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The Latest Edition of Insight Magazine - Issue 4 March 2012

The Latest Edition of Insight Magazine - Issue 4 March 2012

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  • 1. insight Inside • COP 17 outcomes • New fuels, new engines and new designs • Engineering the Olympics • ISO 9001 evolution • Focus on Brazil • Hong Kong MTR The Lloyd’s Register Group magazine Issue 4 March 2012 asset management Arctic challenge: maintaining the balance
  • 2. Inside Issue 4: 2 challenge Contents in full: 2 The Arctic challenge: introduction 4 Arctic transit: Northern Sea Route Arctic Can we develop the region’s resources and 7 Fram: polar voyager maintain the environmental balance? The 8  Tackling the cold, hard facts: Northern Sea Route and drilling in the Arctic drilling in the Arctic 10  overning the ‘polar Mediterranean’: G 12 deadline to 2041 Klaus Dodds, Professor of Geopolitics at Royal Holloway, University of London 12 On a deadline to 2041: Robert Swan On a 15 Constant innovation: Gearbulk Norway Robert Swan, OBE, polar explorer and 16 New fuels, new engines & new designs environmental leader is on a mission 18  ew steerage at the IMO: N to protect Antarctica Koji Sekimizu, IMO’s Secretary-General 20 Empowering eco visions 18 steerage at the IMO 22  eading in the right direction: H Henry Derwent, President & CEO of IETA New 24  he paradox of perfection: James Smith, T Koji Sekimizu, IMO’s new Chairman of the Carbon Trust Secretary-General talks about the 26  hat does COP 17 mean for carbon W role of the IMO and his key aims trading and CDM? 27  he long wait for investment grade T 20 policy: Joan MacNaughton, Senior VP, Environmental Policies, Alstom Empowering eco visions 29  people discipline: Andrew McCusker, A E-idea is helping young eco-entrepreneurs former Operations Director, MTR to develop innovative environmental 32 SO 9001: Business management I projects and businesses literature’s most influential work? 34  ngineering the Olympics – E 29 discipline Sir John Armitt, Chairman, ODA 37 s London’s transport network up to I A people the job? Meeting the Olympic challenge Andrew McCusker, former Operations 38 A country transformed: Brazil Director for Hong Kong’s MTR, talks 40 Rise of leisure ships in China about asset management 42 Committing to a food safety culture Insight is our magazine for decision-makers The magazine is produced by working in the marine, energy and transportation Group Communications, designed by sectors. Care is taken to ensure that the Conran Design Group information in Insight is accurate and up to date. and printed by Pureprint. However, we accept no responsibility for Editor: Kathy DavisLloyd’s Register works with businesses inaccuracies in or changes to such information.and organisations around the world to The views expressed do not necessarily represent E kathy.davis@lr.org the position of the Lloyd’s Register Group. T + 44 (0)20 7423 2654enhance the safety of life and property atsea, on land and in the air. We help our Copyright © Lloyd’s Register 2012. www.lr.orgclients face today’s challenges and plan for All rights reserved.tomorrow and beyond.
  • 3. Insight March 2012 1 Welcome To our latest issue of Insight. Richard Sadler, Chief ExecutiveOnce again I am proud to introduce our latest edition of Insight, develop innovative environmental projects and businesses. Wea title that is becoming increasingly respected among politicians, update our readers on the latest developments from COP 17 andindustrialists and business leaders for its coverage of global issues. the climate change agenda. We look at the continuing evolution of the international quality standard, ISO 9001. The challenge ofThis edition covers a wide range of subjects that focus engineering the Olympics and creating a transport system to copeon the critical infrastructure that society relies on to sustain life, with its demands is examined. We also chart the rapid growthand quality of life. It has contributions from people with a unique and transformation of Brazil and China’s leisure ship market.view and huge depth of expertise in the issues that will be the From food safety to future fuels – we examine the issues thatmeasure of our collective success in meeting these challenges. affect our daily lives.We look at the challenge of protecting our Arctic and Antarctic The solutions to these challenges require teamwork fromregions, examining the balance between developing the Arctic’s everybody involved – transcending geographical and politicalresources and trade routes and protecting our planet’s last great borders – because, as always, teams make better decisions.wilderness for future generations. Koji Sekimizu, Secretary-Generalof the International Maritime Organization discusses his priorities We need to be well informed for the best collective outcome.for the protection and regulation of seaborne trade. E-idea is We hope that Insight will help you be better informed andprofiled, a new initiative to help young eco-entrepreneurs to make better decisions.
  • 4. 2 March 2012 Insight TheArctic challengeCan we develop the region’s resourcesand maintain the environmental balance? The Arctic •  orth of the Arctic Circle (66° 33’N). Region includes N the Arctic Ocean and parts of Canada, Russia, Greenland, USA, Norway, Sweden, Finland and Iceland. •  rctic Ocean has a 45,000-kilometre shoreline with A a 14,000-kilometre2 surface; 1.5 x area of USA. •  he Arctic states – members of the Arctic Council – T are Canada, Denmark (including Greenland and the Faroe Islands), Finland, Iceland, Norway, Russian Federation, Sweden and the USA.
  • 5. Insight March 2012 3 Recognising the potential for increased marine activity, the Arctic Council called for an examination of the issues and in 2009 approved the Arctic Marine Shipping Assessment (AMSA) 2009 Report includingThe Arctic is opening up. its recommendations on enhancing marineWith Arctic sea ice reducing safety, protecting Arctic people and theby about 10% per decade environment, and building an Arctic marine infrastructure.and high commodity pricesmaking the vast hydrocarbon The region’s extreme and unique environmental and operational challengesreserves more economically had put the exploitation of the hydrocarbonattractive, global interest in reserves, estimated at 22% of the world’sthis region is growing. recoverable reserves, beyond viable reach. But high commodity prices and growingIt is a unique area and the indigenous global demand mean that energy explorationpeoples, flora and fauna have adapted and production is moving further northto its cold and extreme conditions. into these harsh and challenging conditions.As demands on the region increase, the ModuSpec, a leading provider of technicalneed for co-operation and negotiation services to the offshore drilling sector, talkswill grow. But who looks after the Arctic? about operating safely and effectively inOn page 10 Professor Klaus Dodds talks the Arctic on page 8.about the geopolitics of the region and The Arctic is especially vulnerable to theargues that the Arctic Council will have effects of global warming and concernsa key role to play in developments. are mounting about the increasing levelsThe Arctic Council, set up in 1996, is a of mercury and other pollutant fallouthigh-level intergovernmental forum to in the region. The Arctic Council urged allpromote co-operation, co-ordination and countries at COP 17 to take decisive actioninteraction among the eight Arctic states, to hold the increase in global averageinvolving the indigenous communities and temperature below 2C above pre-industrialother Arctic inhabitants on common issues, levels. We look at some of the outcomesin particular sustainable development and of COP 17 on pages 22 to 28.environmental protection in the Arctic. And what about the Antarctic? PolarThe increasing economic activity and explorer and environmental leader Robertretreating sea ice has encouraged interest Swan is focusing his attention on savingin the Arctic seaways, most notably the the world’s last great wilderness as weNorthern Sea Route, as examined on page 4. report on page 12.
