Insight Issue 5 Sept 2012
-
Upload
ahmad-azaizeh -
Category
Documents
-
view
541 -
download
7
description
Transcript of Insight Issue 5 Sept 2012
Global implications of urbanisation
Inside•Energyefficientships•Larsen&Toubro’smission•Watersupplyissues•Storingrenewableenergy•Railassetmaintenance•Asiacarbontrading•FocusonSingapore•WorldOceanCouncil
insightTheLloyd’sRegisterGroupmagazine Issue 5 September2012
Inside Issue 5:Contents in full:2 Urbanisation3 Welcometothecity9 Amissiontocreatevalue:interviews
withLarsen&Toubro’sseniormanagement,includingChairman,AnilManibhaiNaik
12 Undergroundmovement:howcantheurbanmetromeasureupinthe21stcentury?
14Singapore:anurbanisationsuccessstory16Globalfoodchallenge19Water:thenewcarbon?22Fromcompliancetoperformance:
ALcontrolLaboratories25Averymodernfleet:PolysHajioannou,
CEOofSafeBulkers27Shippingfocusedonmoreefficientfleets28Bottlingnature’sforces:howcanwe
storerenewableenergy30Thereturnoftheblackrock:willcoal
fuelthefuture?32 Cruise–forgingahead:ChristineDuffy,
PresidentandCEOofCruiseLinesInternationalAssociation
34Stewardsoftheseas:PaulHolthus,WorldOceanCouncil
36Valuegenerator:ProfessorLeovanDongenofNedTrainandUniversityofTwente
39Businesssurvival:thevalueofindependentthird-partycertification
42ThegrowthofcarbontradingschemesinAsia
2UrbanisationThecityisthefuture–itbringsbothnewpossibilitiesandchallengesfordevelopment
9Mission to create valueLarsen&Toubro’sseniormanagementdescribethecompany’stransformationandthechallengesofurbanisation
22Compliance to performanceALcontrolLaboratoriesmakestheconnectionbetweenstrategicgrowthandcertifiedmanagementsystems
25A very modern fleetPolysHajioannou,CEOofSafeBulkers,talksaboutthechallengesofmodernshipping
36Value generatorProfessorLeovanDongenofNedTrainwelcomesrecognitionoftheimportanceofprofessionalassetmaintenance
Lloyd’s Registerworkswithbusinessesandorganisationsaroundtheworldtoenhancethesafetyoflifeandpropertyatsea,onlandandintheair.Wehelpourclientsfacetoday’schallengesandplanfortomorrowandbeyond.
Insightisourmagazinefordecision-makersworkinginthemarine,energyandtransportationsectors.CareistakentoensurethattheinformationinInsightisaccurateanduptodate.However,weacceptnoresponsibilityforinaccuraciesinorchangestosuchinformation.TheviewsexpresseddonotnecessarilyrepresentthepositionoftheLloyd’sRegisterGroup.
Copyright©Lloyd’sRegisterGroupLimited2012Allrightsreserved.
ThemagazineisproducedbyGroupCommunications,designedbyC o n r a n D e s i g n g r o u p
andprintedbyPureprint.
Editor:KathyDavis
[email protected]+44(0)2074232654www.lr.org
Thestatisticsabouturbanisation,populationgrowth,thenumberofpeoplemovingtowardscentresofpopulationneartheseaandtheshortageoftraditionalhydrocarbonresourcesareallwellknownandofincreasingconcernforgovernments,urbanplannersandsocietyasawhole.Globalisationisbothanopportunityandathreatinpreparingourselvesfortheinevitableconsequencesthesechangeswillbring.Itcontinuestoaddpressuretoglobalshippingandinfrastructure.
Whileonedoorcloses,anotheropens.ThedeclineinnuclearpowerconfidenceasaresultofFukushimacoincideswiththeadventofshalegasasamainstreamresourcethatcouldchangethesocio-politicallandscapeoftheworld.Increasingly,globalthinkersareconvincedthatwatershortages,ortobemoreprecise,distribution,isbecomingmoreofathreattosustainabilitythanenergyresources.
Allthisishappeningwithinthecontextofanincreasinglyunstablefinancialworldbringingrecessiontomanycountriesandregions.
Thereislessmoneyinthehandsofgovernmentandyetanincreasinglyageingpopulationtosupportintermsofhousing,healthandadditionalleisuretime.Certainindustries,suchasthecruiseindustry,arebenefitingfromthechangeindemographics.Thesameistruefortherailindustry;mainline,subwaysandmetrosmaintainaphenomenalopportunityassociety’sdemandforcheaperandmoreeffectivepublictransportincreases.
ThiscopyofInsightlooksattheseissuesandaimstoprovokethoughtinourreadersastothelikelyimpact,thesolutionsandtheopportunitiesandthreatsfortheirownbusiness.
Lloyd’sRegisterisproudtobeinvolvedinallthesectorsthatneedtobeefficientforsocietytobesustainablein2030andbeyond.Ourstraplineof‘LifeMatters’saysitall.Ihopeyouenjoyourlatestissueandifyouhavecommentsorwouldliketocontributetofutureeditionsthenpleasekeepintouch.
Welcome To our latest issue of Insight.Richard Sadler, ChiefExecutive
Insight September20121
Urbanisation Peoplehavebeenmovingfromruraltourbansettlementsforcenturiesbutthepaceofthatmovementhasincreasedrapidlyinthelast60years.Nowwehave3.6billionurbandwellers(overhalfoftheworld’spopulation)withestimatesofthisreaching70%by2050,accordingtoUNfigures.
InLatinAmericaalreadyeightoutof10peopleliveincities,settoriseto90%by2050.Otherdevelopingregions,includingAfricaandAsia,arestillmostlyruraltoday,butwillhavemorepeoplelivinginurbanratherthanruralareasby2050.
Alongwithindustrialisationandthegrowthofmarkets,urbanisationisoneofthemainforcespropellingeconomicgrowth,aswitnessedinChinaandSingapore,anurbanisationsuccessstorydescribedonpage14.Urbanisationhasbroughtadvantagestonationaleconomiesandopportunitiestoimprovepeople’swell-being,forpovertyreductionandforthepromotionofsustainabledevelopment,butitalsobringsseriouschallenges.
Planningiskey,aviewendorsedbyIndia’sLarsen&Toubroseniorexecutivesonpage9.Citiesneedurbanjobs,housing,energyandinfrastructuretomitigateurbanpoverty,expansionofslums,adeteriorationoftheurbanenvironmentandnaturaldisaster.InAugust2010,a60-miletrafficjamstoppedahighwayoutsideBeijingfor11days.Anefficientmetrosystem,asdiscussedonpage12,isessential.
Andcitiesputstressonfoodandwatersupplies.Onpage16welookattheissueoffoodsecurityandthelinkbetweenfoodproductiontoclimatechangeandonpage19atthepressuresontheglobe’swaterresourcesandthechallengetobusinessofensuringasupplytomeetfutureneeds.
Thecityisthefuture–itbringsbothnewpossibilitiesandchallengesfordevelopment.
2 September2012Insight
F orthefirst-timevisitor,thequickestwaytogetthemeasureofTokyoistotaketheexpressbusortraintoShinjukustation,
thecity’smaininterchange.TotheuninitiatedShinjukuisutterlybewildering:everydaysome3.5millioncommuters–asmanyastheentireLondonUndergroundwillcarryoverthesameperiod–calmlypasstoandfromthedozendifferentraillinesthatservethestation.Ithasmorethan200exits.
Theworld’sbusieststationattheheartofitslargestcity.Itshouldbechaos,butitworks:amicrocosmofTokyoitself.
CitiessuchasTokyoareourdestiny:crowded,frenetic,complex.Some38millionpeoplelivehere,anumberthatwillonlyincrease,asindeedwillthepopulationsofeveryothertownandcityontheplanet.ButTokyohasthegoodfortuneofhavingthenecessaryinfrastructureandthemindsetthatwillenableittoabsorbincreasednumbersandcontinuetofunction.Noteverycityhasthatluxury.
Welcome to
Andrew Foulkes looks at the rise of the city and making the most of its opportunities.
Insight September20123
Altogether nowIn2008humanitypassedasignificantmilestone.Forthefirsttimeeverwebecameapredominantlyurbanspecies;theUNreportsthat52%ofusnowliveintownsandcities.Ourattractiontothebrightlightsisnottobediscouraged.
Citiesarewhereweareatourmostcreative;placesofexchangethatconnectcontinents,culturesandeconomies.Withtheadvantageofscaleandproximitytheyareabletoprovideeducation,healthcareandemploymenttomillions.
Nowhereistheadvancementofurbanisationmoreevidentthanintheproliferationofthe‘megacities’,ataglooselyattachedtoanycityof10millionresidentsormore.Todaymorethan20settlementsfallwithinthiscategory,agroupthathasgrownfivefoldoverthepastthreedecadesandwilldoubleagainoverthenext20years.TheywillcertainlybeamorefrequentfeatureofsouthandeastAsia,whereanumberofcities,suchasChengduinsouth-westChina,willhitthe20millionmarkbeforethisdecadeisout.
Nowhere has the transition to an urban society been as rapid as in China. In 1980 fewer than 20% of its population lived in the cities, today more than half – around 690 million (twice the entire US population) – are classed as urban. Thespeedofthistransformationisunmatchedinhistorybutcomeswithanequallyunparalleledrangeofenvironmentalandsocialproblems.Asaresult,Chinaisoneofanumberofcountriesexploringtheconceptoftheeco-city.Onlandthatwasformerlynon-arablesaltflatsandsmallfishingvillagesjustoutsidetheportofTianjin,around100milessouth-westofBeijing,theconstructionoftheworld’slargestlow-carbonsustainablecommunityisunderway,withsupportfromSingapore,amodelforurbandevelopment(seepage14).
Experimental‘eco’townsandcitieshavetheirdetractorswhoremainscepticalaboutthefeasibilityofentirecommunities
adoptinglong-termsustainablebehaviours,letalonehowtheconceptscouldtransfertoourolder,constrainedcities.Intruth,manyoftheseshowcasetownsdolosetheirinitialfocusasday-to-daylivinggraduallytakesagrip,butsome,suchasPoundburyinEnglandorMasdarCityintheUAEcontinuetofulfiltheirbrief.
TianjinEco-cityisonadifferentscalealtogether.Withinadecade,itisexpectedtobehometo350,000people.Around70%ofdomesticrefusewillbesentforrecycling,renewablesourceswillprovideuptoafifthofitsenergyneeds,whileahermeticallysealedpneumaticmunicipalwastesystemwillcuttheamountofrefuseremovedbytrucksbyasmuchas90%.
Carswillnotbebannedbutlow-carbontransportiscentraltothevision,withresidentialareasclusteredalongalandscapedcentralgreenthoroughfarethroughwhichrunsatramserviceandcyclelanes.
Acityabletostartwithacleanslatehardlyoffersarealistictemplatefortownsandcitiestoreplicate,butthescaleoftheplansinTianjindoessetitapart.Ifitsdeveloperscandemonstratethatcommunitiesofthissize–anditisexpectedtobehalfthesizeofManhattan–canfunctionperfectlywellonlessenergy,itwillhopefullyofferinspirationforfutureneighbourhoodsandpresentsomelessonsforcrowded,car-chokedcitiestheworldover.
Mega-eco-city: ChInA
To a bitter end? Muchofthefuturegrowthintheurbanpopulationwillbeoutsidethemegacitieswiththevastmajorityofustobefoundinsettlementsoffewerthan500,000people.Andwhatconcernseconomists,policymakersandstrategiststheworldoveristhattoomanyofoururbancentresarenotwherethenecessaryresourcesare.Thisleadsmanytospeculateontheconsequencesofsomanyofuslivinganurbanexistence.
Withtheirvoraciousappetitesforfossilfuels–andasmass-producersofasphalt,airpollutionandgreenhousegases–citiesarepossiblyalreadytheplanet’sprimarycauseofclimatechange.Paradoxically,manyofourcitieshavethemosttolosefromclimatechange:threequartersofoururbansettlementsarewithincoastalareasatriskfromrisesinthesealevel.
Butwhilekeepingcarbonemissionsundercontrolshouldtoptheto-dolist,formanycityleadersthereisalsothedutytosupportlocaleconomiesandseeliving
standardsrise.Itisoneoftheunwritten‘contracts’betweenthecityanditsresidentsthatitcanbeanexitrouteforthosewantingtoescapepovertyandseekoutabetterlife.
Andthisiswherethenumbersstarttooverwhelm:alreadymorethanabillionpeopleliveinmakeshifthomes–urbanslums–lackinginbasicamenities.Notallinhabitantswillbepoor,manywillhavework,butitisoftenthecity’songoingfailuretoprovidesufficientaccommodation,transportandresourcesthatiskeepingthemthere.Anditiswithintheseenvironments,oftennestledamongaffluentneighbourhoods,wherepovertyconcentratesandwheresocietycanbeatitsmostdesperateanddangerous.
Thisleadspessimiststoenvisageapointbeyondwhichacitycannotsupportitspeople:aninexorabledrifttowardsasocietyallbutcollapsingunderthepressureofitsungovernablesprawlswithpeoplelefttocompeteoverincreasinglyscarceresources.
4 September2012Insight
Nowhere is the advancement of urbanisation more evident than in the proliferation of the ‘megacities’, a tag loosely attached to any city of 10 million residents or more
Insight September20125
With intense competition for air supremacy from Frankfurt, Amsterdam, and even Doha, many of London’s business and civic leaders genuinely fear the city’s decline as an air transport hub. HemmedinbywestLondon’ssuburbs,thereisnoroomforHeathrowairporttoaccommodateanymoreflights.Norcanitfindawaytoexpandwithinitsexistingfootprintwithoutrunningintoexhaustivedisputeswithitsneighboursorfallingfoulofitsowncapsoncarbonemissions,primarilyfromtheadditionalroadtrafficmoreflightswouldcreate.
MomentumisbuildingagainaroundproposalsforanentirelynewairportintheThamesEstuary.Theattractionsareobvious:flightpathsovertheseameanfewerhouseholdsaffectedbynoise;fournewrunwaysfitfortheneweraofthesuper-jumbo;
and60%ofpassengersexpectedtoarrivebypublictransportthanks,itisclaimed,tonewhigh-speedraillinks.
Thelocationalsohasaringofsenseaboutit.By2020Londonwillbeexpectedtoabsorbanextramillionresidents,upfromeightmillionin2011.Theareabetweentheproposedairportandtheedgesofthecity,theThamesGateway,haslongbeenmarkeddownforalargeproportionofthenewhousingrequired.Plus,amajornewemployerintheregionwillbewelcomed.
Ifallofthatisnotboldenough,howaboutthis:theproposalsrequirethatHeathrowairportisclosed.EvenacitylikeLondonrequiresonlyoneairporthub,andmuchofthefundingwouldcomefromwhatHeathrowwouldleavebehind:Europe’slargesturbanlandbankallowingforanentirelynewwestLondonneighbourhoodtobebuilt.
Thebenefitsareundeniable,butthereisalongwaytogoyet.Britain’splanningsystemisnotgoodatdigestingbiginfrastructure;anewrunwaytoincreaseHeathrow’scurrentcapacitywasbackedin2002but10yearsofplanningdisputeslateritremainsshelved.Itwillalsotakeaboldsetofpoliticianstomakethecall.Heathrowdirectlyorindirectlysupportsover100,000jobsinthelocalarea.
ButLondonwillhavetodecidesoon.Surroundedasitisby'greenbelt'landwithstrictplanningcontrolsthathavekeptthecity’sfootprintincheck,thenewairportoffersachancetopunchthroughandspreadtowardstheThamesEstuary.
EitherthatorLondonerswillhavetosqueezetogetherevenmore.
Development dilemma: London
6 September2012Insight
Cities have more to offerManyeconomistssuggestthat,thoughunpalatable,thepresenceofpovertywithinthecity–alongwithmakeshiftcommunities,blackmarketsandbackstreetfactories–isalsoasignofasuccessfulcity,onethatstillofferssomething.Peoplechoosetoremainbecause,whatevertheircircumstances,thecitystillgivestheirbestchanceofabetterlife.
Andgovernedproperly,thecitywillprovideitsownsalvation.Asabreedinggroundfornewindustries,technologiesandskills,itcannotonlycallupontheresourcesitneedstoaddressitsfuturechallenges,theycanalsoredefinewhattheywillbe.Thekeyisnotjustshort-termintervention–ataskforcehere,ashoppingcentrethere–butalsoaboutallowingcitiestobebetterpositionedtolookafterthemselves.
