TRUE OR FALSE? p. 6 | TOGETHER WITH THE CUSTOMER p. 14 | MOVEMENT p. 24 | HOW GREEN IS NUON p. 42 | LEADERSHIP p. 56
sustainable
SUSTAINABLE NUON YEAR MAGAZINE 2007
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FOREWORD TRUE OR FALSE? p. 6 | TOGETHER WITH THE CUSTOMER p. 14 | MOVEMENT p. 24 | HOW GREEN IS NUON p. 42 | LEADERSHIP p. 56
sustainable
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Sustainability is all about courage Climate change, poverty and environmental pollution: these are the topics I recently discussed with my counterpart at another large company. He firmly believes that our politicians of today will never resolve these issues due to their lack of long-term vision and over-reliance on the free market. The answer, he said, is a meritocracy: a government consisting of a small expert elite with the knowledge, power and means to take fast and vigorous action. His words set me thinking. I understood his frustration, but democracy is too close to my heart to throw out the baby with the bathwater. Even so, he helped make one thing clear to me: we can no longer leave the ball in the government’s court. I think that large companies now have so much knowledge, influence and money that their directors must take their own responsibility. They, essentially, are the elite that my counterpart was looking for. Companies cannot be successful in an ailing and failing society. And for a society that is beginning to sense that its resources are running out, sustainability is no longer an option but a bitter necessity. In other words, using our knowledge, influence and money to advance this cause is no longer a choice, but a moral duty. Public and corporate interests go hand in hand here. Companies that help society are also helping themselves. I am convinced that sustainability is the key to building brands that customers trust, because they give customers what they genuinely need. Added to this, responsible entrepreneurship is the way to build companies people want to work for.
25-04-2008 14:09:58
A SUSTAINABILITY MAGAZINE? YES, THAT’S RIGHT! SUSTAINABLE NUON 2007 IS A MAGAZINE THAT GIVES YOU AN INSIDE VIEW OF OUR ENERGY POLICY. FOR A COMPLETE REPORT ON OUR CSR AIMS AND ACTIONS, PLUS ALL THE FACTS AND FIGURES, SURF TO WWW.NUON.COM/REPORTING2007
Looking at the world around me, I see that companies generally lack just one thing that can help them genuinely embrace sustainability. Call it guts or simply courage. Most important of all: companies must break out of the mould, decision-makers must take positive action rather than passively awaiting that eternal level playing field, managers must stop being held back by the fear of being mocked, and we must all dare to challenge anyone who clings to the old way of doing things. Change is never without risk. In this magazine you can read how Nuon is demonstrating leadership by sticking its neck out in order to bring that sustainable world closer, baby step by baby step. As you will see, that’s not always easy. Amsterdam, 7 April 2008
TO
IS NUON IN
DIVERSITY? Ruud Schuurs, Director of Corporate Social Responsibility
OF COURSE
RF TO
WE ARE! SU
NG2007
TI .COM/REPOR WWW.NUON
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CONTENTS
SIGNS OF TRANSITION
p. 4
1 TRUE OR FALSE ‘We are showing what we are doing’.
p. 7
Why heating networks take time
p. 12
2 TOGETHER WITH THE CUSTOMER Anne-Marie Rakhorst, Search
p. 15
Michiel de Haan, BCC
p. 16
Jeroen Jansen, ASN
p. 17
Climate efforts that yield the most gains
p. 19
Green is growing again in 2008.
p. 23
3 MOVEMENT Green-minded employees
p. 25
ENERGY YEAR IN FOCUS
p. 34
4 HOW GREEN IS NUON? Sustainable results in perspective
p. 43
Sustainability at our neighbours
p. 46
Powerplants acquire a taste for residual waste
p. 48
Where there’s a will, there’s a way
p. 50
Pioneering with less CO2
p. 53
5 LEADERSHIP Dialogue with Pernot and Kemna
p. 57
Stakeholder advice: Cramer, Wempe, Belksma and Cramer
p. 61
Farewell interview with Ludo van Halderen
p. 65
Column of Wessel Ganzevoort
p. 67
ACKNOWLEDGEMENTS Nuon Sustainable is a publication of Nuon. Publisher: Nuon nv, Amsterdam. Chief Editor: Karin Rikkers (Nuon). Concept: Joost Bijlsma (Magma Publicaties)/Greet Egbers (www.greet.nl)/ Scripta Media, Amsterdam(www.scripta.nl). Realisation: Scripta Media. Final Editing: Joost Bijlsma. Editorial Board: Joost Bijlsma, Evelyn Jongman, Ingrid Kluvers, Jacqueline Konermann, Judith Mulder, Ruud Schuurs, Peter van Vuuren. Text: Pieter van den Brand, Ernst Bruinsma, Rutger Vahl, Pierre de Winter. Art direction and design: Greet Egbers, Lina Meisen. Photography: Foto Natura, Hollandse Hoogte, Getty Images, Rob Marinissen, Ellen Martens, Jocelyne Moreau, Edith Paol, Frank Ruiter, Maarten van Schaik, WFA/Reuters, Ernst Yperlaan. Illustrations: Greet Egbers, Michiel Offerman. Lithography: Grafimedia bv, Amsterdam. Printing support: Castel Mediaproducties, Groningen. Printing: Hollandia, Heerhugowaard. Translation: Bosch & Bosch, Amsterdam. With thanks to: Hans Nooter, Gieljan Beijen, Suzanne van Hees, Wendy Dubbeld, Mariëlle Ruijgrok.
The Sustainable Nuon Year Magazine is printed on FSC-certified paper. The inks used contain 15 to 20% vegetable binding agents.
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SIGNS OF TRANSITION
2 1 1
NUNA 4: NOW WITH EVEN FEWER CELLS! After three earlier victories the Nuna solar car triumphed again in the World Solar Challenge in 2007 - with only two-thirds of the solar cells used in the previous events! This solar sprinter is not simply a high-tech indulgence, but a first step towards making solar-powered vehicles a practical reality. As a symbol of things to come, the Nuna did a lap of honour along the A10 motorway.
Nuna1 Nuna2 Nuna3 Nuna4
Solar panel surface area
Time over 3,021 km (hours, minutes)
9 m2 9 m2 9 m2 6 m2
32.39 31.05 29.11 33.17
2
FREE ENERGY-SAVING SCHEME
3
A TRULY GREEN CHRISTMAS TREE ON DAM SQUARE
Over 3,000,000 Dutch households received a voucher for a free energy-saving lamp from Nuon. The aim was to encourage consumers to buy more energy-efficient lamps. Tens of thousands of customers exchanged their vouchers at one of the nine energy shops. And no less than 60,000 energy-efficient lamps crossed the digital counter of the online shop.
The 18-metre-high Christmas tree that adorned Amsterdam’s Dam Square over the holiday season was lit up in energy-efficient splendour for the first time ever – courtesy of a Nuon design comprising 40,000 led lights that use ten times less energy than traditional bulbs. By way of comparison: in 30 days a string of 100 ordinary fairy lights uses 10.5 kilowatt hours, while leds consume only 1.2 kilowatt hours.
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SIGNS OF TRANSITION
6 4 4
WARM INTEREST
5
CLEAN FREIGHT FLOW
Heating is the Netherlands’ best-kept sustainable secret. Of the available potential of residual heating - the equivalent of 15,000,000,000 cubic metres of burned natural gas - we currently use a mere 3 per cent. In 2007, Nuon Heating connected over 6,000 homes to a residual heating network. And the future looks rosy because politicians are warming to the idea of residual heating networks.
Trams emit no exhaust fumes. So why not use them to carry freight into city centres? That’s the idea behind City Cargo, an ambitious project in the centre of Amsterdam. The aim is to cut the number of lorries by half (from 5,000 to 2,500) within ten years. Nuon is investing 3.1 million euros in the project and will receive an interest of 30 per cent, while also delivering renewable energy to drive the project’s trams and E-cars.
6
ENERGY IN THE SHOP WINDOW
7
SMART METERS
The role of energy companies is steadily changing, from product provider to service provider and adviser – which is why Nuon has opened nine energy shops in Alkmaar, Amsterdam, Baarn, Beek, Enschede, Groningen, Leiderdorp, Nijmegen and Zwolle. These shops stock everything related to energy and energy saving, such as energy-efficient lamps, design radiators, thermostats, high-performance boilers and insulation. On average, 45 per cent of the inhabitants of these cities and towns already know of the energy shops.
In the coming years all Dutch households will be fitted out with a new ‘smart’ meter. These provide information on consumption patterns, and can thus help to save energy whilst also enabling more effective and efficient grid management. Numbers of meters to be installed by Continuon (estimate): 50,000 in 2007, 50,000 in 2008, 250,000 in 2009, 500,000 in 2010/2013 and 250,000 in 2014.
7 Nuon Sustainability magazine 2007 _ 5
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Theme 1 TRUE OR FALSE?
True or false? Thanks to Nobel Prize winner Al Gore, the crusade for a greener energy future is well and truly underway. That is a good sign, because broad-based commitment is crucial to achieve the radical changes needed in the energy sector. Unfortunately, there are no magic solutions; the transition from fossil to renewable energy is a gradual process. And energy security is also a key concern. So we must always ensure that our communications do not make reality look rosier than it is. 6 _ Nuon Sustainability magazine 2007
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TRUE OR FALSE?
‘Taking up where Gore left off’
2007 was the year of climate awareness. So it was only logical that energy companies attracted close scrutiny. Coal-fired generation came under fire and, in the heat of the debate, nuances were lost. Together with Øystein Løseth and Kjartan Skaugvoll we tried to separate true from false. On 5 July 2007 Greenpeace dumped twenty tons of coal at the entrance to Nuon’s head office. The protest was aimed at Nuon Magnum, the multi-fuel power station with gasification technology that Nuon is planning to build in Eemshaven. Lumping Nuon Magnum together with ordinary coal-fired plants, the environmental organisation argued that these plans disqualified the company from making CO2 reduction claims and urged the Dutch Advertising Code Committee (RCC) to ban a Nuon advert that made this claim (see box on Educational Advertising). The committee, however, rejected Greenpeace’s argument on the grounds that Nuon is making a genuine effort to reduce CO2.
In the debate about coal-fired generation that was initiated by Greenpeace, reality was often oversimplified: any energy company that wanted to build a (partly) coal-fired power station was by definition in the wrong. The fact that energy sustainability consists of several pillars went largely ignored. These three pillars – as indeed laid down in government policy – are renewable generation, energy saving and greener fossil fuels. Given the confusion of truths and untruths, we invited Øystein Løseth, the Management Board Member responsible for Production & Trade, and Kjartan Skaugvoll, Retail Director, to clarify Nuon’s position.>> Nuon Sustainability magazine 2007 _ 7
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Theme 1 TRUE OR FALSE?
ØYSTEIN LØSETH 8 _ Nuon Sustainability magazine 2007
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TRUE OR FALSE?
< ‘Sustainability is now a core business for energy companies. That’s where you must score points, otherwise you are not viable as a business.’
KJARTAN SKAUGVOLL
< ‘We are currently a knowledge leader in CO2 capture, solar foil, coal gasification and offshore wind.’
Not all coal-fired power stations are the same Skaugvoll: ‘Environmental organisations claim that new coal-fired power stations are by definition a step backwards. But you need to put this into perspective. For instance, we are currently importing German power that was generated using highly-polluting brown coal. If you replace this with modern and less polluting technology, then that is clearly a step forwards.’ Løseth: ‘But the key question, of course, is how much less polluting is that modern technology? Nuon distinguishes itself from energy companies that are planning conventional coal-fired power stations, because we want to build a multi-fuel power station that can burn gas, biomass and coal. What’s more, we are going to gasify instead of burn the coal.’ ‘If this power station will operate as a gas-fired station this will lead to clearly lower CO2 emissions compared to conventional coal-fired generation. But even when gasifying coal, the new plant will be cleaner. As we have already proved at Buggenum, coal gasification emits less harmful substances than traditional coalfiring methods. Only the CO2 emissions would remain roughly the same if you took no further measures. But we are, in fact, going to take further measures.
We want to reduce these emissions by co-burning biomass as well as capturing and storing CO2. And our coal gasification technology is the most suitable method for that purpose. Energy Euro Commissioner Andris Piebalgs hailed Buggenum as a model for the future.’
Investing in wind energy alone is not an option Skaugvoll: ‘Fossil generation is still necessary to offer consumers a reasonable price, for the simple reason that it costs more to generate power from wind or sun. Unless large numbers of customers are willing to pay more for a clean product, such as Nuon’s Natuurstroom, we cannot make that choice for economic reasons.’ Løseth: ‘This, incidentally, is not to say that we are not going to invest more in wind energy. Thanks to government subsidies, these projects can be made profitable. And advancing technology may eventually make wind just as viable as fossil generation. But even if that happens, there is still a very good reason for not placing all your bets on wind: namely security of supply. The wind doesn’t always blow, so you need back-up capacity. And that’s where coal comes in. Because coal is our main Nuon Sustainability magazine 2007 _ 9
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Theme 1 TRUE OR FALSE?
long-term fossil fuel option, with stocks still sufficient to last us about 250 years. And from the strategic perspective, too, we believe it is wise to remain a multi-fuel business. The development of (the price of) energy is too unpredictable to rely on a single fuel or generation method.’
‘We really need to move towards a European green certification system for all member states.’
Nuon is not advertising to spruce up its image Løseth: ‘Any allegations of window-dressing levelled at us are totally unjustified. We have nothing to hide and want to show what we do. And Nuon does a lot. We are investing both in large-scale offshore wind energy and in a solar foil plant, and will continue to do so in the future. We are also reducing the emissions from our existing power stations and exploring capture & storage opportunities to limit our fossil CO2 emissions. Even before the government gave us a 10 million euro subsidy, we had already decided to invest 45 million euros in a CO2 capture pilot.’ Skaugvoll: ‘The public holds us to account for our actions, not our words - and rightly so. That’s why our adverts not only warn people about the changing climate but also provide hands-on ways to reduce CO2. We give energy advice and offer accessible products that make it relatively easy for customers to save energy. We are taking up where Gore left off.’
Nuon wants to be a leader in sustainability Skaugvoll: ‘The desire to lead the way is sound business policy. Sustainability is now a core business for energy companies. That’s where you can score points. Without sustainability, you become less viable as a business and also less attractive as an employer. After all, these things matter to the young talent out there.’ Løseth: ‘Sustainable generation will soon be commonplace at every large modern energy company. If you stick exclusively to old-fashioned technology without researching new methods like CO2 capture, your company will soon sink in the financial rankings, such as Moody’s.’ Skaugvoll: ‘But you must be able to demonstrate that you are genuinely making a difference. Advertising green energy alone is not enough.’ Løseth: ‘With renewable energy already accounting for 4 per cent of our own generation, I think we are among the front-runners. That percentage puts us above the national average and in the future we will at least remain in line with the European targets. Besides this, we are currently a knowledge leader in CO2 capture, solar foil, coal gasification and offshore wind.’ Skaugvoll: ‘And don’t forget energy saving. As I already said, Nuon is coming up with all sorts of tangible solutions in that area. One strong concept gives customers the option of financing energy-saving equipment, such as central heating boilers, via future savings on their energy
bill. This is clearly catching on: our turnover from the replacement of old boilers with high-efficiency ones is growing strongly, while the market itself is contracting.’ Løseth: ‘Even after the unbundling of our business, we will stay ahead in renewable energy. We will adjust our strategy to ensure that we can continue investing at the same level. After unbundling, the separate parts of the business will initially be less financially robust, which is only natural. But you can solve that. The most appropriate choice will depend on the changes that still lie ahead. You could, for instance, look for a partner or reorganise the shareholder structure. Changes like that can create scope for extra investments.’
Fewer green customers does not mean less sustainable Skaugvoll: ‘Your number of green customers used to be an important criterion in the discussion about sustainability. You can easily win that beauty contest by selling green power cheap and luring customers with aggressive discounting. But then you will mainly appeal to priceminded rather than green-minded consumers. The bulk of these will go back to grey power as soon as the next cheap offer comes along. What we want is customers who are really going for green and are prepared to pay a price for that, as was the case with NatuurStroom. We guarantee these customers that the electricity they pay for is produced in the Netherlands from hydropower, solar energy or wind energy. They also receive special offers to help them make their homes more sustainable, such as energy-saving products and CO2 compensation for part of their gas consumption.’ Loseth: ‘The green energy system is certainly capable of improvement. We really need to move towards a European green certification system for all member states – just like the system for CO2 emission rights, so that we can trade the certificates.’
