Insight issue 6, 1/2013

insight A magazine from Lloyd’s Register

Issue 1/2013

Inside • Creating value from ideas • Small modular reactors • Blowout prevention • LNG as fuel JIP • Meeting the skills shortage • De-risk with social media • KORAIL’s safety management reboot

Innovation in a complex world

Inside Issue 1/2013: 2–15 Innovation

Technological innovation can drive our economies forward, create jobs and benefit society

16 What gets measured gets managed

Paul Simpson, CEO of CDP on the evolution of carbon reporting

19 Is nuclear sustainable?

Q&A with Dr Stefan Hirschberg, Head of Energy Systems Analysis at the Paul Scherrer Institut

24 Disciplined approach

Andy Tung, CEO of OOCL says learning from past mistakes has helped the company to stay profitable

30 Against the odds

Taiwan’s high-speed railway has survived many obstacles to become a popular and profitable success story

Lloyd’s Register works with businesses and organisations around the world to enhance the safety of life and property at sea, on land and in the air. We help our clients face today’s challenges and plan for tomorrow and beyond.

Insight is our magazine for decision-makers working in the marine, energy and transportation sectors. Care is taken to ensure that the information in Insight is accurate and up to date, however, we accept no responsibility for inaccuracies in or changes to such information.

The views expressed do not necessarily represent the position of Lloyd’s Register.

Copyright © Lloyd’s Register Group Limited 2013 All rights reserved.

Contents in full: 2 Innovation 3 Creating value from ideas 5 Mining in the deep 7 Small is beautiful: small modular reactors 10 Innovation combination: LNG as fuel JIP 12 Blowout prevention 14 How to attract the winning formula: a new hybrid ferry 16 What gets measured gets managed: Paul Simpson, CEO of CDP 19 Is nuclear sustainable?

Q&A with Dr Stefan Hirschberg, Paul Scherrer Institut 22 Deep down: London’s Crossrail 24 Disciplined approach: interview with Andy Tung, CEO of Hong Kong’s OOCL 26 Marginal to mainstream: How social media can help de-risk your business – by digital strategist Nic Newman 28 Green machines: interview with Monika Bomba, Society of Motor Manufacturers and Traders 30 Against the odds: Taiwan high-speed rail 34 The Guru: interview with Ravi Mehrotra, Executive Chairman, Foresight Limited 36 Tomorrow’s talent: meeting the skills shortage 39 ‘Water lite’ energy for India?

40 Rebuilding trust: KORAIL’s safety management 42 Auditor competency: a key to food safety 44 News update

The magazine is produced by Group Communications, designed by Conran Design Group and printed by Pureprint.

Editor: Kathy Davis E kathy.davis@lr.org T + 44 (0)20 7423 2654 www.lr.org

Welcome To our latest issue of Insight Richard Sadler, Chief Executive Every time we produce a new edition of our Insight magazine I am struck by one overriding thought. The fundamental issues that have often governed the international news since the last issue are discussed in the current copy. This one is no different. Whether it is continuing coverage of liability in the Gulf of Mexico, permission for a new high-speed rail link or striving for sustainable energy sources, this magazine has ‘insight’ on the issues. Lloyd’s Register is working 24 hours a day, somewhere in the world, trying to ensure we assist in some of the biggest challenges society has ever had to face.

These challenges will be with us for many years but the complication is that the economic, the social, the technical and the political, are becoming increasingly interlinked. CSR statements focusing on the environment and social support are now being joined by economic impact reports demonstrating business contribution to a nation’s or global GDP. Deciding where best to contribute to society is based on our understanding of the needs. Knowing what to read about the needs, in this world of printed or electronic and social media, has to be a planned activity. The available options are sometimes overwhelming. However you decide to read our views and Insight, I hope it increases your knowledge and inspires new thoughts and innovations.

2 Issue 1/2013 Insight

Innovation: From the domestication of animals and plants in 9000–7500 BC, to the first iron steamships in the 1820s, and to today’s nano- technology, we have used technological innovation to drive our economies forward, create jobs and benefit society.

Historically, innovation may have happened through chance; recent examples include x-rays, super glue and the microwave.

Now leading companies focus on promoting an environment that encourages meaningful innovations. This is seen as a crucial way to survive and drive their market leadership. Given its benefits to society and the economy, policymakers also aim to develop conditions that will foster innovation.

Innovation is not just about ideas, it is the successful implementation of ideas that lead to more value. But what are the essential ingredients for innovation? What are the best business models? How do we generate the breakthrough

technologies that push forward our lives, our society, our culture? In this issue we look at some of these questions and examples of innovation across the energy, transport and management systems sectors, and even in the way we communicate – the rise of social media.

The population of the world is now more than seven billion and is forecast to reach around nine billion by 2050. As an absolute minimum, these people will need food and water.

They will also need somewhere to live. More of them are living in cities – two more every second, according to the UN. They want a better life: better food; better clothes; more opportunities. They will need transport and power.

Innovation – new and improved technologies – will be critical in meeting these needs and to cope with the environmental challenges in the decades ahead.

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Creating value from ideas It’s vital for economic and social prosperity, but what are the keys to technical innovation?

Russell Barling takes a look.

Innovate For the third year in a row, in 2012, Apple was selected by a jury of its peers as the world’s most innovative company.

But, unlike the previous two years, last year the competition was not even close when consultants Booz & Co consolidated the opinions of the world’s top 1,000 corporate research and development (R&D) spenders. Eighty per cent of respondents had Apple in their top three most innovative companies, against 43% for the runner-up, Google.

Concepts Develop

Ideas

It would be easy – and, in some boardrooms, comforting – to assume that Apple has bought that title every year by virtue of the enormous capital it piles into R&D. Any company with their money would lead the innovation sweepstakes, too, right? Not necessarily.

Apple actually ranked 53rd among the Global Innovation 1,000 in terms of R&D spending, allocating US$2.4 billion, or about 2.2% of its revenue last year.

While Toyota, which was voted seventh among the top innovators, committed US$9.9 billion to R&D last year (4.2% of revenue), more than any other corporation.

In terms of the ‘intensity’ of corporate R&D spending (the proportion of revenue invested back into R&D), Google was top, putting 13.6% of revenue back into R&D. So why do the top spenders appear to underperform in peer rankings, let alone in terms of market cap and revenue growth?

4 Issue 1/2013 Insight Hard to quantify Part of the reason for the disparity is that there is no direct way to measure the influence that the products of innovation have on economic growth, even those that change corporate behaviour and people’s lives. The full impact has an intangible element that is hard to measure.

For the average consumer, for example, innovative communications tools not only entertain, they can change how people interact, how they learn, their public image and the quality of their lives.

Applied commercially, those benefits proffer competitive advantages, which influence the bottom line. But no one really knows by how much. Nevertheless, public and private sector leaders do not dispute that innovation boosts economic growth and profitability.

“Innovation is becoming the spearhead of competition – at a regional level, on a national level, and for companies,” Ben Verwaayen, the CEO of Alcatel-Lucent recently told the authors of INSEAD’s Global Innovation Index. “How to deal with that challenge will determine the destiny of competitiveness for all players.”

“ Innovation is becoming the spearhead of competition – at a regional level, on a national level, and for companies.”

Globally, economists believe that about a third of economic growth is influenced by technological change, suggesting that technical innovation is critical to social prosperity.

Shift to the east As the forerunners of industrialisation, Western nations dominate the global rankings for innovation performance; the exceptions are Singapore and Hong Kong, who both rank in the Top 10, according to an INSEAD report, which ranked national economies on the basis of their innovation capabilities and output.

But many countries with fewer resources are proving more effective at generating results, a fact that is seeing innovation

migrate east with the global economy.

When measured in terms of innovation efficiency – described by the index as ‘countries which are strong at producing output despite weaker innovation environments and inputs’ – China and India sat at the top of the ladder last year.

China, in particular, has made spectacular recent progress on the R&D front: from 1991 to 2011 the amount it spent on R&D increased more than six times, to 1.77% of GDP. It is no coincidence the period that defines its rising R&D commitment correctly correlates with its emergence as a global economic superpower. The plan is for its annual R&D expenditure to reach 2.5% of GDP – the average for EU countries – by 2020.

“At this rate, China could soon go from being the world’s biggest factory to becoming a main laboratory for the planet,” the report’s author, IMD Professor Georges Haour, said. “Never has the world witnessed a large market emerge so quickly as China has. As the economy grows, it is also changing. China is fast climbing the value curve, transitioning from low-cost manufacturing to innovation-led growth.”

Clearly, what Apple and China prove is that it takes more than capital to be an innovation leader. This may be because it is not enough to simply create ideas; the investor must also have an effective strategy for converting ideas into products.

These then deliver profits for companies or less tangible results, such as better health or quality of life, for the stakeholders of public sector institutions.

Innovation models The 1,000 companies surveyed by Booz & Co were asked to separate themselves into three categories: ‘need seekers’ (those who prioritise engaging clients to generate new ideas), ‘market-readers’ (who monitor the market, but primarily rely on incremental advances to existing products) and ‘technology drivers’ (who rely heavily on internal technological capabilities to develop new products and services).

Of those, the ‘need seekers’, including Apple, consistently outperformed their rivals financially, in part because they had

“ At this rate, China could soon go from being the world’s biggest factory to becoming a main laboratory for the planet.” greater confidence in their ability to convert ideas into products. Half of ‘need seekers’ said their companies were ‘effective’ at both the idea-creation and product-output stages of innovation; only 12% of ‘market readers’ and 20% of ‘technology drivers’ expressed the same sentiments.

Moreover, the 25% of respondents who described their company as ‘highly effective’ at both idea creation and conversion also outperformed their peers on three financial measures: revenue growth, market cap and profit margins.

If one had to choose between being good at idea creation or conversion, you would be well counselled to opt for the latter.

Why? Because the survey found that the ability to deliver the product of innovation has a greater influence on economic growth than the ability to create the ideas themselves.

“If you have a creative idea and it doesn’t create value, it’s not technology; it’s art,” Mathew Ganz, Boeing’s General Manager of Research and Technology, told the report’s authors. “If you’re all about value creation with no creativity, the accountants are going to take over. You need to prime the pump with creative ideas and then you need to have rigorous processes in place to turn those ideas into dollars.”

Russell Barling is Lloyd’s Register’s Global Media Manager.

Solutions

Insight Issue 1/2013 5

M ining in

the deep The mysteries of the deep, a world of giant, sinister-looking creatures, undersea structures and more recently futuristic-looking submersibles and robots. Could this vast and largely unexplored territory become the ‘outer space’ of the future? asks Christopher Browne.

It could well do – though not in the glamorous sphere of space missions, moon landings and the hidden seas on Mars. No, this is a far more commercial sort of venture based on economic forces and the need to replenish the world’s dwindling land-based resources.

This was the winning project in the 2012 Research Collegium devised and organised by The Lloyd’s Register Educational Trust (now part of the Lloyd’s Register Foundation) and the UK’s University of Southampton.

Knowing 71% of the world’s surface is covered by water, more and more scientists, engineers and mining companies are eyeing the oceans and the resources that lie below the seabed as a potential source of our future minerals and ore deposits.

Interestingly, apart from the pioneering work of the French film-maker Jacques Cousteau in the 1950s to 1970s and the more recent discovery of the wreck of the Titanic, the oceans have never held us in quite the same thrall as space. Our exploratory instincts seem to have been sated by the intrepid space probes of the Russians and Americans in the 1960s and 1970s. Yet the potential is there. In the 1970s geologists discovered that huge deposits of gold, copper and zinc, among others, lie in seams one to two kilometres underwater and ejected onto the sea floor by hydrothermal vents or geysers.

So how would this work? What are the technical implications?

Which areas are likely to hold the most valuable deposits? The answers to these and many other questions have been explored in an academic study on sea exploitation, Sustainable Seabed Mining.

6 Issue 1/2013 Insight Development dilemmas The idea of deep sea mining remains at a very early and experimental stage. In the two years since winning the lease for the world’s first commercial deep sea mining operation, off the Papua New Guinea coast, the Canadian contractor Nautilus Minerals has faced considerable opposition from environmentalists and conservationists worried about damage to underwater volcanic sites that shelter hundreds of previously unknown species of fish and plant life.

The study teams found that the Nautilus Minerals project, scheduled to start this year, is likely to have a ‘mine life’ of two-and-a-half years, extracting ore at a maximum 5,900 tonnes a day. But among the species most ‘at risk’ during these projects are marine turtles and whales – and the Papua New Guinea economic zone is a designated whale sanctuary.

It is dilemmas like these that the study addresses, measuring the obvious economic and trade benefits of such schemes against the engineering and mining costs and the effects on the environment and regional biodiversity.

The ore could be gathered by a collection machine fitted with a cutter head and driven by electricity from the surface via a 2,000 metre long cable. The ore would then be then sucked up to an operating vessel by a subsea pump. The collection machine would be fitted with a camera and various sensors and detectors so the engineers on the surface can control the undersea mining activities effectively.

Once again, potential operators face disturbing a region of biologically significant coral reefs, unique marine and coastal areas and a diverse number of local species. The Red Sea also has its own network of marine protected areas.

Acknowledging the limitations of carrying out and publishing their research in six weeks, this multi-disciplinary group nonetheless presented a body of work which could form the basis of future industrial and academic investigation.