  • 6. 4 March 2012 Insight Arctic transit: Northern Sea Route The potential for commercial shipping The appeal of a regular trade route from Europe to Asia crossing the Arctic Ocean has been recognised since the fifteenth century. But it is only in the past few decades that this tantalising prospect has become realistic.T he last two years have seen moves to explore the In 2009, with near record low levels of sea ice in the Arctic, two potential of the Northern Sea Route (NSR) as a German vessels were the first foreign flagged ships to sail the NSR summer season trade lane to and from the booming from east to west. The voyage sparked renewed international Asia markets. Russia’s NSR is a set of sea routes from interest in the route.the Kara Gate to the Bering Strait. The NSR is navigable along its In 2010, Russian nuclear-powered icebreakers enabled four transitentire length during the summer and early autumn, depending on voyages, moving 111,000 tonnes of goods to the Asia-Pacificthe ice conditions. As the sailing distance from a north European region. And 2011 saw a huge rise in transit traffic. Some 34 vesselsport to the Far East using the NSR is approximately 40% shorter and 820,000 tonnes of cargo travelled the route as the furtherthan using the Suez Canal, it is no surprise that the commercial retreat of sea ice doubled the summer transit period to a recordpotential for this route is in the spotlight. 20 weeks, compared to 2009.Open to foreign shipping Demonstrating the advantagesDuring the Soviet Union era the NSR was a very important national “Various shipping and charter companies are pushing thewaterway and powerful icebreakers were built to assist merchant boundaries on the NSR to achieve faster transit times with largerships to reach the various ports in the region. The Russian vessels, demonstrating the potential of using the route,” says Borisgovernment opened the route to foreign vessels in 1991 Ozerov, Lloyd’s Register’s Russia Marine Manager. “One driver isand the first non-Russian flagged vessel used it that summer. the future development of Russia’s Arctic hydrocarbon resourcesHowever, after 1993, volumes of domestic and transit traffic that will need transport to global markets.”plummeted, partly because government subsidies dried up. In 2010, the Norwegian company Tschudi Shipping and Denmark’sBy 1998, transit traffic had stopped altogether. It was not Nordic Bulk Carriers transported 41,000 tonnes of iron orecommercially viable under the economic and climatic conditions concentrate from northern Norway to China on the MV Nordicof the time according to a joint Russian-Norwegian-Japanese Barents. Based on this, Tschudi Arctic Transit publicised possibleresearch report (INSROP) in 1999. savings of 20.5 days to Yokohama, Japan and 16 days to Shanghai,
  • 7. Insight March 2012 5 MV Nordic Barents and icebreaker, 50 Years of Victory, in 2010.China using the NSR compared to the Suez Canal, for a vessel doubt in our minds that the opening of the NSR has greatsailing from Kirkenes in Norway or the Russian port of Murmansk. commercial potential for both cargo and shipowners.”“The 2011 transit season began unusually early,” says Desmond Cost benefit calculationUpcraft, Ice & Cold Operations Manager, Lloyd’s Register. “In late A lot has changed since the INSROP study in the 1990s. ReductionsJune Russia’s largest independent gas producer, Novatek, chartered in voyage times and some dues – let alone in greenhouse gasthe ice-classed panamax tanker Perseverance to carry 60,000 emissions – have shifted the economics of the NSR, though thetonnes of gas condensate from northwest Russia to China. equation is still finely balanced.Conditions allowed the tanker to sail north “You will need a transit permit,” saysof the New Siberian Islands. This route is Upcraft, “and pay qualified ice pilots,deeper which allows larger ships to use the “This historic sea route additional insurance premiums and RussianNSR. Two months later, using this deepernorthern route, Sovcomflot’s suezmax has got it all; it is safer, icebreaker fees. Some of these direct costs could be offset, as if the voyage was via thetanker Vladimir Tikhonov became the shorter and thereby Suez Canal, there would be canal transitlargest vessel to complete the NSR, taking120,000 tonnes of gas condensate from more eco-friendly” fees, piracy insurance and possibly the cost of installing anti-piracy equipment.”northern Norway to Thailand.” But there are indirect costs too. “VesselsNordic Bulk Carriers used the NSR again operating on the NSR during the summer season need to have anin 2011, when it chartered the bulk carrier Sanko Odyssey to take ice class acceptable to Russia’s Administration of the NSR (ANSR)the largest iron ore shipment yet, some 72,000 tonnes from Russia and meet other Russian regulatory requirements,” says Ozerov.to China. At the time the company proclaimed: “This historic ”The issue of a permit is not routine – in practice a survey maysea route has got it all; it is safer, shorter and thereby more need to be carried out by an ANSR inspector.”eco-friendly. Said in another way – it is good business. The fuelsavings alone add up to approximately 750 tons. There is no
  • 8. 6 March 2012 Insight What about the Alaska (USA) No rt he rn Russia Northwest Passage? Se a Ro ut e Arctic Circle Canada The Northwest Passage (NWP) has not seen the same development as the NSR. There is seasonal traffic on the NWP; one operator is Northern Transportation Company Limited (NTCL) and a reduction in ice conditions would no doubt lengthen its operating season. For transit traffic, although the route has been opened up by the retreat of the sea ice, the conditions are different. Large areas of the NSR had no, or very little sea ice, in the summer of 2011. But hazardous multi-year ge Greenland ice‚ 3–6 metres thick, was still found in the NWP. sa as (DK) tP es The contested sovereignty claims over the waters complicates W Russia n er transit shipping through the NWP and the considerable rth No investment needed in escort vessels and infrastructure needs Iceland to make economic sense for government. Interest is growing however. Quebec’s government in particular, is looking to Norway exploit mineral resources in Northern Quebec. Under its Plan Nord programme it is investigating transhipment, ice-classed UK vessels, and icebreaking capacities.The type of cargo shipped will also have a bearing on the transit in 2012 on four new icebreakers, worth €1.8 billion, and twoviability of the route. Only 22 of the 34 vessels that transited in others are planned. Three of the six will be nuclear powered.2011 carried cargo and 15 of these transported liquid cargo, Key global transport route of the future?mainly gas condensate. A 2005 study funded by the Institute of One key influence on the future transit use of the NSR is thethe North concluded it is technically possible for container traffic perceived hurdle of complying with Russian requirements andto use the NSR but did not look at the economic feasibility of the uncertainty on icebreaker fees and other dues. Companies willconcept. If Russia continues to develop its Arctic hydrocarbon want assurance on these before they invest in the route. Theresources, we may see liquefied natural gas (LNG) being shipped demands faced by the maritime shipping industry to reduce carbonalong the NSR. To achieve this, the industry will need to develop emissions may yet emerge as one of the drivers for developing thededicated high-tech Arctic LNG carriers. route: but the environmental consequences of increased shippingThe Arctic Marine Shipping Assessment (AMSA) 2009 Report in the region also need to be considered.highlighted the need for comprehensive economic studies of The AMSA 2009 Report concluded that “the uncertainties andthe Arctic sea routes, including the NSR, and this is still the case. complex interactions of many driving forces of trans-Arctic navigationRussia’s plans require significant research. While it may be technically feasible toThe Russian government has announced its intention to transform cross the Arctic Ocean today … the operational, environmentalthe NSR into a commercially viable route from Europe to Asia. It is and economic implications and challenges for routine trans-Arcticimproving safety and communication by building 10 new bases for voyages are not yet fully understood”.search, rescue and communication along the route. A new law on The competitiveness of the NSR will increase as the Arctic icethe NSR is in the pipeline, part of which will clarify tariffs for recedes and the summer transit period lengthens – and forecastsicebreaker assistance and other services. for this retreat are constantly being revised. But its future as aInvestment is also needed in the ageing nuclear icebreaker fleet. viable transit route is less clear cut.In October 2011, it was reported that construction would begin E desmond.upcraft@lr.org
  • 9. Insight March 2012 7 Fram: polar voyager Expeditions to the South and North Poles began as early as the 1500s and reached fever pitch in the late 1800s and early 1900s. TodayMarch 1895 T he theory of a trans-polar current in the Arctic Ocean was put forward in 1884. Norwegian explorer Fridtjof northern latitude of 86° 14’ they were The Fram later sailed on two more Nansen reckoned a strengthened ship forced to turn back and eventually important expeditions; to western could use the current to get close to the returned to Norway in August 1896. Greenland and to Antarctica for Roald North Pole. The Fram was the result. Amundsen’s South Pole expedition. The The Fram, with the rest of her crew, ship is now in the Fram Museum at Oslo. Forcing ships through the Arctic ice had continued to drift westwards and in failed many times before. But the Fram was February 1896 the current turned her Today there is a new Fram in polar waters; designed to be lifted up and move with the southwards. She finally emerged from the the MS Fram is a 500-passenger capacity ice, with a hull strong enough to withstand ice and in September returned in triumph cruise ship, owned by expedition cruise the crushing pressure of the pack ice. To to her port of departure, Oslo, with a specialist Hurtigruten. Built in 2007, this provide some comfort for the crew, the ship’s significant amount of valuable scientific Lloyd’s Register ice classed ship has a living quarters were insulated with layers of data – and a healthy crew, unusual for reinforced hull for cruising polar waters wood, felt, linoleum and reindeer hair. such an expedition at this time. in the summer months. In June 1893 Nansen set out on the courageous first Fram expedition. The ship “With MS Fram we wanted to honour Fridjof Nansen’s great efforts, as a became locked in the pack ice near the New Siberian Islands in September. She humanitarian, researcher and polar explorer. We built a ship with qualities was carried for hundreds of miles but did for exploring polar waters, sailing in the wake of Nansen. The ship is small not get as close to the Pole as Nansen had enough to bring guests close to nature and big enough for comfort. From day hoped. Realising this, Nansen and Hjalmar one she has fulfilled her task, sailing both in Antarctic and Arctic waters.” Johansen took to the ice in March 1895 by dog-pulled sled. After reaching a record Dag-Arne Wensel, Director of Technical Maritime Operations, Hurtigruten.