Nuon must partner with the customer Skaugvoll: ‘We are convinced that the best way to succeed with CO2 reduction is to strike up a partnership with the customer. So we are seeking to build closer ties with them. As a large company, we must be constantly vigilant not to alienate ourselves from the customer, which is why we are opening shops that make us more accessible.’ Løseth: ‘Customer contact is particularly crucial now that the energy sector is in transition. Twenty years from now every customer may well have their own small generation unit. To respond to that situation, you need to have very intensive contact with your customer.’ Skaugvoll: ‘Nuon will face new choices in the future. For instance: will we invest in large power stations or in decentralised generation based on micro CHPs or solar energy?’ Løseth: ‘Ultimately the customer will decide what we produce.’ <<
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TRUE OR FALSE?
IS NUON
INTO
T ACCIDEN D N A S S SICKNE EVENTION? F TO PR RE! SUR
2007 SE WE A OF COUR COM/REPORTING . UON WWW.N
EDUCATIONAL ADVERTISING
‘The climate has rapidly become a burning issue among consumers. Their question now is: what exactly can I do? As an energy company we can provide them with answers. That’s the message we want to put across.’ Communication Manager Ilse Lasschuijt of Nuon Retail needs only a few sentences to sketch the idea behind Nuon’s advertising campaign in 2007: a gripping film with images of severe flooding, a rousing soundtrack and lyrics, ending with the thought-provoking message: ‘The climate is changing. The cause? The global emission of CO2. The consequence? Water is once again a threat.’ This was followed by a plea for everyone to tackle emissions together via Nuon’s CO2 reduction plan. This plan can be found on the Nuon website, where consumers can check what the energy company is doing to reduce CO2 and see what they can do themselves. This focus on the climate problem did not go down well with Greenpeace, which complained about the campaign to the Advertising Code Committee. In the eyes of the environmental
organisation, Nuon has no right to claim that it is striving to reduce CO2, particularly in view of its decision to build a new coal gasification power station. The investments in large-scale wind projects, they say, are in no way sufficient to offset this.’
‘MUCH CLEANER’ The verdict of the Advertising Code Committee in this case is instructive. The institute ruled that Nuon had made it sufficiently plausible that it is genuinely seeking to reduce CO2 emissions. What’s more, the committee also upheld Nuon’s right to claim that coal gasification is ‘much cleaner’ than traditional coal-firing methods. But Nuon must be cautious in communicating the potential benefits of the new coal-firing technology. Any claims about specific percentages of cleaner generation must be accompanied by an exact explanation of how and when these results were achieved. The committee also added that ‘clean’ coal technology would be more accurately described as ‘less environmentally
unfriendly’. Nuon has meanwhile adjusted some of its website texts in line with these recommendations. ‘Greenpeace’s complaint may mislead people into thinking that our advertising was controversial,’ says Lasschuijt. ‘The number of complaints aimed at Nuon was actually very low for a campaign reaching millions of consumers. What’s more, the advert has actually boosted our consumer credibility.’ Lasschuijt backs up her assertion with the results of a survey by Market Response. ‘The positive response to the statement “I believe Nuon helps me to reduce CO2” increased 27 per cent following the campaign. The preference for our brand also increased by 13 per cent,’ Lasschuijt adds. She thinks that – despite the risk of negative publicity – Nuon must continue sticking out its neck in its communications on the climate problem. ‘Sustainability is in the genes of this company. As long as we continue explaining what we do, we have nothing to worry about.’ << Nuon Sustainability magazine 2007 _ 11
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Theme 1 TRUE OR FALSE?
Why heating networks take time Residual heating is a promising and responsible source of heating, which enjoys growing political backing. But getting projects off the ground is not always easy: the complicated and time-consuming decision-making involved calls for a long-term future vision. Amsterdam illustrates the point. Amsterdam is keen to encourage heating networks. Residual heating from Nuon’s power station in Diemen is used to heat new residential areas in Amsterdam South East and IJburg. More projects in the north and west of the city will follow in the future. The driving force behind this development is the city council’s ‘residual heating unless’ policy. Under this policy, heating networks are the preferred option for large-scale newbuild and urban renewal projects unless they are not possible or viable. Roelof Potters, business management & development manager of Nuon Heating, explains that such strong political support is crucial to the success of the complex multi-party decision-making preceding the construction of heating networks.
‘You have to agree on delivery conditions, the construction of a network and the choice of heating source.’ Amsterdam Constructing heating networks is a challenge – that much became clear in Amsterdam. There is no shortage of heating sources in the capital city. ‘We are already using the VU University’s power station, the Waste Energy Power Station and our own Diemen power station,’ Potters explains. If all sources in Amsterdam were harnessed, we would have a capacity of about 1,000 megawatts, sufficient to heat 75 per cent of the city. So you might say: let’s get these connected as soon as possible. But
12 _ Nuon Sustainability magazine 2007
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TRUE OR FALSE?
TO
IS NUON IN
CHSEAWRE AIRTE!YSU?RF TO
2007 OF COUR /REPORTING M O .C N O U WWW.N
it’s not that simple, so the Amsterdam city council found when it asked Nuon to use the Hemweg power station for delivering heat to Amsterdam North. Much to the council’s disappointment, the request received a guarded response. ‘It seems logical: the Hemweg is located near Amsterdam North. The people there can even see the chimneys across the IJ. So the councillors reasoned: “That’s our source.” Technically, too, it can be done. We could convert the Hemweg power station, if we thought that was the best solution.’ But choosing a heating source depends on a whole complex of factors in such diverse areas as sustainability, technology, finance and strategy. For one thing, you need to take account of the costs of safeguarding the continuity of the source’s chief activity, which in most cases is security of electricity supply. And the costs of converting the source to ensure a reliable heating supply also need to be factored in. Another key question before connecting sources to the network is: can the heating supplier guarantee supply in the long term? Potters: ‘That can be a problem for refineries and the steel industry, for instance, but also for older power stations such as the Hemweg plant whose remaining life is less than thirty years. A replacement decision will need to be taken in the next decade. So an alternative heating source, such as the municipal Waste Energy Power Station, may be better able to guarantee thirty years’ supply.’ In other words, all factors need to be weighed up in full to get an optimal match between generation and supply. Incidentally, Potters has no worries about whether residual heating will actually be realised in Amsterdam North. ‘We have sufficient heating on offer.’ Various studies into optimal utilisation of residual heating within the region are already underway. But Potters is clear about one thing: ‘I want to give the political world insight into our decision-making process. Openness and mutual trust are absolutely vital in our business.’ <<
THE POTENTIAL OF RESIDUAL HEATING
The residual heating that Dutch companies produce annually is comparable to the heating released from burning 15 billion cubic metres of natural gas. In the Netherlands, we currently use three per cent of that available potential. This percentage will increase in the future, as environmental regulations and growing political will continue to drive this process forward. The great advantage of heating is that existing energy is utilised
much more intensively, which also helps to make the entire energy sector more sustainable. Unlike gas networks, heating networks are suitable for transporting renewable energy. One example is the heating network that is connected to Nuon’s biomass power station in Lelystad. And in the future, Almere’s heating network will be fed with heat generated by an island of solar panels. Nuon Sustainability magazine 2007 _ 13
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Theme 2 TOGETHER WITH THE CUSTOMER
Together with the customer Sustainability can only thrive with the customer. Little can be achieved without loyal customers who genuinely â&#x20AC;&#x2DC;go for greenâ&#x20AC;&#x2122;. It is up to companies to offer customers the sustainable products and services they want and need. With a particular focus on energy efficiency and energy saving: because this is where the greatest short-term gains lie. Here we take a closer look at what Nuon does, what other companies do and what you can do. 14 _ Nuon Sustainability magazine 2007
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TOGETHER WITH THE CUSTOMER
‘Communicate your passion to the customer’ >> Anne-Marie Rakhorst is director/owner of Search, a company specialised in sustainable (construction) projects and sustainability & security training services. Last year this enterprising businesswoman published a book entitled Duurzaam ontwikkelen... een wereldkans (Sustainable development… a world of opportunity). ‘Many people have not yet opted for sustainable products simply because of a lack of knowledge.’
‘ORGANISATIONS ALSO NEED TO MAKE THEIR PRIMARY PROCESSES MORE SUSTAINABLE.’
In your experience, do your customers at Search still place sustainability mainly in the charitable sphere? ‘No, not really, nor do I think that sustainability belongs in the charitable sphere. It’s all about offering goods and services that can compete with non-sustainable ones. What I do notice is that many people still see sustainability and entrepreneurship as incompatible. That’s something I have never understood. I come from a family of entrepreneurs and grew up on a farm. The combination of running a business and looking after nature and the environment was part of my upbringing.’ You have a broad spectrum of customers, including property companies, contractors and governments. How do you interest prospective customers who are still unfamiliar with sustainability issues? ‘My advice is: communicate your passion! I think businesses do far too little to make sustainability attractive to employees and customers. Sustainability is also about innovation; it’s really exciting and a lot of fun. Share that passion, and share your knowledge! Because many people have not yet opted for sustainable products simply because of a lack of knowledge.’
Sustainable or green products are often a lot more expensive than non-sustainable products, as evidenced by product prices in the supermarket. Isn’t this the biggest problem for sustainability at the moment? ‘I don’t think sustainable products necessarily need to be more expensive. Search has commissioned a new building that produces more energy than it costs thanks to good insulation, solar panels and two wind turbines. Actually, we were prepared to invest 10 to 15 per cent extra in our new building, but it turned out that the costs were no higher than a conventional design would have been.’ But what if new technology makes the products more expensive after all? ‘It’s good for the government to temporarily lend a helping hand, to keep down the initial costs for instance. The government needs to invest in the transition to sustainable energy. That’s something the Germans understand very well, which is why they’ve taken over from the Netherlands as the wind energy leader.’ What kind of product portfolio must you offer to appeal to green customers? ‘A single green product is not enough. Organisations also need to make their primary processes more sustainable. A bank that issues cards, for instance, should make them climate-neutral. But I’m not advocating 100 per cent sustainability for businesses straightaway. To achieve that, you would have to rebuild virtually every company from scratch.’ What advice do you have for Nuon? ‘I think it’s fantastic that Nuon is investing in sustainability, but it’s a pity they’re building new coal-fired power stations. I don’t believe in these, certainly not without CO2 storage or re-use. So my advice would be: invest as much as possible in sustainability, in storage heating and cooling systems, in wind and solar energy, and in energy from water. Because that’s where the solution lies.’ << Nuon Sustainability magazine 2007 _ 15
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Theme 2 TOGETHER WITH THE CUSTOMER
‘Explain that sustainability earns itself back’ >> Since mid-2006 the electronics chain BCC has been going for green. Commercial Director Michiel de Haan is the driver of this process: ‘Customers are increasingly opting for sustainable businesses that are genuinely authentic.’
‘OUR CLIMATE OBJECTIVES HAVE LED TO GREATER COMPANY PRIDE.’
Was it a commercial decision to opt for sustainability? ‘No, it wasn’t. When I saw Al Gore’s film in 2006, it felt like a wake-up call. Since then our stores have been made climate-neutral, a third of our employees have signed up as energy ambassadors and we have urged our subsidiaries and suppliers to join our initiative. A special green label called the ‘Groene Stekker’ has been introduced to help consumers make green choices, not just for white goods but also for TVs and computers.’ How do you convince customers that buying green is really necessary? ‘In our brochures we show that energy-efficient appliances earn themselves back in the form of a lower energy bill. Our salespeople also mention it, but we’re not out to persuade customers at all costs. If people are not interested in sustainability, and simply want a Plasma TV, then we don’t force the information down their throats.’ Don’t lots of customers end up going for the cheaper option? ‘Actually, in many cases that would mean going sustainable. We know from our own experience that energy saving always works out cheaper. The lamps in our warehouses have been replaced and we have applied led lighting in the store displays. We recouped that investment within ten months.’
You yourself are extremely passionate and even have a weblog about sustainability. But how do you keep your staff on the shop floor enthusiastic? ‘Sustainability is part of our mind-set at the head office, but you have to keep the issue alive with the salespeople in the stores. So we often raise sustainability at the store manager meetings. It’s increasingly becoming part of our genes. New product lists, for instance, automatically show which articles carry the ‘Groene Stekker’ label. New employees are given Al Gore’s film in their welcome package and are required to pass a CSR training programme within two months.’ How sincere is BCC in pursuing its climate objectives? ‘We are authentic. That’s clear from the consistent implementation of sustainability throughout the company, as I pointed out earlier. So ‘green’ is not merely a claim in our consumer communication, but an integral part of our business processes as well as our contacts with suppliers and other electronics companies. What’s more, we have the full support of organisations like WFF, Natuur en Milieu (the Netherlands Society for Nature and Environment), Milieu Centraal and HIER.’ What’s your opinion of companies who see sustainability as a smart marketing tool? ‘It’s better than doing nothing and at least it’s a first step. But authenticity really matters. Customers will increasingly opt for sustainable companies who are genuinely authentic. It also strengthens your position as an employer: our climate objectives have led to greater company pride.’ What is your advice for Nuon? ‘I thought Nuon’s advert about climate change was really powerful. The dramatic message suits a company like Nuon that’s active in the energy industry. Nuon is on the right road in embracing sustainability. The crucial thing now is that top management take the lead and point the way.’ <<
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TOGETHERSAMEN WITH THE METCUSTOMER DE KLANT
‘You must spoil green customers’ >> Jeroen Jansen is Director of ASN Bank, which was founded back in the 1960s. The bank makes clear choices: against child labour and environmental pollution, and for human rights and sustainability. In the past four years the number of customers has doubled. How does ASN lure the sustainable customer?
‘A SINGLE GREEN PRODUCT IS NOT ENOUGH TO GENUINELY APPEAL TO CUSTOMERS.’
What is your sustainability strategy? ‘First of all, we focused more on our performance. If you bank with ASN, your money is not only invested responsibly but you also get a high-quality service and excellent returns. Secondly, we translated our central message – a better world for the generations of tomorrow – into concrete ‘small-scale’ examples. We made items on child labour, the disappearance of primeval forests and so on. In doing so we brought the abstract concept of sustainability to life.’ A certain group of consumers is still not interested in sustainability. How do you reach these potential customers? ‘With a positive approach. Sustainability used to focus strongly on the “thou shalt not’s”. These days we make it much clearer that you don’t need to adjust your entire lifestyle. By making some minor changes, you can already achieve results.’ Sustainability and the climate are currently hot issues, which generate new customers for green products. Won’t you lose these customers when the hype passes? ‘I’m not worried about that. We see that new
customers also remain loyal to us. The key to this success is good communication. ASN publishes magazines and organises the annual Ethical Investing Day. Our savers and investors feel more like members than customers. We spoil them. Other companies should do the same. They should concentrate more on strengthening ties with existing customers. The focus is still too much on tapping into new target groups.’ What kind of product portfolio do you need to offer in order to appeal to green customers? ‘In the first place, it’s not enough to simply have one green product and leave the rest unchanged. ASN has a 35 per cent share in the market for sustainable investing. That’s huge. If the major banks really set their minds to it, they could blow us away. But they haven’t managed to do that so far, quite simply because they only offer a few green products, which makes them not very credible in the eyes of customers who are seeking sustainable savings and investing solutions.’ Is it important to customers that companies are also green inside? ‘It’s essential. Practice what you preach! The consumer wants to know what kind of coffee comes out of the machine. And a company that offers sustainable products but at the same time sponsors Formula 1 racing won’t convince customers. Sooner or later, companies that are green on the outside but not on the inside will be unmasked.’ What can Nuon do to interest more customers in green power? ‘I would advise Nuon to do much more to communicate the added value of green power, to show that it really makes a difference when you tick that green box.’ <<
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Theme 2 TOGETHER WITH THE CUSTOMER
Jan Mulder of Mulder OrchideĂŤn in De Kwakel makes use of a combined heat and power system owned by Nuon Enso. Nuon supplies Mulder with heating and electricity with the aid of this combined heat and power system. 18 _ Nuon Sustainability magazine 2007
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TOGETHER WITH THE CUSTOMER
Those who fail to use energy efficiently will increasingly suffer the consequences in the future: companies will lose business and consumers will lose purchasing power. For this reason – as well as to promote sustainability, of course – Nuon is helping customers use less energy and squeeze more out of their existing consumption. Here’s a brief run-down on Nuon’s exploits in this field in 2007.