Somecitiesgeneratemoreoutputthanentirenationstatesyetlacktheauthoritytodecidetheirownbudgetsorplanninglaws.FewofthegiantAsiancities,forexample,havetheoptiontoraisetaxesorgeneraterevenuefromutilitiesortransportsystems.Planningregulations,oftenenshrinedinnationallaws,continuetorestricttheirabilitytogrow,aproblemLondonfrequentlyexperiences(seeopposite).Thetimecouldbeapproachingtogivetheworld’sleadingcitiesmoreautonomyandgreaterpowerstomanagetheirownaffairs.
Successfuleconomiesalsoneedacontinuoussupplyofskilledlabourandcapableentrepreneurs.Communitiesthatinvestineducationtendtothrive.InhisbookTriumph of the City,EdwardGlaeser,aprofessoratHarvardUniversity,reportsthatforevery10%increaseinthe
proportionofthepopulationwithuniversitydegrees,percapitagrossproductrisesby22%.Moreeducatedpeoplearethenattractedtothosecommunitiesbecausetheywanttoliveandtradewiththosemorelikethemselves,whichinturnnurturesnewenterprise.
Anditisaskilledandknowledgeableworkforcewhichprovidesaplatformtobuildmoreefficientsocieties.Thisstarts,forexample,byfindingwaystoanalyserealtimedataabouttransport,energyandresourceusageandfeeditbackintothesystemtohelpmanagelimitedresources,butitextendsintoallaspectsofcitylife,fromextractingenergyfromwastetocost-effectivemodularconstructiontechniques(buildoffsite,assembleon)oftransportsystems.
Global problems locally tackledStrongergovernance,investmentineducation,technicalinnovation–itwilltakeamixofallthree,andplentymorebesides,tohelpcitiessteerthemselvesoutoftrouble.Butalways,therecipeshouldhavealocalflavour.
AreportpublishedlastyearbytheUK’sInstitutionofMechanicalEngineerssetoutanumberofproposalsthatcanhelpcitiesabsorbtheextrapopulation.Itfoundthatwhiletherewerefewtechnicalbarrierspreventingtheirwideradoption,solutionswerefrequentlyliftedfromonelocationandtransplantedtothenextwithoutfullconsultationorwithouttakingintoaccountlocalspecificneeds,culturesandevengeography.Narrow,‘off-the-shelf’solutionshaveatendencytoreinventproblems:theslumclearancesthatmerelybreakupcommunities,under-utilisedtramsystemsthatdraincityfinances.
Born to surviveThecityhasalwaysfacedscenariosofimpendingapocalypse.
Intheearly1900sLondon’sstreetwerehometoestimated10,000cabspoweredbyhorse.ThisledplannersandengineerstofretoverwhetherLondonandcitieslikeit,suchasNewYork,wouldonedaysoonhavetobeabandonedamidstreetsburiedunderhorsemanure.Yetthecitysawoffthatparticularcrisisandmanyotherssince.
Therealchallengeahead,then,isnottofocusontheworstofthepredictions,butinsteadlooktoextractthemanyopportunitiesthatagrowingcitywillcreate.
Andrew FoulkesisLloyd’sRegister’sTransportationCommunicationsManager.Eandrew.foulkes@lr.orgFollow me@andrewfoulkes_LR
Stronger governance, investment in education, technical innovation – it will take a mix of all three, and plenty more besides, to help cities steer themselves out of trouble.
Facts and figures
seeoverleafp8
Insight September20127
6.3bn people willliveinurbanareasby2050
1bn in1804
3bn in1959
4bn in1974
5bn in1987
6bn in1998
7bn in2011
8bn in2025
2bn in1927
Megacities
World population
over 6%ofhumanswhohaveever
livedarealivetoday
Undercurrentfertilityrates,theworld’spopulationwillpass25bnbeforetheendofthecentury
Stoodshoulder-to-shoulder,
Los Angeles (1,300squarekilometres)couldaccommodatethe
world’spopulation
Asat2011,therewere
23 citiesintheworldgenerallyregarded
asmegacities
52%oftheworld’s
populationliveincities<500,000
Urbanisation
1bn people liveinmakeshift
homesinurbanareas
oftheglobalpopulationwillbeinurban
settlementsby2100
75%
75% of urban settlements are at risk from a rise in sea level
8 September2012Insight
Megacitiesaccountforaround
4% oftheworld’spopulation
A MISSIon To CREATE VALUE
Larsen & Toubro’s Chairman, Anil Manibhai naik and other L&T senior executives talk to Richard Cook
about the company’s transformation to become a global giant and the challenges of urbanisation.
Insight September20129
It is monsoon season in Mumbai but Anil Manibhai naik, the larger-than-life Chairman of Larsen & Toubro, is not letting the torrential rain outside – or the noise of traffic as the afternoon rush hour begins to swell on the streets below – disturb his flow.“Mymissionhasbeentocreatevalue”saysNaik.“IlaunchedL&T’stransformationaljourneyin1999,whenIbecameCEOandManagingDirector…Ilearnedfrommyfatherthatyougetrespectwhenyouarevalued…Wehavetocreatevalueineverythingwedo.WewillnotstartabusinessthatisnotcentrallyfocusedonbuildingIndia.Therearequickwinsoutthere,plentyoflowhangingfruitbutwewillnotpursuethem.Wewillneverdeviatefromourmissionofcreatingvalue.”
TosayNaikisremarkableisunderstatement.Hewenttoamud-floorvillageschooland,viaasuccessionofscholarships,madesurehegothimselfaneliteeducation.HejoinedL&Tin1965asajuniorengineerintheboilershopandhasbeenwiththecompanyeversince.“ItislikelyIwillreach50yearswithL&TbeforeIfinish”hesays,matter-of-factly.
Naikisopenlydevotedtothecompanyhehasbuiltintoaglobalgiantandisaself-confessedworkaholicwho,formanyyears,workedsevendaysaweek.TodayL&TturnoverisjustunderUS$13billionayearanditemploysaround50,000peoplewhomostlyworkinkeysectorsofIndia’seconomy;construction,power,heavyengineering,shipbuilding,financeandIT.L&TwasinvolvedintheconstructionofIndia’sfirstnuclearsubmarine,isanintegralpartofthecountry’snuclearpowersectorandworksverycloselywithIndia’saerospaceindustry.
Tackling the challengesAttheageof70,Naikfeelshisworkisfarfromfinished.“IamalsonowtheChairmanoftheIndianInstituteofManagement,Ahmedabad.It’sthenumberonemanagementschoolofIndia.AndthereIhaveseenhowhardlyanyonejoinsmanufacturing,heavyindustryorinfrastructure.It’sbanking,financialservices,businessstrategy,brandingandmarketingorIT.”
It’ssomethingthatMadhukarVinayakKotwal,L&TDirector&President(HeavyEngineering),readilyrecognises.“InIndiawecannowproduceanythingbutproductivityisjustonething.Tocompetewiththebestintheworld,wemustproduceasefficientlyasthebestinworld…Thebiggestchallengesareurbanisationofcourse,andmanaginghealth,butit’salsoaroundeducationandemployment.Majorchangesareneededinthewaywemanageourpolicieshere.”
ChairmanNaikcontinueswiththetheme.“ThebraindrainfromIndiaisenormous.Sixoutoftengraduatesleave.Onlyoneandahalfcometomanufacturing.Butwhenyoutalkaboutheavyindustryorinfrastructure,it’shalfoutoften.Thisisworkcrucialtoourcountryandwhoisgoingtodoit?Ithastobetackledsowehavestartedaprogrammethatisdoingexactlythat.Anotherthingthatmustbetackledisthepovertyhere.Indianeedssomuchsocialwork.”Naikscrewshisface,inamixofangeranddetermination.”Actuallytheskyisthelimit…andwearetacklingit.”
Modern urban storyThepovertyNaikspeaksofcanbeseenprettymuchalloverMumbaiwhereL&T’straditionalhomehasbeensince1948,inthenorth-easternfringesofthecityatthemanufacturingcomplexofPowai.ThecorporateofficewhereNaikisspeakingisinthedistrictofAndheri,alsointhenorthernsuburbs.Anareaofafewsquarekilometres,hometoanastonishingfourmillionpeople,AndheriisamicrocosmofIndia’smoderndayurbanstory.Acenturyago,itwasafishingandfarmingvillage.Todayitisanincongruousmixofgleamingofficesandmalls,ancienttemplesandrowuponrowofapartmentblocks.And,morethananything,Andheriisforabout20hoursadayanincrediblemassofhumanityonthemove–incars,buses,mopeds,trucks,cabsandthree-wheelertaxis.PeopledonottalkdistanceinMumbaitheytalktime–insteadofthreekilometrestheysay45minutes(andinrushhourinAndheri,threekilometresin45minutesmightbeoptimistic).
“...the sky is the limit… and we are tackling it”
AnilManibhaiNaik
AnilManibhaiNaik KrishnamurthiVenkataramanan MadhukarVinayakKotwal AnilThapliyal
10 September2012Insight
Bisectingthesuburbistheconstructionworksofanoverheadmetrolinethatwilllinktheinternationalanddomesticairports–bothinAndheri–withthecentreoftownandwill,intheory,alleviatethisdailytrafficchaos.Fornowtheworks’concrete,plantandtrucksjustaddtothedailytrafficproblems.Howeverthishigh,ever-expandingconcretestructure,slowlysnakingitswayacrossthesuburbdoesprovidetemporaryshelterfromthedailydownpoursforthoseforcedtoliveonthestreetsuntiltheygetonthefirstrungoftheurbanladder.
Planning essentialWhileL&T’sexpansivecorporatesocialresponsibilityprogrammesthatNaiktalksaboutwithsuchpassionandconvictionareworkingacrossIndia’scities,L&TisalsoplayingaveryactiveroleinhelpingmodernIndiaimproveitsinfrastructure.
“KeytotheL&Tbrandisthenotionofnationbuilding,”saysKrishnamurthiVenkataramanan,L&T’sMD&CEO.“OneofthebigchallengesthatIndiaisfacingisbasicallythesamechallengethathasbeenseenbyallcountriesthathavemovedfromanagriculturaltoanindustrialeconomy,aslargenumbersofpeoplemovefromthecountrysidetourbancentres.Thechallengeishowtogrownewmoderncities.Thisreallyrequiresplanning.Wearenowseeingsecondlevelcitiesthathavebeendevelopedinaplannedenvironment.ChandigarhisagoodexampleasarethenewurbandevelopmentslikeGurgaonthathavegrownaroundDelhi.ThesehaverequiredmoreimaginationintermsoftheinfrastructurethatconnectsthemandL&Tisplayingaprominentroleinmanyareashere.”
VenkataramanancitesL&T’snewspecialeconomiczoneinChennaithatintegratesacontainerport,ashipyard,andanoffshoreyardbuiltalongsideeachotherinthesamesprawlingpurpose-builtcoastalcomplex.
AnilThapliyal,ChiefExecutive,L&TShipbuildingsaysL&TisusingthisChennaifacilitytoengagethelargestclientsintheshippingworld.“Everythingcanbedoneherebecausewearecommittedtousingtheabsolutebest,”saysThapliyal.“Thereisastate-of-the-artcontainerport,nextdoortothatisashipyard–thatcanbuildanythingfromsubmarinestoFPSOs–andthenthereisacommercialrepairyardthathasoneofthebiggestshipliftsintheworld.It’savastsitethatusesalotofinnovation.Ithasawholelotofpotential.”
“It’safirstinIndia,”addsCEOVenkataramanan,“andfacilitieslikethisaresoimportanttoourfuturesuccess.TheIndianstoryforthelastfive,10,20yearsisagreatstory.Thenextfewyearswillbeastoryofchallenges.Developmentandchangecomesaboutmoreslowlyinademocracy.Youneedconsensusbutalsogoodplanningmechanismsinplace.Weneedtoensurepeopleandinfrastructurelinkeffectively.Landisanissue.Weneedlandfordevelopmentbutwealsoneedtoprotectthefertilelands.Wehaveonebillionpluspeople.Ourlandareaisimportant.”
Venkataramanan,justlikeNaikandKotwal,hascomethroughtheL&Tranksfromtheshopfloorandwillbeenteringhis47thyearofservicein2013.AlsolikeNaikandKotwal,whenhetalksaboutL&Thedoessowithmorethanpassion.Venkataramanansaysqualitypeoplehavebeen,andwillremaintobe,absolutelyessentialtoL&T’ssuccess.“Innovationandworkingwiththebesttechnologyhaveofcoursebeencrucialbut,inaddition,wehavealwaysselectedcompetentyoungpeople,groomedthemtotheL&Tway.Wehaveworkedhardtogivethemgoodleadership,goodvalues.Ourbrandissynonymouswithquality.Andsafetyisofparamountimportance.Butwearealwaysmindfultotreatpeoplewithdignity.Ittakesefforttoretainyoungpeoplebutgreatorganisationsarebuiltwherepeoplestay.”Hepausesforamomentbeforesmilingandleaningforward.
“IhavealwayssaidformostpeopleL&TstandsforLarsen&Toubro.ButformeitwillalwaysmeanLoveandTrust.”Whowoulddoubthim.
Richard CookisLloyd’sRegisterAsia’sCommunicationsManager.E [email protected]
Foundedin1938,Larsen&Toubro(L&T)isatechnology-drivenengineeringandconstructionorganisation,andoneofthelargestandmostrespectedcompaniesinIndia’sprivatesector.L&Thasaninternationalpresence,withaglobalspreadofoffices.L&Tbelievesthatprogressmustbeachievedinharmonywiththeenvironment.Acommitmenttocommunitywelfareandenvironmentalprotectionareanintegralpartofthecorporatevision.
Lloyd’sRegister’sEnergydivisionhasworkedwithL&Tformorethan40yearsandnowallfourdivisionsofLloyd’sRegisterprovideservicestoL&T.
Insight September201211
Nextyearmarksthe150thanniversaryoftheUK’sMetropolitanRailway,theworld’sfirstundergroundpassengerrailway.Theoriginalsix-kilometrelineextendedfromPaddingtontoFarringdon,nearLondon’sfinancialdistrict,andofferedan18-minutejourneyongas-litwoodencarriagespulledbysteamlocomotive.
Itprovedaninstantsuccess,carryinganestimated40,000passengersondayone,affordingtheteamsoftrailblazingengineersaquickchancetopatthemselvesonthebackbeforedoubtlesslyhavingtoshootofftodefendtheirprojectagainstthenewspapercritics:“Neitherthelocomotivepowernortherollingstock
attheirdisposalwasatallinproportiontotherequirementsoftheopeningday…thecrowdswereimmense,andtheconstantcry,asthetrainsarrived,of‘Noroom’,appearedtohaveaverydepressingeffectuponthoseassembled,”reportedThe Guardianon11January1863.Somerelationshipswerenevertochange.
Nevertheless,withintwoyearstherailwaywasaveragingamillionpassengersamonth.BytheturnofthecenturytheconcepthadspreadtocitiessuchasParisandNewYorkandsteamhadbeenreplacedbyelectrictraction–theageoftheurbanmetrowasuponus.
nobody does it betterTodaytherearearound180urbanmetrosofvarioussizesacrosstheworld.Notallareinthelargestcities,notallarelovedandnotallarefullyutilised,buttheyaremostdefinitelypartoftheurbanfabric.
Whatcountsasa‘metro’systemisnotuniversallyagreed.Ittendstobeattachedtoelectric-powered,high-frequencyrailwaysoperatingontheirowninfrastructureindependentfromotherrailorstreettraffic,usuallywithlargesectionseitherundergroundorelevated.Thisisopposedtolightrail,tramorelectricbussystems,whichtendtoweavethroughthetrafficatstreetlevel.
Inshort,theymovehighernumbersmorefrequently:metrostendtoberegardedasbeingabletosupportaround50,000toeven70,000passengersperhour,perdirection(pphpd);lightrailaround10–30,000pphpd.
Thoughfarmoreexpensivetobuild,withsufficientlevelsofpatronagetheytendtobemorecost-effectivetooperateand
By the end of the 20th century the urban metro had lost its glamour. How can it continue to measure up in the 21st, asks Andrew Foulkes.
Undergr und m vement
London 1863
12 September2012Insight
maintainandcanreachintooutlyingsuburbs.Theyhavealsotendedtobeheldinhigheresteembycivicleaders–justseehowmanycitieshaveexcitedlybidforfundingforashinynewmetro,onlytoloseinterestaltogetherwhentoldtoconsiderguidedbusesinstead.Expensivemistakeshavebeenmadeinthepast,wherethemetroislessanintegratedtransportproviderandmoreofamarketingploy.
numbers gameSimplyput,anundergroundmetrocosts:constructingahigh-quality,double-trackroutebeneathacity,whichwillinvolvereshapingexistingsubterraneanutilitiesandcables,canstartataround£100millionperkilometre.