“The study could form the basis of future industrial and academic investigation”

Atlantis II Deep challenge One of the most promising seabed mining sites the study highlights is known as Atlantis II Deep and lies under the Red Sea. Here an engineering system was built and tested successfully in 1979. “With increases in metal prices and advances in technology, seabed mining in Atlantic II Deep becomes tangible in the near future,” say the study’s authors.

Substantial deposits of zinc, copper, lead, silver and gold worth several billion pounds lie in this 62km2 area.

Using lessons learned and challenges identified from the Nautilus Minerals case study, and aided by interviews with experts, the team developed a new concept for Atlantis II Deep based on a site specific assessment taking into account technological, economic, legal and environmental challenges.

Fostering research During an eight-week period in 2012, 25 young research scholars from around the world worked in five teams on the topic of systems underpinning seabed exploitation. The Collegium comprised PhD students and post-doctoral scholars from Lloyd’s Register Foundation funded Centres and other universities as well as a small number of people working in industry. The aim was to provide an environment where individuals can learn and co-operate in small, mixed discipline groups to develop their skills while completing a project that tackles a major global challenge.

The Collegium and research Centres were formerly funded by The Lloyd’s Register Educational Trust (The LRET). On 1 March 2013, The LRET was incorporated into the Lloyd’s Register Foundation, a charity and the parent entity of the Lloyd’s Register group. The Foundation supports the advancement of engineering-related education, and funds research and development that enhances safety of life at sea, on land and in the air.

‘Sustainable Seabed Mining: Guidelines and a new concept for Atlantis II Deep’

by Lev Egorov, Post Graduate Student (Technical Science), Admiral Makarov State University of Maritime and Inland Shipping, Russia; Hany Elosta, PhD Candidate, Marine Structures and Reliability Centre, University of Strathclyde, UK; Dr Nicole Kudla, Research Fellow, Lloyd’s Register Foundation Transport Risk Management Centre, Imperial College London, UK; Shiliang Shan, PhD Candidate, Dalhousie University, Canada; and KyungKyu Yang, PhD Candidate, Seoul National University, South Korea.

Christopher Browne is Lloyd’s Register’s Marine News Editor.

E chris.browne@lr.org

The third Research Collegium 2013 will focus on coastal eco-cities, supported by the Lloyd’s Register Foundation again in collaboration with the University of Southampton. More details about the Collegium and papers from the 2011 and 2012 events can be found at www.southampton.ac.uk (search for ‘collegium’) or www.lrfoundation.org.uk.

The Collegium is one of a number of joint initiatives by Lloyd’s Register and the University of Southampton. Next year, 400 members of Lloyd’s Register’s Marine business will move to a £120 million purpose-built global technology centre (GTC) on the university’s Boldrewood campus. Another part of the collaboration will be Southampton Marine and Maritime Institute (SMMI), the UK’s largest business-university alliance, which will be based next to the GTC and will include academics, leading businesses and research institutes from all over the world.

Insight Issue 1/2013 7

Small is beautiful Small modular reactors Small modular reactors are fabricated in an off-site factory and then delivered to site already fuelled for final installation, significantly reducing construction time

The development of small, factory-built nuclear reactors is being driven by a need to cut capital costs, provide power away from large distribution networks and reduce greenhouse gas emissions. Professors Richard Clegg and Mamdouh El-Shanawany look at the technologies that are becoming available, and gauge the likely take-up of these reactors.

As nuclear power generation has become more established, the size of reactors has grown from the 60MWe levels of the 1950s to today’s 1,600MWe giants. But despite the operating economies of scale that followed, high capital costs twinned with a demand for smaller-scale, more flexible power generation, now sees industry re-visiting small reactors that generate less than 300MWe. These so-called small modular reactors (SMRs) could provide power to small, remote electrical grids in developing countries or be integrated with renewable technologies, such as wind and solar power, to offset variations in energy generation. ‘Modular’ refers to the fact that the reactors are fabricated in an

off-site factory and then delivered to site already fuelled for final installation, significantly reducing construction time.

The latest designs also build on the safety features and emergency responses associated with large-scale nuclear power plants. But the fact that they are smaller and use less fuel enhances their coolability, and reduces the likelihood of core damage in unplanned events.

Why now?

The operating economies of scale that came with traditional large nuclear plants are now over-shadowed by the massive capital costs of building a large plant from scratch. The industry trend towards smaller-scale, more flexible power generation, such as wind and solar energy, has led to a revival of interest in these caravan-sized units, with a number of manufacturers looking to build prototypes.

They could suit countries that lack the robust electrical network needed to transmit the massive output generated from conventional large nuclear power plant, and the technology could also offer a cheaper alternative to diesel generation used in remote regions.

SMRs could be used in both developed and emerging economies worldwide

Three distinct SMR reactor designs are currently being considered, based on light water, fast neutron reaction and high-temperature gas-cooled technologies.

While each has its pros and cons, the designs are generally simpler and will be cheaper to mass produce and site than larger versions. Most are designed with a high level of so-called passive safety, not requiring operator actions or electronic feedback to shut down safely in an emergency. In addition, the American Nuclear Society recently reported that many of the safety features required on large reactors are not necessary in these small designs.

The US is largely focusing on small, light water reactors, thanks to its large pool of industrial experience with this technology.

The reactor design is basically a scaleddown version – less than 200MWe – of existing US plant. This is likely to help development and, importantly, speed up licensing applications in the US. The first demonstration reactors could be up and running by 2018.

Russia, Argentina, France, South Korea, China, Japan and South Africa are also

8 Issue 1/2013 Insight

Small, remote electrical grids in developing countries could be powered by SMRs

SMRs could be integrated with renewable technologies, such as wind and solar power, to offset variations in energy generation

working on SMRs based on existing light water reactor designs. The UK has expertise and experience in SMRs and could also develop as a designer and manufacturer.

sealed reactor will measure only 1.5 metres wide and 2.5 metres high, contain no moving parts and could operate for up to a decade without re-fuelling. A prototype is currently being built.

Better use of fuel Researchers in the US, Korea and Russia are working on fast neutron reactors, that promise to be smaller and simpler than light water types. These reactors typically use liquid metals as a coolant instead of water, allowing so-called fast neutrons of higher energies to drive fission in the reactor.

Meanwhile, US energy giant General Electric and Japanese conglomerate Hitachi have joined forces to construct a fast reactor – the Power Reactor Innovative Small Module (PRISM) – that can actually generate electricity from spent nuclear fuel.

As this project highlights, around 95% of the spent nuclear fuel from conventional light water reactors could be used to generate electricity. GE Hitachi has laid out plans to build a reactor recycling plant in the US. The alliance has also confirmed talks with the UK government to use the technology as a way of dealing with Britain’s civil plutonium stockpile.

As such, these reactors use the full energy potential of the nuclear fuel, rather than the 1% consumed by light water reactors. Because the reactors consume the transuranic elements in the fuel, the radioactive lifetime of waste is significantly reduced and the re-fuelling interval extended to as much as 20 years.

The reactors, however, also demand a fast-reacting safety system, and cannot rely on passive safety features alone.

Perhaps the most high profile fast neutron reactor is a 70MWt/25MWe unit from US-based Gen4Energy. The portable,

The third SMR design-type is based on the concept of a high-temperature gas-cooled reactor. Classed as a ‘Generation IV’ reactor – and yet to be built – these reactors have very high outlet temperatures and are suitable for applications such as generating process heat for industrial applications or producing nuclear-assisted hydrogen for fuelling the hydrogen economy.

The Chinese energy firm, Chinergy, is pioneering one of the most advanced high-temperature gas-cooled SMR projects to date, and has submitted plans to build 18 reactors of 210MWe, equipped with passive safety systems.

Quicker turnarounds A common advantage of SMRs is that they can be built relatively cheaply, in clean conditions, in a factory environment. A 2011 report from the University of Chicago Energy Policy Institute concluded that these reactors could compete effectively with alternative energy sources.

US-based Gen4Energy estimates one of its reactors would cost US$100 million to build compared to the US$4-6 billion needed for a larger conventional plant. Once it was manufactured, it would be moved to site for final assembly by truck or train, and then installed below ground. The fuel would already be sealed inside the unit, so once in place the reactor could be plugged into the local electricity network to generate power.

At the end of its lifetime, the entire reactor would be shipped back to the factory or a regional fuel centre, removing the need to store spent fuel separately.

Insight Issue 1/2013 9

SMRs can also be coupled to desalination plants to produce fresh water for agriculture and domestic use

This ease of transport and accessibility does raise concerns with some groups, including Greenpeace International, about security and proliferation issues.

In response, Gen4Energy argues that its small reactor would actually help to prevent nuclear proliferation, as the company would remotely monitor reactor cores to prevent attempts to divert nuclear materials, and handle the entire fuel cycle including management of the irradiated fuel.

Such a lease-back business model could be welcomed, for example, by developing countries that wish to acquire peaceful nuclear energy but for which it would not make economic sense to invest in the surrounding fuel cycle infrastructure.

Beyond supply But other key applications exist for SMRs. For example, the reactors can also generate steam for heating or to drive industrial processes in which large, traditional reactors would be too expensive and inflexible.

Indeed, four small 62MWt units are already operating in the Siberian Arctic producing steam for a district heating scheme. A similar set-up could provide heat and electricity for energy intensive operations such as oil shale recovery.

In the electric power industry, megawatt electrical (MWe) is a term that refers to electric power, while megawatt thermal or thermal megawatt (MWt) refers to thermal power produced.

SMRs can also be coupled to desalination plants (as the Chinergy reactors are) to produce fresh water for agriculture and domestic use. While more than 12,500 desalination plants exist worldwide, these energy-intensive processes are mostly driven by fossil fuels.

The US Electric Power Research Institute recently estimated that the US has the potential to generate 201GW from SMRs, while the International Atomic Energy Agency forecast the SMR market could be worth US$250 billion by 2050 with up to 1,000 units built.

While SMRs offer huge potential to industry and governments worldwide to meet growing energy needs, there are design certification and licensing considerations.

Their small size, transportability, siting and novel applications raise particular challenges. This is why light water-based SMRs, which are similar to the existing and thoroughly-tested traditional light water reactors, are likely to be deployed first.

If they are taken up on this scale then there will be a need for international co-operation and supervision to ensure that the set-up and disposal of the nuclear systems are carried out in a controlled and safe way.

Professor Richard Clegg is the Global Nuclear Director for Lloyd’s Register. He has worked in the nuclear industry for almost 30 years, in business, academia and government. Before joining Lloyd’s Register, Professor Clegg was the MD of the UK National Nuclear Centre of Excellence, and before that Chief Scientist at the UK Atomic Weapons Establishment.

Professor Mamdouh El-Shanawany, is Lloyds Register’s Nuclear Technical Director, and joined the organisation from the International Atomic Energy Agency where he was head of the Safety Assessment Section. He was a member of the IAEA team awarded the 2005 Nobel Prize for Peace and is also a visiting professor of Nuclear Engineering at Imperial College, London.

But it seems the future looks bright for small modular reactors.

E energy @lr.org

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The first design for a deep sea dry bulk cargo vessel powered by liquefied natural gas (LNG) is the result of a COSCO Shipyard Group, Golden Union and Lloyd’s Register joint investment project.

“We have moved the industry far beyond the concept stage,” says Nick Brown, Lloyd’s Register’s Area General Manager and Marine Manager, Greater China. “We have addressed the technology issues; at the end of 2012 we issued an approval in principle (AIP) for the product of the project – a new gas fuelled bulk carrier design christened ‘Clean Sky’. A ‘Clean Sky’ ship could be built next year.”

Fast track innovation At any time Lloyd’s Register has dozens of joint investment projects underway. JIPs provide a rapid route to innovation. “The best JIPs are ones in which shipyard, designer, owner and class all work together to achieve a mutual goal of developing a ‘market driven’ design, that is future proofed as far as possible, and attractive to owners due to its operational efficiency and flexibility. When new technology is involved, as in this case, it is also very important that the technology providers, such as engine makers, are involved at the earliest stage,” says Brown.

“If all parties work together the owners gain access to a design that meets their expectations and the yard are able to offer a design that suits the market. The technology provider gains early entry into the market and class is able to ensure all parties are

aware of rules, regulations and codes that need to be applied to the design at the earliest stage.”

A new design On this JIP, in June 2011 the three parties agreed to investigate the potential to develop a commercially viable bulk carrier design capable of burning LNG as fuel. The development team based their work on the well proven conventional COSCO designed 81,000dwt Kamsarmax bulk carrier. This then was re-engineered to employ LNG powered propulsion systems. The AIP comes after exhaustive risk investigations into the gas containment, bunkering systems and performance assessment.

The safety of the containment systems for the LNG fuel was critical.

Various containment systems and configurations were considered by the project team, but the final choice was for a single, 1,160m3 type ‘C’ tank that sits aft on the port side. Lloyd’s Register’s risk methodology for novel technology process provided a pathway through the complexity of the technical risk assessment required.

Flexibility is important The ‘Clean Sky’ design builds in flexibility by enabling owners to choose dual or tri-fuel engines, able to burn heavy fuel oil (HFO) or diesel, as well as LNG. There is uncertainty about the future relative pricing of the conventional fuel oils, that dominate today, and LNG. This flexibility helps ensure that owners of ‘Clean Sky’ types have fuel options. Although for many the attraction of clean gas will outweigh the more complex scrubber option needed to enable conventional fuel oils to meet emission regulations.

Innovation combination A joint investment project has moved the bulk carrier industry far beyond the concept stage for gas powered ships.