Energy First Aid Saving energy to help the climate Thrift is the watchword in the Sustainability Accord concluded between government and business. The central aim of this accord is to achieve year-on-year energy savings of two per cent. Businesses have thus voluntarily committed themselves to doubling their annual energy savings compared to earlier long-term arrangements. Exactly how this improved energy efficiency is to be given shape will be set out in 2008 in sector agreements with, among others, industrial companies, energy companies and SMEs. Europe, too, has embraced energy saving with a brand-new climate plan targeting twenty per cent less energy consumption by 2020. So the question is no longer whether, but how to save energy. One thing, at least, is clear: it can be done. The World Wide Fund for Nature (WWF) has estimated the potential energy savings until 2050 at no less than 80 per cent. Savings advice for businesses The existence of an enormous savings potential comes as no surprise to Niels Unger, Director of Nuon’s subsidiary Ebatech, an independent engineering consultancy which also provides energy advice. Now that the struggle against climate change has started in earnest and the oil price is hovering in the region of 100 dollars, he is noticing that businesses are making energy saving a strategic priority. ‘It is no longer just about the economic impact, but also about image. More and more companies see sustainability as an opportunity. Some are seeking to improve their performance and are more readily inclined to accept longer payback periods; while others are radically revising their ambitions, such as setting zero emissions targets for new offices.’ And when it comes to corporate buildings, location and design are no longer the sole criteria; the oper-
ating costs per square metre also enter into the equation. ‘Until recently, these costs were never mentioned.’ For its part, engineering consultancy Ebatech has seen its activities grow ‘almost uncontrollably,’ as Unger puts it. The new remote management service for monitoring the energy consumption of customers’ buildings and installations has produced good results so far, with energy savings of up to 30 per cent in existing buildings. The consultancy also notices that its own role is changing. ‘We no longer just write reports, but actually enter into partnerships – including with large organisations – so we can find ways of meeting new savings targets together.’ Unger sees more and more businesses forging partnerships that were previously unthinkable. ‘Organisations are keen to learn ways of minimising their energy consumption from each other.’ As an example, he mentions the brand-new Climate Table of the Municipality of Amsterdam. This is a platform where companies can exchange knowledge and experiences and set ambitions. He sees benchmarking as another tool with great added value. Recently, Ebatech developed an energy consumption benchmark for a retail chain. All stores will be subsequently ranked on the basis of their energy consumption, which is continually measured. ‘Information exchange is getting off the ground. The ones who are straggling at the bottom are getting in touch with the leaders to hear how they can raise their game.’ Residual heating Residual heating is one very promising energy efficiency option that definitely deserves mention. Nuon Director Dirk Jansen knows that some 300,000 Dutch households are already Nuon Sustainability magazine 2007 _ 19
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Theme 2
TOGETHER WITH THE CUSTOMER
Photography: Ellen Martens (top left, below)
Dynamicom and Ebatech, subsidiaries of Nuon, advise organisations on public lighting and energy consumption. Energy saving is very much in the spotlight. Municipalities are seeking ways of lighting public spaces in an attractive, safe and energy-efficient manner. And companies increasingly want their buildings assessed for unnecessary energy loss.
HIGHLIGHTS 2007 > Nuon subsidiary Ebatech launched a new remote management service to monitor the energy consumption of customersâ&#x20AC;&#x2122; buildings and installations. This has led to savings of up to 30 per cent in an average existing building.
> In 2007, Nuon Heating connected over 6,000 homes to a heating network. All residual heating projects jointly avoided 160,000 tons of CO2 emissions â&#x20AC;&#x201C; equivalent to the energy performance of an uninterrupted row of solar panels from Amsterdam to the South of Italy and back.
> Together with Pon Powerhouse, Nuon EnSo set up a trading platform for customers with a CHP installation. The platform enables them to trade power directly on the electricity exchange. > Nuon subsidiary Dynamicom took part in the Lighting Taskforce.
> Just under 10,000 homeowners and tenants received energysaving advice from Nuon Retail. In Amsterdam, Step2Save was started up in September. Under this programme, tenants of the housing associations Ymere and Far West are offered a free energy box.
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TOGETHER WITH THE CUSTOMER
benefiting from residual heating but adds that ‘this number can easily be raised to two to three million.’ The biggest task in expanding the capacity for residual heating – which Jansen calls ‘the Netherlands’ best-kept environmental secret’ – is securing the cooperation of the numerous parties involved. A lot of missionary work is needed, says Jansen, ‘to make everyone understand how simple and effective residual heating actually is.’ According to independent energy expert Teus van Eck, the real difficulty is that the interests of individual parties don’t always line up. ‘The party offering residual heating is unwilling to transport it beyond the factory gates, because that’s not their core business. The other party, the customer, wants to be sure they can count on long-term security of supply. Projects like this call for a lot of negotiation skill.’ Dirk Jansen agrees. ‘The supplier is not always keen. They don’t want a whole city hooked up to their plant, and are worried about the possible consequences for the operational continuity and capacity of their power station or factory. But Jansen can dispel these fears. ‘With measures like buffers and auxiliary boiler houses, the original production process need not run any risk.’ Whether a heating project succeeds or not depends on a great many factors. Crucially, there must be enough customers and sales potential to recoup the high investment costs. ‘This is and remains a collective system where lack of commitment from either party is fatal to success.’ No such problems exist at Duiven en Westervoort, for instance, where some 15,000 homes and businesses receive heat and hot water from the local waste incineration plant. ‘With numbers like that, you’re in business.’ Jansen rejects the idea that heating projects depend primarily on new residential developments. ‘Our first step is to locate possible sources of residual heating – not just at Nuon, but all over the Netherlands. About a fifth of the residual heating we sell comes from our own power stations. The rest we buy elsewhere.’ Once the sources are found to be viable, our next step is to seek nearby opportunities for giving this energy a second life. In Amsterdam, for instance, all large-scale new-build and urban renewal projects are checked for their suitability for residual heating. The possibility of connecting existing buildings is not excluded either. ‘It’s high time we tried to find out whether residual heating can be used to heat a badly-insulated historical city centre,’ says Jansen. Combined heat and power The WWF study mentioned above also cites combined heat and power (CHP) as an attractive energy efficiency option. That’s music to the ears of Director Frank de Vries of Nuon Energy Solutions (EnSo), which manages some 200 CHP installations at about 150 companies. ‘With a combined heat and power system the energy content of a single cubic metre of gas is used with 95 per cent efficiency. So the potential CO2 reductions are enormous.’ Nuon EnSo is making strong inroads in the horticultural sector, which already accounts for half of the managed CHP capacity. The great thing about using CHP technology in horticulture is that it yields extra CO2 reductions by also filtering the flue gases. The reclaimed greenhouse gas is channelled back into the greenhouses where it serves as food to grow the plants. Horticulture is typically a sector that is simply teeming with sustainability opportunities. Other examples mentioned by energy specialist Van Eck are the use of earth heat and the transition to energy-efficient led lighting. One reason for the popularity of CHP is that it enables you to respond to the supply and demand for energy. In contrast with wind turbines and solar panels, CHPs are easy to switch on and off, says De Vries. ‘It’s just as easy as turning a car on and off, so you can always match supply and demand.’ In 2007 Nuon
Supply of district heating to customers HE x 1,000
TJ
7,500
126
6,000
132
4,253
150 120
4,792
4,500
152
145
139
4,35 4,356
4,328
4,696 90
3,000
60
1,500
30
0
0
2003
2004
2005
2006
2007
Customers (right axis)
Total supply Total supply 2007
The number of heating customers passed 150,000 in 2007. HE stands for Home Equivalent.
Investments in district heating and cooling networks € million
80 70 60
40
56.0
52.3
50
39.0
39.0 30.6
30 20 10 0
2003
2004
2005
2006
2007
Over the past five years Nuon invested intensively in heating and cooling networks. These make a substantial contribution to energy efficiency. This chart shows the gross investments.
Energy savings by improved energy efficiency GJ
6,000 5,000
4,717
4,000 3,000 2,000 1,000
796
0 Heat use power stations
HP boilers installed
33
21
Use of heat pumps
Supply of cooling
Thanks to the use of efficient technologies Nuon customers save energy, thus avoiding CO2 emissions. The calculation is based on assumptions according to the Energy Saving Monitoring Protocol. In the past five years Nuon invested intensively in heating and cooling networks. These make a substantial contribution to energy efficiency. This chart shows the gross investments. Nuon Sustainability magazine 2007 _ 21
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Theme 2 TOGETHER WITH THE CUSTOMER Consumer By far the most difficult terrain to cultivate when it comes to energy saving is the consumer. A study by PR consultants Porter Novelli gives little cause for optimism. According to the survey conducted in eight European countries, only a quarter of the Dutch population is prepared to do their bit to lower our national energy consumption. The government’s efforts to make people take responsibility for their own behaviour (‘A good environment starts with you’) has so far had little effect. The MNP (Environmental and Nature Planning Agency) has already pointed out that voluntary change is wishful thinking and is therefore pressing for more taxes and stricter regulations. New taxes on flights and cars are already being imposed, whilst energy labels for homes are also being introduced. These measures, however, have not been greeted with enthusiasm. Perry Verberne of Nuon Retail is not discouraged by all these sceptical noises. ‘People are much more aware of the problem and we see more and more customers starting to save energy.’ He also thinks the government measures are opening up opportunities. ‘Real estate agents, for instance, are using the energy label as a selling point for homes.’ Verberne is responsible at Nuon Retail for the energy aspect of products and services that are being developed. Over the past two years a lot has been done to promote energy advice and employees are now certified to hand out energy labels. Just under 6,000 retail customers received energy-saving advice in the past year. Tenants are also being approached and in Amsterdam Nuon started up the Step2Save project, where tenants of the housing associations Ymere and Far West are offered a free energy box containing energy-saving bulbs, draught excluders, a water-saving shower head and a ‘standby-killer’ to make sure that TVs and PCs are truly switched off. These measures jointly yield annual savings of about 70 euros. This direct approach works, according to Verberne. ‘Our employees were invited in at half the addresses they visited.’ The question that obviously springs to mind is: how credible is an energy company that surely wants to sell as much electricity as possible. Verberne: ‘That’s a question I hear regularly. What baker would try to persuade his customers to eat less bread? First of all, energy saving is one of our sustainability priorities. But secondly, there is also money to be made here. If we deliver a new high-performance boiler to a customer, we sell less gas. But that’s more than offset by the maintenance services for the boiler.’ <<
teamed up with Pon Powerhouse to set up a trading platform for customers with a CHP installation. The platform enables them to trade power directly on the electricity exchange. ‘Some customers sell their production for an entire year. Others opt to switch their installation on or off, depending on market demand, so they can earn money on fluctuations in the electricity prices.’ Lighting If you are looking for fast energy-saving results, lighting is the answer – particularly public lighting, which currently accounts for 3 per cent of our total electricity consumption. Director Wilfred Eleveld of Nuon subsidiary Dynamicom sketches a three-stage plan for achieving a total energy saving of 12 per cent. It starts with replacing old lamps with energy-efficient alternatives (8 per cent); the next step is to dim lights wherever possible (3 per cent); and finally gains can be achieved by using smart strategies to turn lights on and off as and when necessary (1 per cent). ‘It’s important to get city councillors on board,’ says Eleveld. Only a few municipalities have a real long-term lighting policy. After a successful national master class in the trailblazing municipality of Leiden, which was attended by 80 councillors from all over the country, Dynamicom is now organising regional meetings. In addition, the company is taking part in the Lighting Taskforce, which was set up by the environment ministry. ‘Here too we see that public lighting is the easiest area for scoring results compared to the other areas the Taskforce is looking at, namely household and corporate lighting. Tackling public lighting is a relatively easy way for municipalities to contribute towards the Kyoto targets.’ Municipal councillors are usually pragmatic people, so Eleveld expects them to be receptive to the idea. But aren’t the local politicians wary of his motives? After all, as a supplier of environmentally-friendly lighting he has a direct interest in winning them to his cause. Eleveld: ‘Our education and information activities only cost us money. We want to make our expertise available and present ourselves as a reliable partner. That helps us cultivate alliances. But we don’t automatically get the contract when a municipality decides to do something.’ Eleveld does acknowledge, however, that he is keen to mobilise municipalities – and for that purpose Dynamicom has developed an instrument that shows municipalities what their performance is compared to that of their counterparts.’
TO
IS NUON IN
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22 _ Nuon Sustainability magazine 2007
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TOGETHER WITH THE CUSTOMER
Green is growing again in 2008 Looking at the figures for 2007, only one conclusion seems possible: the absolute
Energy-aware customer
number of green electricity customers has declined sharply at Nuon. But the
Marketing manager Noor Cloo of Nuon Retail sees precisely the opposite trend among consumers, where NatuurStroom rather than GroenStroom is the green energy sales driver. Growth among Fixed-Price NatuurStroom customers has led to a slight increase in the total number of green customers. Cloo expects this upward trend to be sustained: ‘We are continuing to expand the NatuurStroom brand, via discounts on all sorts of products and services for a sustainable lifestyle.’ Whereas NatuurStroom customers tend to be very loyal, the same cannot be said of GroenStroom customers. No less than 22 per cent of these customers have switched to other products or suppliers. Cloo: ‘That, to my mind, is a logical consequence of our decision in 2006 to focus our green acquisition efforts on genuinely energy-aware customers (i.e. the NatuurStroom customer, ed.). We temporarily suspended our GroenStroom promotions because we knew that the bulk of these green customers were mainly motivated by price. They opted for green energy when it was really good value. As soon as this was no longer the case, many switched back from green to grey.’ Cloo explains that the GroenStroom acquisition efforts have been revitalised through a campaign with supermarket chain Albert Heijn. So though the emphasis remains on NatuurStroom, Nuon is now also cautiously promoting GroenStroom again. This time round, Nuon Retail expects to tap into a more loyal clientele. ‘The heightened attention to the climate problem is giving rise to a new target group. These people want cheap green power, but won’t immediately go elsewhere for a slightly cheaper grey deal,’ so Cloo hopes. <<
picture is distorted. Corporate demand for green electricity is clearly reviving, says Nuon Business. And the outlook for the consumer market is also brightening. The promotional efforts for GroenStroom have been revived. Business customers are becoming more ‘green-minded’, claims product manager Anne Korthals Altes of Nuon Business. ‘Our account managers are increasingly being asked what we can do for them in sustainability terms. They are looking for a supplier who not only delivers energy but also gives advice on issues like saving energy.’ Even so, the figures for 2007 provide objective observers with no proof of this green revival. Business sales of Natuurstroom (generated in the Netherlands from sun, wind and water) decreased by two per cent, while sales of green electricity – GroenGarant and Greenstep (both generated from biomass and hydropower) – fell by three per cent. However, as noted, this picture may be inaccurate. ‘This is because the growing demand in the course of 2007 will only become visible in the figures a year later. When 2008 had only just started, we found we had already sold over 400 gigawatt hours of green electricity since 1 January. That is substantially more than the 311 gigawatt hours sold in 2007. And we still expect to conclude significantly more green contracts,’ says Korthals Altes. All in all, Nuon Business is expected to end 2008 with sales in the region of 550 gigawatt hours. ‘That is almost twice as much as last year.’ And the demand for green is set to rise further, Korthals Altes firmly expects. ‘Particularly in the public sector as government customers will be obliged to buy 100 per cent renewable energy from 2010.’ Yearly supply of NatuurStroom
RA-verified
GWh
Number x 1,000
1,500
200
Total supply of green energy to consumer / small business customers GWh
Number x 1,000
750
5,000
647 1,200
500
4,000
519 126.3
900 600
160
160.8
662
132.4
124.7
124.3
697.6 569.1
543.9
587.5
536.9
120
3,000
80
2,000
0
0
2003 Total supply Total supply 2007
2004
2005
2006
250
2,724 2,297
2,040
0
1,995 1,470
40
300
346 409
2007
Total number of customers (right axis)
The number of NatuurStroom customers increased slightly compared to 2006.