Thatmeansmetrosneednumbersinordertorepayinvestment:linearrouteswithpopulationcatchmentsroughlyeverykilometrethatcanprovidesufficientdemandovera20-hour-dayoperationaltimetable.Butpredictingpassengerdemandisanartforminitself,involvingcomplexsoftware-drivenmodellingbasedonextensivesurveyingoflocalresidents’travelhabitsandpotentialtoswitchmode.
Eventhen,veryfewsystemsintheworldcovertheiroperatingcostsfromthefareboxalone–meaningmanycontinuetodemandgovernmentfundingtomaintainservicesandupgradesystemsovertime.Thatcausedmanysystemstoberundown,withmaintenancerationedandpassengercomfortmarginalised.Attheirworst,themetrocametoinheritanunfortunateimageofbeingonlyforthosewhocouldnotaffordtodrivebutalsowillingtotaketheirchanceamidregulardelaysandwell-practisedpickpockets.
Meeting expectationsYetinthisageofrapidurbanisation,anddespitetheinherentriskswithpredictingdemand,managingbuildcostsandthesubsequentoperation,itisunarguablethatthemetrohasnoequalwhenitcomestomovinglargenumbersacrossacongestedcity.
Theyhelpremovetrafficfromthestreetlevel,attractregenerationandinvestmenttoneighbourhoodsandimproveaccessibilityformillions.Furthermore,theyemitnolocalpollutingemissionsanddesignimprovements–suchasrecovering
ChEnGdU 2012
theenergygeneratedduringbraking–aremakingthemincreasinglymoreenergyefficient.
Thechallenge,particularlyonnewsystems,istocontinuetofindwaystoincreasepatronagebypresentingthemetroasthemodeofchoiceforday-to-daytravel.Thatmeansexceedingpassengerexpectationsoverlevelsofcomfort,convenienceandsecurity,suchasimprovementstothestationambience–lighting,cleanliness,passengerinformation,Wi-Fi–allofwhichhelpusersfeelmoreatease.
Butitcouldalsoinvolvetechnologicaldevelopments,particularlyinthesignallingsystem,toimproveservicefrequencyandreliability.ArecentupgradeofLondon’sVictoriaLinereducedserviceintervals(headways)fromjustovertwominutestooneminute45secondsorless.
Transit fit for the 21st centuryTherecentemergenceofcommunications-basedtraincontrolasthestandardsignallingsystemforurbanmetrosoverthepastdecadehasalsoencouragedtheplanninganddevelopmentofentirely‘driverless’systems.Thiscouldhaveaprofoundimpactonhowandwherefuturemetrosdevelop.
Mosturbansystemswouldrelishamovetothisdriverlesstechnologyasservicescanthenberunmorecost-effectivelywiththeflexibilitytoadjustfrequenciesduringsuddenpeaks(suchasattheendofasportsevent)withoutbeingdependentonstaffrotas.Theyreportimpressivefiguresregardingefficiency,reliabilityandsafetyperformanceandhelptopresentanairofmodernitythatcanattractextraclientele.
In2011,theDubaiMetroopeneditssecondlinetobecometheworld’slargestunattendedtrainoperation(UTO)at75kilometres.Itisnowexpectedthataround75%offuturesystemswillbesimilarlyautomated.Therecentretro-fitofParis’sline1toUTOoperationprovedthatevenexistingnetworkscannowseriouslyconsiderconverting.Thiswillalladdtowardsmakingurbanmetrosmoreeconomical,morereliable,morepassenger-focusedandultimately,betterpreparedforthe21stcentury.
Themetromightbeapproachingthegrandoldageof150,butthere’splentyoflifeleftinityet.
Andrew FoulkesisLloyd’sRegister’sTransportationCommunicationsManager.Eandrew.foulkes@lr.orgFollow me@andrewfoulkes_LR
Insight September201213
Singapore Coming to a city near you?
While the problems of rapid and uncontrolled urban growth – slums, crime, pollution – are all too apparent in cities around the world, if we want reasons to be cheerful about the rise of urbanisation, we could do worse than look to Singapore, says Matt Shinn.
SingaporeisamongthemostdenselypopulatedcitiesonEarth,withmorethanfivemillioninhabitantslivinginjustover700squarekilometres,anarealessthanhalfthesizeofGreaterLondon.
YetaccordingtoaKnightFrankandCitiPrivateWealthreportinAugust2012,thecity-state,whichisacentreforinternationalfinanceaswellashometomanymultinationals,isthewealthiestnationin
theworldbyGDPpercapita.OtherstudiesrankSingapore’sinfrastructureasamongthebestintheworld,withitsroads,portandairtransportfacilitiessecondtonone.Andyetthisisalsooneofthecleanestandgreenestofcities.Clearly,Singaporeisdoingsomethingright.
A history of planningSingaporeisthearchetypeoftheplannedcity,withatraditionofdeliberatedesign
thatgoesbacktoitsfounding,bySirStamfordRafflesin1819,asadeepwaterharbourservingBritishinterestsintheFarEast(themaritimeindustrycontinuestobeanimportantcontributortoSingapore’seconomy–seefeatureopposite).Thecolony’soriginalplancanstillbeseeninthepatternofSingapore’sstreetsandzonallayout.
Today,Singaporedealswiththechallengesthatfacealloftheworld’sgreatcities–
14 September2012Insight
providinghousingandsanitation,dealingwithwaste,helpingbusinessestothrive–inanunusuallycentralisedway,withitsUrbanRedevelopmentAuthoritykeepingatightgriponlanduseinthecity.
Singaporeisseverelyconstrainedbylackofspace,andwhilelandreclamationhasalleviatedtheproblemtosomeextent(addingatleastahundredsquarekilometressinceitwasfounded),thisisstilltheworld’smostdenselypopulatedcountry.Itisacentralaimofurbanplanning,therefore,touselandasefficientlyaspossible.
Singaporeislaidoutasaseriesofpartiallyself-sufficienttownsanddistricts,helpingtotakesomeofthestrainoffthecity’scentralbusinessdistrict.Housingisalmostallhigh-density.Andsincelackofspacerulesoutlandfill,morethanhalfofthecity’swasteisrecycled.
Trafficpollution,meanwhile,isdealtwithbycarefullycontrollingthenumbersofcarsinthecity.Only16%ofSingaporeansownvehicles:doingsomeansfirstgettingaCertificateofEntitlementthroughpublicauction,andthenbeingsubjecttotolls,basedonwhenandwhereyoudrive.Singapore’sMassRapidTransitsystemisahighlyefficientalternative,transportingmorethantwomillionpassengerseveryday.
Exporting expertiseAndaspectsoftheSingaporemodelforurbandevelopmentcouldbecomingtoacitynearyou,asSingaporestartstoexportitsexpertiseinurbanplanning.Forexample,lastautumnsawworkbeginonanew‘eco-city’inTianjininnorth-easternChina,whichisbeingjointlydevelopedbyaSingaporeanplanningteam(seepage4).
TechnicalassistanceissoldthroughtheSingaporeCo-operationEnterprise,launchedin2006todealwithforeignrequeststosharethecity’spublicsectorexperience(itreceivessome10delegationseachmonthfromothercountries),whileUrbanRedevelopmentAuthorityInternational,setuptwoyearslater,dealsspecificallywithrequestsforhelpinurbanplanning.
The role of technologySingaporeisalsolookingtopositionitselfasaleaderinthetechnologiesneededbythecitiesoftomorrow.Thecityhasmade
itselfatest-bedforinnovationswhichbothhelpittomeetitsownchallenges,andcanalsobemarketedabroad.
Overthepastdecade,forexample,SingaporehasopenedaseriesofNEWaterfiltrationplants,which,togetherwithothersthatusedesalinationprocesses,nowmeetnearlyhalfofthecity’swaterneeds.AndtheexpertisethatSingaporeancompanieshavebuiltupthroughtheseprojectshashelpedthemcompeteforworkabroad:inthepastsixyearsover100contractsforwatertreatment,worthsomeUS$5billion,havegonetobusinessesfromthecity.
Andinmanyotherareastoo,technologyinSingaporeisprovidingsolutionstocommonurbanproblems.
Singaporeispioneeringtheuseofcleansolarenergytechnology,forexample,withpublichousingprecinctsacrossthecitybeginningtomeettheirownenergyneedsthroughsolarpower,whilealsohelpingtodevelopnewsolartechnologyspecificallydesignedforthetropics.Singapore’sCleanEnergyResearchProgramme,whichalsosupportsresearchanddevelopment(R&D)infuelcells,windand
marineenergy,biomass,andenergyefficiency,isexpectedtocontributemorethanUS$1billiontoSingapore’sGDPby2015.
Newtechnologyisalsobeingappliedtothemanagementoftrafficpollution.Singaporeintroducedtheworld’sfirstelectronicroadtollcollectionsystemtoregulatecaruseinthecity,especiallyatcertaintimesofday.Singaporeisalsoacentreforstudyofelectric-poweredvehiclesinatropicalenvironment.
A model to follow?ThereismuchinSingaporetoemulatethen:asacitywithoutahinterland,ithashadanunusualdegreeoffreedominmanagingitsownaffairsanddevelopingitsownsolutions.UrbanauthoritiesaroundtheworldmaylooktoSingaporeforideas,perhapswithsomeenvyofthecity’sabilitytoimposetop-downsolutions.
Matt Shinn isafreelancewriterspecialisinginbusinessandfinance.
dynamic maritime R&d cluster Singaporeisaglobalmaritimehub,withstrongeconomiclinksandconnectivitytoallthemajorworldmarkets.ItisdevelopingitsR&Dactivitytostrengthenitsmarineandoffshoresectors.ThisinvolvesstrongR&Dlinksbetweentertiaryandresearchinstitutionsandthemaritimeindustryitself,including:
• CORE.TheCentreforOffshoreResearch&Engineering,setupin2003attheNationalUniversityofSingapore(NUS),hasprofessorshipsendowedbyKeppelCorporationLimited,TheLloyd’sRegisterEducationalTrustandtheMaritimeandPortAuthorityofSingapore(MPA).
• MaritimeInnovation&Technology(MINT)Fund.TheMPA'sR&Dframeworkinvolves:educationandtraining;R&D;test-beddingprototypes;andcommercialisationofproductsandservices.Toimplementtheschemesandprogrammesunderthisframework,theMPAhasestablishedtheS$100millionMINTFund.
• SMI(SingaporeMaritimeInstitute).AjointeffortbyMPA,theAgencyforScience,Technology&ResearchandtheEconomicDevelopmentBoard,withlocalinstitutesofhigherlearning:incorporatedin2011todevelopstrategiesandprogrammesrelatedtotheacademic,policyandR&Daspectsofthemaritimeindustry,withacommittedS$350milliontofundinitiatives.
Professor Yoo Sang ChooResearchDirectorofCOREandLloyd’sRegisterEducationalTrustProfessor.
Insight September201215
16 September2012Insight
C reatingasustainableglobalfoodsystemthatwilleradicatehungerisoneofthegreatestchallengesfacingmoderncivilisation.Attemptstofindasolutionhavebeenvariouslycomplicatedbycomplacency,
economics,politics,logisticsandurbanisation;theyarenowbeingmademoredifficult–andmoreurgent–bytheneedtoaddressclimatechange.
“Morefoodisneededfromlessland,withlesswater,usinglessenergy,fertiliserandpesticide,whilenotincreasinggreenhousegasemissions,”SirJohnBeddington,theUKgovernment’sChiefScientificAdviser,tolddelegatesinMayataforumorganisedbytheFoundationforScienceandTechnology.
Simplyput,theglobalfoodsystemisoneofthegreatestemittersofthegreenhousegases(GHG)thatarecurrentlyresponsibleforwarmingtheEarth.
Dependingonwhereyoudrawtheboundariesforthefoodsystem,estimatesoftheamountoftheGHGitemitsvarygreatly.Forexample,accordingtoa2011report,agriculture,which
includestheproductionoffertilisers,‘directlycontributes10%to12%ofglobalGHGemissions;thisfigurerisesto30%ormorewhenlandconversionandcostsbeyondthefarmgateareadded’(The Future for Food and Farming,UK’sGovernmentOfficeforScience).
WithagriculturecurrentlymissingfrommostnationalGHGinitiatives,thereislittledoubtthattheproportionalcontributionfromthissectorwillincrease,accordingtothereport.Whiletherearesomeregions–suchasintheUK–wherethevolumeofGHGemissionsfromagricultureisonthedecline,ingeneral,GHGfromfoodproductioncanbeexpectedtoriseastheglobalpopulationincreases,becomesmoreprosperous,andmoredesirousofforeignorout-of-seasonfoods.
Beyond the farm gateFoodproductionaside,thereisconsiderableenergyburnedpackagingfoodandgettingittomarket,causingemissionsbeyondagriculturalpracticesthatcontributetothepaceofclimatechange.
Ensuring global food security – and ending hunger – has always been viewed as a mammoth task, one which society has largely failed to meet. But recent recognition that it is intimately linked to climate
change has started the clock on finding a solution like never before. Russell Barling explores the challenge.
Global food challenge
Insight September201217
AccordingtoDrPeterHolmgren,aformerDirectorofEnvironment,ClimateandEnergyattheUN’sFoodandAgricultureOrganization,thefoodsystemisresponsibleforabout30%ofglobalenergyconsumption,80%ofwhichisrealised‘beyondthefarmgate’.
Withsomuchofthefootprintcreatedoutsidethefarmgatetherewouldappeartobesolutionsavailablebyfollowingtheleadsetbyownersofnon-foodsupplychains;forexample,byembracingthebest-practicesolutionspromotedbyenergy-efficiencystandardssuchasISO50001.Theseincludetransitioningtolowercarbonorbiofuels,findingmoreefficienttransportroutes,andencouragingbetterdemandforecastingtominimisewasteandredundancyatfactories,distributioncentresandretailoutlets.
Butinthefoodsystemthecauseofwastagevariesgreatly,sobespokesolutionsareoftennecessary.Itisestimated30%to40%ofthefoodweproduceisneverconsumed:inthedevelopedworlditiswasted;inthedevelopingworld,thefoodproducedoftendoesnotevengettomarket.
obvious solutions?Totheuntrainedobserver,thesolutionsmayseemobvious:ifpeoplearestarving,whynotgrowmorefood?IfgettingfoodfromAfricatomarketinEuropeisburningtoomuchenergy,whynotencourageconsumerstosourcetheirfoodlocally?
However,localinitiativestoimprovesustainabilitycanhaveglobalconsequencesthatundothemostsensibleofstrategies,nomatterhowlogicalandwell-intended.Theuseofbiofuelstoreduce
carbonemissionsinthefoodtransportchainisagoodexample.“Twobillionpeopledependoneatingthefoodweareusingforbiofuels,”saidDrHolmgren.“Thatisanissue.”
Changingtradingandconsumptionpatternstoencouragepeopleto‘buylocally’alsocanhaveunintendedconsequences.Accordingtothereport,The Future for Food and Farming,aboutamillionlivelihoodsinAfricaaresupportedbyUKdemandforthecontinent’sfreshfruitandvegetables,mostofwhichareperishablessentbyair.ItisestimatedthatmovingproductiontotheUKwouldreduceBritain’stotalemissionsbylessthan0.1%.ButtheassociatedjoblossesmayalsosendtensofthousandsofAfricansbacktosubsistenceliving,encouragingthemtoconvertmoreforeststofarmlands,andreleasingmoreofthenitrousoxideandmethanegaseswhicharethelargestsourcesofGHGemissionsfromagriculture.
Clearly,thetrade-offsofanylocalinitiativesneedtobeunderstoodinaglobalcontext.
Reducing emissionsDespitethecomplexities,thereportsuggeststherearefourwaystogiveimpetustoemissions-reductionactivitiesinthefoodsystem.Onewouldbebycreatingmarketincentivestoreduceemissions;thesecouldincludegrants,subsidies,levies,carbontaxesorcapsandtradeschemes.Secondly,theintroductionofmandatoryemissionstandardsorlimits,bydirectregulation,maychangeproductioncostsandbelinkedwithmarketadjustments.
Athirdwayisadoptinglow-emissionstrategiesthroughmarketpressuresdrivenbyconsumerchoice.Thisrequiresinformed
consumersandsourcesofaccurateandtrustedinformationsuchasemissionslabellingorproductcertification.Finally,therecouldbevoluntary(non-profitdriven)measurestakenbyindustryinlinewithcorporatesocialresponsibility.