  • 10. 8 March 2012 InsightWhile activity remains speculative, interest in effectiveness of plant, equipment and processes; and safeguarding the environment. But the Arctic conditions bring additionalexploiting the Arctic’s hydrocarbon reserves challenges. The remoteness, limited hours of daylight and freezinggrows at a rapid pace. Further steps in that weather hinder search and rescue operations. Long periods in suchdirection will mean grappling with the region’s harsh conditions with extreme periods of day and night can take aextreme and unique environmental and psychological toll and increase the risk of human error. The heavy icing of exposed equipment impacts on safety of people and theoperational challenges. The very worst plant. Other risks to personnel are freezing and non-freezing coldconditions demand the very best practices. injuries, high levels of ultraviolet light, slippery surfaces, falling ice, impaired visibility and immersion in the Arctic waters.ModuSpec, the number one provider of offshoredrilling rig pre-charter surveys and assessments, ModuSpec has a seven-step approach in response to these challenges. This begins before the operation even starts, withand member of the Lloyd’s Register Group, design and installation. The other steps are establishing a plannedtalks to Jason Knights. maintenance system, winterisation, contingency planning, putting in place management plans and systems, ice protection andIt is -10C and summer in the Arctic; winter temperatures drop to removal, and regular in-service inspection.around -40C. Given the severe cold operators drilling in the regionface a number of specific issues. “There must be a full understanding Oil development in sensitive areas, such as the Arctic, is unlikely toof the environmental conditions in which people, plant and processes be compatible with the view of conservationists. If development isare working – the three Ps – given the temperature levels, as well as to take place, steps need to be taken to help reduce the risks andthe hydro-meteorological, bathymetric, seismic and ice conditions,” impact at the installation and operational phases. Industry alsosays Andrew Calderwood, Senior Project Manager at ModuSpec’s has to appreciate that sourcing energy is rarely totally benign.Netherlands office. This understanding has led to a heightened As valuable as energy has become, some things are worth more.awareness that winterisation, preparing for the conditions, is essentialfor safe, effective Arctic operations, Calderwood explains.The operational landscape is as harsh as the region’s treeless Jason Knights is Global Communications Managerpermafrost vista. A number of best practices are critical and the for Lloyd’s Register’s Energy business.three Ps need to be treated as part of the whole ‘system’. E jason.knights@lr.orgAs with the operation of any high-risk capital-intensive assets, the Tweet me @saferenergythree areas of main concern are the safety of personnel; safety andTackling thecold, hard factsOperating safely and effectively in the Arctic
  • 11. Insight March 2012 9The seven-step solution:1 Forward-thinking design and installation To help mitigate risks, the ModuSpec team considers itimperative to assess a drilling unit during its design. This exercise 5 Putting in place management plans and systems “The first thing we ask is, ‘What can go wrong?’” says Meindert Sturm, Business Development Manager, ModuSpec.can be divided into three distinct areas: hazard identification; “This could be anything from loads falling and harminglikelihood and consequences; and mitigation steps. Factors personnel, to a vessel colliding with an offshore structureinclude the need to protect equipment though encasing and and blow-outs.”appropriate positioning of deck equipment to reduce the To help prevent disasters, management systems should dictatelikelihood of human error in the harsh conditions. working methods, in combination with systems that identifyThe bottom line is that there needs to be a rigorous, possible threats. For example, an ice management plan willforward-thinking design and installation process, with clear give the operating crew a series of step-by-step instructions.communication between the developer, operator and local In extreme weather situations, the rig operators will havecommunities who occupy the area potentially affected by a sufficient time to disconnect from the well before an ice floeproposed project. strikes the rig. Management systems can also incorporate the use of marine radar or more sophisticated equipment,2 Establishing a planned maintenance system An important step is to introduce an enhanced plannedmaintenance system that will address substantial risks before such as radar early warning systems to help prevent collisions. An oil-spill contingency plan is also vital, considering the limited time available for a clean-up operation and the environmentallyentering cold climate regions. The system should specifically sensitive area. To this add a couple of facts: “Oil persists forfocus on elements that become safety and operation critical longer in Arctic conditions because it evaporates more slowly,when drilling in Arctic conditions, such as heat tracing on fire and can be trapped under ice, making it less accessible tofighting lines and drain lines. bacterial degradation,” says Sturm. It’s essential to fully consider human factors when devising3 Winterisation “The main challenge is making the environment safeand more comfortable for personnel,” says Calderwood. management plans and systems. Where neglected, this has often led to the energy industry having to change the way it operates. In addition, communities are becoming more“This requires a deep understanding of the physiological powerful stakeholders, with clear ideas on how asseteffects of working in isolation.” Given the extreme owners and operators should prepare, monitor andconditions, the human factor should not be overlooked. manage their activities.“Thorough assessment is required of crew safety andoperations, onboard equipment and fittings, and constructionmaterials,” explains Ad Tange, Global Commissioning Managerfor ModuSpec. “The first step must ensure all aspects of drilling 6 Removal of and protection from ice Breaking up ice with mallets, by hand, is still the main solution. Steam lances and hot water jets are also employed,unit winterisation meet with the required operating procedures but the use of electrical equipment remains a moot pointfor Arctic conditions, including an ice management programme. (while reducing the amount of manual labour required, thereCrew need to be trained and provided with appropriate are question marks over maintenance costs). “Care must beequipment to work in cold climates, work routines should be taken to prevent damage to equipment,” adds Calderwood.altered to reduce the time that personnel are exposed to low “Controls, in particular, can suffer mechanical damage, andtemperatures, and sheltered and heated locations must be electrical equipment can be damaged through the ingressprovided for personnel working for extended periods on of water and steam.”the open deck.” Mooring equipment on mobile offshore drilling units are also susceptible to a build-up of ice caused by spray rain, hail and4 Contingency planning The various types of evacuation and rescue optionsavailable should be considered in light of the extreme conditions, snow, especially the forward moorings of floating storage units. It is not uncommon for machinery to be placed in an enclosed forecastle. It is also important that the mooringwhich often restrict activity. These include the use of offshore drums are covered so that icing can easily be removed.standby vessels, helicopters or a Seascape system of evacuation,and lifeboats designed to operate on ice. “When there is an icebuild-up, unlike in warmer open-water operations, the offshorestandby vessel may have a higher power requirement than a 7 Regular in-service inspection Adhering to a careful inspection regime and regular inspection plan is critical.supply vessel,” emphasises Desmond Upcraft, Ice & ColdOperations Manager, Lloyd’s Register.