1,000
0
2003 Total supply Total supply 2007
2004
2005
2006
2007
Number of customers (right axis)
The number of retail customers who purchase GroenStroom again fell strongly in 2007. Nuon Sustainability magazine 2007 _ 23
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Theme 3 MOVEMENT
Movement When it comes to making your business more sustainable, one thing is clear: youâ&#x20AC;&#x2122;ve got to move to improve. Transition hinges on movement, preferably from within. Because it is the people themselves who must set change in motion. Or, as Al Gore put it while visiting the Netherlands: â&#x20AC;&#x2DC;Both the political and the climate system are non-learning and slow-moving. But a social movement can trigger a sudden turnaround.â&#x20AC;&#x2122; Highlighted in this theme: passionate and motivated employees who are eager to drive sustainability forwards, both at home and in their projects. 24 _ Nuon Sustainability magazine 2007
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Wendy Dubbeld
Rolf van der Mark
Maarten van Riet
Lars Falch
Bart van Hattum
Elisabeth Loudon
Alex Geschiere
Tom Cohen
Robert de Kler
Patrick van Duren
MOVEMENT
‘Replacing 5 million meters’ Patrick van Duren (38), Project Manager at Nuon Tecno Working on intelligent energy meters ‘Two years ago, when I became involved in this, I thought: “Interesting job.” But I had no idea of the magnitude of the project; you simply keep going from one thing to the next.’ Patrick van Duren is working on the InfoStroom Project, which aims to replace the current gas and electricity meters with smart – remote-readable – meters at no less than 2.7 million consumers and small businesses by 2015. With these smart meters, you have direct insight into real-time consumption around the clock – which is good for customers because their bill is based on actual consumption. And if you know how much energy you’re using, you’ll probably try to be more economical; that’s the underlying idea. What’s more, in future the meters will be equipped with additional remote control functions, such as switching gas and electricity on and off, measuring power failures and recording the gas and power
supply. This can help us achieve intelligent grid management, which is obviously a great advantage for an energy company like us.’ ‘It is a mega project. Two years ago we embarked on the pilot roll-out, which involved replacing 50,000 energy meters. Very soon, from 2009, we must have an organisation in place that is capable of replacing almost 5 million meters.’ ‘Sustainability is not my main motivation. I just see it as a great challenge to pull this off. You’re constantly confronted with changes in technology, legislation and processes. And now there is the unbundling operation as well. This means capturing a position in a new constellation, which may not be easy. But that also keeps us on our toes. When things start becoming a routine, it’s probably time to look for a new challenge.’ Nuon Sustainability magazine 2007 _ 25
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Theme 3 MOVEMENT
‘Giving the portfolio a green makeover’ Robert de Kler (40), head of Engineering Services Testing CO2 capture for the future ‘You know, for a technical geek like me, this company is ideal. I started my career designing petrochemical installations and then briefly worked at the consultancy arm of the technical inspection institution, Kema. But in 2000, when the liberalisation of the energy market was well and truly underway, I realised that where I really wanted to be was at the energy companies themselves. There were enormous challenges awaiting me at Nuon. I simply couldn’t resist them.’ Robert de Kler is currently engaged in a project aimed at demonstrating whether CO2 capture is possible at the Buggenum power station. They’re testing an innovative pre-combustion method. Nuon can do this because it has a coal gasification power station where the coal is not burned but gasified. ‘We’ve set up a test environment in our coal gasification power station in Buggenum. If the results of this experiment turn out to be positive in
2010, we want to apply the same technology in the new power station of Nuon Magnum at Eemshaven. Using coal gasification at this power station would result in the emission of about 6 million tons of CO2, some 1.5 million tons of which we expect to be able to capture with the aid of this technology. That is the equivalent of the CO2 emissions of some 250,000 households.’ ‘In 2004 I started this project together with several others. We wrote a strategy paper for the grey production strategy, which resulted in various projects. One of these was the plan for the super coal gasifier at Eemshaven. We then soon all agreed that if we built a plant like that we also needed to achieve CO2 capture. In the final analysis that is what motivates me: the need to give Nuon’s portfolio a green makeover, but in a responsible manner, with technologies that are feasible and affordable. Green is great, but it must be economically viable too.’
‘The heat pump is a great success at parties’ Tom Cohen (41), Financial Manager at Retail Installed a heating pump at home ‘Last summer a friend called me. He’s the director of an electrical engineering firm and had a heat pump installed in his home. “You must pop over for a second” he said. So my wife and I went straight round to his place. It was a boiling hot summer’s day; well over 30 degrees Celsius. But in their home it was extremely pleasant; no more than 21 degrees. Because with a heat pump you can also cool a house. At the time we were already having our own pump installed and any doubts we may have had were immediately dispelled.’ ‘We started building our home two years ago. And during the preparations with the architect I realised that if I ever wanted something like that again, now was the time. We soon found
out that the heat pump had not yet made its mark in the Netherlands – in contrast with Germany, for instance. Our architect had no idea what we were talking about and by no means can every electrical engineer install them.’ ‘It was a fairly large extra investment. You don’t recoup that in a hurry, because though we were able to disconnect our gas, the pump requires more electricity. On the other hand it enhances the value of your home and the coolness in the summer is a sheer delight. I expect it to take at least 15 to 20 years to earn the investment back. But it’s a great success at parties and what I really like is that heat pumps are now being installed at four of the ten new houses being built near us.’
26 _ Nuon Sustainability magazine 2007
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MOVEMENT
‘A fairy-tale cable with low energy loss’ Alex Geschiere (38), senior consultant at Tecno, Working on super conduction Coming soon in 2012: a six-kilometre super conductor cable running from Amsterdam North under the river IJ to the centre of the city. Making use of ultra-low temperatures (cryogen), this feat of ingenuity will be able to transport 250 MegaVoltAmpère (up from the current cable’s 100 MVA). That is Alex Geschiere’s vision for the future. If successful, it will be nothing short of a revolution – because so far only a single company in the United States has managed to lay a super conductor cable over a length of 600 metres. In 2006, Geschiere got round the table with a delegation from a cable supplier famed for its super conductor prowess. Geschiere: ‘We had a meeting and proposed this project to them within an hour.’ Even these seasoned pioneers were taken by surprise. Geschiere refers to it as a ‘fairy-tale cable’. ‘Everyone is talking about the huge capacity gains, but I have discovered other advantages as well. First and foremost it is an eco-friendly technology, with low energy loss.’ Also, to cater to the growing demand for renewable energy, we need to connect more and more alternative energy sources to the grid, such as wind turbines and combined heat and power units. All these connections are technically difficult to achieve because they cause large fluctuations in tension and high short-circuit flows. This cable significantly reduces the fluctuations in tension and blocks the short-circuit flows
which, in turn, makes it much easier to hook up all sorts of renewable initiatives to the grid.’ Breakthroughs The problem with super conduction is the cooling of the cable. This is done using liquid nitrogen, which can sink to a temperature as low as -200 degrees Celsius. The challenge is to pump this round a closed circuit. So far, nobody has managed to do that over long distances. Geschiere is confident that he and his cable supplier will crack the problem by 2012, but he is unwilling to go into too much detail: ‘We have already made quite a few breakthroughs in such areas as reducing energy loss and improving insulation.’ However, the revolutionary scale of the project became clear when Geschiere presented the plan to the cream of the super conductor world at a congress in Paris. Geschiere: ‘Everyone gave us a standing ovation. Only two days later the negative reactions started to arrive, including comments like: “It will never work”, and “you’re overreaching yourself”. That kind of criticism galvanises me and motivates me even more to persevere and continue working on a technology that is more environmentally-friendly than any other known alternative. If we pull this one off, we’ll give the integration of renewable energy sources a major push in the right direction.’ Nuon Sustainability magazine 2007 _ 27
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Theme 3 MOVEMENT
‘Reward people for CSR’ Elisabeth Loudon (42), Manager of Legal Affairs Working on CSR at Nuon Business
‘What I notice among our business customers is that they need a sparring partner who helps them achieve energy savings and fulfil their CSR ambitions. One instrument that’s coming back into vogue is the Guarantee of Origin (GvO). These certificates guarantee that the electricity supplied has been produced with renewable means. Incidentally, customers don’t necessarily take our CSR advice. It must make financial sense too.’ CSR is close to Elisabeth Loudon’s heart. Last August she put her name down for the role of ‘Internal CSR Sponsor’ and is now the voice for CSR in the management team of Nuon Business. ‘Don’t expect me to solve the CO2 problem. I don’t have the training for that. But I’ve always loved nature and in my spare time I also help out with Third World projects. Good causes, in other words, and Social Responsibility is certainly that. The products and services that we are coming up with to promote sustainability appeal to me. To my mind, Nuon is ideally placed to be a positive force in this field. So I want to do my bit too.’ In the autumn of 2007 a two-day training programme was organised for CSR coaches. Their job is to provide information and motivation within their division. In her role as CSR coach at Nuon Business, she gives twohour workshops to encourage teams to start moving in the direction of sustainability. ‘I have already given four of these workshops,’ Loudon says, adding that in her view some departments at Nuon no longer need them. ‘But there are others where CSR still receives little or no attention. And these are the ones we want to reach. Don’t get me wrong, a lot is being done already. But what I miss is a clear indication from line management as to where we want to go on this issue. That’s why some still take a non-committal stance.’ Looking for a way forward She understands why CSR is not being tackled in a uniform manner throughout the organisation. ‘Everyone is looking for a way forward, because CSR is a wide-ranging subject that can be pursued in lots of different directions.’ Added to that, Nuon is in a period of transition, so change and uncertainty is the order of the day ‘The proposed merger last year and the unbundling operation this year are not making it any easier to map out a clear and uniform course,’ she readily acknowledges. But according to Loudon there are ways of making CSR a less non-committal issue. ‘One way would be to reward people for their CSR performance. That would give everyone a clear incentive.’ 28 _ Nuon Sustainability magazine 2007
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MOVEMENT
‘Energy saving will soon be a national pastime’ Bart van Hattum (28), new business developer at Nuon Retail Tempting customers to save energy
Soon every household will have a smart gas and electricity meter, giving consumers a new energy-saving tool. But will they use it? That’s the question Bart van Hattum addressed in his Business Administration graduation thesis. Human behaviour is difficult to influence. No one knows that better than he. ‘When I was studying in Rotterdam, my two flatmates always left everything on - even the small electric heater in the bathroom, which used about 50 cents of power per hour. That cost us at least 5 euros a day. I used to comment about it, but they never really listened.’ One day the landlord presented us with an additional energy bill of 500 euros each. ‘They rarely used that electric heater again, but otherwise their behaviour showed little or no improvement. After making a few more remarks, I decided to let the matter rest to avoid tensions. This is also clear from my research: energy-conscious members of a household tend to keep their mouths shut just to keep the peace.’ Innovative website But don’t think Van Hattum is discouraged by his findings and experiences. Far from it in fact: he is entirely confident that he and his co-workers can persuade two million consumers to better their ways. Naturally, there are obstacles.
Van Hattum: ‘The first step is to show people how much energy they consume. You can do that with the smart meter, for instance, or the innovative website that we are developing here at Nuon. Instead of giving general energy-saving tips, this special website – which is due to go live in the summer – gives personalised energy advice. Visitors who key in their details immediately see how many euros they can save. This acts as a trigger for action. Next you must point out how improvements can be made, such as installing a water-saving showerhead, a new fridge or a new boiler. Then you indicate the costs of these measures and how quickly they will recoup their outlay. It’s best when you can remove all barriers, just like we did with energy-saving light bulbs in our online energy store: www.nuonenergiewinkel.nl. Customers only pay for the products after earning them back. They barely notice the change, because it’s all done automatically via their energy bill.’ So when will consumers start using these energy-saving services en masse? ‘It will be a gradual process,’ says Van Hattum. ‘The more customers know about their energy use and potential savings, the less likely they are to rob their own purse. Few people say they are not bothered about their energy bill. So energy saving is almost certain to become a national pastime, just like in Japan.’ Nuon Sustainability magazine 2007 _ 29
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Theme 3 MOVEMENT
‘50% fewer lorries in Amsterdam’ Lars Falch (37), Manager of Sustainable Energy Strategies Moving towards freight transport by tram ‘To really spark my enthusiasm, a project needs to meet certain conditions. For starters, it must be new, clean and innovative. Next, it must have a clear impact on shareholders and customers, and finally it must be profitable. This one ticks all the boxes.’ By ‘this one’, incidentally, Lars Falch is referring to CityCargo, a freight transport system based on trams to carry cargo into the city centre of Amsterdam. There, the goods are transferred at specific drop-off points to electrical vehicles known as E-cars that deliver to customers all over the city. Five years from now four distribution centres – known as cross docks – are to be strategically placed on the periphery of Amsterdam where lorries can deliver their goods. Then the trams take over, using the same lines as the public transport trams. A month-long pilot in the spring of 2007 revealed that the Amsterdam tram network can cope with the extra traffic. The municipality has backed CityCargo with a ten-year concession to make the plan work. Falch: ‘If successful, it can cut the number of lorries driving through Amsterdam by half.’ The 8 o’clock news How did Nuon get involved in the project? ‘CityCargo asked us to sponsor them. After giving the matter careful thought, we said yes.
And when the pilot succeeded and the concession was granted, we decided not only to deliver renewable energy and energy advice but to go a step further and take a financial stake in the start-up.’ Freight is hardly Nuon’s core business, so why this decision? Falch: ‘It gives us access to the market for electrically-powered mobility, which has great potential. If the concept succeeds in Amsterdam, we can take it to other Dutch cities and even abroad, primarily of course in our home markets Belgium and Germany.’ CityCargo is already attracting a lot of foreign interest and was recently extensively featured in the 8 o’clock news broadcast of the French station TF1. But Falch remains realistic and acknowledges that a lot remains to be done. Securing sector-wide commitment is crucial: ‘The road hauliers are very enthusiastic and CityCargo has already signed a letter of intent with a number of carriers. But whether they will embrace the initiative as quickly as we want, I cannot say. That’s beyond our direct influence.’ Does Lars Falch envisage Nuon taking part in more projects like this outside its core business? ‘When it comes to energy and sustainability, nothing is outside our core business. Take construction, for instance. If we are involved in a far earlier stage in new-build projects, we can do even more to help achieve genuine sustainability.’