Insight Issue 1/2013 11 “Tough environmental requirements mean vessels will have to comply with the International Maritime Organisation’s (IMO) Tier III Nox regulations by 2016 and this opens up demand for new ship propulsion solutions incorporating cost effective technologies.

This could trigger a substantial shift towards natural gas-powered vessels; and in gas mode dual fuel engines already comply with the IMO’s Tier III requirements,” comments leading Greek ship operator Golden Union. “Using LNG may be the ideal solution for meeting increased environmental performance without losing competitiveness. This design offers significant reductions in SOx, NOx and particulate emissions – as well as CO2 – by simply using cleaner LNG instead of employing costly and complex cleaning systems which do not always work.

“Looking at the commercial perspective of LNG as a ship’s fuel, the capital expense of installing an LNG fuel system should be paid off after a few years by operating expense savings, especially if a vessel is trading within emission control areas. Global reserves in LNG greatly surpass oil reserves. LNG is becoming more readily available in the market. This, in combination with steady demand, should reduce price volatility in comparison with HFO. Keeping this in mind, HFO and marine diesel and marine gasoil prices will be likely to increase faster than LNG rates, speeding up the pay-off of the system.”

Paving the way “COSCO Shipyard Group has a strong sense of social responsibility.

We are innovating to help shipowners meet new IMO emissions

and performance requirements,” says Zhan Shu Ming, COSCO Shipyard Group’s Head of Engineering. “Our development in LNG as an alternative fuel technology will not be limited to the application to bulk carrier designs, but also for other ship types.

The current achievement is only the beginning of our research and development for LNG as an alternative fuel and the COSCO Shipyard Group, as a pioneer in this new technology, is committed to even more in-depth research in the future.”

Most LNG-as-fuel research, technology development and newbuilding activities have focused on specific niche sectors such as ferries, offshore vessels and short sea, or inland, trades. This project paves the way for take-up in deep sea bulk carrier trades – and tankers.

“The challenges are similar for tankers,” Brown said. “Clearly there are benefits with using clean gas technology. The key issues now are commercial.”

The LNG storage tank is located aft on the ‘Clean Sky’ Kamsarmax bulk carrier. A Kamsarmax is a bulk carrier of around 80,000 deadweight tonnes (dwt) designed to meet berth restrictions at the port of Kamsar in Guinea, requiring maximum ship length overall of 229 metres, while maximising cargo capacity.

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Blowout prevention The response to the Deepwater Horizon disaster has spurred an innovative solution, reports Jason Knights.

Between April and July 2010, an estimated 4.9 million barrels of crude oil gushed from the damaged Macondo well into the Gulf of Mexico following the explosion that killed 11 workers and destroyed the Deepwater Horizon drilling rig.

This was, according to President Obama, the worst environmental disaster America had ever faced.

By the time the leak was stopped, oil had affected more than 1,000 miles of coast in five US states, seriously damaging local fishing and tourist industries – as well as the reputation of the offshore oil and gas sector.

Something had to be done to make sure it never happened again.

A new US government department – the Bureau of Safety and Environmental Enforcement (BSEE) – was set up, which has implemented the most aggressive and comprehensive offshore oil and gas regulatory reforms in American history.

Spotlight on BOP The disaster was the result of a blowout, and ‘the blowout was the product of human error, engineering mistakes, and management failures’, according to the official report of the US government’s Oil Spill Commission.

This put the spotlight on the failure of the well’s blowout preventer (BOP).

A BOP is a large, specialised valve used to seal, control and monitor an oil or gas well.

It can be the size of a double-decker bus

and, in the case of the Macondo BOP, weigh up to 400 tonnes. It is there to prevent the uncontrolled release of oil or gas and is critical to the safety of the crew, the rig and the environment. It is the final line of defence.

BOP failures are uncommon, but far from unknown: there have been a few major incidents since the Deepwater Horizon.

Failures can be electrical, hydraulic or mechanical. But whatever the cause, failure in such a complex system, controlling 500,000–750,000 pounds of ram force in water that might exceed 9,000 feet deep, can pose a catastrophic risk of fire, explosion and death.

When a problem is detected in a BOP system or component, a decision has to be made whether to pull the BOP to the surface for inspection – or not. Such decisions are made on the basis of some understanding of what the problem might be and a risk assessment of the potential seriousness of the fault.

But such decisions can also have significant cost implications. According to Duco de Haan, CEO of Lloyd’s Register Energy – Drilling: “The operational cost of drilling a deep water well typically ranges from US$1 million to US$1.2 million a day. In some of the ultra-deep water projects, it could take 8–12 days – or even longer – to secure the well, recover and repair the BOP, re-run and then re-test it before resuming operations. So, one incident could cost US$14 million.” The annual cost to the industry of pulling up BOPs runs into many hundreds of millions of dollars.

Insight Issue 1/2013 13

As a result of the subsequent regulatory changes, there was a clear industry need for an effective BOP failure‑decision model

However, most risk assessments currently used in the industry do not employ a uniform process, meaning that ‘pull’ or ‘no pull’ decisions are not being made on a consistent basis. The human factor is also significant. It can result in decisions that are subjective and non-transparent, which are difficult for senior management to understand and unacceptable to regulatory bodies.

One of the key recommendations of the Oil Spill Commission’s report was that the US should introduce ‘a ‘risk-based’ regulatory approach’ similar to that which ‘has long-since been adopted in both Norway and the United Kingdom’.

As a result of the subsequent regulatory changes, there was a clear industry need for a BOP failure-decision model which could detail changes in operational risk quickly and confidently, that removed subjectivity and that was verifiable.

Innovative response Following discussions with owners and operators in the sector, Lloyd’s Register group members ModuSpec and Scandpower began work on developing such a model. ModuSpec has extensive experience in the industry, having evaluated 80% of the world’s offshore oil and gas drilling units; while Scandpower’s RiskSpectrum software is used in 50% of the world’s nuclear power plants to help them operate safely.

The BOP Risk Model they created is an innovative new application for the Scandpower software. And now with the expertise of Lloyd’s Register acquisition WEST Engineering Services, the leading drilling industry BOP specialist, it can be taken to the next level.

Scandpower’s Vice President Business Development, Inge Alme explains: “There are many similarities between the fail-safe requirements of a BOP and those of the safety systems in a nuclear plant. In order to ensure that they work when they are needed, there is a high degree of functional redundancy built into these systems. Safety features are duplicated in order to reduce the consequences of single failures.

“The software models the performance of the BOP. If everything is working as it

should, all on-screen indicators show green. Indicators can move to amber or red depending on the significance of any problem that is detected and entered into the model. Redundancy within BOPs means that they have parallel functions doing the same thing. The risk model can suggest whether a problem in one component or subsystem warrants a decision to pull the BOP, or whether the back-up functions are sufficient to allow the rig to continue operating.”

All ‘pull’ or ‘no pull’ decisions are ultimately made by a human operator. “But,” Alme says, “what the model does is to provide better decision support – consistent factual information – upon which those decisions can be based.”

It also improves audit traceability and regulatory compliance, and decisions can be supported by evidence-based explanations.

“The risk model can and will reduce non-productive time dramatically,” says Duco de Haan “which will save money. But it also gives everyone involved an unbiased assessment of the risk quickly, based upon regulations and specifications, removing the potential influence of cost on the ‘pull’/’no pull’ decision.”

The model is now in use in the Gulf of Mexico. In a 12-month period, ModuSpec – acting as an independent third-party – recommended the continuation of operations on 29 occasions when, following the detection of potential failures, the regulator would otherwise have forced the operator to pull their BOPs to the surface.

By preventing non-productive time, this saved operators more than US$200 million in lost revenue – and it helps protect lives and the environment.

Lloyd’s Register Energy – Drilling is Lloyd’s Register’s rig inspection business. It has been formed from a recent merger of Lloyd’s Register group members, WEST Engineering Services and the ModuSpec Group.

Jason Knights is Global Communications Manager for Lloyd’s Register’s Energy business.

E jason.knights@lr.org Follow me @jasonknights_LR

14 Issue 1/2013 Insight

How to attract the winning formula An innovative hybrid ferry scheme in Scotland provides benefits for the wider economy, finds Christopher Browne.

Š Courtesy of Roy Paterson

Insight Issue 1/2013 15

What are the magic ingredients that can turn an everyday project into a great one? A wise economist would undoubtedly say money, an element of luck and sheer hard work.

But there are other, less obvious factors that can give schemes the winning formula. Anything to do with green technology and the environment, a concept much loved by ecologists and entrepreneurs alike, will always help to entice an investor or potential contractor. And then innovation can give form to your concept and help you achieve the much needed X factor.

One such recession-defying project that is now nearing fruition on the River Clyde in the Port of Glasgow is a hybrid ferry scheme. For two years a local firm, Ferguson Shipbuilders, has been working on the site of this historic shipbuilding port, to build the world’s first seagoing passenger ro-ros driven by diesel and battery power.

“The allure of life as an engineer should start at school,” says Henderson. “I think we need to make engineering and sciences exciting and appealing to the next generation during their early school days with the correct balance of theory and practical. The Young Engineers projects in Scottish colleges are still going strong, so clearly we are trying to encourage kids back into the sector.

“Local business benefits from the increased employment and such projects bring more people to the local area which means that not only is the money made here but more importantly spent here too”

Forefront of technology The Small Ferries Project, as it is known, is a partnership between Glasgow’s Caledonian Maritime Assets Ltd (CMAL), founded four years ago, and Ferguson with technical support from two Scottish companies, Tec-Source and Seatec. Funding was raised from the Scottish and Irish governments with a grant from the European Regional Development Fund.

Launched in December 2012, the first of two vessels, Hallaig, is named after a poem by Sorley Maclean. The names of its hybrid successors in the fleet will also be drawn from Scottish literature.

Launching the vessel, Scotland’s Deputy First Minister, Nicola Sturgeon, said: “It has been over five years since the last commercial ship was fully built and delivered on the Clyde, and the launch today of the first of two new cutting-edge vessels symbolises everything that the Scottish government is striving to achieve.”

The project has attracted more than 200 shipbuilders and engineering support staff to the Port of Glasgow and, as David Henderson, Lloyd’s Register’s Senior Surveyor on the project, says: “Projects like these put Clyde shipbuilding back at the forefront of technology and generate massive interest which helps showcase the innovation, expertise and craftsmanship capabilities of Scotland and the UK.” Employees today and tomorrow Andrew Flockhart, CMAL’s Head of Business Development, says: “Innovative companies are able to attract and retain employees by providing a work culture that allows a degree of risk-taking and encourages innovative thinking, as well as being prepared to offer a competitive remuneration package. We have helped create internal jobs by attracting additional projects by being recognised as innovative. Our suppliers, that is shipyards, have probably benefited more from our innovation however, as they employ additional shipbuilders and apprentices through the newbuild projects that we commission.”

“The Scottish government’s focus on green energies – and its target of 30% of all energy needs from renewable sources by 2030 – offers young engineers a great environment to contribute to and to help achieve such a challenging target.

What professional engineer doesn’t want to look back on their career and say ‘I did that’?”

Wider benefits Apart from attracting jobs and kudos, the hybrid ferry project’s green effect has had an impact on the local economy too,.

“Local business benefits from the increased employment and such projects bring more people to the local area which means that not only is the money made here but more importantly spent here too,” says Henderson.

“I really hope this project acts as a catalyst for future investment.”

“Due to the way in which CMAL receives its funding (from the Scottish government),” says Flockhart, “it is important that we demonstrate how we impact on the Government Strategic Priority of moving towards a low carbon economy as well as supporting social and economic development. It would be far harder to attract financial support if we didn’t demonstrate and deliver this.”

The Small Ferries Project may help stimulate future engineering jobs. Says Flockhart: “The hybrid ferry has attracted a great deal of interest and as a result has generated a number of spin-off projects such as developing a semi-automated charging system for the ferries which is currently being developed.”

So the magic ingredients seem to have come together and what the Clyde does today might provide a template for success elsewhere.

Christopher Browne is Lloyd’s Register’s Marine News Editor.

E chris.browne@lr.org

The two hybrid ferries will carry up to 150 passengers and 23 cars or two HGVs. Operated by Scotland’s CalMac Ferries, they will be used on a network of short crossing routes around many of the Scottish islands. Using the latest green technology, they will be powered by small diesel generator sets that feed power to a 400 volt switchboard supplying power to electric motors to drive the ships’ propellers. The ferries will charge overnight while berthed, drawing power during off-peak hours.

16 Issue 1/2013 Insight

What gets

measured gets managed For over a decade CDP has worked with companies to catalyse action towards a more sustainable world, as Paul Simpson, CEO of CDP tells Alex Briggs.

Companies that measure their environmental risk are better able to manage it strategically. And those that are transparent and disclose this information are providing decision makers with access to a critical source of global data that delivers the evidence and insight required to drive action. In a recent interview with Insight, Paul Simpson, CEO of CDP spoke about the strides that CDP has taken since its inception some 10 years ago, and the important role that reporting plays in climate mitigation strategies.

Alex Briggs Since its launch, CDP appears to have been on an incredible journey and now works with 722 institutional investors, holding US$87 trillion in assets, to help reveal the risk in their investment portfolios. What sort of innovative initiatives have you used to drive CDP forward over the past 10 years to deliver a return on this investment?