Whatisnowevidentisthatfoodsecurityandglobalwarmingareinextricablylinked.EnsuringfoodsecurityhasbecomeaprerequisiteforcommittedactiononclimatechangebecausenodemocraticgovernmentcanintroducemeasurestoreduceGHGiftheyhavesignificanteffectsontheircitizens’accesstofood.
Whilefindingasolutioniscomplex,provingsuccessorfailureinthesearchforglobalfoodsecuritycouldbeveryobvious.Becauseeffectively,ifthereishunger,youdonothavesustainabledevelopment.
Russell BarlingisLloyd'sRegister’[email protected] me@russbarling_LR
18 September2012Insight
More people. There are always more people. But there is no more water.Between1960and2000thepopulationoftheworldgrewfromthreetosixbillion.Itisnowmorethansevenbillionandisforecasttoreacharoundninebillionby2050.Asanabsoluteminimum,thesepeoplewillneedtoeatanddrink.
Theywillalsoneedsomewheretolive.Moreofthemarelivingincities–twomoreeverysecond,accordingtotheUN.Theywantabetterlife:betterfood,betterclothes,moreopportunities.Theywillneedtransportandpower.
Forthepastcenturywaterusehasbeengrowingatmorethantwicetherateofpopulation,accordingtotheFoodandAgricultureOrganization.By2025,waterwithdrawalsarepredictedtoincreaseby50%indevelopingcountries,andby18%inthedevelopedworld.
Water The new carbon?
Considering how essential fresh water is to all life on earth, it is astonishing how little there is – and how little attention we pay to it. But that’s going to have to change, and businesses need to start adapting, reports Martin Beaver.
Insight September201219
But still, there is no more water. Although70%ofthesurfaceoftheearthiswateranditfallsfreefromthesky,lessthan5%ofitissuitableforhumanoranimalconsumption,andonly0.6%iseasilyaccessible.
“Yetbecauseeveryoneneedswater,”saysJeremyMann,HeadofGeosciences&TechnologyDevelopmentattheglobalminingcompanyAngloAmerican,“whenyoubuyit,itisnormallypricedatalowlevelthateveryonecanafford.However,thisisunlikelytobethecasein20years’time.”Therefore,hesays,companiesneedtotreatwateras“astrategicallyimportant,non-renewableresource.”Thisisamajorbusinessrisk.Withdemandincreasingandsupplystayingthesame,theeventualconsequencesarenotdifficulttoimagine.
And then there is the impact of climate change.Predictionsofhowandwhereclimatechangewillaffectwatersupplyaredifficulttomakeaccurately.Trytofactorinwhentheimpactswilloccur,andbusinessesarefacedwithahighlycomplexmatrixofpossibilities.
“Shiftsintheavailabilityofwaterareoneofthemainwaysinwhichclimatechangewillmanifestitself,”saysRichardGarner,whoisresponsibleforAngloAmerican’swaterstrategy.ThisisaviewechoedbyUNESCO’sWorldWaterAssessmentProgramme.Meltingicecapscouldseecoastalareassufferfromariseinsealevels,disruptinginfrastructureanddisplacingpopulations.Dryareasoftheworldcouldbecomedrier–orwetter.Orboth.
“Asacompany,weareexpectingvariablesupply,escalatingcostandincreasingregulationofwater,”Garnersays.
Miningisarelativelyvulnerableindustrialsector,beingaheavyuserofwaterandinvestinginassetsthathaveunusuallylongtimescales.Butitisfarfromalone.
“Industriessuchasfood,beverageandapparelfacesignificantrisks,”saysEdwinPiñero,ExecutiveVicePresidentofVeoliaWaterNorthAmerica.Agriculture–whichunderpinstheseindustries–uses70%oftheworld’sfreshwater.
Statisticsrelatingtowateruseareplentiful–thoughnotalwayseasytoauthenticate.Toproduce1kgofbeef,forexample,itissaidtotake13,620litresofwater.Globalproductionofbeefin2010wasmorethan25milliontonnes.Asinglecottont-shirtrequiresaround1,500litresofwater.
But,asPiñeropointsout,theissuesfacingmanufacturingcompaniesrelatenotonlytotheirownwateruse,buttothatoftheirsupplychain–directandindirect.Herethenumbersforessentialitemscanbecometerrifyinglylarge.
Itissaidtotakearound250,000litresofwatertomakeonetonneofsteel–withglobalproductionataround130milliontonnesamonthaccordingtoWorldSteelAssociationfigures.Uptotwothirdsofthiswatermightberecycled.But,asAngloAmerican’sJeremyMannsays,“onceyouhavedestroyedthequalityofwater,itisverydifficulttoreinstateit.”
AccordingtotheUSInstituteofElectricalandElectronicEngineers,‘fossil-fuel-firedthermoelectricpowerplantsconsumemorethan500billionlitresoffreshwaterperdayintheUSalone’.Althoughpowerplantsusewaterprimarilyasa“non-contact,once-throughcoolant,”Piñerosays,“inareasofhighlyvariableorlowavailability,evenindustriesthatusewateronlyforcoolingandthenreturnittotheecosystemcanstillbeatrisk.”
Aswatersupplytightens,competitionforitsusewillincrease.“Companieswillfacetheadditionalriskofhavingtheiraccesstowaterrestrictedbylocalgovernmentswantingtoensureadequatesupplyfortheirresidents,”Piñerosays.“Yetcompaniesmaywellnotknowexactlywheretheirsuppliershavewaterriskexposure.Simplyknowingthereisadequatewaterinyourownecosystemisnotenough.”
20 September2012Insight
So what to do? Can technology solve the problems?Technologycancertainlyhelp,thoughshiftsinweatherpatternsareprobablybeyondmankind’sabilitytosolve.
Therearemegaschemesunderwaythataimtomovewaterfromwetplacestodryones.TheChinesegovernmentishalfwaythroughtheworld’sbiggestwaterdiversionproject,transportingwaterhundredsofkilometresfromthecountry’swettersouthtothedry,heavilypopulatednorth.IndiahasevenmoreambitiousplansforwaterdiversionsthatcouldtotalUS$120billion.
Atalowercorporatelevel,AngloAmericanhasinvestedinadesalinationplantinChilethatwillsecurethefutureofoneofitscoppermines.ButatacostofUS$100million.IthasinvestedasimilaramountintreatingwastewaterfromsomeofitsSouthAfricancoalminestosupplydrinkingwatertoresidentsofanearbycity.Partnershipswithlocalgovernmentsarevaluable.
Thelong-termanswer,forallbusinesses,istouselesswater.However,thisdemandsanappreciationofthestrategicimportanceofwater,dataoncurrentuse,andamethodologyforachievingstrategicgoals.MannsaysAngloAmerican“isnowlookingatitsentireoperation–fromstarttofinish–fromtheperspectiveofwater.”
Could water be the new carbon?Even20yearsagoa‘carbonfootprint’wasnotasignificantelementinmanycompanies’strategicthinking.Butitistoday.
Waterfootprintsmightfollow.Andarealdifferenceisthat,unlikecarbon,“waterissuesarelocalandaccesstoitisaverysensitivehumanrightsissue,”saysPiñero.Thiscouldmakewateranevenmorepotentissue.
“Companiesneedtohaveenoughwater,oftherightquality,attherighttime,intherightplace,”Piñerosays.
Thechallengetheyfaceisensuringthattheydo.
Martin Beaverisafreelancewriterwhospecialisesinhealthandsafety,andenergyindustryissues.
Manufacturing fresh water: desalinationWhere water is scarce, desalination may be the only viable means to provide the water supply necessary to support population growth and sustainable development. The Middle East is the biggest market for desalination, with large-scale programmes also in Australia, Algeria and Spain. China is forecast to become one of the biggest desalination markets.
“Spain is a microcosm of the world’s irregular water distribution; four years ago, Barcelona’s supplies were so low that it imported water by ship,” says Jorge Aldegunde, Lloyd’s Register’s Energy Business Manager Spain. “Consecutive governments have prepared different water plans, changing from a proposal for a big transfer of water from the Ebro River to the manufacturing of 51 desalination plants. Only 17 are so far running at below full capacity and the rest are still to be commissioned. Demand is low as the final price of the water will be around 1.1 €/m3, higher than the 0.3 €/m3 that the agricultural sector can pay.”
Although the costs of desalination have fallen dramatically since the 1980s they are generally still high compared to natural fresh water. Most industry commentators believe costs will continue to fall steadily due to technological advances, improvements in energy efficiency and an increase in the lifetime of desalination plants. And as population growth continues and water availability declines, the price of fresh water will begin to rise, creating the potential for desalination to become more cost-competitive.
As water resources become even more stretched the applications of desalination are likely to increase rapidly. The main trend is the switch from municipal to industrial demand. This reflects, in part, the current high levels of investment going into the energy and mining sectors in regions with limited access to water resources, and water-intensive industries are investing in technologies that help them to use water more efficiently.
This fast-changing industry is continuously developing and current focuses are on reducing energy consumption and impact on the environment.
• Over 300 million people in 150 countries have some or all their daily water from desalination.
• 16,000 plants produce 66.5 million cubic metres a day, 0.6% of global water supply.
• Around 60% of plants treat seawater; other feedwater is estuary water, groundwater and waste water.
International Desalination Association (IDA)
Insight September201221
From compliance to performance
ALcontrol Laboratories’ senior management highlights the connection between strategic growth and certified management systems.
22 September2012Insight
sideofthebusiness,oiltesting.“Ourclients–whichincludeoilcompanies–requiretheirsupplierstopossessthesamestandardsasthemselves.Sowithoutacertifiedmanagementsystem,wewouldnotbeabletowinbusinessfrommanyofourmajorcustomers.”
RiskreductionisastrategicobjectiveformostbusinessesandmanyofALcontrol’sclientsdemandcertificationasawayofreducingriskintheirsupplychains.“Managementsystemsareveryimportantinriskcontrol,”saysMikeMcCorkell,UKManagingDirectorFood&Water.“Theyensurethatrisksareperiodicallyreviewedwithclearmitigationplansinplace–anyattempttomanagerisksinanadhocmannerwouldbearecipeforfailure.Managementsystemsprovideaframeworkforaddressingissuesinastructuredway,whichhelpsintheidentificationofpracticalsolutionstomitigatethoserisks,andtherebyservestobuildbusinessresilience.”
driving improved performanceThereisaclearconsensusamongALcontrolmanagementthatastronglinkexistsbetweenmanagementsystemsandimprovedperformance,withalltheALcontrolexecutivesreferringtothebenefitsofmonitoringandthecontinuous
improvementthatisdrivenbymanagementsystems.Thecompany’sexperienceissummarisedbyCutler:“SinceimplementingourEMS,wehaveseenatremendous
improvementinourperformance.Themanagersandstaffcannowseewhatisgoingonandeverybodyknowswhattheyaresupposedtobedoingandwhatimpacttheirworkhasonthekeymetrics.
“Withourmanagementsystem,ifouremployeesseeanydropinperformance,theyautomaticallyputthingsrightwithoutanyneedformanagementintervention.”
AkeycomponentoftheservicesprovidedbyALcontrol’sassuranceprovider,LRQA,is‘themedsurveillance’whichdescribesthe
approachtakenbyassessorstoidentifythekeystrategicissuesaffectinganindividualorganisationandapplyingtheseaskeytargetstodriveorganisationalcomplianceandperformance.
TheALcontrolseniormanagementteamidentifiedsignificantadvantagesfromthisapproachbecauseithelpedthemtodrilldowntotheissuesaffectingtheobjectivesofgreatestimportance.McCorkellreports:“Generally,thebenefitswehaveenjoyedfromthemedsurveillancehavecomefromtechniqueratherthantechnology.Sometimes,thereisanassumptionthatchangewillrequireheavyinvestmentinnewtechnology.However,wehavefoundthatbenefitshavecomefromsimplechangesintechnique;staffengagementhasenabledustochangebehaviouranddeliversomeprettyimpressiveimprovements.”
Energy efficiencyAnotherexampleofhoworganisationalperformancecanbedriventhroughmanagementsystemsisenergyefficiency.Therisingcostofenergycombinedwithincreasedregulatorypressure(suchastheCRCEnergyEfficiencyScheme)andadesireamongmanyorganisationstoreducetheircarbonfootprint,isdrivingafocusonenergyuseandALcontrolisnoexception.AspartofitsEMS,thecompanyhasbeenlookingforwaystoimproveenergyefficiencyforover10yearsandDavidDoherty–HealthSafetyandEnvironmentManagerbelievesthatthisisoneofthewaysinwhichmanagementsystemcertificationhas’providedatenfoldpayback’.
ALcontrolLaboratoriesisanorganisationthatbelievesthatthoroughunderstandingoftheirstrengthsandweaknessesleadstotheidentificationofpotentialareasforcompetitiveadvantage.Thisstrategicapproachtobeingasustainable,successfulbusinessisunderpinnedthroughitsrelianceoncertifiedmanagementsystemsasamanagementtool.
Link to business objectivesALcontrolmanagementbelievesthatthereisastronglinkbetweencertifiedmanagementsystemsandtheachievementofstrategicobjectives.“Ourobjectivesarefirstlytoincreasebusinessandprofitsbuttodosoourobjectivesalsoincludemakingsurewehavegotenvironmental,qualityandhealthandsafetycontrolsinplace,”saysGeneralManageroftheOilTestingDepartment,BobCutler.“Withouthavingamanagementsystem,wecouldnotmonitorwhatwetrytodoandmaintainourperformance.”
IainSwinton,BusinessDirector(UKandIreland)forLand,adds:“Obviously,asanenvironmentallaboratory,weareheavilyfocusedontheenvironmentalaspectsofourbusinessanditisveryimportantthatwebehaveinanethicalmannerwhenitcomestotheenvironment.OurEMSenablesustodothat,andensuresthatweareabletogiveourcustomersconfidencethattheycanrelyonusandthatourenvironmentalcredentialsarespreadacrossthegroup.”
AcertifiedEMSisalsoarequirementofmanyofALcontrol’smajorclients.ThisisparticularlyimportantforCutler,andhis
“...without a certified management system, we would not be able to win business from many of our major customers”
Since being certified to the Environment Management Standard (EMS) ISO 14001 in 2003, ALcontrol has put management systems at the heart of its organisation to drive competitive advantage, employee engagement and strategic performance.
Insight September201223
AcommonresponsebyALcontrolmanagementwasthatthemanagementsystemsappeartohave‘takenonalifeoftheirown’.Forexample,McCorkellsays:“Onceouremployeesbecomefullyengagedinissuessuchasenergyefficiency,theystartfindingwaystoimproveperformancethatcouldneverhavebeenimaginedattheoutset.”
Anumberofinitiativeshavebeenintroducedtoreduceenergy.Forexample:atrafficlightsystemenablesstafftoidentifywhichelectricalequipmentcanbesafelyturnedoff;extractionsystemsareonlyoperatedwhenneeded;andstorage
hasbeenreorganisedsothatsomewalk-incoldstorescouldbe
decommissioned.Thesemeasures,combinedwithgoodservicingschedulesandstaffawarenessofenergyusage,sawareductioninALcontrol'senergyconsumptionby17%equatingto
over1.5millionkWhsavedovertwoyears,whichisacostsavingofover£100,000.
Staff engagementAsignificantpartofALcontrol’sbusinessisconductedintheenvironmentalsector,sothecompany’semployeesalreadyhaveahighlevelofenvironmentalawareness.Asaresult,managementfirmlybelievesthatemployeesaremotivatedbythe
company’sEMScertification.McCorkelldrawsaclearparallelwiththepersonallivesofstaffinwhichtheyseektolowertheirownenvironmentalimpact.Asaresult
hesays:“Theyexpecttheiremployertodemonstratethesamevalues.AtALcontrolanumberofchampionsfortheenvironmenthaveemergedwithinthecompany,andthesystemhasbecomeself-perpetuatingaspeoplelooktoachieveobjectivesthatgivethemarealbuzz.Staffengagementcertainlytakesaboostfrompeoplearrivingatworkknowingthattheiremployerdemonstratestheircommitmenttotheenvironmentbyholdingappropriatecertificationfortheenvironmental managementsystem.”
Adding valueItisvitallyimportantfortheassuranceprovidertoaddvaluethroughouttheassessmentandcertificationprocess.Thisisachievedintwoways.Firstly,reputationandcredibilityisimportantifcurrentandfuturestakeholders–whooftenspanmultiplecountries–aretobesatisfiedthatthecompany’scertificationishelpingtobuildbusinessresilience.Secondly,thetechnicalexpertiseoftheassessorwhoconductstheassessmentsmustbehigh.ThiswashighlightedbyALcontrolmanagementwhoallcommentedonboththevalueof“anindependentpairofeyes”andtheadvantagestobegainedfromanexperiencedLRQAassessorwhounderstoodtheirindustryandwasabletoidentifyopportunitiesforimprovementthatwouldbeofrealvaluetothebusiness.