  • 12. 10 March 2012 InsightGoverning the ‘po A s the sea ice thins and the Arctic Ocean opens states can acquire wider rights by providing scientific evidence to up, the subject of geopolitics rises to the surface. the Commission on the Limits of the Continental Shelf (CLCS). In Professor Klaus Dodds from Royal Holloway, turn, this UN body issues technical recommendations for debate University of London, talks to Jason Knights and negotiation among the relevant coastal parties. “All five statesabout some key issues and their potential impact on plans have embarked on mapping projects designed to demarcate theirto exploit the region’s natural resources. extended continental shelves.”In August 2007, as part of the privately funded Arktika The Arktika expedition is a case in point. To date, only Norway’sexpedition, a Russian flag was deposited on the Arctic Ocean’s maximum sovereign rights have been pinned down, elsewhere,seabed, provoking headlines and warming the collar of the then “a submission deadline in 2009 for materials to be sent to theCanadian foreign minister. Symbolic posturing aside, the notion of CLCS encouraged febrile reporting, so if there was ‘a race toa scramble to lay claim to the region is not just outdated but also the Pole’ it was related to this submission deadline.”wholly misplaced, explains Professor Klaus Dodds. “Under widely With the CLCS inundated with enough work to last for 40 to 50recognised international rules, the entitlements of the five coastal years, settling shelf sovereignty among the remaining coastalstates [Canada, Denmark/Greenland, Norway, Russia and the states may be some way off. Awaiting technical recommendations,United States] are well established over a large portion of the in fact, is likely to be the tip of the iceberg. “Negotiations will notArctic Ocean. There is no need for these five states to scramble.” be simple when it comes to a region of such strategic and symbolicLocation is clearly everything. “Geographical proximity is key in importance.” Canada and Russia believe that their sovereignrelation to ownership of the Arctic Ocean.” rights extend all the way to the central Arctic Ocean.Cloudier waters A clear way forwardWhere the waters of sovereignty get cloudier is the point at which “The good news is there are rules and the coastal states seem toan extended continental shelf ends. On this matter, the United be following these.” Dodds points to the Ilulissat Declaration asNations’ Law of the Sea Convention (LOSC) sets out how coastal one of the most important regional developments so far in settling overlapping extended continental shelves peacefully. “In May 2008, representatives of the five coastal states declared that they were committed to resolving any overlapping claims in the Arctic Region and that the ‘law of the sea’ provided a legal framework for such resolution. Critically, the reference here is to the ‘law of the sea’ and not the LOSC, in recognition of the fact that the United States is not party to the LOSC. The ‘law of sea’ refers to customary international law, which applies to all states.” In addition to this consensus, there is another positive factor for those looking to exploit the region’s oil and gas reserves. “The identified hydrocarbon resources seem to fall within the clear and exclusive economic zones of the five coastal states.” However there are other natural resources that may hinder negotiations between the coastal states, emphasises Dodds. These include fishing potential and a deep seabed which might be rich in manganese nodules and minerals known as ‘The Area’, an area of the Arctic that is not part Klaus Dodds is Professor of Geopolitics at Royal Holloway, of the extended continental shelf. University of London. He is the editor of The Geographical Journal and his next book will be The Antarctic: A Very How inviting is the Arctic? Short Introduction (Oxford University Press 2012) followed “A resource-rich, accessible Arctic is an image peddled by journalists by A Scramble for the Poles? Contemporary Geopolitics and sometimes politicians, but does it pass muster politically and of the Arctic and Antarctic (Polity 2013). economically?” asks Dodds. Is it yet the ‘polar Mediterranean’ predicted by the Canadian geographer, Viljamur Stefansson?
  • 13. Insight March 2012 11 lar Mediterranean’ “One can’t view the Arctic as a blank space on a map, emptied 200 kilometres from the Sakhalin coast in the Sea of Okhotsk of people.” The region is a mosaic of different places. “In the (Russian Far East), is “a timely reminder, albeit in the sub-Arctic, Canadian Arctic, oil and gas companies have found it challenging of the extraordinary operating conditions and challenges faced.” to operate, with an indigenous population that holds clear rights, All at a time when “reputations travel fast” and companies is pressing on outstanding land claims and holds diverse views on cannot afford to make mistakes in the Arctic or elsewhere. the exploitation of natural resources. One of the common pitfalls Later rather than sooner is the erroneous assumption that all indigenous people think the “Exploitation of the Arctic’s natural resources may take longer same. This must be avoided. The people want their respective than expected if the recent past proves enlightening,” says Dodds. views to be heard and to be treated seriously. While many in the He highlights two projects severely delayed by politics and local communities welcome the benefits that industry brings in economics. Plans to develop the Shtokman (Stockman) field in terms of new jobs and revenue streams, others see the downsides the Russian sector of the Barents Sea, one of the world’s largest and are weary of being short-changed by the ‘South’ once again.” natural gas fields, began in the early 1990s and was “postponed by stockholders a few years ago because of the sudden over- “Exploitation of the Arctic’s supply of gas on the market and then hindered by the economic weakness of Russia.” The MacKenzie Valley Natural Gas Project in natural resources may take longer Canada’s Northwest Territories (connecting northern onshore gas than expected if the recent past fields with North American markets) also has a long history, dating back some 40 years. “The project has been subject to lengthy proves enlightening” negotiations with indigenous communities.” What next? The key players in the Arctic do not want a treaty, as exists in the Then there is the wider political debate of whether we should be Antarctic, says Dodds, so “the Arctic Council will play a key role looking for more sustainable energy sources. “As the Norwegian and must to be seen to be effective.” The Council is the most foreign minister [Jonas Gahr Støre] pointed out, this is a global significant soft-law intergovernmental forum for the promotion paradox, not just an issue for the Arctic states.” While Dodds of co-operation in the Arctic. Members comprise the five coastal privately hopes that we will have largely ‘de‑carbonised’ by the states, along with Finland, Iceland and Sweden. “The Arctic time anyone gets around to exploiting the Arctic’s most inaccessible Council faces a difficult job ahead. It will need to be more than resources, he acknowledges that we all want to heat our homes, advisory in the longer term. A legally binding search and rescue drive cars and board planes. And “for the indigenous Northern agreement and a proposed oil-spill response plan are promising communities, hydrocarbon and mineral resources could prove signs, and it must also be seen to be meaningfully championing valuable revenue streams.” the rights of indigenous and First Nations communities.” It also What of the broader economics? “Financially, one can’t put a value needs to be careful that environmental stewardship is not merely on 22% of the world’s untapped hydrocarbon resources that the regarded as self-interest, cloaked in virtuousness. “Wider interest geology of the region suggests. We need to be quite cautious as in the Arctic will only increase, especially with regard to ‘The Area’ to how much will be discovered, let alone extracted. Recent Cairn and general navigation and access rights. The Council will need to Energy results for exploration wells offshore of Greenland were a be comfortable with that notion. Being graceful with observers, bit disappointing.” Uncertainty in the riches may well be reflected such as the European Union and China, a major coastal state with in the political wavering of Greenland’s prime minister, Kuupik a keen sense of its rights of innocent and transit passage, may be Kleist, in the push for autonomy from Denmark, points out Dodds. the price to be paid to avoid tensions. The list of Arctic Ocean To an unknown total hydrocarbon value, add unpredictable stakeholders will surely only get longer – the geopolitics of the long-term markets, with ever-fluctuating oil and gas prices. Arctic region will stretch rather than remain fixed.” “Does diminishing sea ice even open up the region, operationally speaking?” questions Dodds. Ice remains a problem and it is still Jason Knights is Global Communications an inhospitable region in terms of tsunami-like waves, high winds Manager for Lloyd’s Register’s Energy business. and heavy winter storms. The upturned Russian oil rig, Kolskoye, E jason.knights@lr.org Tweet me @saferenergy
  • 14. 12 March 2012 Insight On a deadline to 2041 Saving Antarctica: The last great wilderness Robert Swan, OBE, polar explorer and environmental leader is on a mission to protect Antarctica, reports Richard Cook.