Paul Simpson We started CDP in 2001 because in talking to investors about the forthcoming risks and opportunities climate change would present to their investments, the common message we heard was that ‘we do not have enough information to assess these risks and opportunities’. So when we set up CDP it was to gather this information for investors – specifically focused on the 500 largest companies in the world. Of course, 10 years later a lot has changed. We have moved now to the 5,000 largest companies in the world because our investors have said to us ‘we don’t just want this information on the largest companies, we need wider

coverage of our portfolios’. As a result, a push is under way to move to greater coverage of emerging markets to include China, India, Brazil and South Africa. CDP sees that there are significant growth trends in those markets, with increasing levels of investment both in country and from the international markets into those countries. So the move to being truly global has been a big change.

In the early days we were collecting data for the first time so we did not really know what we’d have, how we could turn that data into information, knowledge and wisdom to inform business and investment decisions. Over time, we started to use the data in different ways – particularly through scoring, where we score companies on the quality and completeness of their disclosure.

Today, scoring has evolved further and not only relates to how well companies are providing the information their investors have asked for, but also on their climate performance including their greenhouse gas (GHG) emission reduction strategies.

Beyond that, we moved from just focusing on carbon emissions and climate risk to include water. In addition, we are in the process of merging into CDP an organisation called the Forest Footprint Disclosure Project, so CDP now looks at climate, water and forests.

This approach fits with the trend we see where climate change has been a catalyst for companies to pay attention to wider environmental issues and risk management.

Insight Issue 1/2013 17

“What we have seen is that companies – particularly the large multinational ones – have started to evolve and innovate in the way they approach sustainability”

18 Issue 1/2013 Insight AB What’s the link between CDP, innovation and the way companies are evaluating their impact on the environment?

PS One of the things we are doing at CDP is learning from the companies we work with and who report on climate change and water. What we have seen is that those companies – particularly the large multinational ones – have started to evolve and innovate in the way they approach sustainability. It has become more integral to their business strategy.

This has also led to changes and innovation at CDP. We have our own innovation pipeline process now. As a small, nimble organisation we found that our colleagues were coming up with so many new ideas that we created a specific innovation process to effectively manage those and develop the good ones. Some of that innovation has been reflected in the way we ask questions.

We started out with just seven simple questions, and we learned from the investors and the reporting companies that we could often get better information if we asked the question differently.

Samsung says a 1% reduction in their brand value because of negative climate change perceptions from their customers is worth US$200 million to the business AB What changes in approach are companies taking towards verification and what benefits can be delivered to stakeholders?

PS After we had been going through the reporting process for three or four years, we started to build a wealth of information and we asked how it could be improved. One of the key things that came back was that investors, companies and governments said ‘we want common standards’; ‘we want comparable data that we can trust’.

We investigated how we could get the standards to be used in a common way to drive trust in the information. As a result, we – along with our verification partners – developed our own verification strategy. In our scoring systems we started to increase the scores for verification so we knew we could drive the change. In fact, in 2012 we saw an increase of 36% in the number of global 500 companies having their GHG emissions data independently third party verified.

So verification has become a very important part of driving trusted, comparable data.

We have seen that companies are also placing a greater focus on improving their data quality. As an example, some companies may have said five years ago that their information might be +/-20% correct but as the focus on this information has become more intense and the association with business value more important, people have said ‘our legal department wants to make sure this is accurate information just like our financial information’.

So that’s driven verification from within the business and it’s the investors who have been saying ‘we want to see this information reported and verified so that we can trust it and use it to make investment decisions’.

Over the last three to five years, we have seen a real trend of major companies who start with monitoring and then say ‘the next step is to have this information verified so that our stakeholders will trust it and we know it is the right information’.

AB In your opinion, what is the single biggest impact that the CDP has made over the past 12 years?

PS When we started, we could only find fewer than 10 companies who were monitoring and publicly reporting their GHG emissions.

Today there are over 4,100 global corporations reporting to CDP, 56% of the market capitalisation of the top 30 stock markets.

So already, more than half the world’s value is monitoring and reporting on climate change and I think that’s been driven by our work, our requests and of course, from that are many other benefits as we know measurement leads to management. We have over 700 investors now who are starting to think about how they should integrate this into their investment decisions. There is a long way to go with that work but they realise it is an issue.

AB So what’s the answer for an organisation to be both successful and sustainable?

PS Clearly, we are in tough economic times and many businesses have been finding that challenging. Firstly, with an increasing world population where we have a finite planet and finite resources, there is no doubt that resource scarcity is becoming a bigger issue.

And whether that is the resource of a stable atmosphere or the resource of the minerals and metals available to businesses, there is going to be a big on-going theme about resource efficiency.

Whatever business you are in, you need to find a way to be very lean and efficient. So monitoring what you are doing, checking and adapting your systems and processes to drive efficiency through not just your operations, but also your supply chain, is critical. This is really going to be key as to who the future winners are in a changing world.

Further, businesses need to get better at their communications.

They need to get better at saying ‘we can differentiate ourselves from our competitors because we are better on climate change, we are producing cleaner water than them, our products are more efficient and are going to save consumers money’. Samsung says a 1% reduction in their brand value because of negative climate change perceptions from their customers is worth US$200 million to the business. So I think that really clarifies that point.

Alex Briggs is Senior Marketing Communications Manager, Lloyd’s Register Quality Assurance.

E alex.briggs@lrqa.com Follow us @LRQA_CC_CSR CDP is the new name of the Carbon Disclosure Project.

LRQA is a verification partner of CDP www.cdproject.net

Insight Issue 1/2013 19

[

Is nuclear sustainable?

]

Japan’s 2011 Fukushima Daiichi nuclear disaster has prompted a rethink of nuclear energy policy in many countries. Germany decided to close all of its reactors by 2022. Italy has banned nuclear power.

And the International Energy Agency has halved its estimate of additional nuclear generating capacity to be built by 2035.

20 Issue 1/2013 Insight

In 1996, 18% of the world’s electricity was supplied by nuclear power. Last year it was down to 13%. But this shift could add a billion tonnes of greenhouse gas emissions by 2020 if nuclear power is replaced by increased use of fossil fuels.

be affordable and there must be security of supply. It must make efficient use of limited resources, and minimise risks to human health, ecosystems and the climate, as well as having broad public acceptance.

Are the decisions being made about nuclear proportionate and sensible in the light of global population growth, urbanisation and economic development? And are sustainable alternatives available – or indeed genuinely sustainable?

None of the available energy technologies satisfies all of these requirements. They all have strengths and weaknesses. Future developments will certainly lead to mitigation of some of the weaknesses but trade-offs will be necessary for quite some time.

At the Paul Scherrer Institut in Switzerland, Dr Stefan Hirschberg and his team have developed tools to weigh and balance the factors that go into measuring the environmental, economic and social dimensions of sustainability power supply technologies: factors such as eco-system impacts, cost, availability and accident risk. He has been speaking to Martin Beaver for Insight.

What are the real issues with nuclear?

Ultimately, nuclear energy is controversial because it produces radioactive wastes and people are afraid of accidents. Overall, the critical issue is public acceptance.

Therefore, effective safety regulation is fundamental, and the wide variety of safety standards at the existing nuclear plants worldwide is an obstacle to developing lasting trust. Technically, satisfactory solutions for the waste issue have been developed.

But practical demonstrations are needed – though there are promising projects, particularly in Finland and Sweden.

New nuclear is capital intensive and so will only be economically attractive for investors where there is public acceptance, political support and a stable regulatory environment.

Nuclear proliferation to countries with dual aims for their nuclear programmes is another significant issue.

Can you see a future without nuclear power in the global energy mix?

Abstaining from nuclear is technically feasible. But meeting ambitious energy

policy goals without this almost CO2-free option will obviously be more difficult. For example, 700 million tonnes of CO2 have been avoided each year in the EU thanks to nuclear power; that is roughly equivalent to all CO2 emitted by the EU’s 200 million passenger cars.

It is still a minority of countries – 30 of them – that operate nuclear, though in some the dependence is very high. More than 75% of French electricity is nuclear generated, for example, and the figures for Belgium, Switzerland and Sweden are all 40% or above.

China has a low proportion of nuclear electricity at the moment (1.8%), but high motivation for a rapid expansion of its nuclear capacity as a result of its increasing demand for energy and the devastating impacts of coal-fired generation on health and the environment.

If countries come out of nuclear power is there a sustainable alternative?

A sustainable energy supply needs to meet a number of challenging economic, environmental and social criteria. It must

Where countries have decided to phase out nuclear, these decisions are based on a belief that avoiding the risks of severe nuclear accidents outweighs the challenges – and reflects current public opinion.

Which countries are prepared now for the alternatives to nuclear power generation?

Germany has the most developed example of a new energy policy without nuclear.

Its expansion of mainly stochastic [variable] renewables, such as solar and wind, has been quite impressive though that success is based on (currently decreasing) state subsidies.

However, electricity has become much more expensive in Germany, insufficient grid expansion is creating a bottleneck for electricity supply, and there is still an extensive dependence on fossil fuels.

Globally, there is reasonably good progress in terms of expanding the relative contribution of renewables, though somewhat disappointing progress in improving energy efficiency.

In 1996, 18% of the world’s electricity was supplied by nuclear power. Last year it was down to 13%

Insight Issue 1/2013 21 But constrained supply should not lead us to limit the use of electricity as a substitute for fossil fuels. We should also continue to increase the efficiency of the overall energy system through, for example, heat pumps and electrification of the transport sector.

A significant new factor is shale gas, particularly in the US. This could enable autonomous energy supplies with major geo-political implications. On the other hand, it is not necessarily good news for climate protection.

If countries opt out of nuclear, will other countries become their baseload supplier via imports?

Importing electricity, either nuclear or non-nuclear, is one option for addressing the national electricity supply issue. It is also subject to major uncertainties with regard to the availability of surplus electricity, costs and access to the grid. This is why many countries prefer to develop their own supply capacities in the first place.

Given potential dependence on imports, the priority should be for renewable electricity. But, realistically, this might simply not be available.

Imports of nuclear electricity by countries which phase out their own nuclear, is ethically problematic – even if it was possible. In Europe it will be increasingly difficult to build up nuclear capacities to be used partially for exports, though some potential nuclear newcomers such as Poland may be considering such an option.

Would the global industrial and transport infrastructure ever be able to cope without nuclear?

If there is a will to do without nuclear – and take the consequences – then a phase out in the long term is technically feasible.

However, there’s no such thing as a free lunch.

Hydro power will continue to expand where it is still underdeveloped. But in a number of countries its potential is close to being exhausted. Wind has a high potential in some regions of the world, particularly offshore. Solar PV [photovoltaic] costs are being reduced, due to technological progress and a shift of production to China – though this brings a number of undesirable impacts on the environment.

Further efforts need to be made to reduce the material intensity of solar PV.

The sector requires the deployment of technologies on a large scale over the long term. Furthermore, since energy is so capital-intensive, clear regulatory requirements are highly desirable for major investment decisions. Large changes in the shares of the various energy sources do not happen overnight so the expectation is that, globally, fossil fuels will still be dominant in 2030. But hopefully, their share will be reduced towards 2050 as a consequence of expansion in renewables.

Other renewables of interest include biomass (provided that particulate emissions are kept under strict control and resources are used in a sustainable manner), solar thermal and geothermal energy – which have high potential but a moderate or low level of technological maturity respectively.

I think it is quite unlikely that nuclear energy will ever be abandoned entirely – and highly unlikely in the short to medium term. It can play a central role in the future in view of its potential contributions to protecting the climate and to security of supply – provided that its implementation will be accepted socially. This in turn depends on developments with regard to the handling of accident risks and wastes, proliferation issues and the economic competitiveness of nuclear energy.

The expansion of stochastic renewables will require major changes in the electric grid, the provision of back-up power and the development of various types of storage option. This all leads to additional cost and to acceptance problems.

More generally, the choice of energy technologies should take into account country-specific conditions: the availability of natural resources, the climatic conditions (amounts of sunshine or wind), and in the case of nuclear, the level of technical development.

It’s ironic that some of the industrialised countries which are best equipped for the safe operation of nuclear are planning to phase it out, while a number of developing countries are planning to introduce nuclear despite not being fully prepared for mastering the challenges in terms of competence, infrastructure, regulation and safety culture.

Is there a future for nuclear?

Time will tell. And time is fundamental in the evolution of the energy sector.

Yet nuclear alone cannot solve the energy supply challenges globally. Renewables and energy efficiency are essential for the long-term assurance of secure supply.

Stefan Hirschberg obtained his PhD in reactor physics from Gothenburg’s Chalmers University in 1981. He subsequently worked for ABB in Sweden and with the International Atomic Energy Agency in Vienna, before joining the Paul Scherrer Institut in Switzerland in 1992 where he is Head of Energy Systems Analysis. He can be contacted at stefan.hirschberg@psi.ch Martin Beaver is a freelance writer who specialises in health and safety, and energy industry issues.

22 Issue 1/2013 Insight October 2012: The 550 tonne tunnel boring machine ‘Elizabeth’ is lowered 40 metres into a shaft at Limmo Peninsula, near Canning Town in east London, the launch site for Crossrail’s eastern tunnel.

Crossrail is currently the largest construction project in Europe requiring 21km of twin-bore tunnels directly beneath the city centre as part of its full 118km east-west route. Once services commence in late 2018 Crossrail will add 10% to the capital’s rail capacity and bring 1.5 million more people within 45 minutes of its main business districts.

As the appointed notified body, Lloyd’s Register is scrutinising the detailed design and construction of the central section between Paddington and Liverpool Street and will develop the verification evidence to certify compliance with the common European technical specifications for interoperability.