Summarising,Swintonsaid:“Byputtingourmanagementsystemsattheheartofourorganisation,weareseeingtangibleresultswhicharehelpingtoprovidecompetitiveadvantageandbusinessresilience;intoday’stoughmarket,independentmanagementsystemscertificationremainsacompellingpropositionandisextremelyvaluabletotheongoingsuccessofourorganisation.”
ALcontrol, one of the world’s leading environment and food testing companies, provides analytical services to organisations around the world.
Witharound1,500employeesworkingin30laboratoriesandservicecentresconductingmillionsoftestsperyear,ALcontrolofferstestingandanalyticalservicesforsoil,water,foodandoiltohelpclientsdemonstratecompliancewithregulationsandachievetheirhealth,safetyandenvironmentalgoals.Throughanetworkoflaboratoriesin11Europeancountriesandprovidingsupporttocustomersglobally,ALcontrolaimstobetheleadingenvironmentandfoodtestinggroupinEurope.
ALcontrol believes that employees are motivated by the EMS certification
24 September2012Insight
A very modern fleet
Polys Hajioannou, CEO of Safe Bulkers, is a modern Greek shipowner; an owner managing the challenges
of today and tomorrow, but also a representative of the personal and ‘hands-on’ leadership that has characterised
the legendary tradition of Greek shipping.
Photographer©WillemOldenburg
Insight September201225
T herearemanyshipownersofGreeknationalityandtheyhavemanydifferentapproachestobusinessanddifferingpersonal
styles.WhilemodernGreekownersareperhapslesswellknownontheworldstagethansomefamousnamesofthepast,theseareownerswhoarejustassignificantastheirindustryforebears.Theshipownersoftodaymustdealwithabiggerandmorecomplexindustryandthecurrenttechnologicalandinvestmentdilemmaspresentedbyhighbunkerfuelprices,emissionregulationsandrequirementssuchasthenewballastwaterconvention.
TodaySafeBulkerscontrols21drycargoshipsinavarietyofclasses:panamax,kamsarmax,post-panamaxandcapesize,withacombineddeadweighttonnageofnearlytwomilliontonnes.Eightmoreshipswillbedeliveredby2014.SafeBulkersisapubliccompany,listedontheNewYorkStockExchange.
Lloyd’sRegisterspoketoSafeBulker’sCEO,PolysHajioannouintheAthensseasidesuburbofVoula,wherethecompanyoccupiesamodernoffice.Weaskedhimaboutthechallengeshiscompanyfaces–particularlyhighenergypricesandstrictenvironmentalregulations.
“Shippingisaneverevolvinganddynamicindustrywhichovertheyearshasfacedplentifulregulatorychangesforsafetyandenvironmentalpurposeswhichultimatelyaffectthenormalcourseofbusiness,”Hajioannoucommented.“Beingfocusedonrepeatedlyorderingnewbuildshipsofthelatestdesignsandtechnologiesallowsustofeelcomfortableinfacingthenewchallengesofthemarketandtoadjusttothemsmoothly.“
high specification tonnage Indeed,thecompanyhasaverymodernfleet.Itsfleetaveragessomefouryearsofageandoneofthespecialcharacteristicsisthatthecompanyhasnotboughtanysecondhandshipssince1986.ItsapproachistoacquirefromleadingJapaneseshipyardsthelatestdesignsavailableandbuildthemtoitsownspecifications.
SafeBulkershasbeenkeenonbuildingvesselswithbiggerandmoreefficientmainengines,abletooperateatlowerRPM,providingbetterfueleconomyandmore
flexibilitytothecharterersespeciallyatpresentmarketconditions.Givencurrentfueloilprices,thatdecisionislookingsmart–savingwelloverUS$2,000perday.NordoesHajioannouseefuelcostscomingdown.“Thiswillnotstop[risingbunkercosts].WewouldnolongerbesurprisedtoseeHFO(heavyfueloil)approachingUS$1,000pertonneatacertainpointinthenextthreetofiveyears,thoughwearehopingtobeprovedwrong.”
Thecompany’shighspecificationtonnagehasensuredthatthereisareadysecond-handmarketforitsships,whenitisreadytosellthemon,andthisallowsittokeepreinvestinginmoderntonnage.Thishelpedthecompanytosell11secondhandbulkersintheboomingtimesof2007–2008.
SafeBulkershasincorporatedothertechnicalandoperatingpracticestomaximiseefficiency:policiessuchasregularpropellercleaningand,whenwaitingforlongperiodsatanchorages,arrangingwithcharterersforashortsteaminglegeverytwoweekstopreventtheaccumulationofmarinegrowthontheunderwaterhull.“Wecleanourpropsandseachestseverysixtoninemonthsandwiththepaintsthatweareusing,andbypreventinggrowthatanchorage,wecanavoidcleaningvessels’hullsinEuropeanandAustralianwaterswhereenvironmentalrestrictionsapply.“
Hajioannouseesthedemandforeco-efficiencyintensifying,withmarketsreducingtheearningpowerofolder,higherconsumptionships.“Chartererswillstarttoleaseefficientshipsmoreoftenandheavyconsumptionshipswillstruggletofindreasonableemployment.“
Thecompanyapproachofacquiring,‘thebestshipswiththelatesttechnology’,seemstobestandingSafeBulkersingoodstead.WesaygoodnightandthankHajioannouforhistime.NighthasfalleninVoulabutthelightsinthecompany’sbuildingstillburnbrightly.Outatsea,inallthetimezonesoftheworld,SafeBulkersshipsaretradingwhile,inJapan,dawnwillsoonbreakovertheshipyardsconstructingthemostmodernships–soontojoinaverymodernfleet.
Safe Bulkers approachSafeBulkershaslookedtoleadthewayinfleetdevelopmentbybuying,between2001to2007,highspecificationshipsinaseriesofsisters.Tsuneishishipyardbuiltatotalof15vesselsbothpanamax(EUROTESS’76–TsuneishiEconomicalStandardShip)andkamsarmaxwhichweredesignedonthebasisofLloyd’sRegisterastheclassificationsocietyandequippedwithbiggermainengineanddieselgenerators,ballastcontrolconsoleandextramooringarrangement.Thesamephilosophyhasbeenfollowedforthefive87,000dwtpost-panamaxesSafeBulkershasbuilt,between2006and2009,inthehighlyrespectedIHIyardinJapan.
InrecentyearsSafeBulkershasadoptedstrongcommercialrelationswithanotherrenownedJapaneseyard,Imabari,aworldleaderintermsofdesign,qualityandefficiency.OutofsevenvesselsorderedatImabari,SafeBulkersalreadyhasthreeinitsfleetofthe95,000dwt‘Nexter’typepost-panamaxvessels.Theseareconsiderablyshallowerat14.45metresscantlingdraftandatleastfivetonnesmoreeconomicintermsoffueloilconsumptionincomparisonwithotherpost-panamaxesbuiltinChina.
Furtherordersincludetwo76,000dwtpanamaxbulkcarrierswithelectronicmainenginesandadvancedfuel-savingdevicesexpectingtobringdownthefueloilconsumptionbelow25tonnesperdayat13.5knotsladenspeed.Followingtheowner’sstrongrecommendation,Imabarirecentlydevelopedanewshallowdrafted80,000dwtvesselwith35-metrebeam,anin-betweendesignofthemodern32-metrebeampanamaxandthe38-metrebeampost-panamax,offeringflexibilityoncethenewPanamaCanalopens.
26 September2012Insight
Greekshipscarryinggrain,ore,crudeoilanditsproductsplayalargeroleinkeepingtheenginesoftheworldeconomyturning.
WhilethedomesticproblemsandfutureoftheGreekeconomyhavebeensubjectedtointensescrutinyandspeculation,Greece’sshippingcompaniesremainakeycornerstoneofthemostglobalofindustries.Greekshipownerscontrol19%oftheworldfleetofbulkcarriersandoiltankers.
Timesaretoughinshippingrightnow.Althoughtheindustryisstillagrowingsectorandasimportantasever,thereisanover-supplyoftonnagefollowingexuberantorderingandadecadeofhugeincreasesinshipyardcapacity–mainlyinChina.Nowtherisingcostofbunkers(ship’sfueloil)combinedwithairemissionsregulationisposingsometoughquestions:‘DoIneedto,canI,orshouldIbuildnew,moreefficientships?’
And,soitwasinJune,withthesequestionsheavyintheair,thattheshippingworldcametoGreece–asitdoeseverytwoyears.ThisbiannualpilgrimageistoattendPosidonia,ahugefestivalofshippingheldintheGreekcapital,namedfortheGreekgodoftheoceans.RelationshipsarevitalinshippingandthemanyreceptionsforwhichPosidoniaisrenownedenableshippingfriendshipstobecementedandstrengthened,networksbuiltandmaintained,anddealsstruckbetweentheowners,shipmanagers,shipbrokers,shipbuilders,insurancechiefs,classificationheads,bankersandmanyothermarinestakeholders.
WhilePosidoniahasasubstantialsocialsideitisverymuchmore.ThePosidoniaexhibition,housedthisyearinanexcellentnewvenue,isashowcaseforshippingservicecompaniesandshipyards.Thisyeartherewerealsoaseriesofsuccessfulbriefings,forumsandconferencesthatexaminedtheshippingissuesofourtimes.
Withfuelefficiencyapriority,theshipyardswereinGreecetotryandsellnew‘eco’designstogetherwithnewpaints,newenginesandotherequipmentthatareonofferandthattheyhopetheycanselltosupportthenewgenerationofefficientshipsthattheyardsaremarketing.
Andthemainquestionsintheforumsandconferenceswerewhetherexistingshipswouldbemadeobsoletebynewshipsandtowhatextentanticipationisjustifiedthatnewshipswillincreasinglyoutperformexistingtonnage.
Therearetwoperspectiveshere.
Itisnaturaltoexpectthosewithlargeexistingfleetstodefendvaluesofshipsboughtathighlevelscomparedtotoday’snewbuildingprices.Theyhavetheirintereststoprotectandthiscanonlybeexpectedandthemajorityofownerswouldratherthattheexistingstateofover-supplyisnotexacerbatedbyneworders.
Ontheotherhand,charterers,thecompaniesthatemploytheships,wouldliketoreducetheirfuelbillsandsoareextremelyinterestedinmoreefficientdesigns.Theywouldhappilyseemorechoiceandthebalancebetweensupplyanddemandtiltedintheirfavour.
Howeveratpresenttherearefewnew,demonstrablymoreefficientshipsavailableforcharter.Althoughthislookssettochange,itmaysometimebeforetheshipperformancestatusquoisheavilychallenged.Inthemeantimetheindustrywillbeexaminingwithgreatinterestopportunitiestoimprovetheperformanceofexistingtonnage.
Nick Brown asks whether the time is right to build the next generation of ships.
Shipping focused on more efficient fleets
nick Brown isLloyd’sRegister’[email protected] me@nickbrown_LR
Insight September201227
Temperatures plummeted. Snowflakes became snow blizzards. As 2011 drew to a close, many European countries experienced the bleakest December for a century. While consumers shivered and turned up the heating, utilities shook their heads and turned to the problem of renewable energy: how do you store it until people need it? “Weallknowtheweatherisunpredictableandhasasignificantimpactonthecostforwindandsolarenergyinstallations,”saysSeanCuthbert,Lloyd’sRegisterODS’sEnergySustainabilityAdviser.
“Itishardtosaywhenthewindwillbloworthesunwillshine.Couplethisbasicfactwiththecomplextaskofstoringenergyandyoucanbegintofeeltheindustry’sheadache.”
Itisafrustratingproblemconsideringmanyofourdailyneedsaremetbyacommonplaceobject:abattery.Yettodate,attemptstoevolveconventionalbatteriestoservegrid-sizedapplicationshaveprovedunsuccessful.Thereasonispartlybecausebatteriesarenotgoodatdispatchingelectricityathighvoltages,andhigh-voltagetransmissionisthemostefficientwaytotransportelectricityoverdistances.Itisalsoaboutscalabilityandsizeofthepoweroutputandthetotalenergystored.Withtherightconditions,thebiggestoffshorewindfarmscanproduce400MWofpower,butthelargestsetsofconventionalchemicalbatteriescanonlystore
Bottling nature’s forcesHow can we best store renewable energy?
Sean Cuthbert, Lloyd's Register ODS’s Energy Sustainability Adviser, talks to Jason Knights about the challenge for green energy.
28 September2012Insight
afewmegajoulesatatime.AstheFinancial Timesputit:wewasteahugeamountoftherenewableenergywedoproduceandwehavetokeepexpensivefossilfuelstationsonstandbyforwhentheweatherfailstodeliver.
Safe, reliable, affordable storage Americanenergyanalyst,LuxResearch,estimatesthatglobaldemandforgridstoragewillincreasefromUS$50billiontodaytoUS$113billionin2017.
Sowhataretheapproaches?“Thefirstislongtermtotakeadvantageofdaily,weeklyandseasonalvariationsinrenewableenergy,”saysCuthbert.“Short-termstorageisequallyimportant.Frommillisecondstominutes,utilityprovidersneedtohandlerapidenergysurgesanddropsofelectricitysupplyacrossagridwhilematchingdemand.Ifdemandoutstripssupply,electricityisdispersedtoowidely.Thefrequencyfalls.Lightsdim.Ifsupplyoutstripsdemand,thefrequencyrisesandelectricaldevicescanbedamaged.”
Long-term thinking Onemethodappearstobewayinfront.Pumped-storagehydroelectricity(PSH)accountsforahighpercentageoftheworld’selectricitystorageneeds.Itworksbyusingelectricitytopumpwatertoahigherpointwhenthereislow-energydemand.Whendemandincreases,waterisreleased,poweringgeneratorsasitgushesdownwards.
Thetechnologyisestimatedat70%to80%energyefficient,withthecapabilitytostorepowerforlongperiodsanddispatchhigh-voltagepoweratamoment’snotice.Thecatchisgeography.SettingupaPSHschemerequireshillsandlakesandtheyareinlimitedsupply.“Thedownsideisthatenergyisnotstoredindefinitely,”saysCuthbert,“andinplacessuchasEgypt,theUS’ssouthwestandChina,evaporationlossesareverysignificantwhichlowerstheoverallenergyefficiencytoaround50%.”
Sonewtechnologiesandmethodsarebeingdevelopedandtested.Oneapproachhastwoshafts–onelargerthantheother–shiftingwaterbetweenthetwo.Surpluselectricitypumpswaterdownthesmallershafttoraiseaweightinthelargershaft.Whenelectricityisneeded,theweightsinks,forcingwaterturbinestogeneratepower.AnotherapproachistheuseofminepitsforundergroundPSHfacilities.
Harnessinggasinplaceofwaterisalsobeingexplored,withexcesselectricitybeingusedtocoolandcompressairwhichisstoredunderground.Whenpowerisneeded,compressedairisreleasedtoturnturbines.Newtechnologiesarebeinglookedatthatalsocaptureheatusedintheprocesstoboosttheenergyefficiencyofthesystem.
“Forlargegrid-scalepowerprojects,engineersaretestinghowsurpluselectricitycanbeusedtoproducehydrogenfromwater,andwherehydrogencanbestoredincavernsorgaspipelinenetworksandusedtofuelpowerstationswhenelectricityisrequired,”saysCuthbert.
Short-term answers Todate,gridoperatorshavereliedonfossil-fuelplanttobalanceshort-termenergydemandwithsupply.Incorporatinggreateramountsofrenewableenergyintothemixmakesthebalancingactmoredifficult.Thequestionis,whatcansmoothoutthepeaksandtroughsinsupply?
Theflywheelanditsphysicsaresimple.Flywheelsaresuspendedinavacuumbyelectromagneticforces,wheretheycanspinattwicethespeedofsound.Grid-scaleflywheelscanabsorbordispatchmegawattsofenergyatanytime.Thenthereare‘Powercubes’(lead-acidbatteries)thathaveaddedsuper-capacitors.Theseefficienthybridsarebundledintoshippingcontainersforgridoperatorstouse.
Utilitysuppliersarealsoturningtheircustomers’buildingsintoelectricitystorageunits.Freezerunitsorventilationsystemscanactasatypeofstorageand,bygrabbingextraenergy,participantsintheschemewillneedlesslater,meaningfuturedemandcanbereleasedforotherusers.IntheUS,morethan30,000MWofelectricityiscontrolledthisway,with‘demand-response’customersreceivingadiscountedbill.