  • 15. Insight March 2012 13Robert Swan is, as ever,in full ‘attack’ mode.“The world is stuck on words,” he says,“and we need to move on from that. Weneed to act not just speak. We need to beintelligent with technology. And we needto be positive. If I get sent another gloomyemail or video about how the world is goingto end, I am going to…” Swan pauses andseems uncharacteristically lost for words.“I am going to…” he pauses again, laughsand shouts in mock horror, “… I am goingto shout at someone.”This is classic Swan: serious, passionate,a little scary but also always very quick toturn to humour to drive his point home.He is straight talking to the point of beingbrusque and he peppers his proclamationswith the word ‘attack’, which sums him upwell, as Swan’s life can be seen as a seriesof interconnected attacks – be it whenhe is running fund-raising marathons ordelivering clever, high-tempo motivationallectures to corporations, students andpoliticians or speaking about his life’s “We must be positive and we must act,” The ship they chose to carry them fromwork, Antarctica. says Swan. “Once you move from words the UK round the Cape of Good Hope to action, then you start to build the and through the notorious southernThe greatest challenge knowledge that can bring about real oceans was the Southern Quest. Swan’sSwan is the first person in history to have change. Then change can become a team found the vessel in Tyneside, UK,walked to both the North and South Poles business opportunity and that is when it where she had been working as a trawler.but while he is justifiably proud of these actually becomes powerful. Technology “We didn’t completely know what weincredible achievements, today he quickly and safety is what will save us,” he says. were doing,” says Swan with a self-dismisses the term ‘polar explorer’. “I don’t deprecating grin. “A lot of people laughedreally know what that means anymore. The A young explorer when we said we were going to take theonly exploration that really matters now is Swan grew up obsessed with the ship to Antarctica but someone said youworking out this planet’s survival. That’s early 20th century heroes of Antarctic need to talk to Lloyd’s Register, they’ll tellthe greatest challenge.” exploration. In the early 1980s, aged you what you need to do and that’s exactly just 21, he started to assemble the firstSpend about a minute with this enigmatic what they did. And they were fantastic.” non-government expedition to Antarcticaman and you will quickly find the real and the South Pole and started to try to Lloyd’s Register ship surveyors gave SwanRobert Swan. Today he is an inspirational raise the not inconsiderable amount of advice and certified the ice strengtheningenvironmental leader, a renewable energy US$5 million to fund the expedition. Swan work that was carried out on the Southernchampion and, above all, a passionate, thought he would do it in a ‘few weeks’ Quest. Brian Purtle, now Lloyd’s Register’sengaged, energetic protector of his but it actually took him more than seven Technical Performance Group Manager,beloved Antarctica. years. His drive brought him in front of was one of those surveyors and recalls:Swan firmly believes that if we can the father of the conservation movement, “We had started to do a lot of conversionseducate and inspire tomorrow’s leaders French marine biologist Jacques Cousteau, in the early 1980s in the North East as theinto protecting Antarctica through the who said he could help Swan raise the offshore business was booming – trawlers,better use of renewable energy and waste funds if they would leave not a trace of supply boats, that type of thing – but therereduction systems, these lessons and waste, “just their footsteps in the snow”. were not many clients like Mr Swan andactions can be carried back into mainstream Swan agreed – and is still very much driven his team. They were an eccentric groupcommunities across the planet. by this solemn promise today. And as funds of people and to tell the truth, we did began to slowly trickle in, Swan started not think they would make it. I remember to build a team and purchase equipment. several issues related to the ship being
  • 16. 14 March 2012 Insightfit to undertake the journey and the crew This almost killed him, then deeply Cleaner Energy’ that has, to date, connectedcertainly made the most of the time in dock. depressed him and finally galvanized him. with 500,000 students from across theOne thing that sticks out is they strapped a world. Swan has just cycled across India 2041 missionbeer barrel to the mast… something to do to work with India’s youth who, he says In 1992 and 2002, he gave keynotewith a sponsorship by a local brewery and “have to be part of the solution rather speeches at the World Summit formaybe some free beer! It was all very novel than the problem.” He currently serves Sustainable Development and wasbut they were a good bunch.” as an UNESCO Goodwill Ambassador with charged by global leaders to undertake special responsibility for youth, acting as aSwan’s ‘good bunch’ made it to the environmental missions with industry, special envoy for the UN Director-General.South Pole on 11 January 1986. The wholly business and students. He has called his And he is now, once again, working closelyunassisted expedition (without even radios) organisation 2041 because his overriding with Lloyd’s Register.comprised three people, each pulling a life mission has a hard and fast deadline.160-kilo sled laden with food, fuel, supplies In less than 30 years’ time, in 2041, there Lloyd’s Register is sending two employeesand shelter, for 70 days across 1,400 will be a renegotiation on the United and one E-idealist (see page 20) on Swan’skilometres. Swan’s team took everything Nations moratorium on mining in next annual Antarctic expedition to workback with them afterwards and repeated Antarctica. The continent’s designation on renewable energy and environmentalthis after they reached the North Pole as ‘a natural reserve, devoted to peace and projects. Initially these projects will havein 1989. science’ could be rolled back and Swan’s application in Antarctica but, over time, singular aim is to stop should have resonance across the globe.It was on these this happening.journeys that Swan “Lloyd’s Register understands modernsaw the effects Swan’s overriding Everything he technology and checks that it worksof environmental does is aimed at which means they are an important partdegradation first mission, to continue working towards the of moving things forward” concludes Swan.hand. In Antarctica,the governmental the protection of continuing protection of the Antarctic “It’s fantastic that they care enough about their people to invest in their involvementexpeditions left Antarctica, has a Treaty so that the with 2041. I have had a long and goodthousands of tonnesof rubbish strewn 2041 deadline. last great wilderness on earth is never relationship with Lloyd’s Register and am glad that it is re-kindled and is as strong asacross the ice. On a exploited in the same ever. We will do very good work together.”more personal level, way that the Norththe team was affected by the then little Pole has been and continues to be. For more details of 2041 and Lloyd’sknown effects caused by the hole in the His strategy is simple – to generate Register’s work on the next Antarcticaozone layer. Swan’s eyes first blistered, awareness but, more importantly, action expedition go to www.lr.org/2041then turned him temporarily blind and then among tomorrow’s thought leaders whochanged colour permanently, from dark to will be in positions of real responsibility Richard Cook is Lloyd’s Register Asia’slight blue. On the way to the North Pole, when the critical decisions are being Communications Manager.Swan and his comrades found the solid ice made in three decades’ time.that should have been there had melted E richard.cook@lr.org He is relentless in his work. His yacht 2041and the team had to hop from ice floe has sails made of recycled plastic bottlesto ice floe to complete their journey. and travel the oceans on her ‘Voyage for
  • 17. Insight March 2012 15 The shipping industry is under pressure to comply with ever stricter environmental regulations and, with oil more expensive than ever, to reduce fuel costs. Nick Brown talks to Bergen-based Gearbulk Norway about the future of shipping.Gearbulk is the world’s largest operator of open hatch, Fuel type is another area of attention. With conventional heavygantry craned ships – general cargo ships primarily designed for fuel oil so expensive and an increasingly high focus on emissions,transporting forestry products. And it has led the way in evolving alternatives are being sought.the designs of its ships. The ships’ large cargo holds allow for an Gjerde thinks that it’s only a matter of time before we see anefficient stowage and flexibility of cargo type. Gearbulk seeks to increasing use of LNG in the deep sea. “It’s obviously attractivemaximise cargo opportunities. It has invested in the capability to in Norway where there is a ready supply. The likely middle groundsupport other niche trades such as liquid pitch and orange juice. for some time is dual fuel engines.The company is always discussing the next generation of Gearbulk “Shipping has been hopelessly conservative. We need fresh views.ships. “Right now, for example, we are looking at different engine We probably need to take a fresh approach to recruitment as weand hull performance monitoring systems on our newer vessels,” need to find the right balance between practical engineeringsays Sjur Gjerde, Managing Director of Gearbulk Norway. experience and commercial requirements.“There are huge savings to be made, better hull forms, better “We have to sort out the technical issues – and we always canengines – but we need to be able to measure performance – – but it’s the human issues that are the most challenging. As anso many claims are being made about performance by suppliers. industrial player with a long-term approach, intending to operateWe want to tie yards and suppliers to the mast on their claims our specialist ships for 35 years or more, we are very interested infor efficiency gains. Half of the salesmen walk away when finding the right solutions – it’s a constant process of innovation.”we say this – but we can work with the others.”But things are moving in the right direction. “Over recent years the A longer version of this interview will appear in the next editionindustry had to face a ‘take it or leave it’ situation when ordering of Lloyd’s Register’s Shipping & the Environment. Nick Brown isnew vessels in terms of accepting yard standard volume design. Lloyd’s Register’s Marine Communications Manager.Now we are seeing yards trying to grab competitive advantage byoffering more fuel-efficient ships – especially in Japan – and we are E nick.brown@lr.orgseeing the potential for soft funding for environmentally efficientships, those with a low Energy Efficiency Design Index.”
  • 18. 16 March 2012 InsightNew fuels, new engines &new designsFuture technology and innovation is neededin shipping as emission regulations and fuelprices drive change, says Tom Boardley,Lloyd’s Register’s Marine Director. A vision for a sustainable shipping industry in 2040 In November 2011, the heads of some of the most significant players in world shipping put their names to a commitment to make shipping more sustainable. The Sustainable Shipping Initiative (SSI) brings together leading companies from across the industry and around the world, to plan how shipping can contribute to – and thrive in – a sustainable future. Representing Lloyd’s Register as one of the signatories was Marine Director, Tom Boardley. He said “The SSI is an important initiative. At a time when many are struggling to stay in business, investing in a cleaner future is perhaps not everybody’s favourite subject. But what makes a business sustainable is changing. At Lloyd’s Register we are putting ever more resources into helping owners, builders and all marine stakeholders better understand the implications of new regulation and technology in our more complex world.”