21km tunnels directly beneath the city

118km track and tunnel in total

Deep Down

Insight Issue 1/2013 23

+10% London’s rail capacity

550tn tunnel boring machine

D isciplined approach Andy Tung, CEO of Hong Kong’s OOCL, talks to Sam Chambers on how to remain profitable.

Learn from past mistakes to avoid future ones. So says the ancient Chinese proverb, a maxim Hong Kong’s Orient Overseas Container Line (OOCL) has admirably taken onboard to make it one of the star performers in the choppy waters of today’s liner scene.

Despite a tough final quarter OOCL, one of the world’s largest shipping and logistics companies, managed revenues and liftings for 2012 that are likely to be the envy of most of their peers.

OOCL moved 5.22 million teu last year, up 3.7% from 2011. Revenues grew 6.7% to US$5.9 billion. Intra-Asia and Australasian trades proved to be the best performers accounting for 2.67 million teu and US$2.09 billion in revenues. While others remained mired in red ink, OOCL continues to stay in positive territory.

Lessons learned History dictates that OOCL is naturally cautious when it comes to investments and service networks. Combined with a firm commitment to be a leader in IT, the Hong Kong liner finds itself far less exposed than many in the market. This conservatism stems from a massive restructuring that took place during a previous shipping slump in the mid-1980s. The lessons learned were the importance of maintaining minimal debts, using your own capital wherever possible and focusing on familiar trades, something actively pursued by the line’s boss, CC Tung, for the past 20 years.

Now those trade secrets have been passed down to the latest generation of the Tung family to steer OOCL through these tough times. Last year Andy Tung stepped up from Chief Operating Officer to CEO at

OOCL. Tung becomes the third generation to take the helm at Hong Kong’s largest shipping outfit, the line tracing its roots back to 1947 when legendary owner CY Tung kicked off a service from Shanghai to the US. When Insight catches up with Tung he is on a hectic schedule of vessel christenings and deliveries that sees him flitting between Shanghai and Korea for a number of champagne smashing moments.

Supersize Significantly the Korean trip saw OOCL take on its largest ships to date, a pair of 13,208 teu ships. Lest people forget in the sensational climb up the size charts of container shipping of late, a period that sees ships of up to 18,000 teu being built, it was OOCL that ushered in this supersized generation a decade ago. In 2003, OOCL took delivery of the world’s first super post-panamax containership, OOCL Shenzhen, which at 8,063 teu broke size records and ushered in the new era of mega boxships.

The new ships are all part of long held plans to reduce chartered-in tonnage to around one in three ships at OOCL; its fleet’s average age of under six-years old is among the youngest in the industry.

Tung is aware of the tough conditions facing his family firm, but like his uncle before him he greets these problems face on and with a level head.

“In line with our earlier forecast,” says Tung, “2012 proved to be another tough environment for the container shipping industry with weak demand growth, volatile fuel prices, and unsustainable freight rates for many major trade lanes.”

He recounts how significant freight rate improvements did not materialise when Asia-Europe volumes began to shrink earlier in the year. Bunker costs remained high, and in view of what he describes as ‘the lingering overcapacity issue that will likely continue to haunt the industry well into 2013’, many carriers will anticipate ‘huge challenges’ in adjusting their product structures and optimising slot utilisation.

Challenges ahead Every trade that OOCL is in faces its own difficulties, even the company’s erstwhile

revenue mainstay of intra-Asia, as Tung elucidates: “As the sluggish consumer demand growth from the West continues to affect the demand of goods produced by the factories from the East, the intra-Asia trade that moves the commodities to produce those finished goods will likely continue to face challenges.”

Since the Asia-Europe, trans-Pacific and intra-Asia trades account for more than half of the capacity lifted globally, Tung anticipates many carriers will spend more time exploring new opportunities elsewhere to fill their ships.

However difficult the conditions, Tung is resolute. “No matter how tough the market environment is,” he affirms, “the industry will likely remain resilient in 2013, working towards a more positive supply and demand balance.”

To this end, Tung appeals to his fellow carriers to maintain strict capacity management in this brittle environment.

“It is critical that apart from the need for effective cost controlling measures on the individual carrier level, discipline in capacity deployment and the ability to hold on to sustainable freight rates will also be essential on the industry-wide level to help rebuild a more stable and healthier business environment for all,” he concludes. Wise words from someone who has learned from the past.

Andy Tung has served the group in various capacities, including as director of reefer trade of OOCL between 1993 and 1998.

He left the family firm for a while to pursue other interests, a period of time that saw him rise to become chief operating officer at Hong Kong Dragon Airlines. He rejoined the group in 2006 and was appointed OOCL’s COO in January 2009.

Tung holds a Bachelor degree from Princeton University and an MBA from Stanford University in the US. He is the eldest son of CH Tung, the former chairman of the group who became Hong Kong’s first leader after the territory was reunified with China in 1997.

Sam Chambers is the editorial director of Asia Shipping Media, the publishers of Maritime CEO, SinoShip and SeaShip News.

26 Issue 1/2013 Insight

Insight Issue 1/2013 27

A

few months ago I had the surreal experience of sitting within the walls of the Vatican listening to one of Pope Benedict XVI’s top advisors espousing the benefits of social media. Archbishop Celli, who luxuriates in the title President of the Pontifical Council for Social Communications, was speaking at the end of the Pope’s first week on Twitter. The Archbishop explained that the Pope was aware of the risks and dangers of social media, but felt these were outweighed by the opportunity to discuss and debate the religious message with such a large global community.

The Pope is not alone. A recent report by the Digital Policy Council showed that 75% of the world’s leaders now have an active presence on Twitter – twice as many as the year before. After years in which social media was viewed as a frivolous distraction at best, there is a growing realisation amongst those with the most serious of occupations that there may something of great value here.

And yet oddly business is lagging behind. Less than 5% of CEOs of Fortune 500 companies are on Twitter in a personal or professional capacity; less than 10% are active on Facebook.

While marketing departments enthusiastically conceive viral videos and set up Facebook pages to promote products, there is a real fear in many organisations of the consequences of engagement and transparency.

powerful global networks that are changing the nature of modern communication. In the US and the UK, more people use Facebook than the top news websites put together – social networking takes around 20% of people’s time online.

There are many reasons to hold back – from shortage of time to legal or other concerns. Netflix’s Reed Hastings is currently facing a potential SEC lawsuit over statements he made on Facebook.

But many of the rules themselves have been thrown into confusion by the speed and ubiquity of social communication. Hastings has pledged to continue talking and sharing information with customers and evidence suggests that he is right to do so. In one recent survey 71% of respondents said CEO participation in social media improves brand image, 78% said it led to better communication, and 64% said it provides more transparency.

Building trust It is true that social media has blurred the line between personal and professional – giving rise to a number of new business dilemmas. There are many celebrated examples of employees saying the wrong thing, but on the whole, these mistakes are becoming less frequent and can be managed with the adoption of clear and sensible guidelines. An over cautious approach may be stopping companies seizing the bigger benefits which include getting closer to customers, and engaging with them in entirely new ways. Here are just a few examples.

In one recent survey 71% of respondents said CEO participation in social media improves brand image

Backlash At one level this fear seems justified.

When Netflix announced it was changing its pricing structure, it led to a huge customer backlash with tens of thousands of negative comments across its blogs and on Facebook and Twitter. Within months the company lost 800,000 customers and two-thirds of its market value.

Social media was also blamed when Britain’s biggest selling newspaper, the News of the World closed in the wake of phone hacking allegations. Advertisers had felt pressure to pull their support for the paper following petitions and popular outrage in Facebook and Twitter But these networks did not cause the protests against Netflix and News Corp – just as they did not bring down tyrannical regimes in the ‘Arab spring’. What they did was to amplify and speed up the nature of dissent. In the process they are increasing the pressure on businesses and institutions.

Join the debate Social media ruthlessly exposes the differences between politicians and their voters, businesses and their customers. Its very speed also demands real time, 24/7 responses across multiple channels and a more conversational way of communicating. Social media is noisy and unruly but joining in with those conversations can often help defuse problems before they emerge. Most press offices with hierarchical checking processes and traditional skillsets are simply not equipped to deal with the new media landscape.

In just a few years, networks like Facebook and Twitter have gone from marginal activity to mainstream – in the process creating

@ President Obama put social and personal communication at the heart of his successful re-election campaign.

Social media was no add-on – his victory announcement was made first on Twitter. @ Companies like the BBC are now using social media routinely as part of their product development process – listening to customers and working with bloggers to identify problems with new software releases. @ And companies like Dell have invested heavily in people and systems to support on-going communication with customers via social media. That involves, listening, responding and ultimately selling product too.

Embedded within these examples are the new rules of the social media game. Openness and transparency builds the trust that eventually allows you to talk about products and services within these personal networks. In many ways this is not about the term ‘social media’ at all but about the culture of a company and the way it communicates – inside and out. Social media are not about a quick win or a fast return on investment. They are also not an add-on to your existing way of doing business. They involve putting audiences and networks at the heart of your communication. To do that, above all, means casting off the fear and taking the plunge.

Nic Newman is former senior new media executive with the BBC. He is a digital strategist and visiting fellow at the Reuters Institute for the study of Journalism at Oxford University.

28 Issue 1/2013 Insight

green machines

Monika Bomba from the Society of Motor Manufacturers and Traders talks to Robert Gibson on how car makers are investing in green standards.

Like all industries, the automotive sector is facing a challenging time. The current economic climate and weak consumer confidence have resulted in falling vehicle registrations across Europe. These conditions have forced manufacturers in the UK to look even harder at all areas of their business and search for new ways to improve efficiencies, innovate and cater for challenging customer needs.

One of the areas manufacturers are focusing on is environmental standards.

So at a time when every new investment is being closely scrutinised, why are car makers placing their bets on green?

Investing in the environment The recently published 2012 Automotive Sustainability Report (www.smmt.co.uk/ sustainability) by the UK’s Society of Motor Manufacturers and Traders (SMMT), focuses on three areas; social, economic

and environmental performance. Trends in the report indicate that environmental improvements are more pressing than ever, with innovation in manufacturing and technology behind some of the sector’s major achievements. As Paul Everitt, SMMT Chief Executive explained: “Besides the substantial 23% improvement in average new car CO2 emissions since 2000, an efficient and globally competitive manufacturing base has contributed to driving down every single key environmental indicator. From substantially cutting the amount of waste going to landfill to significant reductions in total water usage, efficiencies at every level of manufacturing have produced outstanding environmental results for UK automotive.”

While some industries are only just learning the value of environmental improvements for business, the motor trade is not one of them.

“For manufacturers, the motivation for improving their environmental performance is twofold,” says

Monika Bomba, Technical Manager – Environment at the SMMT. “Obviously the first is awareness of the environmental impact of their industry’s production processes, office activities and product use.” The reduction of CO2 emissions arising from the production process has seen great progress in recent years. But CO2 is not the only driver for change.

“The second main motivation is cost: environmental improvement usually benefits an organisation financially too,” Bomba says. “Implementing certain measures can reduce the amount of water or electricity you’re using for example, which reduces your costs.

Quality management is something that is highly integrated into the production processes, something which happens on a daily basis. From a practical point of view, the results of a quality management approach save money – that’s enough innovation alone.”

Improving energy performance The SMMT report shows that manufacturers are keen to use management standards

Insight Issue 1/2013 29

such as ISO 50001 and ISO 14001 to improve environmental performance.

Bentley Motors’ headquarters in Crewe was the first plant in the UK automotive industry to achieve certification to the energy management standard ISO 50001, in recognition of continuous improvement in energy efficiency and the organisation’s commitment to reducing its overall environmental impact. The organisation has a track record in this area – it became the first of its kind to receive certification to the environmental management standard ISO 14001, in 1999.

Audited by Lloyd’s Register Quality Assurance (LRQA), Bentley’s Crewe plant had successfully implemented a series of initiatives to improve its energy record, including improved heating and lighting, better controlled boiler and compressed air systems, greater insulation and more efficient variable speed drives. The results speak for themselves. Between 2000 and 2010, the energy used on site for each car produced was reduced by two-thirds, and by 14% for the overall site. According to Bentley, this delivered savings of 230GWh of energy – enough to power 11,500 houses for a year. During a period between 2002 and 2007, when car production increased tenfold, the organisation was able to boast that there had been no commensurate increase in environmental impact. And while the initial outlay was considerable (Bentley says a ’significant proportion’ of its £1 billion investment in the plant was devoted to environmental improvements) the results were welcomed.

Speaking after certification was received, Michael Straughan, member of the Board for Manufacturing at Bentley’s, said: “It’s a tribute to the efforts of everyone here in looking for new and innovative ways to

improve the energy performance of our facilities, and I know this commitment will continue. Bentley’s commitment to improved environmental performance goes beyond the factory itself. In 2008, we announced an environmental strategy for our products that is delivering a fleet reduction in CO2 of more than 15% in four years and the introduction of a new powertrain which, by itself, improves fuel economy by 40%. Added to this is a production volume, 90% of which is compatible with sustainable biofuels. We are determined that Bentley should be the leader of the high luxury automotive sector in terms of environmental performance.”

In other areas, Bentley’s waste recovery and recycling strategy is achieving a recycling rate of 77%, quickly approaching its target of 80% recycling. And water usage – a major part of the organisation’s car body coating process – has been halved over the past decade.

The road ahead As Straughan suggested, manufacturers will continue to place emphasis on the value of environmental innovation as their research and development functions strive to give their organisation the competitive edge. Bomba says: “Someday we’ll reach a point when we can’t make the existing production processes any more efficient.