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MOVEMENT
‘More and more young people are sticking their necks out’ Maarten van Riet (53), Senior Consultant at Nuon Tecno Innovator
As we leave Nuon’s headquarters after the interview, he suddenly points to the ground: ‘Do you see that grate? There’s a new transformer under there that I’m testing at the moment. It’s really handy; these days I can get minute-to-minute updates on my PC. In fact, I can even check at home to see whether our CEO is still at the office. No, I’m not going to tell you whether he puts in long hours,’ says the unconventional researcher with a wink. Maarten van Riet has Nuon blood flowing through his veins. Having worked here for thirty years, he considers the power grid his baby. ‘Strange as it may sound, you end up becoming part of a company like this. If you attack Nuon, you attack me. That’s really a deep thing with me.’ Van Riet is brief on the subject of sustainability. ‘These days there’s a lot of talk about cradle to cradle; in other words, everything must be recyclable and used to strengthen the cycle. Well, it just so happens that’s what we at Continuon have been doing with our grid for years. Our grid is like a museum: oil pressure cables, cast-iron sleeves, lead pipes; all sorts of stuff from the year dot. And ever since I started working on that grid, I had three thoughts in the back of my mind: how can we be more sustainable, simple and reliable? So any new cables we put in the ground are made of plastic and completely recyclable. You have no idea how many kilometres of oil pressure cable we have already replaced in the past 30 years and the impact that has had on the environment. But we’ll never be entirely rid of that old junk.’ Replacing material is not the only recipe for a more efficient and reliable grid. Another important component, according to Van Riet, consists of regular measurements, so that you know the level of consumption and grid load. As an example he mentions the SASensor Continuon has developed. This automated system combines various measuring and control instruments and is used to keep close track of the energy distribution. ‘That’s stealing the show at the moment. I think we’re going to sell thousands of them.’ Second-guessing the future So what about the energy landscape of the future? Van Riet is not volunteering any concrete statements at the moment. ‘We have developed some extreme scenarios at Continuon and are trying to find answers for all these contingencies. One scenario sees the grid disappearing and businesses and households generating their own energy as self-sufficient units. Another involves packing the grid full of smart applications to make it indispensable. There is even a scenario where a war or health epidemic wipes out half the population. With all these scenarios you have to ask yourself how the grid will be affected and what you should – or should not – do now to minimise any adverse consequences in the future.’ At this stage, says Van Riet, we are merely second-guessing the future. However, he does dare to draw three straight lines to the future: ‘1) The grid is becoming steadily cheaper – only 30 per cent of what it cost 30 years ago. 2) Society and customers are becoming more and more important, so we must increasingly find the optimal solution at a local level. And 3) Nuclear energy is not a sustainable solution, so we will avoid it.’ Woolly socks and sandals Nothing is too strange in the in the world of energy generation for Van
Riet to investigate. Sun, wind, biomass, algae, combined heat and power and, since recently, even bacteria in cooperation with the Agriculture University of Wageningen. All these new – environmentally-friendly – ways of generating electricity are investigated and tested. Some are already in large-scale use. ‘In the coming year we intend to do lots of system studies to find out, for instance, whether algae constitute a good combination with coal gasification. Because algae can live on CO2 and also yield fuel into the bargain; so that’s killing two birds with one stone. Electricity generation with bacteria may sound like one of those ‘woolly socks and sandals ideas’, but we are also investigating this seriously, because it may well be the key to the energy revolution we’re looking for.’ Has he never felt he would be better off at a start-up company that is fully committed to a single new revolutionary technology? Van Riet: ‘Frankly, no. Energy is such a complex territory that I don’t think you should force a single solution on the market. Nor can you speak of winners and losers. Each situation calls for its own solution. We are investing in all these possibilities in the hope that they will actually catch on. Internally we don’t dismiss anything outright. Our efforts needn’t immediately yield tangible results, but we are certainly working our socks off to find constructive solutions, and that positive energy in itself makes it all worthwhile. Looking around me, I see more and more young people who are prepared to stick their necks out and go for it. And crazy creatives attract crazy creatives. It’s a positive spiral, which also keeps me young in spirit.’ Nuon Sustainability magazine 2007 _ 31
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Theme 3 MOVEMENT
‘Sustainability is in our veins’ Rolf van der Mark (53), Director at Emmtec Services Living on a sustainable houseboat
‘Living in suburbia is not for us. This traditional seagoing boat from 1906 appeals to our sense of adventure and independence. We bought it back in 1994, after living for about seven years in a beautiful house in Epse, near Deventer, which we had fitted out and decorated from scratch. Before then we had already moved house seven times and that was to be our home for keeps. But then my employer Akzo offered me a job with the company that is now the Nuon subsidiary Emmtec. I needed to be available round the clock for that job, which meant moving to Emmen. ‘My wife said: “Let’s get a boat this time. Then we can take our house with us in future.” So obviously we haven’t moved since then; that’s life for you. We wanted a ship that could sail and still needed a lot of work.’ Laughing, he adds: ‘Well, it certainly fitted the bill in that sense. At first, living here was quite a challenge: no electricity, no running water, no heating. We had to do the washing elsewhere and went to the swimming pool for a bath. In the winter we huddled up to the diesel fire, with icicles hanging from the roof.’ Soapstone fire ‘We wanted to restore the ship, live as sustainably as possible and do a
bit of sailing into the bargain. For electricity we installed sixteen solar panels, which is not enough incidentally. That’s why we’re still connected to the grid and have a generator. After a few years we installed a soapstone fire – it’s a monster of a thing, weighing about two tons that burns wood fairly efficiently and cleanly. On the deck we’ve made a large square black tank we can fill with water. In the summer it’s warm enough after a few hours for a bath. We have an old Ford truck engine that runs on biodiesel, but we use the sails whenever possible. And finally, we’ve installed a biological purification system for our waste water. Combined with biodegradable detergents, this avoids harming the surface water.’ ‘Sustainability is in our veins. My wife and I believe that we, as humans, are not managing the earth’s resources properly and that radical changes are necessary to give future generations enough clean water, for instance. Living this way is not financially advantageous. Power from solar panels easily costs about a euro per kilowatt hour, if you include all the investments. And that’s expensive. But once you’ve written down the panels, it’s free. It’s a question of attitude. If everyone started using these panels, we could jointly make a big difference.’
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MOVEMENT
‘Solar energy for the price of grid power’ Wendy Dubbeld (35), Manager of Product and Service Management Clearing the way for solar foil ‘In 2003 we bought four solar panels and installed them on our roof. When we were finished, we looked affectionately at the electricity meter for a while, and then started experimenting to see how many appliances we could turn on before switching back to the grid. We found that the panels could power the fridge and several lamps, representing some 17 to 20 per cent of our electricity needs. ‘At the time the investment made financial sense, because the subsidy was good. That was later scrapped, but a new incentive scheme with a 15-year payback period is being introduced in 2008. That’s a start, but I think you need a shorter payback period to attract more consumers. Solar panels are still expensive. Without a subsidy it takes at least 20 to 40 years to earn your investment back, which is too long for the average consumer. I have a strong preference for solar energy because it’s the least intrusive form of energy for your surroundings. Solar panels don’t bother anyone and produce energy from a source that puts a smile on everybody’s face – the sun.’ And that is precisely why Wendy Dubbeld is so enthusiastic about Helianthos, the Nuon subsidiary that is engaged in the development of solar foil – a cheap alternative to solar panels. It’s cheap thanks to the use of less silicon and no glass. Together with her colleagues at Helianthos, Wendy is exploring ways of putting this form of energy generation in the market. She is a hostess, contact person and sounding board rolled into one for her colleagues. Does she think solar foil will succeed? ‘In their current form,
solar cells are less efficient but the cost price is also comparably far lower. Eventually we expect to achieve the same price per kilowatt hour as for grid power.’ Price breakthrough In May 2006 Nuon took over Helianthos from Akzo Nobel. And in 2007 Environment Minister Jacqueline Cramer signalled the start of the construction of a Helianthos pilot plant at Kleefse Waard in Arnhem. Nuon is investing over 10 million euros in the project. ‘We hope to take the pilot plant into service after the summer holidays, and then move on to a larger plant.’ What Helianthos is seeking to achieve is a price breakthrough. That is vital in this market which, though experiencing tremendous growth, is still largely subsidy-driven and as such a no-go area for large investors like banks. The solar foil still needs further development, but the prospects are promising. Dubbeld: ‘The efficiency and life of the product have both been greatly improved. And we have also made tremendous advances towards large-scale production.’ So where does she expect to see Helianthos five years from now? ‘It will be a thriving and rapidly expanding business, with solar foil a common sight on factory roofs. We still have some way to go, but I’m confident it will be a big success.’ <<
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ENERGIEJAAR IN BEELD
ENERGY YEAR IN FOCUS
1
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– The weather has gone haywire. January 2007 brought heavy snowfall in Spain, but was the mildest on record in the Netherlands (photo 1). And the winter as a whole was the warmest-ever with an average temperature of 6.5 degrees Celsius. Visible consequences were early-nesting stork pairs (2) and a growing kingfisher population.
The odd weather fanned the climate debate
and on 22 February the new Dutch government (4 and 5) unveiled its ‘Clean and Economical’ climate programme, with incentives for eco-friendly lease cars (6) and a flight tax (7).
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1ST QUARTER
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ENERGY YEAR IN FOCUS
1
2 - On 18 April 2007 Prince Willem-Alexander inaugurated the first Dutch offshore wind farm at Egmond aan Zee (photo 1), an initiative of Nuon and Shell.
The spring and summer of 2007
produced a bumper crop of climate awareness events. The Netherlands marked the Queen’s birthday with the opening of its very own Noah’s Ark in Schagen (4, 5, 6). Then Greenpeace rebuilt Noah’s Ark on Mount Ararat (3 and 7) in connection with the G8 in June. Later, the environmental organisation staged vehement protests against coal-fired power stations. One of these protests was held around Live Earth Alert on 07-07-07 (2), which Nuon sponsored in the Netherlands.
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2ND QUARTER
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ENERGY YEAR IN FOCUS
1
2 â&#x20AC;&#x201C; The International Energy Agency warned on 9 July that oil would run out earlier than originally expected. The reason: the emergence of Asia and the resulting increase in demand (photos 1 and 2). In the late summer and autumn the oil price spiralled from just over 70 dollars per barrel to 90 dollars. No wonder there are plans to restart oil extraction in and around Schoonebeek (4). On 7 September, the two largest Dutch energy companies, Nuon and Essent, aborted their merger process (3).
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3RD QUARTER
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ENERGY YEAR IN FOCUS
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2 â&#x20AC;&#x201C; The climate problem continued to concentrate minds. The climate summit in Bali (photo 1) ended on a euphoric note. Al Gore and the Intergovernmental Panel on Climate Change received the Nobel Peace Prize (2).
Tens of thousands of households in the Bommelerwaard area were rudely reminded that power cannot always be taken for granted (3, 4 and 6).
And Christmas was more led-lit (5 and 7) than ever.
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4TH QUARTER
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Theme 4 HOW GREEN IS NUON?
Nuon is this green After the major eye-catching projects of 2006, the year 2007 was comparatively calm. Or are appearances deceptive? Last year we worked on all fronts to promote the sustainability of the energy supply - witness our investments in wind and solar energy, CO2 capture and heating systems. This theme answers such questions as: what does Nuon do, where is Nuon now and where is Nuon heading? 42 _ Nuon Sustainability magazine 2007
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ZO GROEN IS NUON
Sustainable results in perspective What exactly do energy companies contribute towards energy sustainability? That’s a hard question to answer. Viewed in the correct (European) context, fuel mix and emissions data are certainly useful but they only tell part of the story. Above all, these popular sustainability comparisons fail to include crucial initiatives that will not translate into measurable benefits until well into the future. Strategist Ruut Schalij: ‘We’re not going for quick wins that make no long-term contribution.’
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Theme 4 HOW GREEN IS NUON?
‘The danger of the green hype is that companies may go for certain types of measures, not so much to help the environment, but because they look good in the stats’
‘Play to your own strengths’ is a well-known cliché in the world of sports. It is predicated on the notion that anyone who focuses too much on others will never get the best out of themselves. Even so, companies keep a hawk-like eye on benchmarks and performance indicators to see where they stand in the competitive pecking order. The energy sector is no exception and these days everyone is particularly keen to come out tops in the sustainability rankings. A noble aspiration in itself but Ruut Schalij, Corporate Development & Strategy Director, also has some question marks: ‘rankings must never become an end in themselves.’ Power label To get the full picture, you need to know the story behind the figures and not rely too much on comparison tools. One of these comparison tools is the power label (or ‘supply fuel mix’ in energy jargon), with which the Dutch government obliges the country’s suppliers to inform their customers of the origin of the supplied electricity. Apart from indicating the used energy sources (coal, natural gas, nuclear and renewable), the power label also shows the environmental impact in terms of CO2 emissions and radioactive waste. A cursory glance suggests that Nuon’s power label for 2007 is a lot more sustainable than in 2006: the hydropower component advanced strongly (+6.5 per cent to 17.5 per cent) and the CO2 emissions factor fell from 447.3 grams per kilowatt hour last year to 391.9 grams in 2007. Judging from this, you might think that a great deal has changed at Nuon - which is certainly true; but in actual fact the decline in the CO2 emissions factor is mainly attributable to a new calculation method for the process gases that Nuon burns at its power station in Velsen. These gases already contain a lot of carbon dioxide before the burning process. Until 2006 all CO2 released during the burning of these gases had to be included in the emissions count.
Nuon argued that this was unfair as these gases would otherwise have been burned off by Corus (thus also causing CO2 emissions), instead of being put to good use. By burning this fuel, Nuon saves a substantial amount of natural gas that would normally be required to generate this amount of energy. The energy watchdog DTe eventually agreed and gave Nuon permission to ‘count’ CO2 emissions from the Corus gas in the same manner as the CO2 emissions from ‘ordinary’ natural gas. The power label now provides a better basis for comparison, but this example shows how easily the comparative picture can be distorted. Emissions Actually, the emission figures provide a better indication of Nuon’s activities to reduce its environmental impact. One salient difference between 2006 and 2007 concerns the increase in the absolute carbon dioxide emissions. This is due to the sharp rise in the company’s own electricity generation activities. Interestingly, even though production was substantially higher, the relative CO2 emissions remained at virtually the same level as in 2006, namely 856 grams per kilowatt hour. The relative emission level is determined by the type of power station deployed for the generation of electricity. The aim is to use the most energy-efficient units first, which means that wind farms, hydropower stations and district heating stations receive priority. Another striking statistic was the fall in relative NOx and SO2 emissions despite the higher production level. This is the tangible result of technical adaptations at power stations. The Amsterdam-based power station Hemweg 8, for instance, was equipped with a DeNox installation, thus reducing the NOx emissions from 0.493 gram per kilowatt hour in 2006 to 0.336 in 2007. Similarly, the SO2 emissions decreased from 0.115 grams per kilowatt hour to 0.096 thanks to the renewal and rearrangement of the sprayers in the flue gas desulphurisation installation at the same power station.
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HOW GREEN IS NUON?
Fuel mix supply Nuon Group
RA-verified
23.2% Coal
Emission ratio CO2, NOx and SO2 per unit total electricity production g/kWh
900
17.5% Hydro 0.01% Solar
853
0.8
2007
1.1% Biomass 3.2% Wind 4.4% Miscellaneous
0.6
0.493 0.4
9.1% Nuclear 41.5% Natural gas
Grey energy Renewable energy CO2-emission rate Radioactive waste rate
856
0.336
0.2
78.1% 21.8% 391.9 g/kWh 0.000270 g/kWh
0.096
0.116
0.0
2007 CO2 NOx SO2
2006
1.
In het duurzaamheidsverslag 2006 zijn de waarden voor aandeel Aardgas Centrales
The CO2 emission factor of the supply fuel mix was 391.9 gram/kilowatt hours, which is lower than in 2006.
The emissions per kilowatt hour of NOx and SO2 have decreased. That of CO2 remained virtually unchanged.
Europe Nuon also wants to be a major sustainability player at European level. In the liberalised energy world no one can afford to ignore the European market – which is why Nuon and Essent commissioned Kema to make a comparative study of the environmental performance of 17 European energy companies in 2006. In that comparison Nuon came sixth in terms of in-house renewable energy generation (excluding hydropower). The Kema study also revealed that in 2006 Nuon performed very well on NOx and SO2 emissions compared to its European counterparts, but less well on CO2 emissions. The latter was mainly because Nuon, unlike many large European players, does not have a large nuclear energy component in its generation mix. A second reason was the extra emissions from the CO2-rich process gases of Corus. Though now excluded from the power label (see above), these process gas emissions are still included in the calculation of the CO2 production emissions.
per cent to 875 million euros, with accelerating turnover figures and excellent customer satisfaction ratings. ‘These strong results enable us to continue investing in new technologies for the further promotion of green energy,’ so board chairman Ludo van Halderen assured his audience at the presentation of the full-year figures.
Investments Another important yardstick for energy companies is ‘investments in renewable production capacity’. Nuon can look back on a few fat years in this respect, with annual spending on wind, sun, water and heating running to more than 100 million euros between 2004 and 2006. In 2007, however, investment expenditures were lower, mainly due to the absence of subsidies for large wind projects. A relatively large amount was spent on solar energy (8.8 million euros) and CO2 capture (45 million euros). Strictly speaking, the latter is not an investment in renewable production capacity and is therefore excluded from the renewable investment calculation. 39 million euros were invested in heating, bringing the total investments in wind, solar, hydro and heating to 63.7 million euros. In the coming years Nuon’s investments in renewable energy are certain to remain at the high level seen in the past years. Financially speaking, 2007 was a good year for Nuon. Net profit increased by 15
Transition Fund Strategist Ruut Schalij is at pains to stress that what matters is Nuon’s actual contribution towards energy transition. ‘Figures are instructive, but they are not the be-all and end-all. We are going for high-grade and workable sustainable solutions, not for quick wins that make no longterm contribution. The danger of the green hype is that companies may go for certain types of measures, not so much to help the environment, but because they look good in the stats,’ says Schalij. He mentions the example of biomass, where each ‘type’ of biomass must be carefully assessed to ensure it makes a real contribution towards energy transition, and without creating new problems elsewhere. Another risk of relying too much on statistics, according to Schalij, is that worthwhile initiatives fall by the wayside because they lack headline appeal. Energy-saving advice is one such low-key but important activity, as is researching and developing sustainable technologies. ‘Some expect to see every investment translate instantly into greener production; unfortunately it’s not that simple. Lots of sustainability investments have a long gestation period before producing visible results.’ To invest venture capital in transition technologies on a more structural basis, Nuon has set up the Energy Transition Fund. This fund supports energy-related technologies aimed at improving efficiency in energy consumption or reducing our dependence on fossil fuels. Ruut Schalij: ‘The fund has started with 40 million euros, which will be used to finance renewable energy technologies that are being readied for the market. That could be anything from smart meters to solar foil, and these efforts are certainly not confined to the Netherlands.’ <<
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Sustainability at our neighbours In Belgium and Germany Nuon is a new and up-and-coming player. We asked the local CEOs about the views on sustainability in their country and the renewable potential of these â&#x20AC;&#x2DC;newâ&#x20AC;&#x2122; markets.