  • 19. Insight March 2012 17One hundred years ago a Lloyd’s Register New technologies and innovation The result is that the shipping world is fast becoming a moresurveyor attended the sea trials of the first complex place. New technologies and innovation will play aseagoing diesel-powered merchant ship, vital role in the immediate and long-term future of shipping.the East Asiatic Company’s innovative Selandia. Lloyd’s Register has talked about this as a ‘new paradigm’. AnyThe propulsion technology on trial a century evolution will be gradual but already we can see changes happening.ago now dominates the industry and, for New fuels, new engines and new designs are becoming available.most merchant ships in the last 50 years, there The difficulty for shipowners, builders, equipment makers and, dohas been a clear orthodoxy in engine room not forget, financiers, is not only what technology to support butarrangements and the type of fuel used. when to invest. The future is further clouded by the weak market outlook and the hangover of the biggest boom in new orderingNearly all ships now use marine heavy in history – the new ships still being built are, in the main, littlefuel oil in diesel engines. different to the ships in demand a decade or more ago.Today we stand on the brink of a new era. Most new technology being brought into operation now has beenEmissions regulation and higher fuel oil prices are driving change developed for relatively small or niche markets such as ferries andin shipping today. Future fuels, the future for marine engines and inland waterways – sectors where exposure to new regulation istomorrow’s ship designs are key areas that Lloyd’s Register is most concentrated and where local emissions and other factorsworking on to help the marine industry to reduce emissions are felt most keenly.and find greater efficiencies. More clarity needs to be brought to the differences betweenRegulations requiring ships to produce less locally harmful pollutants, local air emission benefits and the GHG impacts of shippingsuch as sulphur oxide (SOx) and nitrogen oxide (NOx), in emission and the technologies required. At present the real driver is localcontrol areas (ECAs) such as the Baltic and North Sea are due to be air emissions. But, for example, we really need more data on themade stricter from 2015. Ships will need either to switch to different, total energy lifecycle impact of fuels such as LNG. There is plentycleaner, fuels or install abatement systems – ‘scrubbers’ – to extract of work to be done here.harmful emissions. Approximately 80–90% of merchant vessels will At Lloyd’s Register we constantly strive to provide impartialenter an ECA during their lifetimes and more ECAs are expected – technical guidance. And as well as guidance, verification is crucial.particularly in the Mediterranean and the Far East – in the future. Many claims are being made about performance, about GHGIn terms of greenhouse gases (GHG), the International Maritime emissions and about safety of new arrangements. Owners andOrganization (IMO) has developed global energy design and operators need data and they need it verified – what you cannotenergy management regulations that will help reduce the measure, you cannot manage.tonne mile GHG impact of shipping. The Ship Energy EfficiencyManagement Plan (SEEMP) and, for new ships, the Energy Tom Boardley is Lloyd’s Register Marine Director.Efficiency Design Index (EEDI) will come in to force in 2013.These are the first such global regulations to mitigate GHG E tom.boardley@lr.orgemissions made by any United Nations agency.But with the consequences for shipping of the UNFCCC processstill not clear after COP 17, a global GHG regime seems as remoteas ever. The agreement to the second Kyoto Protocol commitmentperiod, covering mainly EU member states, makes it more likelythat the European Union will take action on shipping – indeedit is starting the process of investigating how a regional GHGscheme could work for shipping. As a global industry requiresglobal regulation it is far from clear what the impact ofregional imperatives will be.At the same time the price of fuel oil has been rising dramatically. Our recent special Horizons supplement looks in more depth atExisting ships were developed to operate in a world where ships’ the future challenges for shipping; go to www.lr.org/marine.bunkers were available at US$150 a tonne. Bunker oil is now in Our next issue of Shipping & the Environment, due out inthe US$700-800 range. So, the economics of ship operations March, will look further into the environmental issues, whathave changed. operators and shipyards are doing, as well as at specific regulatory compliance requirements and tools to help the industry in reducing environmental impact and capturing efficiency gains.
  • 20. 18 March 2012 InsightNewsteerageat the IMOKoji Sekimizu talked toChristopher Browne aboutthe role of the IMO andhis key aims.Koji Sekimizu of Japan was elected inJune 2011 as the Secretary-General ofthe IMO with effect from 1 January2012, for an initial term of four years.
  • 21. Insight March 2012 19The International Maritime Organization (IMO) Role of the IMOshould lead the global fight against piracy, says We asked Koji Sekimizu whatKoji Sekimizu, IMO’s new Secretary-General. in his view is the IMO’s most important role.“There needs to be a formal mechanism to A passionate advocate of sustainability, “IMO is a specialised agency of thediscuss and tackle piracy and there should one of Sekimizu’s first tasks will be to United Nations and, as such, it is thebe one organisation to govern the problem. co-ordinate IMO’s presence at the UN global standard-setting authority forIMO, as the UN agency responsible for Conference on Sustainable Development the safety, security and environmentalregulating various aspects of international – known as Rio+20 to mark its 20-year performance of international shipping.shipping, is competent and has the relevant history – in Rio de Janeiro on 20–22 June. Its main role is to create a regulatoryexpertise to address this,” said Sekimizu, On the agenda are the future of the green framework for the shipping industrywho recently signed an agreement for economy and ways to develop a new that is fair and effective, universallyIMO to fund an anti-piracy training centre framework for sustainable shipping. adopted and universally implemented.in Djibouti, on the border of Somalia. “Although sustainability of shipping has To create, in other words, a level been widely discussed in the context of playing field so that operators cannot“IMO, in co-operation with the UN, address their financial issues by simply sustainable development over the lastneeds to deal with pirates and criminals cutting corners and compromising on two decades, we have not yet developedin Somalia, as well as helping the Somali safety, security and environmental a common concept for the sustainabilitypeople to deal with pirates internally, performance. This encourages of the maritime industries and in particularin order to ensure their eradication, innovation and efficiency. the shipping industry,” he said.for without addressing these issueswe cannot eradicate them,” he said. Sekimizu wants IMO to play a more “Such a performance-based approach proactive, policy-driven role. “The role was taken by IMO, for example, withThe 59-year-old, who was Director of regard to climate change and air of IMO is very important and it is up toIMO’s Maritime Safety Division until his pollution. Mandatory measures us to make sure there is more co-operationrecent promotion, is something of an adopted by IMO will require the between individual governments, so theexpert on piracy. He has represented IMO energy efficiency of new ships to world economy can enjoy a continuouson the Contact Group on Piracy Off the improve incrementally, but leave it environment-friendly and low-cost supplyCoast of Somalia and was actively involved to the industry to determine exactly of goods,” he said.in the 2009 Seoul high-level meeting on how the targets will be met.piracy in the region. His other goals for the UN agency are to help develop new global goal-based “IMO also works hard to help buildShortly after he took office on 1 January the capacity of its Member States standards for ships; various safety-related2012, Sekimizu appointed Captain Harmut to address issues within its purview, issues, including the safety of passengerHesse, Senior Deputy Director in the and this is a central theme in our ships; ensuring that the education, trainingMaritime Safety Division, to the position of continuing work to combat piracy, and recruitment of seafarers provides aspecial representative for maritime security for example. continuous supply of quality mariners;and anti-piracy programmes. Hesse will drafting new maritime security and “I feel very strongly that IMO needsalso co-ordinate the Djibouti Code of anti-piracy legislation; and maritime traffic to act in the interests of all thoseConduct and act as IMO’s representative at management in straits and key sea areas. who rely on shipping as the deliveryconferences and meetings on piracy issues. mechanism of global trade – andHowever, as IMO Secretary-General, Christopher Browne is Lloyd’s Register’s that means the vast majority ofSekimizu’s brief is obviously far wider than Marine News Editor. the world’s population. We allpiracy. He is known as a highly creative need a shipping industry that isproblem-solver and, in his 22-year IMO E chris.browne@lr.org safe, secure, environment-friendlycareer, has had extensive experience of and efficient, and it is IMO’s job,handling and helping to draft safety, as the industry’s regulator, to makeenvironmental protection and anti- sure that is the case.”emissions legislation. As Director ofIMO’s Environment Division he oversawthe phasing out of single-hull tankersafter the Erika and Prestige disastersin 1999 and 2002 respectively.