Oneofthemostpromisingmodelsisacentralisedlarge-scale(utility-scale)electrochemicalenergystoragesolutionthatisnotdependentongeographyandcanalsobescaledseparatelyintermsofpowerdeliveredandenergystored.Suchtechnologyexists:theflowbattery,currentlythesubjectofresearchincludingastudysponsoredbyLloyd'sRegister.
A European supergrid “Short-termstorageisessentiallygridmanagement,sowecanexpectupgradedlinksandsmartersystems,”saysCuthbert.“Look,forinstance,attheinterconnectorsbeingbuilttoserveaEurope-widesupergrid.France,BritainandtheNetherlandsarehookedupwithafurthernineEuropeanlinksplanned.Tomorrow’spowermaycomethankstothelatestturbinesbeingbuiltoffthewind-lashedScottishcoastandsolarpanelsinsouthernGermany,TurkeyandNorthAfrica,orthankstowavetechnologyofftherollingEuropeancoastlinesandhydropowerfromdamsinNorway’sfjordsandtheSwissAlps.”
Progressis,itseems,beingmadetobottlenature’s‘free’power.
Jason KnightsisGlobalCommunicationsManagerforLloyd’sRegister’[email protected] me@jasonknights_LR
Insight September201229
ThE RETURn oF ThE BLACK RoCKIt powered the Industrial Revolution. Will it fuel the future?
The world needs a steady supply of base-load energy. Yet again, coal appears to be providing the only real answer, especially for the emerging economies, reports Jason Knights.
30 September2012Insight
E mittingtwiceasmuchcarbondioxideasnaturalgas,coalseemsanoddchoiceasa‘fuelofthefuture’.Theblacksedimentary
rockconjuresupimagesfromthepast–ofsteamships,locomotivesandfactoryfurnaces.Indeed,formuchofthe20thcentury,coalappearedtobeonitswayout.Bythemid1960s,oilhadovertakencoalastheworld’smostusedenergysource.Addgrowingfearsoverclimatechangesincetheendofthelastcenturyandthe‘blackrock’offossilfuelsseemedboundfortheannalsofenergyhistory.
Butwhileanumberofoldcoal-firedplantareheadingfordecommissioningorbusyreinventingthemselves,thisisfarfromthecompletepicture.Takingtheworldasawhole,coalhasnotbecomelesspopularinrecentyears:itsuseisontherise.AccordingtotheBP Statistical Review of World Energy June 2012,coal’stotalshareoftheworld’senergyconsumptionisestimatedat30.3%,thehighestsince1969.Bycontrast,oil’sshareofglobalenergyusepeakedat48.5%in1973.Ithasnowslippedbackto33.1%.
Coal’smainstrengthsarethreefold.Itischeap.NootherfuelasidefromUSshalegascanbeatitspriceperunitofenergyproduced.Itisabundant,withpossiblyenoughcoalleftinthegroundtosupplycurrentenergydemandsforover120years.Moreover,coaliswelldispersed.Importersarelessworriedaboutsecurityofsupplyorhavingtodealwithcartelsthanwithotherfossilfuels.
Coal fired in Asia AsChina’seconomyhasgrown,energydemandhassoared.ChinahasovertakentheUSasthelargestglobalenergyconsumer.UnworriedbyEuropeanregulationsorstrongenvironmentalopposition,ithasoptedforthecheapest,mostreliablesourceofenergyitcanfind:coal.Italsooffersasecuresupply.Chinahasvastcoalreserves,asdoesneighbouringMongolia.
Inthelasteightyears,China’scoalusehasdoubled,anditisestimatedthathalfofthecoalburnedintheworldisnowburnedinChina.Thecountry’sminersworkhardtodeliverthreebilliontonnesofcoalayear,makingChinatheworld’slargestcoal
producer.Yetitsdemandforenergyissogreatthat,lastyear,itovertookJapantobecometheworld’sbiggestimporterofcoaltoo.Thecountrymightbeheadingforaneconomicslowdown,butinthelongerrunitsenergydemandwillcontinuetogrow,evenifitisataslowerratethanrecenttimes.
India’scoaluseisgrowingfasttoo,almostdoublingin12years.Italsohashugedomesticreserves–thefifthbiggestintheworld–andistheworld’sthird-largestproducer.Butwithonethirdofhouseholdsnothavingenoughelectricitytopoweralightbulb,Indiaisdesperateformoreelectricity.WehaveseenhowIndia’senergycrisisspreadtomorethanhalfthecountryafteritseastern,northernandnorth-easternelectricitygridscollapsed,leavingmorethan600millionpeopleacross13stateswithoutpower.Energysupplyiscritical.WhileIndiaisexpectedtotriplethenumberofcoal-firedplantsoverthenextdecade,ithasalsocutcoalimporttariffs,openingupapotentiallyvaluablenewmarketforproducers.LookwiderafieldacrossAsiaandyouwillseeasimilarpictureofmorecoal-firedpowerplants.
not just the emerging markets Whilethenewgrowthincoaluseiscomingfromtheemergingmarkets,thedevelopedworldisprovingreluctanttogiveupthisfossilfuel.TheUS,forexample,reliesoncoalforapproximatelyathirdofitselectricitydemand.Andevenifutilitieswanttoswitchfromcoaltogasmuchdependsontheinfrastructureandcapabilityofthepowergrid.
Economicsmayalsocomeintoplaytoreducetherateofswitchover.Thecurrentlownaturalgaspricesarelikelytorisewhenliquefiednaturalgas(LNG)exportterminalsarebuilt.NewfacilitieswillallowUSLNGproducerstoselltoAsia–wheregasisfivetimesmoreexpensive.Inthisnewmarketlandscape,coalwillbecomeincreasinglycompetitiveasanalternativefuel.
AGermanenergystudyevenconcludedthatcoalplantwillenjoyanupswinginEurope.
Germany’sdecisiontoclosedownitsnuclearreactorsby2020willcreateanenergysupplyshortage.Thatgapcould
bemadeworsebylowersubsidiesforrenewableenergysources,combinedwithvolatilegasprices.Enter50GWofnewEuropeancoalplant,whichcouldpotentiallybebuiltbetweennowand2020.
Forasustainableenergyfuture,coal’senvironmentalimpactshouldbereduced–morethan70%ofCO2emissionsarisefromcoal-firedpowergeneration,accordingtotheInternationalEnergyAssociation.Usingcoalmoreefficiently,coupledwithcarboncaptureandstoragewillbeimportantsteps.
What of the alternatives? Lookingatotherenergysources,solarandwindpowerhavemadehugeadvancesinthelast10years,butcurrentlyprovidelessthan2%oftheworld’stotalenergysupply.Whilethesepowergenerationtechnologiesneedtobeapartoftheenergymixofthefuture,theirenergyisintermittentandclimate-dependent.Improvementsinelectricitystoragewouldhelp,butrenewableenergystillneedstobebackedbyplantthatcansatisfy‘on-demand’power.
Iscoalthesolutionhere?Oilisbecomingexpensivewithharder-to-reachanddeeperexploration.Naturalgashaspotentialandproductionwillnodoubtboom,butitisunlikelytosupplantcoal.Andtheshalegasrevolutionsparkedbyadvancedtechniquesindrilling,hasyettocatchoninEuropeandAsia.Asfornuclear,thefuelsource,uranium,isextremelycheapbutnuclearplantareexpensivetobuild(accountingforsome60%ofthetotalcostofpowerproduced,comparedtoabout14%foragasplant).Overalonglife,nuclearplantcanoftenprovecost-effective,buttheinvestmentupfrontisachallengetoheavilydebt-burdenedeconomiesintheWest.Soitcomesbacktosatisfyingbase-loadpowersupplywhichmeanscoalislikelytobewithusaspartoftheenergymixsolutionforsometime.
Jason KnightsisGlobalCommunicationsManagerforLloyd’sRegister’[email protected] me@jasonknights_LR
Insight September201231
How has the industry responded in the wake of the Concordia incident?Overthepastseveraldecades,thecruiseindustryhascontinuallyreviewedbestpracticesanddevelopedinnovativetechnologiestofurtherstrengthenitssafetyrecord.
IntheimmediateaftermathofConcordia,CLIA,speakingonbehalfoftheglobalcruiseindustry,launchedtheongoingCruiseIndustryOperationalSafetyReview,whichwasannouncedpubliclyon27January2012.ThereviewisacomprehensiveassessmentofthecriticalhumanfactorsandoperationalaspectsofmaritimesafetyandbeganwithaninternalreviewbyCLIAmembersoftheirownoperationalsafetypracticesandproceduresconcerningissuesofnavigation,evacuation,emergencytraining,andrelatedpracticesandprocedures.
Thereviewisguidedbyathird-partypanelofexpertswhoseroleistoprovideanimpartialassessmentoftherecommendationsdevelopedbythereview.Eachpanelmemberbringsin-depth
experienceinthemaritime,regulatoryandaccidentinvestigationfields,withpanelmembersbalancedgeographicallywithequalrepresentationfromtheUSandEurope.
Todate,CLIAandtheEuropeanCruiseCouncilhaveannouncedsixnewpoliciesaspartofthereviewthathavebeenadoptedbytheirmembercruiselines.Allpoliciesexceedcurrentinternationalregulatoryrequirementsandpertaintoawiderangeofissues.ThesepolicieshavebeenorwillbesubmittedtotheInternationalMaritimeOrganization(IMO)forindustry-wideimplementationtofurtherimprovesafetyonboardcruiseships.
Wearetakingaholisticlookatsafety,asevidencedbythebreadthandscopeofthenumerouspoliciesthathavebeen
Keeping guests and crew healthy, safe and secure and protecting the environment are
fundamental to the cruise industry.
Cruise: forging ahead
Christine duffy, President and CEo of the Cruise Lines International Association (CLIA) answers some queries posed by Rebecca Moran.
In 2011 worldwide, a record 16.3 million
passengers went on a cruise
32 September2012Insight
developedandadoptedaspartoftheReview.Detailsonallpoliciesareavailableonlineatwww.cruising.org.
What is the cruise industry doing to reduce its impact on the environment?Ourindustryhasavestedinterestinprotectingtheglobaloceanenvironment,notonlybecauseitistheresponsiblethingtodo–butalsobecausecleanoceansandbeachesareessentialtothecruiseexperience.
Wefollowenvironmentalstewardshippracticesthatseektofullyprotectthecommunities,ports,andwaterswhereverweoperate.Iamextremelyproudthatourindustryhasbeenattheforefrontofwastewatertreatment,emissionsreductionanddevelopinginnovativetechnologiestoreducetheenvironmentalimpactofcruising.
CLIAmemberscurrentlyemploywastewatermanagementpracticesandproceduresthataresubstantiallymoreprotectiveoftheenvironmentthanarerequiredbyregulation.Ourmembers
areinvestinghundredsofmillionsofdollarsintechnologiestofurtherreducetheimpactofcruiseshipsontheworld’soceansandecosystems.
Asmorefuel-efficientshipshavecomeintoservice,CLIAmembershavebeensystematicallyreducingairemissions.Theindustryhasinvestedsignificantlyoverthelastdecadetodevelopandimplementnewtechnologiesthathelptoreduceairemissions,includingutilisingexhaustgasscrubbers,developingenginesthatrunmoreefficientlyandusingshorepower.
I’dalsopointoutthatcruiselineshaveavarietyofenvironmentallyinnovativeprogrammesinplacethathelpshipsconserveenergy,fromswitchingtolowenergyLEDlights,usingrecycledhotwatertoheatpassengercabins,andusingspecialwindowtintingthatkeepspassagewayscooler,whichrequireslessairconditioning.
Are there any industry trends you’d like to highlight?Inthelastfiveyears,theglobalisationofcruisinghasbeenoneofthedominantthemesintheindustry,withparticularly
stronggrowthinEurope.Weareseeinggrowinginterestincruisingtoexoticregionsoftheworld.CLIAmemberlinesareprovidingmorechoiceinitineraries,price,andlengthofcruise.There’sanevengreaterchoiceinshipboardactivitiesandamenities,notablynewdiningexperiences.Iwouldalsonotethatweareseeingincreasingpopularityofshortercruisesacrossallpricecategories.Otherstrongareasofgrowthforourindustryareintheluxurycruisemarketandtherivercruisemarket.
Final words?Ithinkit’simportantforpeopletoknowthatcruisingisoneofthesafest,affordableandenjoyablevacationexperiencesavailabletoday.Infact,cruiseshaveahigherpercentageofsatisfiedcustomersthananyothervacationexperience.
Rebecca MoranisLloyd’sRegisterAmericas’[email protected]
About CLIAThenonprofitCruiseLinesInternationalAssociation(CLIA)isthelargestglobalcruiseindustryorganisation.CLIArepresentstheinterestsof26memberlines,15,000travelagents,and120executivepartnersbeforeregulatoryandlegislativepolicymakers,supportingmeasuresthatfosterasafe,secureandhealthycruiseshipenvironment.
www.cruising.org
Insight September201233
Stewards of the seasThe World ocean Council has a vision: ahealthyandproductiveglobaloceananditssustainableuse,developmentandstewardshipbyaresponsibleoceanbusinesscommunity.
34 September2012Insight
Paul holthus, the Council’s Executive director talked to nick Brown about bringing together the ocean business community to collaborate on stewardship of the seas.
PaulHolthus,ExecutiveDirectoroftheWorldOceanCouncil(WOC),regularlycirclestheglobetobeincontactwithleadingoceanindustrycompanies.Awiderangeofindustrieshaveaninterestinoceanresources:shipping,oilandgas,fisheries,aquaculture,tourism,renewableenergy(wind,wave,tidal),ports,dredging,cablesandpipelines,carboncaptureandstorage,aswellasthemaritimelegal,financialandinsurancecommunities.
Holthusisfocusedondevelopingcollaborationacrosssectorsbybringingtogethertheoceanbusinesssustainabilityleaderswhoaredrivingchange.Heisseekingtounderstandandharnessthepowerofcorporatedecision-makerstotackletheenvironmentalissuesthatarechallengingcontinuedaccesstooceanspaceandresourcesbyresponsiblebusiness.
“Leadershipcompaniesaremakinggoodprogressbutweneedabroadrangeofoceanindustries,wellbeyondmerchantshipping,workingtogetherifthediverseoceanbusinesscommunityisgoingtosecurethefutureforoceanhealth,productivityandsustainableuse.”Butwhilesomuchofthefocusinshippinghasbeenonemissionsfrommerchantships:“WOCistryingtolookatthewholepictureacrosstheoceanuserspectrumandthebroadrangeofoceanissues,frominternationalpolicytopractical,operationalissues.”
The WoC rationaleAlthoughtheoceancovers71%oftheearth’ssurface,itisanincreasinglycrowdedplace.Oceanindustriesofallkindsareexpandingrapidlyandimpactsonthemarineenvironmentaregrowingataneverincreasingrateandglobalscale–affectingendangeredspecies,ecosystemhealth,criticalhabitatsandcoastalcommunitiesthatdependonmarineareasforfoodandlivelihood.Conflictsintheuseofoceanspaceandresourcesareontheriseamongindustries,andwithotheroceanstakeholders.
Oceanindustriesarebeingheldaccountablefortheirimpactsbygovernment,inter-governmentalandnon-governmentalstakeholderswhoarepursuingincreasedmarineenvironmentalregulation.Privatesectoraccesstooceanresources,servicesandspaceisincreasinglyatriskduetothelossofthe‘license’tooperateandtheemergingoceangovernanceregimes.Unfortunately,therehasbeenlittleornointeractionamonglike-mindedresponsiblecompaniesacrossthesectorstodevelopleadershipandcollaborationonoceansustainabilityandengageinsystematic,co-ordinatedinvolvementwithotheroceanstakeholders.
Theprivatesectoristheprimaryoceanuserandisbestplacedtodevelopandimplementthepracticesneededtoensuremarineecosystemuseissustainable.Anincreasingnumberofcompaniesandindustryassociationsaretacklingtheenvironmentaleffectsoftheiroceanactivities.However,inaglobal,interconnectedocean‘commons’,theactionsofonecompanyorevenanentiresectorarenotenoughtoaddresscumulativeimpactsofgrowingoceanusebyadiverserangeofindustries.Thereisclearlyaneedforoceanindustriestocollaboratewithinandacrosssectorstoaddressimpacts,reduceconflicts,developproactiveoceansustainabilityleadershipandconstructivelyengageotherstakeholders.