A lot of SMMT members are now looking to produce renewable energy on-site (for example, solar panels, wind turbines, carbon neutral electricity and heat from virgin biomass), as another way to reduce our carbon footprint, in addition to using green energy tariffs.”

Such attitudes are not yet reflected in the vehicle uptake. The SMMT report shows that in 2011, registrations of alternatively fuelled vehicles such as electric cars and

petrol electric hybrids passed 25,000 for the first time. Progress is slow. There is a wide choice of electric vehicles (EVs) on the market, but ultimately it depends on uptake – the UK needs people to actually buy them. While there is subsidy from the government to encourage consumers to buy EVs, the economic conditions are not helping. And EVs are not necessarily an environmental solution alone – to have a real impact, the source of electricity must be renewable. For drivers, their overall carbon footprint would depend on which country they are in when they plug in their electric car.

While the motives of the automotive industry will always remain inseparable from the economic and political climate, car makers are making steady progress during challenging times. Few are able to match the auto sector’s investment of £6 billion over the past 18 months.

Sustainability is about balancing the economic, environmental and social considerations to make sure the business remains viable. Despite the challenges experienced during the first decade of the 21st century, mutually beneficial investment in the environment is being made year-on-year, and UK manufacturers have the evidence to prove it.

Robert Gibson is Deputy Editor of Quality World (QW ) the flagship publication of the CQI, with a monthly readership of 34,000. Lloyd’s Register is a member of the Chartered Quality Institute (CQI) – www.thecqi.org.

30 Issue 1/2013 Insight

Against the odds Taiwan’s high-speed railway has survived earthquakes, typhoons and the recession to become a popular and profitable success story, says Andrew Foulkes.

A

wintry December wind whistles through the upper concourses of London’s St Pancras station and a small group huddles closer together as they listen attentively to a tour of the station’s operations.

Among the group is a delegation from the Taiwan High Speed Rail Corporation (THSRC) led by Dr Ou Chin-Der, its Chairman and Chief Executive.

Strictly speaking, with just 108km of purpose built track, there is little the UK can teach Dr Ou and his team about high-speed passenger services.

However, the recent redevelopment of St Pancras and neighbouring King’s Cross station are admired within the rail industry as much for their commercial prowess as they are for their architectural splendour.

It is estimated that around 20% of those milling about St Pancras at any given time are not there for its domestic or international train services, but its retail boutiques, plush cafes and top-end hotel.

And now, on adjacent brownfield to the rear of the rejuvenated stations, an entirely new 65 acre commercial district is under construction.

This is what THSRC have come to see: following a successful turnaround of the railway’s passenger numbers – which recently passed 200 million in just six years of operations – attention is now starting to turn towards the potential for development of its own stations and adjacent land.

Engineering marvel The Taiwan high-speed railway is, in itself, something of an engineering marvel. It consists of a single 345km north-south route along the island’s west coast, connecting the capital, Taipei, to the southern city of Kaohsiung. The vast majority is built either upon viaducts or through tunnels and subjected to some of the worst that nature has to throw at it, including summer typhoons and frequent earthquakes; it has survived more than 150 of magnitude 4 or higher since it opened.

Despite this, the railway has performed remarkably well and boasts a perfect safety

Insight Issue 1/2013 31

the odds record thanks in no small part to a sophisticated warning system that automatically reduces speeds, or brings trains to a halt, during major seismic events.

But it is no secret the railway experienced a difficult start. When THSRC won a 35-year ‘build – operate – transfer’ concession in 1998 it was amid the turbulence experienced across the Asian economies in the late 1990s. While similar projects were scaled down or abandoned, THSRC persevered with what remains one of the largest privately-funded rail projects ever undertaken.

By the time services commenced in January 2007 they were more than a year late, meaning 12 months’ revenue had been lost. Just as troubling were the initial patronage figures – around a quarter of those anticipated – and a shortfall in commercial and residential development along the route.

No easy ride Such experiences go some way to explaining why high-speed rail still divides opinion.

Though often perceived as futuristic and cutting edge, high-speed rail is approaching its 50th birthday (Japan’s Shinkansen opened in 1964). Yet beyond networks in Japan, France, Germany, and only more recently in Spain, Italy and China, it remains limited to the occasional hundred miles here and there, mainly in Asia and Western Europe.

Schemes are frequently announced in every corner of the world but most flounder. In part this is due to the costs of purpose-built aerodynamic rolling stock and the dedicated infrastructure that minimises curvature and avoids crossings with conventional services (though in some territories, such as Germany, conventional lines have been refurbished for highspeed fleets).

Furthermore, new builds inevitably provoke animosity within the communities where services will race through without stopping (as illustrated on page 33). This means expensive wrangles over land purchases and noise mitigation measures.

There is also debate over high-speed rail’s actual competitive edge over other modes.

General consensus is that they depend heavily on the presence of two high density populations at each end of a route that is no shorter than 150km and no longer than 800km. On shorter or longer routes the advantages quickly dissipate. But not every country’s commercial map fits these dimensions.

No surprise, then, that in the face of such political and financial risk, promoters can lose heart. And more often than not it’s because their schemes lacked a compelling

32 Issue 1/2013 Insight But THSRC’s trains – capable of reaching 300km/h – cut the Taipei and Kaohsiung journey time to around 90 minutes. Stopping services connect to six other regions along the route, regions at risk of slipping too far behind Taiwan’s main economic engines.

Crucially, the plan was not dependent on targeting the business community or challenging the domestic aviation market – a reason often stated by many other projects.

“High Speed Train has very large capacity compared to airlines. I cannot rely purely on attracting air passengers away from the flights,” says Dr Ou.

Dr Ou Chin-Der, Chairman and Chief Executive of the Taiwan High Speed Railway Company (THSRC)

business case from the outset. Is it about tackling the growth in air travel? Boosting network capacity? Increasing national productivity? Spreading economic growth?

Back on track For Taiwan, as Dr Ou explains, a highspeed railway was very much in keeping with the country’s own physical and economic geography.

“The intention was to create a new market – to enable people to travel between our economic centres and return home in a single day. This has opened up communities and regions to our main centres.”

With largely mountainous terrain in the east, the majority of its 23 million citizens are confined to a corridor along the western coast.

Commuters between Taipei and Kaohsiung previously had to choose between a four hour journey by conventional rail or a comparatively expensive 30 minute flight.

Communities in-between, meanwhile, were forced to make do with the unpredictable national road and rail infrastructure that was already under considerable strain due to the sheer concentration of the population.

“The business travel market on our high-speed service is only about 30–40%.

We therefore looked beyond the business traveller that defines the aviation market, to open up new opportunities for families, and tourists from abroad, to travel the length of the country and back in a single day.”

The intention was to create a new market – to enable people to travel between our economic centres and return home in a single day Inevitably, it took time for travel habits to adjust to forecasts. But this is not unique: passenger numbers for the London – Paris – Brussels network in 2010, at around 9.5 million, were barely those originally forecast for 1996 by its original developers.

However, THSRC passenger numbers are now more than double those of its first year of service. This, along with a government-backed refinancing deal to reduce the interest rate, and a general upturn in the economy, has enabled THSRC to report its first profits in 2011, just four years into service. A remarkable turnaround in such a short space of time.

Now THSRC is expanding with three new stations along the route and a short

extension to Taipei’s Nangang District.

As with the original route, Lloyd’s Register will be providing independent safetyassessment services throughout.

Securing the future When the time is right, THSRC hope its station properties will also one day act as anchors for future economic development in the communities they serve.

Scanning the horizon of the new King’s Cross neighbourhood rising from a previously industrial and downtrodden area of north London, Dr Ou is clearly impressed with the scale of the ambition on display.

“Our stations are in central locations and integrated with existing transport, so the opportunity is there – the immediate environments are currently empty,” says Dr Ou. However, he warns, there is no magic formula: “There are different styles of development. Every successful project has something behind it. Whether it is in its architectural design or its function within the neighbourhood, what is important is that the development is right for that location.”

This is the same mindset that ensured Taiwan’s railway stands as proof that with careful planning and a clear purpose about how it will carve out a new market, high-speed rail can be both beneficial and profitable.

Taiwan built a system that was ‘right for the location’ – one that suited the needs of the country’s economic landscape, offered the highest transit volume for the lowest land use, and met long-term reduction in energy use and pollution levels.

Despite the obstacles, Taiwan demonstrates that high-speed rail can enter its next half-century as a popular, sustainable and efficient mode of inter-city travel.

Andrew Foulkes is Lloyd’s Register’s Transportation Communications Manager.

E andrew.foulkes@lr.org Follow me @andrewfoulkes_LR

Insight Issue 1/2013 33

HS2: WHEN IT’S YOUR BACKYARD “Whoever wrote that, should be fired” says an angry resident to no-one in particular but looking at a group of us circled around the same display panel.

We are in the clubhouse of a local amateur rugby club in Amersham, Buckinghamshire, where the UK’s Department for Transport is showcasing the plans for ‘HS2’, a proposed highspeed line, initially from London to Birmingham, to residents along the route. All going to plan, services will be passing within yards of where we are standing from 2026, at a cost put at somewhere around £19 billion. A second stage would then extend to Manchester and Leeds around six years later at a total cost of around £32 billion.

The offending statement in question claims that ‘We sought to identify a route using the following high principles: avoiding homes, communities and environmentally sensitive areas’. But is one of the many assurances scoffed at by today’s visitors, along with statements that only a small number of homes will experience ‘a perceptible increase in noise’ and no ‘on-going’ overnight maintenance.

It’s a slick presentation with touch screens detailing every aspect of the construction, sound booths demonstrating anticipated noise levels, a multitude of literature, and harassed officials calmly trying to douse the claims of the ‘Stop HS2’ campaigners, who are pitched outside the front doors.

Locals are understandably concerned and HS2 is proving a tough sell. This is despite

some expensive commitments regarding visual and noise reduction. It is worth noting that despite similar concerns from residents during the construction of the UK’s only existing high-speed route, between London and Folkestone, that neither Eurostar nor Kent County Council have since received any noise complaints since services began.

The arguments for and against will rage on as Britain’s complex planning system digests what would be the largest infrastructure project the country has committed to for a generation.

But Britain needs this railway – its networks are the busiest they have been since the 1950s and already stretched to the limit. Parts of the recently refurbished West Coast line (which the proposed route will follow) will be full by 2020. Tweaking and adapting the existing infrastructure will no longer suffice.

Besides, with no major rivers to cross or mountains to tunnel through, four of Britain’s leading economic and transport hubs (London – Birmingham – Leeds – Manchester) can be connected with a mere 300 miles of new track. European competitors would see that as a bargain.

Amid the war of words the scheme’s supporters are unfortunately prone to confusing their own arguments – one day the rationale is capacity, the next it’s economic growth – which can be unhelpful. HS2 still enjoys cross party support and legislation, in the form of a Hybrid Bill, for Phase 1 (London to Birmingham) is due in Parliament before the end of 2013.

But there is a long way to go before construction could start sometime in 2018 and many communities, like Amersham, to be won over in the meantime.

34 Issue 1/2013 Insight

The Guru: Ravi Mehrotra engineer, shipowner, businessman, philanthropist and philosopher Nick Brown talks to Ravi Mehrotra, founder of the Foresight Group of companies.

In 1960, when Ravi Mehrotra left school in Kanpur, in the North of India, he followed what he calls his ‘little dream’. He wanted to see the world. To do so he needed a profession – and he chose shipping. Kanpur was a long way from the sea but the young Ravi had a plan to make his dream come alive, to grow into reality: he would become a marine engineer.

He saw the world and a great deal more besides. Today, with a diversified business empire spanning ships, rigs, shoes and restaurants, Mehrotra has responsibilities far beyond the running of ship’s engines. He has come far from, but he has never lost sight of, his modest beginnings.

What’s in it for you?

And now Mehrotra has added ‘author’ to his list of achievements.

His book, What’s in it for you? emerged from a first attempt to write a biography. Speaking in his office in the City of London on the wettest of days in a wet winter, Mehrotra says he could never get comfortable with the idea of publishing his life story. The biography was shelved. Some years later the suggestion was made that he could use his life experiences to produce a management book built around a series of case studies.

And that is what he has done. The book charts his life through a series of lessons from Kanpur to his life today in London and a very interesting decade or so in Iran, straddling the time of the Shah and the immediate post-revolution period.

Where perhaps the book is most successful is in recalling his thoughts, and what happened to him, in the time between leaving home and the point where he emerged as a shipowner. Often the stories of the well known somehow skip neatly over that critical period between the early formative years and the eventual skill or career for which the subject would become best known.

‘I developed a burning ambition to become a shipowner of repute’

What’s in it for you?, concludes with a step-by-step process designed to help the young choose what path to follow. This adds further to the sense that this period and the decisions he made then are still important to Mehrotra and formed a pattern that would shape how his life unfolded. One of the keys to the life he has led, and his openness to adventure, is his attitude to taking advantage of opportunity to further his goals: ‘Evaluate each opportunity, ask yourself whether it is consistent with your goal… the truth of the matter is that opportunity is everywhere. Just open your eyes and LOOK.’ From India to Iran Mehrotra has certainly had his adventures.

After graduating from the Directorate of Marine Engineering and Training in Calcutta, with the medal, ‘Best All Round Cadet Suitable for the Merchant Navy’ he followed a career at sea as

Insight Issue 1/2013 35 a marine engineer with Shipping Corporation of India (SCI).