  • 22. 20 March 2012 Insight Empowering eco visions A new initiative called E-idea is helping young eco-entrepreneurs to develop innovative environmental projects and businesses to benefit communities in the Asia-Pacific region. Graham Meller reports.
  • 23. Insight March 2012 21T he British Council and LRQA have formed a highly Successful E-idealists innovative project called E-idea to encourage In each country, a jury of climate and sustainability specialists and assist young eco-entrepreneurs to develop selected the winning initiatives against five key criteria: ability environmentally beneficial projects and businesses to produce behaviour change among a defined target audience;in the Asia-Pacific region. focus on a specific community or industry; capacity to be replicated or expanded over time; clarity of communications; and prospectsE-idea is providing innovators with the training, support and capital for future commercialisation and investor or donor appeal.needed to develop projects that will engage the widest audienceand have the greatest possible positive effects on sustainability in Arif Nugroho, one of the winners, has developed a companytheir communities. Almost 900 applications were received from that converts waste coconut husks into biodegradable nettingAustralia, China, Indonesia, Japan, South Korea, Thailand and in Indonesia. He says: “E-idea is like a bridge that has enabledVietnam. From these, 40 winners (dubbed E-idealists) are receiving me to communicate and promote my coconut fibre wasteseed funding grants as prizes to help address significant local and utilisation programme.” Nugroho’s clients include multinationalsregional sustainability challenges such as transportation, waste such as Chevron and Total and his project employs 100 femalereduction, energy efficiency, and sustainable design. workers, reduces waste and mitigates the ecological damage caused by resource extraction.The E-idea has an ambitious target of supporting a new wave ofentrepreneurs across Asia who see that profit and environmental Huang Ke has been creating rooftop gardens in Shanghai tosustainability are not mutually exclusive. It provides an outstanding promote local sustainable food production and to enhance theplatform that brings people together and what every young quality of life. By September 2012, her organisation, V-Roof, willentrepreneur with a good idea needs: attention and funding. have planted rooftop gardens over an area of about 10,000 squareLRQA and the British Council hope that through E-idea, these metres in three Shanghai Project neighbourhoods.eco-entrepreneurs will help create a smarter and cleaner future, Khwankhao Sinhaseni, an E-idea winner from Thailand, hasand inspire others to follow in their footsteps. established an organisation that will convert organic waste intoHuw Oliphant, British Council Project Manager for E-idea, shared fertiliser. She says: “E-idea is an opportunity for a new generationhis thoughts on the need for all parties to provide continued to embrace environmental protection and winning will enable ussupport to the winners: “The British Council believes that this is to enhance the scope and professionalism of our project.”particularly important because these eco-entrepreneurs will be Winning engineering solutions were submitted by Seungjae Lee of‘change-agents’ in tackling climate change, leading by example South Korea, for a solar-powered rubbish compaction bin, Michaelin showcasing the business opportunities available in the green O’Brien of Australia, for solar-powered medical lights to use in remoteeconomy, sharing sustainable practices within their communities field hospitals and Satoshi Yanagisawa from Japan for a hand-crankedand engaging with peers and decision-makers at local, national power generator called Cyclus to recharge hand‑held digital devices.and international levels.” Roll-out plansFor LRQA, the significant financial contribution to the project In early 2012, one E-idea representative from each country will enjoyis only a part of its commitment. The real value is being able a study trip to the UK to foster ties and best practice with Britishto mobilise the expertise of its people coupled with its global eco-entrepreneurs and community-based groups. A final event stagedinfrastructure and networking opportunities. “Helping in November 2012 will bring together successful eco-entrepreneursorganisations to improve their environmental performance has to showcase the most notable E-idea achievements.always been a core activity for LRQA, so we are also providingmentoring and guidance for the E-idealists” says Simon Batters, Plans for a wider roll-out of the competition are under way, asE-idea project director and Vice President LRQA Japan and Korea. British Council CEO Martin Davidson explained: “I think the big challenge for us now is how do we take these fantastic ideas andIn a testament to this pledge, both sponsors hosted a three-day turn them into something that’s practical, which can go to marketworkshop in Indonesia for the winning E-idealists. The event not and can become used in normal day-to-day life? So what we wantonly gave the E-idealists the opportunity to network with potential to do is work with LRQA to actually find a way to do this.”business partners but also provided them with valuable mentoring. Paul Phyall, Senior Vice President LRQA Asia, said: “One of theJohn Rowley, Director Lloyd’s Register Asia (LRQA is member of greatest benefits of the E-idea is that it is empowering these youngthe Lloyd’s Register Group) said: “As a not-for-profit organisation, eco-entrepreneurs to realise their dreams. It is also helping societyLloyd’s Register invests time, money and resources to fulfil its to recognise the contributions that young people can make. Wecharitable mission to enhance the safety of life, property, the hope that through the experience, these individuals will inspireenvironment and make a difference to society. While other others so that the benefits of sustainability will be cascadedorganisations do something to make money; we make money throughout their communities.”to do something. If we can help these young eco-entrepreneursachieve their goals, by association we achieve ours.” Graham Mellor is an environment journalist. www.e-idea.org E marcomms@lrqa.com
  • 24. 22 March 2012 Insight right directionHeading in the COP 17 might not have got the UN’s efforts to slow the pace of climate change back on track, Henry Derwent, President and CEO of the International Emissions Trading Association tells Russell Barling. But, he says, it has at least got it back in the direction of the track. Henry Derwent became the RB: How did COP 17 compare President and CEO of the with your previous experience International Emissions Trading of similar events? Association (IETA) in February HD: It was a pleasant surprise. But one 2008 and will step down from was left wondering whether something the organisation this year. nicer could have happened. It was a Previously, as international surprise because many people (other than climate change director for the UK government, those who are deeply, permanently and he oversaw the UK’s role in the international passionately committed to the UN’s role negotiations in the G8 and in other forums. Henry in this) had come to the conclusion that has been closely associated with the development the parties (the developed and developing of greenhouse gas trading in the UK and Europe countries in particular), were locked into from its earliest days and has been involved in a sort of deadly embrace. Before the many COP meetings. conference, many people thought that no developed country would commit to a new set of Kyoto targets without the larger developing countries formalising targets of their own. This required an overall acknowledgement that there is now a group of developing countries, such as China, for whom a different set of responsibilities and obligations ought to apply. Those countries are not the same as Somalia or Burkina Faso. For their part, the developing countries collectively – and with a great display of solidarity – have consistently said that the developed countries have not kept their side of the bargain regarding the first set of Kyoto commitments. So why should they agree to change the terms of the agreement? In the run-up to Durban it was difficult to see anything changing.