SoS 2013TheWOCwillholditssecondSustainableOceanSummitin2013andhopestobuildonthesuccessoftheevent,firstheldinBelfastin2010.Thisistheonlyinternational,‘cross-sectoral’oceansustainabilityconferencedesignedforandbytheprivatesector.
HolthusispositiveabouttheInternationalMaritimeOrganization’s(IMO)role.“TheIMOisaleaderinhowUNagenciesneedtotakeonglobalchallengesanddevelopsolutionsinpartnershipwithindustry,”saysHolthus.“IMOisshowingthewayintacklingtheinternationaloceanchallengesataglobalscaleanddevelopingenforceableregulations.”
AndtheWOCwasinvitedbytheUNtohelpdevelopanOceansCompactforconsiderationbytheworld’sgovernmentsattheRio+20summitonsustainabledevelopment.“TheworkoftheprogressivecompaniesintheshippingindustryandIMOprovidedimportantinputtothis,”saysHolthus.InAugust,theUNSecretary-General,BanKi-moon,launchedtheOceansCompactwhichaimstobringtogetherallpartsoftheUNsystemtoimprovetheco-ordinationandeffectivenessoftheworkoftheUNonoceans.
ForHolthus,highseasgovernanceandbiodiversityimpactsaresomeofthenextbigthingsthatoceanindustriesneedtoknowareonthehorizon.Itisparticularlyvitalthattheshippingindustryunderstandstheimportantimplicationsofthesedevelopmentstomaritimetransport,andthatshippingcannotsolvetheseissuesonitsown.“Shippingneedstoengagewiththeotheroceanuserstotackletheseocean-scalesustainabilitychallengesinwaysthatworkforthebusinesscommunity.TheWOCistherecreatingtheeyes,earsandvoiceforshippingandotherindustriesinthesecross-cuttingoceandiscussions.”
nick BrownisLloyd’sRegister’sMarineCommunicationsManager.E [email protected] me@nickbrown_LR
Insight September201235
Value generatorFrom his corner office in a tower block overlooking Utrecht Central Station, Professor Leo van Dongen
can oversee all the comings and goings at one of the Netherlands’ busiest stations.
36 September2012Insight
Professor Leo van dongen talks to Andrew Foulkes about the importance of professional asset maintenance in the rail industry
Itisavistathatwouldbecherishedbyanyrailenthusiast,butVanDongenhasmorereasonthanmosttovaluethisparticularvantagepoint:itishisjobtoensurethatcommutershereinUtrecht,andelsewhereacrossthecountry,willbegettinghomethatevening.
AsDirectorofFleetServicesforNedTrain,VanDongenis,ineffect,thenation’strainengineer-in-chief,responsibleforthemaintenanceofthe2,900carriagesthatservethenationalnetwork.Dayin,dayout,ithisteam’sresponsibilitytomanagethefleet’srepairandrefurbishmentprogrammeswithoutanyimpactontheclockworknatureoftheDutchrailtimetable.
It’sacomplexlogisticalexercisewithlittlemarginforerror.And,withalmost30yearsinthebusiness,itisnotsurprisingthatVanDongenhasstrongviewsabouttheroleofthemaintenanceprofessionwithinasuccessfulrailbusinessandisembarkingonaprojecttoraiseitsacademicstandingandpassonthecoreskillstosimilarindustriesthataresodependentupontheircapitalassets.
dutch mastersTheDutchexpectagreatdealfromtheirrailway,whichisunderstandablegiventhecountry’sphysicalandeconomicgeographycouldnotbemoresuitable.
Withnotrulylargecities,butaround50majorurbancentres,thecountry’snetworkoperatesonsomethingmoreakintoalarge-scalemetrosystem,withthemaintownsconnectedbyastricttimetablethatseesintercityservicesrunningat15-minuteintervals.Nomoresothanintheregionknownasthe‘Randstad’,thedenselypopulatedareaformedbythecountry’sfourlargestcities–Amsterdam,Rotterdam,UtrechtandTheHague–wherealmosthalfofthecountry’s17millioninhabitantslive.
TheDutchrailnetworkhasalwaysbeenmuchadmired–askanyvisitortoSchipolAirportabouttheeaseatwhichtheycanconnecttoanymainbusinesscentre–andisregardedasoneofthemostefficientinEurope.Butattheturnofthemillenniumperformancewashardlyfivestar.Almostoneinsixcarswerestuckinthemaintenancequeueandengineerswerestrugglingtoobtainthenecessaryparts,allofwhichcontributedtoashortageofavailablerollingstock.Punctualitywasdownto79%.
Itwasaperiod,saysVanDongen,duringwhichonecouldalsosenseanindustrythathadstartedtoloseitstechnicalknowledge.“Historically,likemanytrainoperators,whenprocuringnewvehicleswewouldliterallyspecifyourowntrains.Thismeantthe
designandbuildofourfleetwouldbeinformedbyourownexperiencesandourowntechnicaldemands.Inturnwecontinuallybuiltupourowninternaltechnicalcompetencies.”
However,changesinthemarketmeantthatvehiclesbecamelessbespokeandmore‘offtheshelf’,withthemanufacturersthemselvessettingthetechnicalcapabilitiesfortheirvariousmodels.Asaconsequence,saysVanDongen:”we[therailwayindustry]forgottheknowledgeweneededtomanageourownmaintenanceprocesses”.ThiswasasymptomofthechangethatsweptthroughEuropeannetworksduringthe1990swhenitbecamearequirementofEUmemberstatesthattheorganisationsoperatingtheinfrastructure(track,signallingetc)wereseparatedfromthosewhorancommercialservices.
NederlandseSpoorwegen(NS),theDutchrailways,beganthenecessaryrestructuringin1994and,today,itsinfrastructureismaintainedbyProRail,whileNSoperatesthevastmajorityofnationalservices(withafewregionallinesrunbyprivateinterests).NedTrainisafullsubsidiaryoftheNSgroup,maintainingthevehiclesthatenableNStooperatethe4,800servicesthateachdaycarryoveramillionpassengersacrossoneoftheworld’shighestdensityrailnetworks.WhiletheNSfleetisitsmainresponsibility,NedTrainisfreetocompetefornon-NSbusiness.
However,itwasduringthisperiodwhentheengineeringtradewithintherailindustryfounditselftakingabackgroundroleasprivatisation,shareholdervalueandoutsourcingbecametheboardroombuzzwords.
“Atthattime,managers,engineersandoperatorswerenotco-operatinginthedevelopmentoftheinnovationchainofproduct,processandtechnology.Therewasnoopeninteractionbetweenthesedisciplines.”
Back in chargeYet,today,punctualityisbackto95%.Sowhatchanged?
“We’vegotcontrolagain,”saysVanDongen,“technologyisbackontheagendaandmaintenanceprocessesarenolongerseenasacostbut,instead,somethingtobeinvestedinandintegratedwithinbusinessstrategy.”
Somehigh-level,basicfactsunderlinehispoint.Asaroughguide,procuring100carriagesaspartoftheannualrenewalprogrammewouldcostanoperatorapproximately€200million.Butthecostofmaintenanceovertheir30-yearlifespan,atcurrentprices,willbemorethandoublethat–broadly€300millionforgeneralongoingyear-roundmaintenanceand€100millionforafullrefurbishmentaroundthehalfwaypointofitslifecycle.
“Inanysector,overthecourseofanasset’slifetime,abusinesscanfinditselfspendingseveraltimesitsinitialinvestmentoncyclicalmaintenance,modernisationandlifeextension.”Yettooofteninindustrythelifetimemaintenancecostsareleftasanafterthought.
”We have a better balance now between
business execution and maintenance concepts”
Insight September201237
Furthermore,giventhatfleetmanagersmustalsoliveinaprofitandlossworld,theyareacutelyawarethatcarefulinvestmentandmanagementoftheresourcesattheirdisposalcanalsodeliverquantifiablebenefits.Forexample,whenin-servicetrainsreportafaulttheissuewilltypicallybesomethingroutine,afaultypantographorasetofmalfunctioningdoors.Repairingsuchfaultsintheworkshopmayrequirejustanhour,butitcantakeadayeithersidetomovethevehicletoandfromthedepot,meaningthetrainiswithdrawnfromserviceformorethan48hours.
WhichexplainsNedTrain’sdecisiontoinvestinnewTechnicalCentres(smallworkshops)inspecificlocationsacrossthenetwork.Thequickerturnaroundofvehiclesworksoutequivalenttohavinganextra25to30carriagesinserviceatanygiventime–extrastockthatwouldotherwisecostaround€50milliontobuy.
Furthermore,thediagnosticequipmentcarriedonboardtoday’smodernfleetsallowmaintenanceteams,throughremoteconditionmonitoring,toanticipatefaultsbeforetheyevenoccurandtoorganiseresourcesaccordingly.Arollingstockengineer–whothesedaysisaslikelytoworkwithalaptopratherthanatoolbox–couldhavealreadydiagnosedtheproblemandbefullypreparedwithnecessaryequipmentbeforethetrainisevensummonedtotheworkshop.
ToVanDongen,ratherthanbeingseenasanecessaryevilcomprisedofteamsworkingthroughthenightwith‘open-endedspannersandgreasyhands’,maintenanceshouldberespected
asadisciplinethatsitsattheinterfacebetweenassetownersandsuppliers,ensuringthatmaintenanceplanningisfullyintegratedinoperationaldecisions,fromtheinitialbusinesscasethroughtoprocurement,delivery,serviceandeventualdecommissioning.
“Itisnotjustaboutrepairs,itisaprofessionthatinvolvestechnical,administrativeandmanagementresponsibilities,”hesays.“Itisnot
acost,butmoreofavaluegenerator.”
ThatisthechangeinculturethattookplaceinNedTrain:“Wehaveabetterbalancenowbetweenbusinessexecutionandmaintenanceconcepts”.
Supporting the next generationInadditiontohisdutiesatNedTrain,VanDongenisalsoworkingwithatriumvirateofDutchuniversitiestopromotetheacademicstandingoftheprofessionandencouragefurtherresearchintomaintenance
processes.ThisSeptemberseesthelaunchofnewpost-graduatequalificationsinmaintenancemanagementwiththefirst16participantsstartingunderhistutelageattheUniversityofTwente.
TheresearchisfundedbyTheLloyd’sRegisterEducationalTrust(TheLRET),withVanDongenheadingoneofTheLRET’s27researchcentresofexcellencearoundtheworld.EachplaysavitalroleinfulfillingTheLRET’saimtosupporteducation,trainingandresearchprogrammesintransportation,science,engineering,technologyandthesafetyoflife,worldwide,forthebenefitofall.
Itissomethingaboutwhichheisclearlyproud.“Therewillbeincreasingdemandacrossallsectorsforyoungengineerswhoareabletomaketheirpresenceknown.Itisourresponsibilitytomakesurethatthenextgenerationarereadyandabletomakefurtherprogressintermsofunitingtechnology,knowledgeandoperationalmanagement.”
no compromise on safetyBackinhisofficeitislateFridayafternoonandUtrechtCentralStationisgearingupforoneofthebusiesttimesoftheweek.LeovanDongenhasseenenoughFridaygetawayspassquietlybytoexpectanythingdifferenttoday.Sowhatkeepsanexperiencedfleetmanagerlikehimselfupatnight?
“Safety,”herespondswithoutanyhesitation.“It’smyrole.It’sthemostimportantthing,moreimportantthanreliability.Nocompromises.”
Inanindustrythathasundergonesomuchrestructuringandfindsitselfunderincreasingpressuretoincreasecapacitywhilecuttingcosts,itisreassuringtoknowthattheindustry’sengineershaverediscoveredtheirvoice.
Andrew FoulkesisLloyd’sRegister’sTransportationCommunicationsManager.Eandrew.foulkes@lr.orgFollow me@andrewfoulkes_LR
“Maintenance should be respected as a discipline that sits at the interface between asset owners
and suppliers.”
38 September2012Insight
Exploring the value of independent third-party certification
As businesses around the world seek to improve competitiveness, lower risk and build resilience, Insight talks to two leading
authorities in the field of independent certification.
Mike JamesisManagingDirectorofLloyd’sRegisterQualityAssuranceLtd(LRQA)andMichael ToffelisAssociateProfessorofBusinessAdministrationatHarvardBusinessSchool.Toffel’sresearchseekstoidentifywhichvoluntaryprogrammesandmanagementsystemstandardsactuallydistinguishparticipatingcompaniesashavingsuperiorperformance.
CEOs and managing directors worldwide are increasingly recognising the link between certified management systems and the success and survival of organisations. This senior engagement is not only unlocking the intrinsic value of certified management systems but is delivering a clear return on investment to organisations worldwide. drivers for certification Inthecourseofhisresearch,ProfessorToffelhasfoundthatthemaindriverforindependentcertificationofqualitymanagementstandardssuchasISO9001(QMS)ismeetingtherequirementsofcurrentandpotentialcustomers.However,hesays:“Incomparisonwiththequalitydomain,companiesmorerarelyrequiretheirsupplierstoadoptinternationalstandardsgoverningenvironmentalmanagementandlabourconditions,whichisonereasonfewercompanieshaveadoptedthem.Thismeansthatsuchstandardsoffergreateropportunityforsupplierstodifferentiatethemselvesfromtheircompetitors.”
Insight September201239
theirapproachacrosstheirvariousplants,whichsomemanagershavenotedisparticularlyhelpfulafteracquisitions.So,ISO14001canprovideaconsistent,structuredapproachtothemanagementofenvironmentalaffairs.”
Afurtherbenefitofindependentcertificationiscompliancewithcustomer-specifiedrequirements:“Manycompaniesnowrequireindependentlyapprovedcertificationtoanumberofdifferentstandardsinordertolowerriskandassuretheresilienceoftheirsupplychains,”saysJames.Thepremiseisthatbecomingcertifiedtomanagementsystemsstandardsyieldssuperiorperformancethroughprocesscontrolorproductquality.Inaddition,somebelievethatadoptingthesestandardscanleadtofewerproblemssuchasprocessdisruptionsorproductdefects.
Ifthesestandardscauseorganisationstocreatestructuredprocessesforemployeestoofferimprovementsuggestionstomanagement,thentheadoptionofthesestandardscouldleadtoimprovementsinemployeeengagement.
Whileallcertificationdeliversanumberofcommonbenefits,eachindividualstandardprovidesitsownspecificadvantages.Forexample,Toffelsays:“Intermsofprocesses,afewacademicstudieshaveshownthatEMSadoptersexperiencedfasterreductionsinpollutionandgreaterimprovementsincompliancewithenvironmentalregulations,comparedtoasimilarsetofnon-adopters.”
Inadifferentstudy,co-authoredbyUniversityofCalifornia,Berkeley’sProfessorDavidLevine,ToffellookedatISO9001againcomparingadopterswithnon-adoptersoveraperiodoftime.TheresearcherslookedatsingleplantfirmsinCaliforniaandfoundthattheQMSadoptersrealisedfastersalesgrowthandemploymentgrowthcomparedtoasimilarsetofnon-adopters,whichservedasthecontrolgroup.TheyalsofoundsomeevidencethatQMS
Continuousimprovementisakeyfeatureofinternationallyrecognisedbusinessstandards.Organisationsarerequiredtosetobjectivesandtargetsandtomeasureandreviewprogressagainstthesetargets.Butitdoesnotstopthere.AsToffelsays:“Thewholeideaisthatasyouachievethesetargets,yousetnewones.Forexample,theenvironmentalmanagementstandardISO14001(EMS)containsalotofprovisionstohelporganisationsensurethatproceduresaredocumentedandthatstaffarewelltrained.Butifthatwereallithad,thenyouwouldn’tnecessarilyexpectimprovement;targetsthatrequireperiodicreviewandrevisionensureadriveforcontinuousimprovement.”
What are the benefits of certification? MikeJamesbelievesthatindependentassessmentandcertificationtointernationallyrecognisedstandardsinspiresstakeholderconfidenceanddrivesorganisationalresilience,competitiveadvantageandgrowth.
TakingISO14001asanexample,thisstandardhelpscompaniestoorganiseenvironmentalmanagementprocesseswithinaplantoracrossanorganisation.Itrequiresthecreationofanenvironmentalpolicyanddocumentationofproceduressuchastrainingandinternalqualityaudits.
”ManyofLRQA’sclientshavedemonstratedthatanEMSimprovesanorganisation’sregulatorycomplianceinareassuchasenvironmentalemissions,energyefficiencyandwastemanagementandassuchcanofferopportunitiesforcostreduction,”saysJames.“Thecreationofaneffectiveenvironmentalmanagementplanreducesrisk,providingassurancetostakeholdersandoftendeliveringbrandbenefits.”