Subsequently he came ashore to work for SCI, where he would embark on what was one of the central periods of challenge and opportunity in his life. Seconded to pre-revolution Iran to establish a joint venture company for SCI, he lived through the upheavals of the revolution and the Iran-Iraq war to establish a series of shipping businesses in difficult circumstances and became Principal Advisor on Shipping to the new government.

Leaving Iran, in 1984 he established his own shipping company in London and in 1986 bought his first ship.

But he still had one big Iranian adventure to manage when he was asked to help Iran export its crude oil while under threat of Exocet missiles targeting the Kharg Island export terminal. “Having carefully studied the risks of the helicopter mounted Exocets, we established a VLCC (very large crude carrier) tanker shuttle service running shipments of crude oil from Kharg Island to floating storage and loading terminals using ULCCs (ultra large crude carriers) in the Straits of Hormuz,” he explains – a long way in all respects from the desert heat. He considers one of his finest achievements to be dealing with the associated insurance risks.

Insurance rates had rocketed under threat of the Iraqi missiles and Mehrotra established Iranian underwritten war cover policy to cover the risks involved.

In 1989 he established a drilling company and acquired drill rigs but his main focus was of refrigerated cargo ships (reefers). And this eventually led him to adventure in the US capital markets to fund further growth.

Make failure work Raising $100 million of high yield bonds in the US capital markets in 1997 to finance the acquisition of more reefers, he later had to fight to keep his company when, following a downturn in the reefer markets, his investment vehicle Amer Reefer Company (ARC), became subject to a takeover battle. ARC had been

© Courtesy of

Joop Klaasm an

unable to keep up interest payments to bondholders. Mehrotra is admirably candid about all this in Life Lesson Nine of the book – ‘Make failure work’.

Eventually, he emerged from bankruptcy proceedings with his company and has fought on ever since. Today he remains a shipowner, drill rig owner, owner of six restaurants (including the first Indian restaurant in Beijing) and the owner of a large shoe business in India.

He has fond memories of Lloyd’s Register from the earliest of his shipping days, “Lloyd’s is my home”, he says today. “I sent many able young surveyors to careers at Lloyd’s during my SCI days.”

Looking ahead he says that he hopes classification societies will consider certifying the competence of ships’ crews and, as a committee member, he has always pushed this agenda.

If there is an overall theme to his life, and his book, it is the importance of family and ensuring that you have balance in your life.

He sees it as vital to give back outside of work. In his home town he has established a charitable school, named for his beloved mother, to provide the less fortunate with a chance of a career at sea. The Amer Maritime Training Academy was inaugurated in 2002 and provides a pathway to the sea for the ‘poorest of the poor’ to become ratings – the general seafarers on board merchant ships. Now 16 young people graduate every three months.

Mehrotra found his path and as well as providing a route to the sea for the less well off, he has now shared, in a most engaging manner, his own pathway through life and its lessons.

Nick Brown is Lloyd’s Register’s Marine Media Manager E nick.brown@lr.org Follow me @nickbrown_LR Ravi Mehrotra is a member of Lloyd’s Register’s Advisory Committee.

Ravi Mehrotra (right) as an apprentice at the Kolkata shipyard

36 Issue 1/2013 Insight

Tomorrow’s talent Julie Mitchell investigates the engineering skills shortage.

With a growing population placing ever greater pressure on resources and clamouring for new technology, engineers are in demand like never before.

But expanding the talent pool is a global challenge.

“The well-being of the world largely depends on the work of the engineer,” said one of the 20th century’s most distinguished practitioners, Sir William Halcrow. He believed that for those with ‘imagination and keenness’ here could not be a better profession.

Engineers have made, and continue to make, a vital contribution to the advancement of society. Now, as the world faces a rapidly increasing population, along with the inexorable rise of urbanisation, the opportunities for skilled engineers are practically limitless.

Shrinking pool Yet despite this, their numbers are shrinking.

In recent years there has been much talk of a talent war and, particularly in developed economies, there is the issue of too many ‘baby boomers’ poised to retire and too few young people picking up the baton. Overall, many countries are seeing a slump in numbers enrolling on engineering courses.

“When the banking crisis hit in 2008, there were suggestions that the war on

talent was finished,” says Greg Allen, Global Head of Resourcing at Lloyd’s Register. “But it hasn’t gone away. Our experienced pool is shrinking, as people get older and retire, and we are looking at where tomorrow’s talent will come from.”

BMT, an international design, engineering, science and risk management consultancy, has noticed a similar trend. “It’s not just a shortage of engineers generally but also those who have consultancy and customerfacing skills,” says Head of HR Anne Segall.

“The more specialised the skills, the more difficult it gets.”

In 2012, Engineers Australia said their shortages were such that the country was ’relying on temporary skilled migration to fill engineering workforce gaps’. It’s a similar position in South Africa where engineers are being brought in from abroad to fill a shortage that is partly the result of homegrown talent opting for jobs in Europe and Australasia. The Engineering Council of South Africa has endorsed a strategy of recruiting retired engineers to mentor and help train young graduates.

Insight Issue 1/2013 37 Rising demand A UNESCO report, published in 2010, highlights the escalating demand for engineers around the world. For example, it estimated that 2.5 million new engineers were needed in sub-Saharan Africa alone for the region to meet its 2015 UN Millennium Goal deadline of improved access to clean water and sanitation.

EngineeringUK recently published a report stating that, between now and 2020, the UK needed to nearly double the number of engineering graduates from 46,000 to 87,000 a year, while numbers of those qualified at advanced apprenticeship or equivalent needed to rise from 27,000 to 69,000 a year. Allen points out that the situation in the UK has been further complicated by the decline in number of mechanical, chemical and software engineering courses in recent years. Also, due to visa restrictions, many of the overseas students who are attracted to these courses have to return home at the end of their studies.

UNESCO, governments, professional engineering bodies and employers all recognise that the long-term solution is to reach out to schools early and inspire youngsters, particularly more girls, to become tomorrow’s engineers. There are many approaches being taken, for example the Lloyd’s Register Foundation, a charity and parent of the Lloyds Register group, supports a range of educational, vocational training and research programmes.

Recruit and retain To overcome the talent shortages in the short term, employers are working harder – and smarter – at recruiting and retaining the best people.

Allen says Lloyd’s Register is moving most of its Marine London personnel to Southampton – close to the university – where it is creating a global technology centre to grow its own talent. “We are doing the same in Singapore with our Energy business,” he explains.

“These centres will concentrate research into new technology.”

“We need to be more innovative in finding talent,” says Lloyd’s Register’s Group Human Resources Director John Stansfeld. “It’s no longer enough to put an advert in the paper.

We have to employ different approaches to identifying where the talent lies and then make the right proposition to them.”

The use of digital media, particularly social sites like Facebook and Twitter, is becoming more important for engaging with ‘Generation Y’. Says Allen: “Greater interconnectivity means people are better informed, they can access pages on their phone or tablet telling them about Lloyd’s Register and what customers are saying.”

The business recognises that it needs to ‘sell’ itself more. “Life matters is one of our values and a powerful call to arms,” Stansfeld believes. “Our people make a difference by providing better safety outcomes.”

He accepts that fewer people remain with one organisation throughout their career, which is why Lloyd’s Register helps them, where possible, to develop and broaden their skills.

BMT also enables its engineers to move around the globe and to different parts of the Group. It has boosted its pay and benefits package to attract talented engineers and also expanded its recruitment practices to embrace social media.

“There is no doubt that the way we recruited in the past is not the way we are recruiting now and in the future,” Segall explains. “We are also pursuing links with education. As a member of EngineeringUK we are keen to join in their events with schools and help to secure a more diversified workforce. In Singapore we run talks at universities and have links with universities in the US, where we also offer internships.”

As part of its commitment to retaining staff, BMT provides personal development plans and training programmes. The company also runs development centres in which select groups of staff from around the world take part in competency-based exercises and receive detailed feedback.

Looking ahead, Segall is confident that the engineering capacity situation will eventually improve, a view shared by Stansfeld who adds: “To win the war on talent we have to marshal every tool in the box and we are having some success in getting the right people in the right place at the right time.”

Julie Mitchell is a senior writer specialising in the engineering sector.

2.5m engineers needed in Sub-Saharan Africa by 2015

38 Issue 1/2013 Insight

EU wind industry

skills gap 5,500

Skilled employee shortage

+11.6 Wind energy installed (2012/GW)

7%

European electricity is wind (6.3/2011)

The EU wind energy sector is now meeting 7% of Europe’s electricity demand – up from 6.3% at the end of 2011.

According to the 2012 annual statistics from the European Wind Energy Association, Europe installed 11.6 gigawatts (GW) of wind power capacity in 2012, bringing the total to 105.6GW.

operations and maintenance,” says Andrew Garrad, Chairman of GL Garrad Hassan.

“Engineers are in desperately short supply and the problem will get far worse unless action is taken.”

The forecast for 2013 and ahead is less promising for economic reasons, with the political uncertainty surrounding subsidies.

And added to this, the wind industry in Europe also faces a severe skills shortage of around 5,500 appropriately qualified staff per year. Longer term, this shortfall could climb to 18,000 by 2030 – nearly 5% of the entire wind industry workforce – if numbers of suitable workers do not increase.

The report’s recommendations to help close the skills gap, include bolstering Science, Technology, Engineering and Maths (STEM) skills through schools, universities, and vocational training, and more industry input into academic courses. It also calls for more wind energy-related training courses, and greater emphasis on training in operations and maintenance.

The warning comes in a report, European Wind Energy Training Needs, Opportunities and Recommendations, to be published by the EU’s Wind Energy Technology Platform (TPWind), based on research by renewable energy consultancy GL Garrad Hassan.

“There is a real risk of a shortage of suitably skilled workers. Well over half of the shortfall in new workers in 2030 could be in

“Targeted training courses must be created and graduate numbers from those courses increased, so that the sector can meet its staff needs and continue to provide jobs and revenue in today’s tough economic climate,” comments Henning Kruse, Chairman of TPWind.

Insight Issue 1/2013 39

‘Water lite’ energy for India?

India is at an energy crossroad and, if the experts who forecast the country’s future demand are right, it is in danger of facing the wrong way.

The demand for energy in India is set to rise dramatically. According to the International Energy Agency’s (IEA) latest world outlook, no other major country is expected to see a greater expansion in demand for energy over the next 20 years, not even China.

While global demand for energy is expected to grow at a compound annual rate of 1.3% until 2035, India’s booming population and emerging middle class will require 3.1% more energy per year, the IEA says.

However, its national thirst for energy will need to be sated without increasing the use of its other most valuable commodity: water. And that will not be easy.

The volume of water consumed annually in energy production will double by 2035, the IEA says, more than half of which will be used to generate coal-fired electricity (more than 80% if you add biofuels, the second most water-intensive energy source). By that time, the UN says more than 1.8 billion people will be ‘living in regions with severe water scarcity’.

That is bad news for India, home to 16% of the world’s population, but only 4% of its water. Equally unsettling is that its mainstay – coal-fired electricity – is the most waterintensive energy source. By 2035, the annual demand for coal-fired energy in India will have jumped 220%. Clearly, something has to change.

“Energy and water are tightly entwined,” Sandra Postel, Director of the Global Water Policy Project told National Geographic recently. “It takes a great deal of energy to supply water, and a great deal of water to supply energy. With water stress spreading and intensifying around the globe, it’s critical that policymakers do not promote water-intensive energy options.”

But in India, with no fewer than seven ‘energy’ ministries responsible for policy, a joined-up strategy is proving elusive.

Two ‘water-lite’ energy options are solar and wind power, which collectively account for less than 1% of water consumed for energy, now, and in the future. Neither is currently on track to deliver the kind of base-load electrical power that will be required.

With much of India basking in 300 days of sunshine annually, solar appears to be the answer, a fact verified by an official at the recent launch of the state of Kerala’s roof-top solar power programme.

“We’re all hoping that we’ll soon succeed in finding a solution [to India’s energy needs],” Farooq Abdullah, Union Minister for New and Renewable Energy, told The Hindu. “This is a challenge we have to take head-on. Solar energy is our future.

It is rather the future of the world.”

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+1.3% +3.1% World

India

Energy growth to 2035 (%)

16% 4% of world’s population

300 Days of sun

of world’s water

40 Issue 1/2013 Insight

Rebuilding trust

In April 2004 South Korea became only the fifth nation in the world to open highspeed rail services. As with the rest of the network, public trust in its operational safety was high. But the country’s first high-speed incident in February 2011 changed all that. Andrew Foulkes charts its recovery.

The high-speed train, known as the KTX, was already decelerating as it approached Gwang-myeong station, near Seoul, when the rear six cars suddenly separated from the tracks.

Meticulously rehearsed procedures ensured all 147 passengers were safely evacuated from the carriages and escorted to the station. Only one passenger required medical assistance.

Despite this exemplar response, as you might expect from one of the world’s most safety-conscious operators, the incident

really could not have come at a worse time for the national operator, KORAIL. Brand under fire Even during the best of times, rail organisations can be challenging, unwieldy businesses to manage. But with interests across high-speed, freight, national and commuter metro services, South Korea’s national operator is more complex than most.

Like many national railways, KORAIL can trace its roots to the 19th century when the railways were introduced to the Korean peninsular. Since then the fortunes of Korea’s railways have fluctuated alongside those of

Insight Issue 1/2013 41 the country itself, but today it serves over one billion passengers each year (placing it seventh in the global table of passenger numbers) across almost 3,500km of track.

and Maglev. Central to this is the aim of a new formalised approach in line with international standards. This passed the National Assembly in December 2012.”

