedegaard. “With a powerful alliance of partners in place, Sustainia can get across the message that if existing solutions were implemented on a large scale, we could make really sustainable societies. We will work for bottom-up change by informing industries, sectors, decision makers, CEOs and civil societies about the many sustainable alternatives,” says Laura Storm, Executive Director of Sustainia.
SUSTAINIA100: From water cooling in Canada to smart buildings in Sydney
While Azuri Technologies is still celebrating its big win, Sustainia’s search for new innovative projects has already begun. Every year, Sustainia identifies the most promising sustainable solutions, projects and initiatives around the world. Over a period of more than six months, the Sustainia secretariat, partners and consultants screen, compare and test projects to select 100 of them for the annual list, Sustainia100, representing state-of-the-art innovation within ten key societal sectors: 54 – no 03 2012
For the 2012 inaugural Sustania100 list, over 300 solutions were submitted: varying from solar power in Sudan to sustainable fashion in Switzerland; from water cooling in Canada to solar cooling in Singapore; from buses in Brazil to smart buildings in Sydney. The final list of 100 prominent solutions represented more than 45 countries on six continents. Behind the solutions were start-ups, mature companies, research projects, spinouts, community projects and artists. Not only had they all created an innovation that cared for our environment and resources, but many were also characterised by a competitive business model. Solutions showcasing a new growth model
The latter component makes all the difference. Sustainia100 could be just another list to celebrate green innovation, but its ambitions and potential are far higher than that. Sustainia100 is the exponent of
Sustainia Action Forum The Sustainia Award ceremony on 11 October in Copenhagen was attended by over 1,000 people. Earlier in the day, there was a high-level Sustainia Action Forum. The roundtable discussion focused on how sustainability can be the next driver for prosperity and growth. The discussion, which was attended by DNV Group Technology & Sustainabily Officer Bjørn K. Haugland and Head of CSR Sven Mollekleiv, centered on the role of business. “Sustainable development is not conceivable unless businesses are a part of the solution,” commented Haugland. In reference to DNV’s strong commitment to social responsibility, Mollekleiv pointed out: “Business cannot succeed in a society that fails. In the end, business leaders, politicians and other key stakeholders must understand that going green can be compatible with growth and prosperity.”
a new industrial revolution – a new driver of growth. “The hundred sustainable solutions presented by Sustainia are examples of a new job and growth model that is rapidly developing at a time when more and more companies and entire industries are realising the huge challenges associated with the failures of traditional energy supplies, scarce resources, and a meltdown in biodiversity.” says DNV Group Technology & Sustainability Officer and Sustainia committee member Bjørn K. Haugland, and adds “Sustainia100 sets a standard for what kind of sectors, companies, jobs and products we should focus on to create a future of sustainable growth that cares for our resources.” “Don’t tell it -- show it, as the saying goes in journalism. Awareness about the problem is rising, and now Sustainia shows that the intelligent and innovative solutions for a world we like are already here,” said EU Commissioner Connie Hedegaard, who is a member of the Sustainia Award Committee.
Sustainia Award in brief The Sustainia Award is an annual international award presented to a solution, technology or initiative with a significant potential to contribute to building a more sustainable future. The award is founded by global sustainability alliance Sustainia and Scandinavia’s leading independent think tank Monday Morning in collaboration with former Governor Arnold Schwarzenegger’s initiative Regions20. Mr Schwarzenegger serves as honorary chair for the Sustainia Award Committee. The award is presented on an annual basis at a ceremony in Copenhagen, Denmark. Every year, the Sustainia secretary identifies 100 ready and available solutions with the potential to have positive social, environmental and economical impacts. The 100 solutions are listed in the Sustainia100 catalogue that provides an overview of sustainable solutions from around the world. Sustainia100 is also the list of nominees for the Sustainia award. The nominees represent ten sectors: Health, Resources, Energy, Education, IT, Fashion, Food, City Planning, Transportation and Buildings. Covering a wide range of sectors, the list of nominated solutions provides a guide to readily available know-how for a sustainable society. From the pool of 100 nominees, the Sustainia secretariat shortlists ten finalists, each representing one of the main sectors. The members of the Sustainia Award Committee discuss and rank the finalists to select the winner.
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+ Carbon Market Mechanisms
The CDM and beyond Despite its travails, there is plenty of life in the CDM yet – and a proliferation of other carbon market opportunities, DNV KEMA’s Stein Bjørnar Jensen tells DNV Forum
photo: Nina E. Rangøy
How do you see your Clean Development Mechanism (CDM) business evolving, now we are at the end of the first Kyoto Protocol period?
developers see opportunities after 2012 within other non-European carbon trading initiatives.
The future of the CDM is primarily dependent on the development of certified emission reduction (CER) prices. At the current levels of around €1 ($1.30) we are concerned that the monitoring and subsequent verification of monitoring reports are becoming less frequent. We are, however, optimistic that the CDM will continue for many years. In the short term, we expect less CDM project development, partly because new projects in least developed countries (LDCs) will not take off immediately – but mostly because there is almost no incentive to invest in low-carbon solutions at current carbon prices. This has to change! We expected – and planned for – a drop in new project validation in 2012, and a shift to verification of existing projects. But the validation market has been surprisingly strong during the year, and the verification market slightly weaker than we had expected. Maybe the continuous interest in uploading new projects into the pipeline, especially in China, is a signal that project
The recent CDM Policy Dialogue produced a long list of recommendations. Which would you most like to see adopted, and what role would verifiers have in helping implement those changes?
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I Stein Bjørnar Jensen, Global Business Line Director ACS, DNV KEMA Energy & Sustainability.