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Roberte Kesteman, CEO Nuon Belgium
Thomas Mecke, CEO Nuon Germany
‘From grey to green: the ‘Great opportunity for momentum is growing’ efficient power’ How well is Nuon doing in Belgium? ‘We have been active in the Flemish energy market since the liberalisation in 2002. Our focus is on the retail and mid-business markets. Competition is still fierce, particularly in the large business market, but that hasn’t prevented us from winning customers. We now have 260,000 customers, with an 8 per cent share in the Flanders retail market.’ Do you want to grow and, if so, how? ‘We want to grow to a 20 per cent market share within a few years. But it’s difficult to become a major player in our market. Fair pricing, for instance, is still very much an issue. In the past, nuclear power stations were depreciated at an accelerated rate, which was passed on in the electricity prices. To assert ourselves as an important player in this market, we need to produce our own energy. That’s why we are currently developing a mid-sized gas-fired 400-megawatt power station near Charleroi in the Walloon region, which is due to come on stream in 2011 or 2012. And we have also made an offer for Distrigas, the gas operations that Electrabel/Suez are having to unbundle.’ Is Nuon seen as a sustainable player in Belgium? ‘Definitely, we are fourth in Greenpeace’s list of green energy companies, which also takes our fuel mix on board. The only ones ahead of us are small local greenonly suppliers; the large ones are all trailing behind. Our Nuon Generation Award for the company with the best renewable energy policy is also good for our image. Last year the award went to Colruyt, a department store chain that sets itself energy targets, monitors its energy consumption and invests in solar and wind energy.’
How renewable is Nuon Belgium itself? ‘With a renewable energy component of 60 per cent, our ordinary electricity has a significantly better fuel mix than that of our major competitors. This gives us an advantage. But we also want our customer base to be as green as possible – which is why we are developing wind farms in Belgium. Flanders has a congenial subsidy climate for wind as well as for solar energy, which is another avenue we are pursuing. Our aim is to continue evolving as a sustainable company in order to attract as many green customers as possible, while also persuading our grey customers to switch over to green.’ How important is renewable energy to Belgians? ‘It’s becoming increasingly important. Let me give you an example: we initially thought that businesses would go for price rather than for green. We were wrong. More and more business customers are listening to the sustainability argument and are taking up our offer to switch over from grey to green, including large companies like the high street bank KBC.’ <<
How is Nuon doing in Germany? ‘We are active on several fronts: industrial estate management, street and traffic lighting in Berlin and the sale of electricity. As a new supplier we sell power to consumers. And that’s going well. More and more Germans are switching over to ‘lekker Strom’ and ‘wakker Gas’. We already have 200,000 retail customers. Our acquisition of customers is mainly aimed at the major cities such as Berlin, Leipzig, Düsseldorf, Hamburg and Stuttgart. This is because in Germany, you must concentrate on a few selected sales areas. There are no less than 900 networks in our country, so customer acquisition is still highly grid-bound due to the strong differences in distribution charges.’
survive. But there are differences in emphasis between the debate in Germany and in the Netherlands. Nuclear power, for instance, is still a very dominant topic. And we are saddled with heavily polluting brown coal power stations.’
Is Nuon Germany growing? ‘Absolutely. We were among the first companies to benefit from German liberalisation and are continuing to do so. The initial wait-and-see attitude towards switching has disappeared now: half of German consumers have already switched at least once. Our accessible and transparent approach via the internet appeals strongly to the group who are willing to switch suppliers. We are purely targeting retail customers whom we attract with a combination of a price guarantee and a switch bonus. Everyone is now adopting this system, but thanks to our strong focus on specific areas, we remain very much in the picture as a new energy company.’
Lekker Strom is nuclear-free. How green is the product in other respects? ‘The CO2 emissions from the power we supply are half the German average. The mix contains renewable energy in the form of water and wind. The rest consists of electricity generated from coal and gas. We now have only one mainstream product. But we are developing a new form of green electricity: efficient power with which we help the customer to make savings. There are great opportunities here. But it is not easy because Germans too are not very willing to pay more for renewable energy.’
How important is renewable energy to Germans? ‘As in the Netherlands, renewable energy is at the top of everyone’s list. Thanks to the successful subsidy under the Erneuerbare-Energien-Gesetz (Renewable Energy Act), we are leading the way in the field of wind farms and solar energy. And Germans, like the Dutch, are convinced that only sustainable businesses will
Even so, your country has a sustainable image in the Netherlands… ‘The reverse is also true. The Netherlands also has a good reputation for sustainability in Germany. Which helps us as a fresh newcomer. Our product ‘lekker Strom’ is nuclear-free. That fits in with Germans’ image of a Dutch company, because quite a few are aware that there are virtually no nuclear power stations in the Netherlands.’
Is offering green products sufficient in itself? ‘Obviously, renewable energy must eventually become a dominant part of our sales. But I also believe in energy saving. Particularly in the short term, this will be the key to a more sustainable future. The Nuon model of energy saving advice and intensive service is ideal for achieving success in Germany. That will really help us stand out from the crowd here.’ << Nuon Sustainability magazine 2007 _ 47
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Theme 4 HOW GREEN IS NUON
Power stations acquire a taste for residual waste Industrial and agricultural residual waste flows are highly suitable for generating electricity. Nuon’s soon-to-be-expanded power station in Velsen, for instance, has run for years on a diet of process gases from its neighbour Corus, while other power stations have a taste for biomass in the form of wood trimmings, grape seeds and even monkey nut shells. Read on for a closer look at residual waste as a fuel of the future. >>Any Google Earth user who zooms in on Corus’s plant in IJmuiden will see an enormous pipeline that could easily swallow a small car. It’s through this pipeline that the steel producer’s process gases flow to the nearby Nuon power station. These are CO2-rich, low-calorie gases that are released during the production of steel. Despite their low combustion value – only 10 per cent of that of natural gas – these process gases are still excellent for generating electricity. The gas travels through the pipeline to various destinations, one of which is Nuon’s steam and gas turbine unit IJmond 1 on the Corus site. This unit exclusively consumes furnace gas, while the Velsen 24 and 25 units (boiler installations with steam turbine) are equipped to take a mix of process gases. If necessary, however, these installations can also run on natural gas alone. The three production units jointly account for an electrical capacity of about 1,000 megawatts – nearly ten times the amount generated by Nuon’s large wind farm off the coast near Egmond.
Process gases Chances are that Nuon will soon be using even more process gas to generate electricity. Corus currently sends about one-third of its production of the gas to the energy producer, while using the remainder for its own steam production and energy supply. But the steel company is seeking to optimise its production process, which will result in a higher steel output and – hence – more process gases. The expectation is that these gases will subsequently be made available to Nuon. Meanwhile, the energy company is eyeing a new gas turbine unit at the Velsen-North location to process this gas. Reusing as much process gas as possible is important for energy efficiency reasons. After all, the alternative is to burn the gas off. ‘And that simply means throwing energy away,’ says Nuon environment adviser Rob Exalto, who is handling the licence application for the new unit. ‘What we are doing now leads to optimal and clean combustion with energy gains into the bargain. It is obviously a lot better for
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HOW GREEN IS NUON
the environment to put these flammable residual products to good use – even though the large volumes and low combustion values make these process gases less efficient than natural gas.’
Notorious waste flows such as chicken manure, animal flour and palm oil are strictly off-limits at Nuon.
Monkey nuts The biomass power station in Lelystad is another location where Nuon uses residual waste flows. Every year some 25,000 tons of clean wood trimmings are burned there to provide about 3,000 households with heating and power. These trimmings come from the nearby woodland estates of the Forestry Commission. No other biofuels are burned at Lelystad, but the picture is very different at the Willem-Alexander power station in Buggenum. Here energy is not only generated from coal but also from various kinds of biomass. The coal gasification power station in Limburg currently ‘co-burns’ numerous residual waste flows such as sawdust, grape and sunflower seeds, and monkey nut shells. Martijn van Gemert, who masterminds the biomass co-burning strategy, explains that a great many residual waste products were tested in the past. ‘Basically you can add all sorts of materials into the fuel mix.’ But only a select few meet Nuon’s strict technical criteria. Van Gemert: ‘One condition is that the material must not damage the installation in any way.’ The sawdust that is used, for instance, is basically finely ground wood dust. ‘Smaller than 1.4 millimetres to be exact. That gives the best burning results.’ Sustainability criteria Notorious waste flows such as chicken manure, animal flour and palm oil are strictly off-limits at Nuon. Van Gemert: ‘We look carefully at the origin of the biomass, because we don’t want woods being specially felled for this purpose, for instance. And we also try to minimise the CO2 emissions as far as possible during transportation.’ This is why ships are the preferred mode of transport. A special unloading installation with a silo has been built in Buggenum. The bulk of the residual waste products come from our neighbouring countries. Whatever the origin, the biomass must meet the government’s sustainability
criteria formulated in 2006. The CO2 balance must be in order and the production must not affect the food or animal feed supply or have any negative impact on the local biodiversity and economy. ‘We subscribe to these criteria,’ Van Gemert says. From 2008, companies are obliged to report on the sustainability of their biomass. In addition, the government, knowledge institutes and the business community are seeking to set up a certification system for the importation of biomass. This stems from the Accord of Schokland that was concluded last year and to which Nuon is a signatory. Companies only receive a subsidy for co-burning imported biomass that is certified as sustainable. ‘This is the only way to meet society’s demand that biomass be 100 per cent clean.’ Setting up a certification system is by no means an easy task, Van Gemert emphasises. ‘It takes years to develop good sustainability verification indicators.’ Large strides forward Van Gemert sees expanding the amount of biomass as a major challenge for the future. The WillemAlexander power station can co-burn up to 30 per cent of biomass and currently processes some 50,000 tons. ‘We are aiming for 100,000 tons in the future. Achieving this is, above all, a logistical challenge.’ Van Gemert believes residual products can help the Netherlands make large strides towards achieving the government’s target of a 30 per cent reduction in greenhouse gas emissions in 2020. ‘What’s more, it is a cost-effective way of generating energy.’ Small wonder, then, that the designers of Nuon’s Magnum multi-fuel power station at Eemshaven are seeking to include a substantial co-burning component – as much as 40 per cent in fact. ‘It would be ideal,’ Van Gemert concludes, ‘if we could upgrade biomass to high combustion values and make it insensitive to moisture absorption. That would make outdoor storage possible and give biomass the same physical characteristics as coal. We could then co-burn sustainable biomass on a large scale and make a real contribution to the government’s climate objectives.’<< Nuon Sustainability magazine 2007 _ 49
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Theme 4 HOW GREEN IS NUON
Nuon’s sustainability investments slowed in 2007 compared to previous years, partly due to a lack of subsidies and licensing problems. But hope is on the horizon: Nuon is developing a substantial wind project in Antwerp with Belgian partners, and funds have been earmarked for a solar cell plant and heating projects as well as for studies into CO2 storage and a large biomass plant.
‘Where there’s a will, there’s a way’
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HOW GREEN IS NUON >> On 18 April 2007, Crown Prince WillemAlexander opened the Netherlands’ first wind farm at Egmond aan Zee, an initiative of Nuon and Shell. The official inauguration of this 180 megawatt offshore wind farm marked a milestone. Jaap Olthoff, known as Mister Wind Energy at Nuon, beams as he recalls this memorable day. No wonder: ‘We saw all our hard work rewarded with the on-time and on-budget completion of a high-tech wind farm that meets the strictest safety requirements.’ And Olthoff has yet another reason for looking back on 2007 with satisfaction, namely his involvement as Director in the formation of WEOM, the Wind Energy Development Company in which Nuon has grouped together all its wind activities. ‘Our knowledge about the management, development and construction of wind energy is now concentrated. That’s a much better way of working.’ Lack of subsidies But Olthoff is much less content with the actual development of wind energy in 2007. This ‘good
wind year’ was a black year for growing the renewable generation share in the Netherlands. The lack of subsidies and licensing problems thwarted the development of new projects. Nuon was forced to shelve a number of plans for major offshore wind farms (see box Gone with the wind). Consequently, new developments in the Netherlands were confined to projects in Oudendijk (4.8 megawatts), the start of the construction of a plant in Echteld (8 megawatts) and the initiation of the project to replace turbines on the dyke at Enkhuizen. A great many projects, including a large 100-plus megawatt project, are awaiting the introduction of the new renewable energy subsidy scheme (SDE) that is to replace the former MEP (Environmental Quality of Electricity Production) scheme. Olthoff: ‘In terms of government support we are in a transitional period. The MEP was suddenly abolished in 2006 and its replacement, the SDE, will only be introduced in the course of 2008. Compounding the problem is the fact that since 1 January 2008 the new Energy Investment
Allowance (EIA) is a lot less supportive of wind energy. As a consequence, lower-yielding wind projects, such as those located in the interior, may no longer qualify,’ says a visibly disappointed Olthoff. Torpedoed projects Managing Director of Technical & Project Development Herbert Jost emphasises that the actual size of the subsidies is less important than their reliability. ‘What you need for investments, above all, is a long-term and consistent support policy.’ According to Jost, other changes are also essential to realise a genuine breakthrough in renewable energy, particularly in the sphere of spatial planning. ‘Lower authorities should receive incentives to be more cooperative when it comes to issuing licences. The procedures need to be accelerated. And offshore wind projects must be given much more support,’ says Jost. According to Jaap Olthoff, Nuon can’t wait to expand its wind capacity: ‘We are really eager to press ahead. And where there’s a will, there’s a
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HOW GREEN IS NUON
Investments in renewable energy capacity € million
RA-verified
80
73.0
70
0.8
66.3
60 50
47.6
40
63.2 0.2
1,8 1.8
0.6 4.5
GONE WITH THE WIND?
30 72.2
42.5
20
63.0
64.5
24.7
0.8 8.8
10
15.1
0
2003 Wind Solar
2004
2005
2007
2006
Hydro
In 2007 Nuon invested less in wind energy than in previous years, but allocated more money to solar energy.
Operational renewable energy production capacity MW
RA-verified
800
654
600
557
14 40 11
14 40 11
443
400
200
589
492
10 40 11
344
382
8 40 4 292
374
2 40 8 324
Developing large wind turbine projects is an uphill struggle in a rule-bound country like the Netherlands. The marine wind farms Nuon is seeking to develop with Shell illustrate the point. Licence applications for no less than four offshore wind farms foundered in 2007. A first request had to be withdrawn due to the late announcement of a new clearway (a shipping channel including buffer zone where construction is prohibited, ed.) for a major new development at the Port of Rotterdam. The other three requests were rejected because of alleged dangers to shipping. A new government-appointed shipping safety committee, the Nautical Advisory Group, advised against all three applications. This news came like a thief in the night, because the applications satisfied all the guidelines of the MER Committee, which also takes safety on board. Nevertheless, the Ministry of Transport, Public Works and Water Management decided to follow the advice of the shipping safety committee in its proposed decision. Nuon has lodged an appeal.
way. But the road is long and full of twists and turns. The government is still ambivalent on too many issues. In the guise of VROM (Netherlands Ministry of Housing, Spatial Planning and the Environment) it set out climate policies with ambitious targets, but in other guises the government throws up all sorts of obstacles.’ More specifically, Olthoff is referring to the shipping safety committee that unexpectedly torpedoed three large offshore wind farm projects of Nuon and Shell. Jost: ‘We have appealed against this proposed decision. But the government should really show stronger leadership and prevent such situations arising in the first place.’
0
2003 Wind Solar
2004
2005
2006
Hydro Biomass
In 2007 the installed capacity increased by 9%. The renewable production also increased by 9%.