From its origins in the Ministry of Transportation it became the Korean National Railroad (KNR) during the 1960s, from which the ‘KORAIL’ name derives. In 2005 KNR was split into a nationwide operator, which continued with the KORAIL name, and Korea Rail Network Authority which constructs the track infrastructure.

In August 2012, KORAIL entered into a contract with Lloyd’s Register to review its safety management system. “Europe is where railways originated and we know Lloyd’s Register played a leading role in the safety management changes that occurred in the UK following privatisation,” says Na. “So we believed they could perform the review more objectively and competently than any other organisation.”

But in recent times KORAIL has received criticism from those who believe its status as a state-owned enterprise is outdated.

Some have even called for private firms to be allowed to bring competition to certain services, particularly the profitable high-speed route. The debate was peaking when the derailment occurred.

“Following the incident, the Korean media stirred up a very negative image of KORAIL among the public,” says Na Min-Chan, Executive Director of KORAIL’s Safety Office.

“Minor failures and problems were reported with an increasingly negative view. This meant rising public anxiety fuelled by minor exaggeration on social networks.”

The entire KORAIL brand was under criticism.

Decisive and proactive KORAIL’s response in the aftermath was decisive; putting its entire safety management process under independent review by Lloyd’s Register.

Though its safety systems had been built from lessons learned throughout its previous 113 years – culminating in a record already amongst the best in the world (in 2010 it was ranked number one for lowest accident rate by the International Union of Railways (UIC)) – improvements were still sought. According to Na: “We felt strongly that we needed to move to a more sustainable, proactive safety system.”

Young Sang Kim, Lloyd’s Register principal specialist explains: “The government proposed a bill for a new certification scheme for safety management systems, following the amount of change that the Korean rail network had recently undergone, in particular with regard to safety on the country’s various systems – including high-speed, metro, monorail

Lloyd’s Register’s team undertook a series of document reviews, interviews with the KORAIL management, and on-site audits to see whether the safety management system (SMS) was correctly implemented and fully understood to serve its purpose. Their final report presented 21 recommendations and six roadmaps, for the period 2013–2017, which KORAIL is now using to update current processes and will add to the corporation-wide safety management master plan to serve the business through to 2020.

“To apply the recommendations necessary to improve our safety management system, such as those related to SMS documents, occupation competency and human factors, we will introduce pilot programmes after developing concrete plans and consulting with related departments. We will build a safety management system which complies with the international standards through continued co-operation with Lloyd’s Register,” says Na. Change was already underway ahead of the review. A new Safety Office was created in May 2011, reporting directly to the CEO, with exclusive responsibility for safety management across every aspect of the business. This led to the establishment of teams within KORAIL’s headquarters and regional offices dedicated to vertical and horizontal safety improvements across the organisation.

A Safety Railway Management Committee was also formed to discuss staff concerns and make decisions on key safety-related policies and issues with KORAIL’s vice president as its chairperson.

Chung Chang-Young, KORAIL CEO

Reboot gives confidence for the future Though many organisations implement such programmes, few can match the speed and impact experienced within KORAIL. Following careful promotional work to ‘tell the story’ about the changes taking place, the brand ranking of KORAIL has leapt from 80th place in 2011 to 26th in 2012, according to 2012 data from Brand Stock, a brand value assessment company, a clear sign that it is regaining the trust of the public. Its reputation as a safe operation was confirmed by the 2012 Innovation Award presented to the delegation during the UIC’s annual general meeting in Paris.

As a result of the reboot of its safety management, KORAIL has renewed confidence for the future. “Korean society recognises that rail is an efficient and environmentally friendly form of transportation and our government is expected to greatly increase its investment,” says Chung Chang-Young, KORAIL CEO. “We are geographically positioned as the potential starting point of a network that stretches far into the Asian continent. It is important to us that we continue to improve operations and processes, especially in safety management, and remain at the top as the safest and most efficient operation there is.”

Andrew Foulkes is Lloyd’s Register’s Transportation Communications Manager.

E andrew.foulkes@lr.org Follow me @andrewfoulkes_LR

42 Issue 1/2013 Insight

Auditor competency a key to Food safety Best practice and innovation are driving food safety across global supply chains, says Cor Groenveld.

1.8m die each year due to contaminated food and water

162bn US$ costs to economy and 5,000 deaths due to food borne illnesses

Food safety is not a competitive issue.

It is in the interests of stakeholders across the global food supply chain to work together to ensure that consumers are confident that food is safe to eat and has been produced in a sustainable manner.

The globalisation of supply chains and the need for transparency and traceability have triggered changes in the way in which food safety is approached. Over the last decade there has been a collaborative approach across the major stakeholders resulting in best practice being highlighted and shared, mediocrity being more easily identified and excellence more readily rewarded.

Thanks to innovation, collaboration and change, the increased focus on food safety across the global supply chain has led to significant improvements. However, there is more to be done; the numbers currently involved in food safety statistics speak for themselves: some 1.8 million people die each year because of contaminated food and water; each year there are an estimated two billion cases of food borne illnesses and, in Western developed countries, an estimated one out of every four to six people suffer from a food borne disease; while in the US, food borne illnesses causes 5,000 deaths annually and US$162 billion costs.

To address these figures and to mitigate risks the food sector increasingly relies on the independent assessment industry, not just to protect brands and businesses from prosecutions and health scares, but also to drive internal improvements and secure competitive advantage.

Driving innovation from the top In 2000, leading global manufacturers and retailers united to form the Global Food Safety Initiative (GFSI), primarily to drive the harmonisation of food safety standards and certification. The move followed a number of food safety crises when consumer confidence was low.

Since then, experts have been collaborating to tackle current food safety issues defined

by GFSI stakeholders. Along with the International Organisation for Standardisation (ISO), the GFSI has driven the move towards a manageable set of globally accepted management systems-based standards and schemes. This harmonisation of standards has been one of the two most significant achievements of the GFSI, and a key innovation in driving food safety; the second significant achievement is the focus on auditor competency.

Competency and consistency While robust independent assessment underpins an organisations’ commitment to food safety, there is a need now for those

Insight Issue 1/2013 43

carrying out the assessment – the auditors themselves – to have a consistent level of experience and expertise. This is known as ‘calibration’ within the industry.

Robust audits and the calibration of auditors are both fundamentally important to ensuring the integrity of the assessment process. The calibration of auditors ensures the same level of auditing across international boundaries. The benefits to global organisations are clear; calibration assures them that their assessment reports have been completed in a consistent way and that their operations are conforming to the relevant standard or scheme – irrespective of geographical location.

This gives an additional level of assurance to organisations and the wider global food supply chain.

Mark Overland, Director for Global Certification at Cargill endorsed this point: “We are rolling out FSSC 22000 to over 1,000 plants in 67 countries. Having the same level of food safety execution at every plant is an expectation from our customers.”

What is becoming increasingly apparent is that organisations like Cargill are taking a global, integrated approach to supply chain and food safety, including their work both up and down the chain.

Customised audits Another development is the increasing use of customised second party audits by organisations seeking internal improvement of their food safety management system or to assure their supply chain. This approach allows an organisation to work with a certification body to develop a bespoke management system and audit approach that not only includes the certification audits against a recognised standard or

scheme but also incorporates industry best practice with company specific systems and processes.

Assessor calibration is also at the heart of second party audit programmes and it can deliver a significant return on investment.

Through regular assessor-client meetings and training sessions, both parties work together to ensure that systems and processes are assessed in a consistent manner, regardless of location or assessor.

In addition to the system becoming more robust over time, the audit process begins to drive internal efficiencies as well as identify areas for further training and improvement.

Some of the world’s leading organisations have turned to customised assurance programmes. Audits are undertaken by skilled and calibrated assessors that cover all requirements and processes that are relevant for the organisation, resulting in reporting that visualises the level of compliance and enables the organisation to improve.

As Cathy Stannard, Global Head of Quality & Food Safety Management of Mars, Incorporated recently explained: “For Mars, a Quality Management Programme compatible with the requirements set out in the GFSI recognised schemes offers us consistency and efficiency, which helps across the supply chain.”

Whatever methodologies, processes and systems are used, the integrity of the audit ultimately depends on the expertise, experience, training, knowledge and insight of the auditing team. Auditors today, working in global markets, not only need to be calibrated, they need the right tools to

do the job – and this means they need continual training and development.

A management systems-based approach to food safety, combining harmonised global standards and consistent, robust assessment, is leading to increased consumer confidence in the global food supply chain. While risk is always going to be a factor in any supply chain, this approach, based on collaboration, trust, innovation, and the leadership of exemplary organisations serving the food industry is helping to ensure that issues can be quickly identified and corrected.

Manufacturers and retailers that may have considered improved efficiencies as the main indicator for success are now putting management systems at the heart of their organisations to manage their supply chain risks. This, in these times of on-going food scares and economic uncertainty, can prove to be a key differentiator and an on-going source of competitive advantage.

FSSC 22000 is a complete food safety management certification scheme based on ISO 22000 and sector specific technical specifications for prerequisite programmes.

Cor Groenveld is Chairman of the Foundation for Food Safety Certification and Global Head of Food Supply Chain Services for Lloyd’s Register Quality Assurance (LRQA). www.linkedin.com/in/corgroenveld Follow us @LRQAFood

News update

44 Issue 1/2013 Insight

Drillship takes the lead

A cutting edge drillship has been designed by a joint development project between Hyundai Heavy Industries (HHI) and Lloyd’s Register.

The HD12000 meets market demand and owners’ higher expectations after the Deepwater Horizon incident. It can drill to depths of 12,000 feet and has greater strength, space and versatility than its drillship predecessors. The 223 metre long vessel is designed to meet the greater complexity, pressures and sizes of today’s drilling equipment and their handling needs. It can also probe to depths of 40,000 feet.

The vessel has a high transit speed of 11.5 knots together with reduced form resistance with integrated thruster pod to hull. It has 40% lower fuel consumption, reportedly, than existing drillships and enhanced seakeeping performance.

Sharma joins the group Acclaimed industry veteran RS Sharma has joined Lloyd’s Register at a time when we are committed to double both our revenue and workforce in India by 2015.

As Chairman of Operations for South West Asia he will support our ambitious plans in the energy and transport sectors.

“We are committed to growing our business in India – organically and inorganically – to expand the independent technical support we can offer to the owners and operators of the critical assets that Indian society depends on,” said Richard Sadler, CEO of Lloyd’s Register.

E energy@lr.org

Insight Issue 1/2013 45

Life on-board is tough, say seafarers

Statnett’s asset management excellence

The design of a ship critically impacts the working lives of seafarers in a number of ways, such as the quality of rest, the level of restoration they can achieve in nonworking hours and their mental well-being.

Yet the design of vessel accommodation is an area which can receive scant attention across the industry and as a result a high degree of variability exists. This observation is one of a number of findings contained in a study, Seafarer Accommodation On Contemporary Cargo Ships, undertaken

by Cardiff-based Seafarers International Research Centre (SIRC) with funding from Lloyd’s Register Foundation.

Statnett SF, based in Oslo, Norway has been certified to the Publicly Available Specification (PAS 55) framework for asset management systems by Lloyd’s Register.

State owned Statnett is the national transmission system operator responsible for the main electricity transmission grid throughout Norway.

A copy of the report can be found on the SIRC website www.sirc.cf.ac.uk

ISA for Taiwan high-speed rail extension The Taiwan High Speed Railway Corporation (THSRC) has chosen Lloyd’s Register as the independent safety assessor (ISA) for the Nangang extension of its network.

“We are pleased to continue this successful relationship with Lloyd’s Register, which began in 2000 when our railway was the first project in Taiwan to undergo an independent verification and validation process,” THSRC Chairman and Chief Executive Officer, Ou Chin-der said.

“I believe that independent assessment is the key to the overall success of a project. It is the only way to ensure that safety standards are maintained throughout the construction and operation of a system.”

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Its asset portfolio consists of approximately 10,000km of high voltage transmission lines, around 140 major transformer and connector stations, an associated telecommunications network and a number of reserve power generator stations. Statnett is also a key element within the Nordic Power System and has interests in international HV interconnectors between Norway and other countries in the Nordic Power System as well as other countries outside of this group.

As part of the certification assessment, our team travelled to north Norway to inspect maintenance activities and to Forde in west Norway to inspect work taking place on the construction of 300km of overhead line, which required them to fly by helicopter to some of the more remote locations.

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Vodafone Greece business continuity management certified Vodafone, the first company in Greece to be certified to the international business continuity management system standard, BS 25999, has also been certified to ISO 22301 – the new international standard for business continuity management. Both certifications were awarded by Lloyd’s Register Quality Assurance (LRQA).

Dionysis Grigoratos, Business Commercial Director at Vodafone said: “Vodafone Greece has been instrumental in providing high quality integrated telecom and IT solutions that increase productivity and competitiveness. Businesses rely on our

services and the Vodafone network because they want seamless communication and new ways of working to be able to continuously meet market demands.”

“Achieving certification to ISO 22301 with LRQA Business Assurance has driven continual improvement across our network,” said Grigoratos. “This demonstrates our on-going commitment to our customers through the provision of reliable and high quality services.”

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Propelling innovation The priority we place on research and development means we can lead and work on the latest innovations. We are supporting the development of new concepts and technologies that will play a vital role in the immediate and long-term future of shipping and energy.

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