The number one issue for the CDM is to urgently address the crisis of demand. The proposal to consider establishing an institution to serve as a de facto reserve bank for CERs, charged with stabilising the market, is very interesting. It is also vital to ensure that the CDM can help national governments and emitters achieve their mitigation targets in a cost-effective manner – creating that bigger market. I believe that the verifiers – the so-called Designated Operational Entities (DOEs) – could help from their broad experience to develop the robust standards that could be effectively reported and verified. The verification is there to create trust that a unit of carbon dioxide avoided is real. We believe that is essential in a future environmental investment and credit mechanism market – whatever form it may take in the future.
In addition, I would like to emphasise that flexible mechanisms, like the CDM, are essential for mitigating climate change in a cost-effective manner, and the success of the CDM has proven this. What decisions do you expect from the talks in Doha that will have implications for the carbon markets and your business?
We certainly need clarification on the new procedure for addressing significant deficiencies in validation, verification or certification reports. This issue has been much discussed, and it is no secret that the current proposal to be presented at Doha is not a proposal that will lead to lower transaction costs. The Association of DOEs has issued a press release conveying the concerns of its members. We are in the process of analysing the effect of the current proposal. Where those analyses will lead us and what business precautions we will need to take is too early to say. We hope of course that, among all the different issues the negotiators have to deal with, the Conference of the Parties will either postpone or send the proposal back to the CDM Executive
Board. That would allow for a bit more time for the board to analyse the consequences of their proposal. If the proposal is adopted by the meeting, I am afraid that it will have an effect on the pace of new projects, especially from the LDCs, much as we saw a lukewarm start of the Programmatic CDM due to its inherent liability risks for the DOEs. A DOE is willing to take on the costs of liability of any error we might have made, but disproportional and uncapped risks, which are most likely only insurable through expensive and specifically design policies, is a problem for us – and I’m not sure that we have been able to get the Executive Board to fully understand this. What role do you expect verification companies to play in the next climate treaty, due to be agreed in 2015?
We believe that verification companies will have an important role to play in future treaties aimed at the transformation of current fossil-fuelled economies towards low-carbon solutions. The negotiations have emphasised the need for Monitoring,
Reporting and Verification (MRV) of both financial support and mitigation measures. Transparency and trust must be built and secured between stakeholders and participants of new mechanisms designed to scale up the financing of mitigation and adaptation activities in developing countries. We expect that new mechanisms will be performance-based, to ensure accountability and credibility, and this will call for verification. Aside from carbon trading, what other environmental markets will be key to DNV KEMA’s future?
DNV KEMA is involved and will continue to be involved in various markets that impact the environment. We provide energy efficiency and sustainability services to energy consumers and to organisations serving these consumers on a global level. Our clients include policy-makers and implementers, direct buyers of energy services, and the providers serving the energy services market. We will continue to focus our services to support the market to more intelligently supply and more effectively utilise energy. no 03 2012 – 57
+ Last word
Sustainable energy: Realistic ambition or oxymoron? A stable legislative framework, clear financial incentives, a transformation of energy efficiency and radical changes in stakeholder dialogue are all needed if sustainable energy is to be anything other than a pipedream, says DNV Two Tomorrows’ Jon Woodhead Given the vast expenditure needed to transform our energy infrastructure away from fossil fuels towards low-carbon sources, is it simply unrealistic to expect that, in the short- to mid-term at least, energy will ever be sustainable? While the technologies of cleaner energy hold vast potential, the transition will be expensive and time consuming. As always in life, the money has to come from somewhere. And for customers faced with ever-rising bills, it must seem as if that somewhere is always their pockets.
Jon Woodhead Sustainability services director
Energy has become a political football, with national interests balanced against local and single-issue concerns. Clear and stable legislative frameworks and financial incentives that enable private sector support are yet to be developed. Uncertainties abound over carbon pricing and differing attitudes to nuclear safety and renewable energy, hampering technical choices about how to invest in assets that will provide a return at an affordable cost of capital. Can the right market conditions be created to get the private sector to invest? How should companies engage with local stakeholders and customers whose support is needed to ensure the investment pays off over the long term? To what extent should consumer prices bear the impact of carbon pricing? For developing countries, the challenge is even greater. According to the International Energy Agency (IEA) World Energy Outlook 2011, 1.3 billion people are still living without access to electricity. The IEA estimates that the cost of creating universal access to electricity by 2030 is $915bn – or almost $46bn per year. Extending energy generation and distribution is just one way to make more energy available to more people. But if we all used energy more efficiently, the
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combined effects would be huge. Unless we change current consumption patterns, the world economy is projected to need 80% more energy by 2050. Smart meters and smart grids have been hailed as potential tools to help manage demand and reduce consumption. While in the short term customers may have to bear the cost of the rollout of smart meters, ultimately they will benefit from greater transparency in pricing and tariffs, which should (in the UK, for example) introduce much-needed competitive impetus to the retail market. Energy companies tackling these issues face another challenge: convincing stakeholders that their views have been taken into account in decision-making processes. When many stakeholders do not appreciate the complex dynamics at play, companies have the unenviable task of convincing customers of the unpalatable truth that continued price rises are justified in the best interests of society. A number of leading energy companies, such as Centrica and RWE npower, have decided to radically alter how they engage with their customers and other stakeholders on these issues. Developing and communicating a vision of the measures that will make each energy company more sustainable is one important step. But this must be joined by efforts to engage with stakeholders on a realistic and transparent vision for energy pricing, the effects of new legislation and the inevitable impacts on energy costs of decisions about generation and distribution. Without this, sustainable energy will remain a pipedream in the eyes of many, undermining the trust and licence to operate that companies need to succeed.
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