2007
Antwerp Despite all setbacks, passionate engineers like Jost and Olthoff are not easily disheartened. If developments are obstructed in the Netherlands, they simply look elsewhere. As an international player, Nuon can consider projects beyond the national borders. Olthoff: ‘We are undertaking intensive efforts in Belgium, where we are buying land among other things. We want to build a large number of wind turbines and use the resulting green certificates for Belgian customers.’ Together with a Belgian investment group, Nuon acquired a concession for at least 90 megawatts of wind energy in the port of Antwerp, where Nuon already has two turbines. According to Olthoff, a favourable wind is blowing for wind energy in Belgium. ‘The fee for delivering energy back to the grid is excellent in Flanders and the same basically applies to the overall subsidy scheme there. Applying for licences also goes a bit quicker in Belgium than in the Netherlands.’
A question of definition Though Nuon’s direct investments in renewable production were disappointing this year, the company is definitely not standing still. Looking beyond wind, there are other appealing examples of renewable energy investments, says Herbert Jost. Take, for instance, the investment in the solar foil pilot plant of Helianthos. ‘Research projects like that are crucial to an energy company, though their beneficial effects are obviously not immediately reflected in CO2 results.’ Other green investments Jost mentions are the Nuon study into a 250-megawatt biomass power station and a large and costly study into CO2 capture at the Buggenum coal gasification power station – a unique pilot that is attracting worldwide attention because the carbon dioxide is captured before combustion (instead of being filtered out of the flue gases after combustion, ed.). Finally, Jost considers it unfortunate that, according to the letter of the law, Nuon’s investments in heating networks are classified as energy-efficiency projects and not as renewable generation. ‘So these don’t count for the achievement of Europe’s green energy targets, even though such systems not only make a significant contribution to CO2 reductions, but also use residual waste flows and eliminate the need for burning gas in residential heating boilers.’ One thing is clear to Jost: we must not put all our eggs in one basket. ‘As long as our energy future remains uncertain we must continue to develop all available options and keep an open mind.’ <<
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Pioneering with less CO2 Carbon dioxide: it’s nasty stuff and all too common. Fortunately the green debate is having more and more impact on the way energy companies operate. The incentives to reduce CO2 emissions are visibly growing. Nuon is investing in an array of innovations to generate cleaner energy for today and tomorrow. Here we take a closer look at the relationship between CO2 capture, emissions trading and efficient power stations. From left to right: Euro Commissioner Andris Piebalgs, Euro Parliamentarian Lambert van Nistelrooij, Øystein Løseth, member of the Management Board of Nuon, and Carlo Wolters, manager of the coal gasification power station in Buggenum.
>>With compliments from Brussels. While visiting the Willem-Alexander power station at Buggenum (Limburg), Euro Commissioner for Energy Andris Piebalgs was visibly impressed and said so. The Latvian sees great potential for the coal gasification technology combined with CO2 capture that Nuon intends to pilot at this power station. The next step is to apply the Buggenum-tested technologies on a large scale at Nuon Magnum, the multi-fuel power station currently under construction in Eemshaven (Groningen). According to Piebalgs, the large-scale application of carbon capture and storage (CCS) makes Magnum a candidate for the demonstration projects the European Commission is starting in the coming years. Brussels has robust climate ambitions and wants to hasten the development of the capture and storage of the greenhouse gas CO2. Having concluded that
renewable energy sources such as solar and wind power are not coming on stream fast enough to serve as a large-scale alternative, the European Commission is eager to advance the application of CO2 capture to fossil generation with all possible speed. Even so, the subsidy pot is not that big; and the demonstration projects – where the technology is tested at existing power stations first – cost millions. However, the European Commission is prepared to help trailblazers by relaxing the subsidy rules. In addition, CO2 capture and storage pioneers are permitted to carry a European logo that gives access to national and international subsidies. First company Nuon is very serious about CO2 capture, explains head of technology Robert de Kler of the Technical & Project Development Division. ‘Currently, all the Nuon Sustainability magazine 2007 _ 53
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Theme 4
HOW GREEN IS NUON CO2 emissions due to electricity production kton
RA-verified
20,000
15,000
14,738
14,881
15,021 13,926 11,744
10,000
5,000
0
2003
2004
2005
2006
2007
The absolute production of CO2 increased in 2007 as a result of a much higher electricity production.
‘Our main strength is that we gasify the coal, so once certain processes are in place, all we need to do is siphon off the CO2’ CO2 goes straight into the air. If we can remove it at acceptable costs, that’s certainly worth doing.’ The pilot in Buggenum is aimed at testing the CO2 technology itself. Actual capture and storage (in empty gas fields) will only come into view at the Magnum power station. ‘We are seeking the best possible route for capturing carbon. We want to know whether everything is working according to expectations. Remember: we are the first company in the world to do it this way.’ The total costs for the CO2 capture pilot at Buggenum amount to some 45 million euros. VROM (Netherlands Ministry of Housing, Spatial Planning and the Environment) has granted Nuon a subsidy of 10 million euros. Why? De Kler explains: ‘First of all, our pilot fits in well with the suite of CO2 capture technologies that are currently being tried out. Nuon’s technology involves pre-combustion capture and looks promising. Our main strength is that we gasify the coal, so once certain processes are in place, all we need to do is siphon off the CO2. With conventional coal-fired power stations, you have to build an entire factory at the end of the chimney.’ Stricter rules CO2 capture and storage also comes under the umbrella of the emissions trading system. It is rewarded by the fact that captured CO2 does not count as emissions. When we reach the point that emitting a ton of CO2 costs more than capturing it, there will be a strong case for capture and storage. The EU Emission Trading Scheme (ETS) was introduced to help Europe attain its ambitious target of reducing
greenhouse gases by 20 per cent in 2020. In addition, it gives companies an extra incentive to make a contribution towards CO2 reductions. Now that the three-year pilot period (2005-2007) is over, Brussels is going to tighten up the system with more stringent rules effective from 2013. As a result, fewer emission rights will come onto the market year on year. The energy sector, being the biggest source of emissions in the EU, will be forced to buy all its CO2 allowances direct at auction. Stephen Asplin, Director of the Energy Trade & Wholesale Division, sees emissions trading as ‘essential’ for the energy sector. ‘The CO2 price is one of the price drivers within the electricity trade. In some respects it determines operational decisions, such as: do we need to run this or that power station today? Because when you generate power, you emit CO2 and that costs money.’ But Asplin emphasises that the way in which the enormous European auctions are set up from 2013 will determine whether the system and CO2 market operate effectively. Asplin sees emissions auctioning as a catalyst for the CO2 trade. ‘Auctioning is a reasonably efficient instrument to sell something that is scarce. The volume of trade will grow significantly, I’m convinced of that.’ The upshot is that efforts to reduce CO2 emissions will become more cost-efficient. DeNOx installation Clearly, CO2 capture and storage is still a long way off, as is a mature European emissions trading system. But that is no reason to sit still. Because the cleanest energy companies today are the winners
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HOW GREEN IS NUON
TO
IS NUON IN
HASING? C R U P E L B A IN SUSTA URSE WE ARE! SURF TO OF CO G2007 M/REPORTIN O .C N O U .N WWW
‘Because the cleanest energy companies today are the winners of tomorrow – so we must continue to do everything we can to minimise emissions’ of tomorrow – so we must continue to do everything we can to minimise emissions. Nuon’s efforts to reduce CO2 emissions at existing power stations start with process optimisation, explains Generation Director Jan Homan. ‘The design of a production unit is a given; it is the outcome of very careful choices made in the past on the basis of fuel and electricity scenarios.’ Optimising these processes often demands far-reaching measures, he says. At the Hemweg power station, for instance, a DeNOx installation was taken into service in 2006 and now captures almost 90 per cent of the flue gases. Last year Nuon’s production plant boasted the highest availability of all energy companies in the Netherlands. The high availability of the 13 Nuon power stations, which Homan puts down to good installation maintenance and management, meant that Nuon was able to use its most energy-efficient units in 2007. These are mainly the young power stations with a modern energy-efficient and environmentallyfriendly design. ‘Just as new cars are cleaner than older models,’ Homan adds by way of comparison. Price tag Extra financial incentives to reduce greenhouse gas emissions may provide a basis for CO2 capture, according to Homan: ‘The price tag attached to the emission rights is definitely a factor. Power production is optimised on the basis of marginal costs and CO2 costs. If we reduce our emissions, we can sell our allocated emission rights or, once the auctioning system gets underway in 2013, we will not need to buy as many rights.’ In that case, says Homan,
investing in energy-efficient installations with lower emissions and CO2 capture may make excellent sense – provided certain conditions are met. First of all, the pilot must be successful and the frameworks for CO2 storage must be clear. Next, the CO2 price must rise and the capture operations must be CO2 neutral, as the European Commission has proposed. ‘If all these conditions are met, then I would say: let’s go ahead and start capturing CO2. Because at that point we can compensate the high investment costs for the CO2 capture installation.’ Asplin affirms that the cost price of CO2 rights will determine the financial viability of coal-fired generation with CO2 capture and storage. ‘The price tag attached to CO2 capture is such that public money will be necessary to make up the difference if the CO2 price is not high enough. If the price is sufficiently high, you can recoup the investment costs faster.’ The CO2 price is currently fluctuating around twenty euros. Asplin expects it to creep nearer to thirty euros in the coming period. How the price will develop after 2013 is hard to tell, he says. ‘First of all, we need a global trading system that includes the participation of other countries like the US and China.’ <<
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Theme 5 LEADERSHIP
Leadership The energy sector is undergoing unprecedented transition: the energy supply is changing, and so are the companies themselves. Market liberalisation sparked a wave of mergers, and now unbundling is on the agenda. Such a period of transition gives rise to great uncertainty and debate. In times like these, leadership is crucial. Who are the most suitable helmsmen, CEOs and shareholders? And what is the correct course?
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Thema 2 LEADERSHIP
‘LEADERS MUST SET THE RIGHT EXAMPLE NOW’ >> MARLIES PERNOT IS GENERAL MANAGING DIRECTOR OF THE HOMEOWNERS ASSOCIATION EIGEN HUIS AND ANGELIEN KEMNA IS ACTIVE AS AN INVESTMENT SPECIALIST AT THE RENEWABLE ENERGY COMPANY ECONCERN. BOTH KNOW EXACTLY WHO AND WHAT SETS THE PACE IN THE BOARDROOMS OF CORPORATE NETHERLANDS – AND BOTH HAVE LOTS OF ENERGY. A DIALOGUE ABOUT THE REQUIRED LEADERSHIP TO MAKE ENERGY TRANSITION A SUCCESS.
Marlies Pernot receives her guest Angelien Kemna at her home base, Vereniging Eigen Huis (VEH) in Amersfoort. The two women have never met before, but are soon on the same wavelength. In an informal conversation prior to the ‘real’ dialogue they switch smoothly between the state of the Dutch economy and the trials and tribulations of everyday life. After introducing ourselves to one another, we walk through the corridors of the building. On our way we pass VEH staff who are busy answering phone calls. As we take our seats,
Pernot tells us that more and more people are phoning the VEH call centre with questions about energy. ‘In the past few years that has changed from a side issue to a key theme for our organisation.’ Pernot had no trouble getting to grips with the energy dossier; she is well-versed in the field, which explains why she is also a supervisory director at Gasunie. Kemna’s interest in energy is more recent. In her role as an investment expert - who formerly managed a portfolio of 160 billion euros at ING Nuon Sustainability magazine 2007 _ 57
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MARLIES PERNOT:
‘YOU COULD LINK EXECUTIVES’ BONUSES TO THEIR SUSTAINABILITY TRACK RECORD. IF CEOS GENUINELY STICK OUT THEIR NECKS BY INVESTING IN INNOVATIVE SUSTAINABLE TECHNOLOGY, THEN THERE’S NO PROBLEM REWARDING THEM FOR THAT.’
- she is currently advising Econcern on a financing structure for its private energy business. Lately she also became an independent member of the Energy Transition Council, in which connection a stack of documentation about the energy situation in the Netherlands landed on her desk early this year. It was an unpleasant eye-opener: ‘I was shocked by what I read.’
EXEMPLARY ROLE Kemna: ‘If you look at all the things that need to be done and within what timescale, then we certainly have our work cut out. This has really got me thinking. Thanks to Al Gore people know that all is not well. But I wonder whether the true scale of the energy problem has sunk in yet. If you ask me, there is no sense of public urgency that we are on the eve of major change.’ Pernot: ‘That is true. Al Gore has laid the basis for the public emotions surrounding the climate. The seed has been sown, but few people are actually standing up and
giving his work a follow-up. You need others with the same intrinsic motivation to take over the torch and keep the message in the spotlight. I see no one in the current government who can advocate the cause with the authority of someone like Jan Terlouw (former Dutch politician, ed.).’ Kemna: ‘Mobilising people is a hard thing to do for politicians in office, because they always need to make compromises. Look at Al Gore himself. He only really let himself go once he had dropped out of the presidential race – that’s when he could muster the emotional commitment to take up the environmental banner and spread the message.’ Pernot: ‘Full-on commitment. That’s what we want from leaders. And preferably linked to solutions. We want to hear what we ourselves must do, preferably from people who set the right example themselves. We want real leadership, from people who don’t drive around in energyguzzlers themselves …’
Kemna: ‘…and, for instance, make sure that their new ministries and head offices are climate-neutral. The exemplary role is crucial. The decision to make sustainable purchasing obligatory for government authorities from 2010 was a fantastic move. That way, the politicians are showing how things must be done. Few people know this, but it will certainly open up great opportunities for businesses.’ Pernot: ‘That exemplary role not only applies to ministers but also to CEOs of private companies. To gain the trust of customers, you have to be very credible yourself these days. And to build credibility, you could link executives’ bonuses to their sustainability track record. If CEOs genuinely stick out their necks by investing in innovative sustainable technology, then there’s no problem rewarding them for that. That way, you kill two birds with a single CSR stone. You silence the debate about fat cat salaries, because people will then understand why the CEO is getting that bonus.
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LEADERSHIP
ANGELIEN KEMNA:
‘THE DECISION TO MAKE SUSTAINABLE PURCHASING OBLIGATORY FOR GOVERNMENT AUTHORITIES FROM 2010 WAS A FANTASTIC MOVE. THAT WAY, THE POLITICIANS ARE SHOWING HOW THINGS MUST BE DONE.’
And sustainability will genuinely matter to the executive personally.’
THINK BIG Kemna: ‘Another problem that leaders encounter in mobilising customers and citizens is that there is no single big solution. Change is necessary on all fronts. This is also the dilemma that minister Cramer is struggling with.’ Pernot: ‘Definitely. That is already a serious flaw in our climate policy. It’s threatening to become so fragmented that it will simply run aground.’ Kemna: ‘In the Netherlands initiatives always get caught up in bureaucratic fiddling.’ Pernot: ‘With all this petty-minded nitpicking there is a real danger that the emerging public awareness of the climate will mutate into irritation over excessive nannying. If you introduce rules, you need broad-based commitment; people must know the whys and wherefores. The same goes for housing. It’s better to think
about fundamentally new building methods, than to impose all sorts of restrictive rules.’ Kemna: ‘It would be a great shame if overregulation impeded innovation. That’s something we must guard against in the Netherlands. We tend to be too quick and zealous in introducing all sorts of rules, many of which are of European origin. You saw the same thing with the large investment funds. Everything left for Dublin and Luxembourg because we were whiter than white on tax issues. Fortunately, our country is starting to take a stand with the Holland Financial Center. The lesson that the government can learn from this example is: don’t always be the first to dance to the European tune and simply try to make smart use of the situation as it is. Copy best practices, if need be. Take Germany, for instance. Their government has made an excellent job of subsidising renewable energy.’ Pernot: ‘We must move towards a culture where there is more leeway. But the government here seems to favour the stick over the carrot.’
Kemna: ‘You must create a good homeland for innovation. If you see what’s happening in California, you can hardly believe your eyes. There’s dynamism, with local government creating a climate where entrepreneurs who invest in energy-efficient products enjoy a competitive advantage. And that’s not even to mention all the oil dollars that are currently being pumped into innovation.’ Pernot: ‘It is a question of daring to think big, which is particularly important in the energy sector where large projects and longterm vision are the name of the game.’
ACTIVIST SHAREHOLDERS Kemna: ‘The way I see it, Dutch politicians should also have a much clearer vision about the future of the Dutch energy sector in Europe. What are their intentions regarding these companies? In the European context Dutch energy companies tend to fall between the minnows and the mammoths. Do you want to create a big company or only niche players?’ Nuon Sustainability magazine 2007 _ 59
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MARLIES PERNOT:
‘CEOS OF ENERGY COMPANIES MUST GO FOR THE INNOVATIVE CHARACTER OF THEIR COMPANY: WHAT ARE WE WILLING TO DO TO IMPROVE THE WORLD?’