Summarising,Toffelsays:“It’sawayoforganisingalloftheorganisation’sactivitieswhichmightotherwisebeconductedinamoreadhocmanner.Itcanalsohelporganisationsharmonise
“The creation of an effective environmental
management plan reduces risk, providing assurance to stakeholders and often
delivering brand benefits.”
40 September2012Insight
The way aheadFurtherresearchisnecessarytobetterquantifythebenefitsofcertificationbelievesToffel.“It’sinterestingthatdespitethewidespreadworldwideadoptionofISO9001andotherindustry-specificstandards,thereisvirtuallynorobustsystematicevidenceabouttheconditionsunderwhichthesestandardsbestdeliverontheirpromisetoultimatelydeliverconsistentlyhighperformance,whetheritbeforquality,environmental,orlabourconditions.Whileacademicresearchershavetheskillstoconductthisanalysis,theydon’thavedataontherelevantprocessandproductmetricsovertime.Iamseekingtoworkwithorganisationsthatarewillingtoshareinformationontheirownfacilitiesoroftheirsuppliers,overtime,beforeandafterthesestandardswereadopted.”
Asforthestandardsthemselves,Jamessays:“Inordertoremainavaluablebusinessasset,ISOstandardsneedtocontinuetoevolve,ensuringthatorganisationsofallsizes,complexitiesandlocationseeaclearconnectionbetweentheirstrategicobjectivesandtheirmanagementsystems.Itisnotjustaboutmeetingtherequirementsofastandardtoachievecertification;robustsystemsandprocessesneedtobeembeddedineverythingthattheorganisationdoes.”
adoptersweresubsequentlymorelikelytoreportzeroinjurieswarrantingworkers’compensation.ThisrevealedthattheadoptionoftheQMSappearstohavesomespilloverbenefitsintermsofimprovingworkplacesafety.
TheCaliforniastudyalsofoundthatQMSadoptersweremorelikelytohavesurvivedseveralyearslater,comparedtothenon-adopters.Toffelbelievesthatthereareseveralpossibleexplanationsforthisfinding.“First,manybelievethatISO9001isaproxyforothergoodmanagementpracticesandthatbetterruncompaniesaremorelikelytosurvive.Second,becauseISO9001issooftenadoptedtoqualifyformoretenders,onemightexpectsalestoincreaseamongadopters,therebyenhancingsurvival–whichwasalsofoundinthestudy.Butineithercase,ourresultsindicatethatcompanieslookingforlong-termsupplierrelationshipscanuseISO9001asausefulpredictorofsupplierlongevity.”
Who benefits most? ProfessorToffel’sworkhasdemonstratedthatintermsofsalesandemploymentgrowth,smallercompaniesexperiencegreaterbenefitsfromadoptingISO9001thanlargercompanies.ThiscouldindicatethatsmallerfirmslearnmorefromadoptingISO9001orthatthestandardisparticularlyhelpfulinenablingsmallerfirmstofocusonquality.
Toffelspeculatesthatorganisationsinlessregulatedindustriesmightgainmorefromadoptingqualitystandards,comparedtoorganisationsinindustries–suchaspharmaceuticals–wherequalityisalreadyheavilyregulatedbythegovernment.“ThebenefitsofadoptinganEMSorQMSmightbegreaterincountrieswithweakerregulatoryenforcementbecauseadoptingstandardstomeetindependentthird-partycertificationcouldsparkaninvestmentinmanagerialattentionthatcansubstantiallyenhanceoperationaleffectivenessandefficiency”,Toffelnoted.
“our results indicate that companies looking for
long-term supplier relationships can use ISO 9001 as a useful predictor
of supplier longevity.”
Theprocessbywhichanorganisationachievescertificationinvolvesanassessmentprocessbyskilledassessorswhoexamineanorganisation’smanagementsystemstodeterminewhethertheymeettherequirementsofthechosenstandardorscheme.Theresultingauditreportandfindingshelporganisationsmanagetheirsystemsandriskstoimproveandprotecttheircurrentandfutureperformance.WhenanorganisationachievesapprovaltoastandardsuchasISO9001(QualityManagementSystem–QMS)itisknownas‘approved’,‘registered’or‘certified’.Accreditationbodiesindependentlyauditcertificationbodiestoensurethattheymeetastringentsetofcriteriaregardingthecompetencyoftheirassessorsandtheirmanagementofpotentialconflictsofinterest,forexample.Certificationthroughanindependent,accreditedcertificationbodyisoftenasourceofcredibilityandcompetitiveadvantageforcompanies.
Insight September201241
The growth of carbon trading schemes in Asia
Governments across Asia are serious about reducing their industry’s contribution to climate change and increasingly
are turning to market-based mechanisms to reduce emissions. But it will take time for these schemes to come into operation and grow the stakeholder confidence they need to build scale, says Robert hansor.
42 September2012Insight
D espiteitsimperfections,theEU’sEmissionsTradingSystem(EUETS)hasinspiredgovernmentsinAsiato
developtradingschemesoftheirown.And,by2020,whenanewglobalagreementonclimatechangewillbeimplemented,manybusinessesinAsiawillalreadybeoperatingnationalcarbonmarkets.
TherearealreadyoperatingschemesinJapanandNewZealand.Australia’scarbonpricingmechanismbeganinJuly:stillmoresystemsareemerginginChina,IndiaandSouthKorea,amongothers.Clearlygovernmentshavefounditeasiertoputinplacelegislationoftheirownatadomesticlevel,wheretheycontrolthelegislativeprocess,ratherthanhavingtonegotiateitontheinternationalstage.
ButitremainstobeseeniftheseschemeswillemergeasfullyoperationalemissionstradingprogrammessimilartotheEUETSandiftheycanbelinkedinternationally.Itwillnotbeeasy.Mostofthehostcountrieshavesignificantlydifferentpriorities,letaloneindustrial,economicandinstitutionalconditions;anddisparatedomesticstakeholdersarepushingandpullingtoformlegislationineachmarket.
SouthKorea,forinstance,issueditsnationalgreen-growthstrategyin2008buthasfaceddifficultdomesticoppositiontoitsproposedETS.Asastopgapmeasure,itimplementedagreenhousegasandenergytargetmanagementsystemandwaseventuallyabletopassitsETSlegislationinMaythisyearafterseveraldelays.
Pilots in ChinaThedraftregulationsfortwoofChina’ssevenregionalpilotprogrammeshavebeenissued,givingstakeholdersaninitialunderstandingofwhatcouldemerge.Thereisnotmuchinformationabouthowapricewillbeformedbut,withanationalcarbonmarketmootedfor2015/16,thisETSeventuallycouldbecometheworld’slargest.
ButwhileChinahasagreattrackrecordfordeliveringonwhatappeartobeostentatiousgoals,manyobserversappeardistractedbythescheme’spotentialand
aremissingtheenormouschallengesthatneedtobeovercome–chieflythatitishardtosaywhetherbusinesswillinvestincleanertechnologiesandprocessesforregionalpilotschemeswhichmaylastjustafewyears.Sothegoalduringthepilotstageshouldbetoprepareparticipantsfortheconditions,standardsandinfrastructurethatwillgovernChina’snationalETSratherthantogeneratehighvolumesoftrade.Itwillneedtomatureslowlyovertime.
Meanwhile,inJapan,turningtwonuclearreactorsbackontoeasepowersupplyproblems,despitewidelyreportedpublicconcerns,highlightstheenergydilemmafacingthecountryaftertheFukushimacrisislastyear.Tomeetitsemissionsreductiontarget,theuseofinternationaloffsetsmaybecomegreaterthanever.Itsproposedbilateraloffsetcreditingmechanismhopestogeneratemanyoftheseoffsetcreditsfromdevelopingcountriestohelpachieveitstarget.AsimilarconcepttotheUN’sCleanDevelopmentMechanism,itscreatorshopethatthesimplerprocesseswillmobilisegreaterlevelsofinvestment.Designedinparttoboostexporttrade,themechanismcouldbeaboonforJapanesebusinesses.
Also,bypotentiallytargetinglargequantitiesofoffsetsunderitsownprogrammebeforeanyothercountrytakessimilarsteps,Japanissecuringarelativelycheapsupplyofcredits.Initialprojectshavebeenidentified,feasibilitystudiescompletedandcapacitybuildingprojectsunderway.Oncetherulesareclarified,itsenvironmentalintegrityandtheimpactitcouldhaveontheinternationalcarbonmarketwillbebetterunderstood.
AndwiththesemultipleschemesinAsiaemerging,withavarietyofemissiontargets,standardsandgovernancemechanisms,talkisstartingofaregionalcarbonmarketbeingestablished.Butwithoutcommonstandardsandrules,itisdifficulttoseehowunitscouldbetradedbetweenthedifferentprogrammes;thewidelydifferingstandardswouldmaketransactionscomplexandcostly.Ifthefragmentedvoluntarymarketcanbetakenasareasonableguide,high-qualitycreditswillbedifficulttoidentifyandpriceswillvarywidely.
A common understanding neededPartoftheproblemisthattheseinitiativesareemergingincountrieswithdifferingeconomicconditionsandinstitutionalcapacities.Ifacommonstandardistoomuchtohopeforintheshortterm,forfutureeaseofintegrationandfungibilityofcredits,theemergenceofacommonunderstandingoftheprinciplesformonitoring,reportingandverification(MRV)arerequired.SimplebutadaptiveMRVregimesthatbuildtrustandconfidenceamongparticipantswillresultinstrongermechanismsovertime.
Inalargepart,thisdependsonthelevelofambitionamongthedifferentschemes’proponents.Ifenvironmentaleffectivenessistheprimarygoalthen,togetherwithAsia’scommitmenttoa2020globalscheme,thereshouldbecontinuedenthusiasmfornationallevelregimesandalsotimeandincentiveforcommonstandardsandapproachestoemerge.
Onethemewhichrunsthroughalloftheseeffortsisthedifferentexperiencesregulatoryarchitectshavehadintryingtoengagetheprivatesectorduringtheearlystagesofsystemdesign.Ultimately,Asianbusinesses–justliketheircolleagueselsewhereintheworld–needalong-termpricesignaltobeginthetransitiontousinglow-carbontechnologies.Inmanycases,thecreatorsofthesenewsystemshavebeenwellservedbysolicitinghighlevelsofinvolvementfrombusinessearlyon.
Foremergingschemes,theshort-termgoalshouldbetoachievemarketreadinesssotheirinitiativesgainsupportfromparticipants.EstablishingcommonprinciplesforMRVisoneofthefirstimportantstepstoprovidingthekindofconsistencythatbreedsstakeholderconfidence.Oncethisisachieved,thelong-termchallengeistosetambitiousreductiontargetsthatstimulatethedemandforcarboncreditsandreleasegreaterlevelsoflow-carboninvestment.
Robert hansorisHeadofClimateChange&Sustainability–[email protected]
Insight September201243
Lloyd’s Register has acquired houston-based WEST Engineering Services in a move that secures the Group's position as the premier independent risk management organisation supporting the global offshore drilling industry.
“TheacquisitionofWESTfurtherexpandstheglobalportfoliooftechnicalserviceswecanoffertothedrillingsector,buildingontheworld-classsupportwealreadyprovidethroughourEnergyteamwhichincludestheModuSpecGroup,ODSandtheScandpowerGroup,”saidJohnWishart,Lloyd’sRegister’sEnergyDirector.“Wearenow,withoutquestion,theindustry’sleadingindependentprovideroftechnicalsupportforsafeandenvironmentallyresponsibledrillingoperationsastheworldcontinuesitssearchfornewenergyresources.”
nuclear power expertise
New
s up
date WEST
Engineering Services joins Group
A new appointment and acquisition in India illustrate Lloyd’s Register’s response to rising demand for technical assurance services in the nuclear power sector.
Mumbai-basednuclearriskspecialists,ReltechConsulting,whichprovidessafetymanagementservicestoamultinationalcivilnuclearclientbase,havebeentransferredtothenewlyformedLRScandpowerRiskConsultancyPvt.Ltd.“BuildingastrongerlocalpresencegivesustheadditionalmanpowerandtechnicalresourcesweneedtoservetheexpandingIndianmarketandourglobalnuclearclients,”saidBjornIngeBakken,ChiefExecutiveoftheScandpowerGroup.
AndwehaveappointedtheinternationallyrespectednuclearsafetyexpertProfessorMamdouhEl-ShanawanyasBusinessLeaderforNewNuclearOpportunities.HejoinsusfromtheInternationalAtomicEnergyAgency(IAEA),wherehemostrecentlywastheagency’sHeadofSafetyAssessmentfortheDivisionofNuclearInstallationsSafety.HewasresponsibleforstrengtheningtheabilityofIAEAmemberstatestoassessthesafetyoftheirnuclearinstallations.TheteamwereawardedtheNobelPrizeforPeacein2005.
44 September2012Insight
Ambrey Risk’s quality first AmbreyRisk,theinternationalmaritimesecurityspecialist,hasbecomethefirsttoachievecertificationtoISO9001:2008fortheprovisionofmaritimesecurityservicesforvesselswithLRQA.CommercialDirector,ShaunWebberstated,“Wewanttosetthebenchmarkforregulatorycomplianceandprofessionalisminmaritimesecurity,soLRQAwithitsstrongmaritimecredentialsasasubsidiaryofLloyd’sRegister,wastheobviouschoiceforus.WearethereforedelightedtobethefirstintheindustrytogaincertificationtoISO9001withthem.”
Marine wind energy project Lloyd’sRegisterhasjoinedforceswithTotempowerEnergySystemsandZodiacMaritimeAgenciestoassessthepotentialofwind-generationdevicesonboardcommercialshipsasthemaritimeindustrystepsupitspursuitofviablecarbon-alternatefuels.
Afullyautonomouswind-monitoringsystemdesignedandassembledbyTotempowerhasbeeninstalledontheZodiac-managedbulkcarrierCape Flamingo.Theprojectwillidentifyandmeasurethepotentialgeneratingcapacityfromwindpowerfortheship’stradingpatterns.Thedatawillbeusedtosupportthedevelopmentofcomputationalfluiddynamics-basedsimulationmodelsthataresuitableforpredictingthepotentialenergyyieldsonotherZodiacships.
London Crossrail roleThelargestengineeringprojectcurrentlyunderconstructionanywhereinEurope,London’sCrossrailscheme,willinvolveLloyd’sRegisterworkingonthecentralsectionofthescheme.Ourroleasthenotifiedbodyextendsacrossthedesign,construction,testingandcommissioningofthesection’svariousstructuralsubsystems,includingthe21kilometresoftwin-boretunnelsthatwillstretchfromthewestofthecity,throughtoStratfordintheeastandsouth-eastLondon.
Europeanlegislationrequiresthatmainlineraildevelopments,suchasCrossrail,areconstructedtocommonstandardssopromotingasinglemarketbyremovingtechnicalbarrierstothesupplyofequipmentandtherunningoftrainsbetweenmemberstates.Asnotifiedbodywewillhelpensurethenewcentraltunnelsectionwillbecompliantwiththislegislationconcerningtheinteroperabilityofrailwayoperations.
Groundbreaking rules for FLnG Lloyd’sRegisterhasuseditstechnicalknowledgeandexperiencetopublishtheworld’smostcomprehensiverulestoguidethedesign,constructionandoperationoffloatingliquefiednaturalgas(FLNG)facilities.
“Naturalgasisakey‘fuelforthefuture’anditssafeandeconomicproductionwillbecomeincreasinglymoreimportant,”saysJohnRowley,President,Lloyd’sRegisterAsia.“TheFLNGfacilitieswehaveworkedontoformtheseruleswillbethebiggestfloatingstructureseverseenandinthecomingdecades,theywillallowustounlocktheworld’sstrandedoffshorenaturalgasreserves.Theyareessentialtotheworld’sfutureenergymixandLloyd’sRegister’sexperienceandknowledgeisintegraltotheirsafe,sustainableandeconomicoperation.”
“Natural gas is a key ‘fuel for the future’ and its safe and economic production will become increasingly more important”
Insight September201245
Loss prevention. how prepared are you?It’syourpeople–yourequipment–yourprocess–yourbusinessreputation
Chooseyourworld-leadingauthorityonsafety,assetreliabilityandbusinessperformancetosupportasaferandmorereliableenergyindustry.
Applyourexpertise:visitwww.lr.org/energy
Lloyd’sRegister,LRQA,ScandpowerandModuSpecaretradingnamesofLloyd’sRegisterGroupLimitedanditssubsidiaries.Forfurtherdetailspleaseseeourwebsitewww.lr.org/entities