ANGELIEN KEMNA
‘I THINK THAT THE SECTOR ACTUALLY NEEDS PRIVATE INVESTORS. THEY SEE THE ENORMOUS OPPORTUNITIES FOR INNOVATION THAT ARE THERE FOR THE TAKING.’
Pernot: ‘Yes, you would expect the government to have a clearer long-term vision for the sector. Particularly with all the current shareholdership uncertainties. We may be moving from a situation where the authorities have a strong grip on the companies to a situation where that grip is less strong. I can imagine that the government is concerned about this, because public shareholders are assumed to have more eye for the general public interest. Obviously there can be tensions there too, because there is not always a single public interest. Interests at a lower public level, such as a new swimming pool, may be at odds with supra-local public interests. But energy transition is one issue where you can justifiably say that there is a single overriding public interest, namely that we need to reinvent our entire energy supply. That, surely, is a strong argument in favour of public shareholdership. Kemna: ‘I disagree. I think that the sector actually needs private investors. They see
the enormous opportunities for innovation that are there for the taking. And they are more inclined to take risks and go for something new. That is precisely what this sector in transition needs. Now that the grids are being separated from the rest of the energy companies, these companies are very suitable for private ownership. That, for instance, is a different debate from the one about Schiphol, which is not a real company as long as it gets its land almost free.’ Pernot: ‘But the big question here of course is: in whose hands will the long-term interests of the energy sector be better off? The disadvantage of public shareholders is that they come from a political background, which can change every four years. And that’s what makes them unpredictable. But I’m in two minds on this. Because private shareholders, too, can be very impatient.’ Kemna: ‘You can overcome that problem by looking for shareholders with a long-term horizon, such as investment BVs of wealthy
families or pension funds.’ Pernot: ‘But public shareholders must also operate with an eye for the long term. If they provide the right frameworks and keep their distance from a visionary CEO, then a publicly run company can also stay on the right course. Ultimately I think that the man at the top is the decisive factor. And CEOs of energy companies must go for innovation: what are they willing to do to improve the world? And they must be supported by activist shareholders who ask probing critical questions.’ Kemna: ‘That is one thing that is absolutely clear: CEOs must take the lead and drive things forward. Because then things will happen from the inside. Sustainability is a question of overall strategy, it’s not a discipline for a division of sustainability managers all doing their own thing. I still hope to inspire my one-time boss, Michel Tilmant of ING, to not only put money into Formula I but also to make that branch of sport energy-efficient.’
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THREE ADVICES
LEADERSHIP
ADVICE #1
‘Forging a bond between different interests’ >> Johan Wempe, CSR specialist, lecturer in governance at Saxion Hogescholen and Chairman of the Green Gas Working Group (Energy Transition Taskforce)
‘Private companies are warming to their role as corporate citizens. But in recent years the reverse was happening at energy companies. The liberalisation of the energy market and the imminent privatisation of these companies forced them into a more commercial role. But customers still expect them to act like public utilities; and that will remain the case. Energy has such a huge impact on society that you cannot leave it to the market alone. Energy companies that refuse to go green will lose customers. In that light it’s a real shame that the grid companies are
being unbundled. After all, it’s precisely in the grids that sustainable innovation is essential. The advent of small-scale renewable generation means that the grid will be fed from thousands more sources. Unfortunately, until now the grids were always treated purely as capital goods. And after the unbundling operation, the grids will be seen even more through the lens of efficiency, making large-scale investments less likely. Fragmentation of activities usually spurs a frantic drive towards super-efficiency, with everyone focusing on their tiny part of
the puzzle – because that’s where they are accountable – and trying to offload the costs and risks elsewhere. There is a danger of two camps developing with the production and delivery companies on one side of the line and the grid companies on the other. The energy market needs leaders with a helicopter view of the entire chain and the will to make system breakthroughs. You must be able to forge a bond between all the various partial interests. Marine wind energy developers, for instance, will have to create common ground with
the shipping industry. Taking the energy sector forwards will also demand creativity in the form of new business models, which will require substantial investments. Because energy companies must start earning less from energy and more from services. These new business models will also call for new pacts with other sectors, such as the building industry.’ <<
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ADVICE #2
‘Mobilise young people and show your passion’ >> Viola Belksma (29), Young Leaders for Nature
‘One day, when I was still a young girl, I was sitting in the backseat of our car and rolled down the window to toss out my chewing gum. But my mother stopped me and said: “If a passing bird mistakes that for bread and swallows it, it might clog up its throat.” After that I never threw any litter out of the window again. Clearly, you can learn at an early age that your actions can harm the environment. But just droning on about the negative consequences of such behaviour has little effect in the long run. You can achieve much more by
mobilising people to take part in initiatives that have a positive impact on nature and the environment. That’s the right angle for approaching young managers. Why? Because young people are perfectly happy to put time into improving the world. But to mobilise them, you need to let them have a say in the solutions; sustainability must start at the bottom. After all, people tend to make that extra effort when they are following their own ideas. Akzo Nobel, for instance, is setting the right example with a CSR innovation competition for young
managers. And at Nuon I think the Solar Challenge is sending out an excellent signal. But what I still miss, on your website for instance, is a clearlyworded commitment that resonates with a passion for green. You say you’re working to be as sustainable as possible because fossil fuels are running low. But you should really be saying: this is our sustainability ambition and this is our timetable; not because resources are becoming scarce but simply because it is better for nature and the environment. That appeals much more to young people.’ <<
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LEADERSHIP
ADVICE #3
‘Integrating sustainability into the strategy’ >> Environment Minister Jacqueline Cramer
‘Sustainability is a mega-mission. Everyone needs to do their bit – in fact, more than just a bit. The trick is to get as many people as possible on board. That’s why the government climate policy is casting its net wide, with me and my fellow ministers mobilising people in each individual sector. I’m happy to say that the sense of urgency is growing in the various sectors, but there are still major differences. These are not that hard to explain, incidentally. Sectors that are under strong public pressure, 63 _ Nuon like the energy industry, are Sustainability magazine 2007
very willing to take things forward. They’re really up for it. The same goes for sectors that are suffering more than others from the high energy prices, such as the horticultural sector. You also still see large differences within the sectors. A lot depends on the leadership at the top: what are the CEOs saying and doing? Twenty years ago I started to persuade top executives that they needed to integrate sustainability into their corporate philosophy. Some are doing that now, others still aren’t. Someone
like Nuon’s Ludo van Halderen, for instance, has bought into sustainability. That makes a big difference. Those who are still refusing to integrate sustainability have had their day. Because I firmly believe that a widespread social movement is now underway. All the signs are that wait-and-see is no longer an option. The question is no longer whether we are going to go the extra mile, but how.’ <<
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â&#x20AC;&#x2DC;But I felt that instead of marginalising sustainability in a separate division, we should see it as a business opportunity for the entire companyâ&#x20AC;&#x2122;
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LEADERSHIP
‘Looking back with pride, looking forward with confidence’ Looking back, Ludo van Halderen is proud of his employees’ commitment and engagement. That, he believes, is the reason Nuon is playing a leading role in the sustainability drive. The board chairman will be leaving the company soon but he has great confidence in the people who will be mapping out the course after his departure. ‘Looking at how we have been in the forefront of developments in the past year, I know we have several good leaders to take the company forward.’ So it is up to Van Halderen’s successors to achieve these ambitious sustainability targets. He will be handing over the helm of a company that is in great financial health, but he himself emphasises the strength and resilience of the human resources.
>> Last year, when the company’s energy peers jokingly spoke of ‘the ayatollahs of Nuon’, Ludo van Halderen took it as a badge of honour. ‘We were given that nickname within the industry organisation EnergieNed because of our proactive and ambitious efforts to make the Netherlands more energy-efficient,’ says the board chairman. ‘Our plea for CO2 capture, our efforts to encourage energy saving at the customer, the letter of intent for the underground storage of CO2 in Groningen: last year Nuon assumed a leading role and I see that above all in the employees. They are the standard bearers of this company’s engagement. The outside world is also taking notice: Nuon is increasingly perceived as the market leader in sustainability.’ But anyone who sticks their head above the parapet is an easy target in the Netherlands. Last year Greenpeace tarred Nuon’s planned multi-fuel power station at Eemshaven with the same brush as the much-dirtier coal-fired power stations. ‘That was a low for me,’ says Van Halderen. ‘A market leader is always taken as the yardstick. I’m not afraid of that. And as board chairman I’m happy to debate the choices we’ve made at any time or any place. But it takes two to tango. Dismissing us with one-liners as a member of the coal-burning fraternity is simply not justified.’ It totally disregards the bold investments that Nuon is making both in renewable energy and in innovative methods to mitigate the environmental impact of fossil energy. Clear-cut commitments Van Halderen thinks that Nuon must step up its pursuit of Trias Energetica, the three-pronged approach of energy saving, renewability and cleaner fossil fuel usage. ‘We still need those fossil fuels to guarantee the security of supply. That, too, is one of Nuon’s responsibilities.’ And the energy company is not alone
in embracing Trias Energetica. In fact, in 2007 the government formulated a brand-new climate policy that echoed these same principles. This policy maps out ambitious renewability and energy-saving targets, whilst also introducing new subsidies for renewable energy and CO2 capture. Van Halderen sees Nuon as a partner in the government’s climate efforts, but dearly also wants a more consistent policy that is not changed every year. ‘It looks as if this government, with its clear and ambitious climate policy, is capable of that. This is why I say: we must make clear-cut commitments now for the coming ten to fifteen years. Let’s do it while sustainability is still high on the social agenda – and before some new issue captures the nation’s attention.’ Do you think the government takes you seriously as a partner? ‘Yes, I do, but it all depends on your own contribution. You’ve got to be proactive. You are the one taking the entrepreneurial risk. If, for instance, you want to build a large marine wind farm, you must analyse the snags and work out the solutions yourself.’ What do you expect from the current government? ‘The minister must set out uniform rules on key issues like CO2 emissions, both in a Dutch and European context. Once we know where we stand, we are prepared to invest in carbon capture. Targets must be translated into feasible policies. At the moment we are heading in the right direction. The covenant for residential energy saving is one example that springs to mind.’ Are the Dutch climate objectives realistic? ‘Only if we manage to engage everyone in the Netherlands. If we are going to invest in renewNuon Sustainability magazine 2007 _ 65
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ability, we need to get the public on board. I am convinced that the objectives can only be achieved if everyone in the Netherlands wakes up to the amount of energy they use. The debate about sustainability and energy saving is still largely a boardroom topic. We need to make it a household topic! That’s where the decisions are made. People need to realise that they too can contribute towards renewability and energy saving. And it’s our job to help them do that, for instance by offering “buy now pay later” deals for low-energy products and marketing new sustainable products like solar foil and high-efficiency boilers.’ Last year you said that a merger with a major player like Essent would be a boost for sustainability. So the merger call-off must feel like a missed opportunity… ‘As a large merged energy company we could have played a leading role in making the Netherlands a greener and cleaner place. The merger process also presented a wonderful opportunity for formulating crystal-clear objectives and visions. That opportunity has passed. The good news is that the future is still at the top of our minds, only for a very different reason. We are required to unbundle Nuon into a grid company and a production and delivery company. So we are basically in the process of setting up two new companies. And the management is seizing this opportunity to redefine our position on sustainability.’
Have the unbundling debate and failed merger pushed sustainability to the background? ‘A great deal of time went into the unbundling and merger processes, which automatically meant less attention for sustainability. We continued to think about it, but not as a top priority. I see that in our objectives, which are not defined sharply enough. How can we help customers save energy? What are our alternatives for fossil fuels? How much energy will customers be using twenty years from now? I expect to see us formulating concrete objectives in 2008.’ Looking back, what are you most proud of? ‘I am proud that more people are enthusiastic about what’s happening in the energy world; I’m also proud of the social engagement that this company has developed in the past years. And I’m extremely proud of the people who do the work on the ground. The employees are really a mainstay of sustainability at Nuon.’ How do you see your own role in Nuon’s sustainability drive? ‘That’s not really for me to say. But if I had to mention something: a few years ago I took the difficult decision to disband the Sustainability Division. That division had been set up with noble motives, namely to do something extra outside our ordinary business operations. And we succeeded in that aim. But I felt that instead of marginalising sustainability in a separate division, we should see it as a business opportunity for the company as a whole. Everyone had to be fully aware of the need
for radical change. But I had no way of telling whether that would actually happen. Looking back, I see that everything has worked out very well. Five years ago, sustainability was an extra, now it is an essential.’
What type of leaders does Nuon need in the future? ‘First of all, people who can handle risks and uncertainties. I still clearly remember speaking to two Arab oil sheiks in 1970. They had come to tell us that the oil price was going to be raised by 50 per cent, from 1 dollar per barrel to 1.50. At the time, that was enough to upset your whole world view! My point is that this sector has always been confronted with uncertainties. We need leaders with the knowledge and courage to respond to this. At the same time, we need people who have the courage to make decisions based on a long-term vision and good financial-economic principles. This sometimes means sticking out your neck. Looking at how we have been driving change forwards in the past year, I simply know that we have those leaders within Nuon.’ What do you see as an important task for your successor? ‘Due to the unbundling debate, amongst other things, the Dutch energy sector has become too inward-looking; its thinking is too small in scope. We’re still talking about a national champion, but in the wider world they’re talking about a European champion. The challenge for my successor is to upscale Nuon to a European context. How is up to him.’ <<
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Column
LEADERSHIP
Desire to change
W
e used to think that fear was a great catalyst of change. We would say: ‘If you don’t sack X number of people, the entire company will go to the wall.’ Or: ‘If we fail to carry out this reorganisation now, the competition will crush us.’ So popular was this approach that we even had a term for it: pain management. Many people still think that scaremongering is the only way to get people moving. And there is definitely a grain of truth in this. As long as the reality of the situation remains unacknowledged, we tend to do nothing or the wrong things. If we fail to see what we are doing to our planet, the chances of turning the tide are slim. Many ‘inconvenient truths’ must become visible before we understand how serious things are. But once we have started moving, fear need not continue to be the dominant emotion. Then we can start changing and improving from a different perspective, the perspective of desire. If you want to stop smoking, you first have to see how cigarettes harm your lungs. But then it sinks in that giving up smoking has great advantages: you no longer need to go out for cigarettes, you don’t have dirty ashtrays in the house, you are no longer embarrassed when you kiss somebody and the dentist is pleased. Isn’t it wonderful to stop smoking? Red and green bigots Many companies are gradually starting to understand the principle of change from a positive angle. Initially terms such as ‘society’ and the ‘environment’ were annoying inventions of red and green bigots: enemies, who could scare you. Slowly but surely, we have come round to seeing that caring for the environment can have countless advantages. It is an engine of innovation. It can cut costs, or at least enhance quality. It improves our reputation among consumers. It means that our employees can be proud, rather
than ashamed, of the company they work for. All these positives make it instantly clear that a committed focus on the environment, society and the future almost always offers strategic benefits. But the really successful companies know that there is yet another dimension to the desire for a better world. Research shows that value-driven organisations often do better – including financially – than companies that are driven purely by rational and strategic considerations. They are driven by values that make them attractive to customers, employees, shareholders and suppliers. These values are not inventions of the corporate communication department. If genuine, they are in people’s hearts and, hence, in the company’s heart too. Angry Together with my colleague Jaap Boonstra, I interviewed Ludo van Halderen, the departing CEO, as part of a leadership programme. When I asked him why sustainability mattered to him, his initial reply sounded a lot like the message that’s posted on the website. But then I asked Van Halderen why sustainability mattered to him personally. And I kept asking and probing until, despairingly and almost angrily, he exclaimed: ‘Do you still not get it? We have a responsibility to our children and grandchildren, don’t we?’ That didn’t come from the corporate communication department but straight from the heart. And the fact that it also happens to make strategic sense is a bonus. I hope his successors let their hearts speak too.
‘But once we have started moving, fear need not continue to be the dominant emotion. Then we can start changing and improving from a different perspective, the perspective of desire.’
Wessel Ganzevoort is a top consultant and professor of organisational dynamics. <<
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TRUE OR FALSE? p. 6 | TOGETHER WITH THE CUSTOMER p. 14 | MOVEMENT p. 24 | HOW GREEN IS NUON p. 42 | LEADERSHIP p. 56
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