  • 25. Insight March 2012 23RB: Expectations were low RB: The Green Climate Fund was RB: Is the ETS the preferred solution,weren’t they? another positive outcome from or do we need different solutions Durban. What do you think of it? for different situations, uses andHD: Very low. Some people felt that there industries? If so, how do youcould be a complete meltdown. HD: Well, there was agreement on the co-ordinate them? structure and governance of the fund.But in fact – and surprisingly – there was But one of the dogs which didn’t barka major shift on the part of the developing HD: Basic economic theory strongly in Durban, was [public discussions about]side, and movement too among some of suggests that you need some form of when developed countries were goingthe developed countries. trading to smooth the edges of any major to put money into it, and how those new obligation on private companies.Two things happened. First, the solidarity contributions would relate to the promises Without it, you are in danger of achievingof the G77 finally seems to have broken. made in Copenhagen [COP 15]. emissions reductions at far higher cost thanThere are now deep fissures between The fund is supposed to contain needs be. There are plenty of economicsub-groups, and the EU was able to claim US$100 billion a year by 2020. But the models that have addressed this issue, andcommon cause with the least developed public sector debt crisis in many developed everybody comes to the same conclusion:countries, as distinct from the rapidly countries means that it’s unlikely that all that the best way to achieve globalindustrialising nations such China, India, the money will be provided by new taxes reductions cheaply is to make sure thatBrazil and South Africa. That shifted the or borrowing. So the assumption is that a you can buy and sell across the world.overall position of the developing countries. significant proportion is going to have to However, it is very complicated to workThe second big change was that China come from the private sector, and quite a out exactly where in the value chain is theactually did what most developed countries number of countries have made that clear. best place to impose the obligation in orderhad been insisting that they do: accept that What we didn’t get was more clarity to achieve the greatest overall efficiency.economic realities had changed so much about what that proportion might be. It depends on a whole host of extraneoussince Kyoto in 1997, that they could no Besides which, many developing countries circumstances.longer pretend that their obligations were are deeply suspicious of any private-sectorno different than other developing nations. Take private motor cars as an example. involvement, preferring no-strings grantsChina actually said: ‘We will accept If those combustion units require permits to the fund by the developed countries.emission-reduction targets’. and those permits are traded, you’d be Nor do we have any greater understanding talking about individual owners ofRB: What caused this shift? of how these substantial sums of private- individual cars having their own carbonHD: In part, I think it was due to the basic sector money will arrive in the fund. budgets and trading between each other.implausibility of a country so economically What’s the incentive? Some economists believe that is exactlypowerful as China suggesting that its what should happen. But most politicians I think we remain a long way from answersposition on the issues should be similar think that quickly gets far too complicated. to these questions.to that taken by a country such as Mali. So the best approach could be to introduce RB: How have the markets beenBut there were also two significant strands a tax or some form of regulation a long affected by what came out of Durban?of global realpolitik. way upstream, in order that the transaction HD: Not an awful lot. There is improved costs of introducing the trading don’tFirstly, the Chinese wanted to maintain a sentiment around the prospect of stronger overwhelm the efficiencies that you oughtposition of leadership among developing action by the countries of the world – to be getting.countries – upon whom their own which will ultimately lead to an increasingeconomic development depends – It is also really complicated to work out carbon price. However, there isn’t actuallyparticularly those who give them access how trading best relates to the host of much of a connection between anyto raw resources. These countries in turn taxes, regulations and subsidies that are possible international agreements and thewanted assurance that China’s position on already in place. On the whole, countries various national and regional emissionsclimate change was in their interests, too. ought to be trying to reduce the number trading schemes (ETS) that are in place of overlapping and mutually inconsistentSecondly, again from a geopolitical or in prospect. support and regulatory regimes.perspective, China saw an opportunity Essentially, the market is interested in Unfortunately the European Unionto demonstrate their ability to be what actually gives value to the emission- appears to be adding to them.positioned among the big boys: they could reduction units. And that’s not theclaim on this issue at least to be taking a Kyoto Protocol. Russell Barling is Lloyd’s Register’s Groupmore globally responsible position thanmany developed countries – especially Media Manager.the United States. E russell.barling@lr.org
  • 26. 24 March 2012 Insight James Smith is a practical man. He’s not looking for perfect solutions. He’s looking for things that work. Consider, for example, his view of the COP process itself. “It’s messy. But this is a process that involves 190 countries, each with their own perspectives. So what can you expect?” In selecting the technologies to deliver a low carbon economy he is concerned about the paradox of perfection. He sees nuclear power generation and carbon capture and storage as two of the leading contenders to move us to a low carbon economy. “They are not attractive options. But they work. Disqualifying both of them would mean that we probably don’t have a solution at all. For the coming critical 20 or 30 years, there are no perfect solutions.” On the need to establish an effective system for the measurement, verification and reporting (MVR) of carbon emissions, he says: “The approach to MVR needs to be practical. Good reporting and transparency are important for collaboration. But let’s not make it a deal breaker at this stage.” The paradox of perfection James Smith, Chairman of the Carbon Trust, talks to Insight on his approach to tackling climate change and the outcomes from COP 17.
  • 27. Insight March 2012 25Positives from COP 17 more energy-efficient houses, appliances, with substantial financial resources andAlthough COP 17 did not come up with cars, offices and industrial processes. the necessary skills. There is, however,a clear, clean ‘solution’ on climate change, This is by far the cheapest way of considerable scope for smaller companiesSmith feels that the agreement that was mitigating carbon and could deliver a with high-tech capabilities to benefitreached should be seen in a positive light. major part of the UK’s 80% emission and prosper as the low carbon“The most significant outcome of the reduction commitment. economy takes shape.”conference,” he says, “was that the parties “We need to invest in each of the big But we need to get on with it. “Time iswere determined to reach an agreement. electricity generating technologies that not on our side,” Smith says. “The rateThe major emitters knew that they had can make a difference: nuclear and wind of emissions growth first has to be slowed,to reach a deal – and they rejected the – and carbon capture and storage (CCS). then stopped, then reversed” – and weoption of walking away.” He acknowledges When you are faced with risk and are some way from this. “We need tononetheless that much still needs to be uncertainty the sensible thing to decarbonise our economies at a rate of 7%done to agree a plan for action and that do is diversify.” a year in order to avoid the tipping point intime is very short. 2040 beyond which we will not be able to “Our society has been built around the highThe agreement, he says, should reassure keep global temperature rises below 2C. energy density of fossil fuels. Replicatingthe energy industry that “ultimately Yet we are currently decarbonising at a rate this through the use of renewables willgovernments will stick to the task” – of just 2% a year. So we have to more than require major engineering works if wewhich should give the sector the confidence treble our current performance. are to harvest what are much more diffuseit needs to rise to the huge challenge it sources of energy. For northern latitudes, “The longer we delay, the steeper thefaces. This comes in the shape of the wind is the most efficient renewable – reductions will need to be, the greaterphenomenal growth in energy demand and preferably onshore wind as this is the technical and engineering challenges,and the need to “ensure that there is the most cost-effective. In the southern the greater the financial cost, and thesufficient, low carbon supply. Economic parts of both Europe and the USA solar lower the chances of us avoidingand population growth means that global panels can be effective. By mid century, significant climate shocks.”demand for energy will grow by 50% in concentrated solar power could bethe first half of the century. This needs to Getting on with it is a political issue. significant in regions with strong sunlight.be delivered while producing 50% lower Governments need to alter the termscarbon dioxide.” “While CCS is a relatively new technology, of trade for energy, Smith says, in order the constituent parts are proven: we to create the right incentives for energyAlthough Smith did not go to Durban, know how to do scrubbing and how efficiency and low carbon energyhe knows what his three key messages to pipe the gas and how to put it in production. “Companies can onlyfor the delegates would have been: reservoirs. The decision of COP 17 to deliver if their costs can be recovered.”•  ring industry into the process of tackling B include CCS in the Clean Development Ensuring that politicians do the right climate change “Industry knows about Mechanism provides economic levers thing at the right time is everyone’s markets and technology”. to get CCS more widely deployed.” responsibility. “We, as citizens, must make•  he problem is not one of technology T He also points out that the use of CCS clear we want politicians to tackle climate or economic resource “The technology in combination with power generation change. And industry has to speak out too, exists, even if not perfect, to get the based on sustainable biomass, is one with a common message.” job done.” of the few ways we have of producing It does not have to be perfect – but it does negative emissions.•  he politics of climate change are T need to work. running behind the technology. Political The time for low carbon technologies agreement and market changes are Smith believes that the resources to solve needed so the technology can be the problem are affordable. “The Stern commercially deployed. Report estimated that 1–2% of the James Smith economy needs to be directed towards was appointed “The technology is clear. mitigating climate change. It is therefore Chairman of the We need much improved affordable. The cost of the damage from Carbon Trust in energy efficiency in climate change would be higher.” September 2011. every nook and cranny of the He feels that there is a “natural ownership” He has over 30 years of experience economy – of the low carbon technologies. “The in the energy industry and was Chairman scale of the engineering and investment of Shell UK from 2004–2011. The Carbon that is needed means it will be the Trust is a not-for-profit company with the existing large engineering, power and oil mission to accelerate the move to a low companies which drive this – companies carbon economy.
  • 28. 26 March 2012 InsightWhat does COP 17mean for carbontrading and CDM? Robert Hansor, LRQA’s Head of Climate Change & CSR – Asia, looks at the implications of COP 17 for the carbon trading and CDM markets in Asia.Prior to Durban, the Kyoto Protocol’s future the UN-backed carbon credits issued under the CDM – will therefore remain the EU Emissions Trading Scheme (ETS) whosewas unclear with many believing it might third commitment period runs from 2013 to 2020. Howevernot survive beyond its first commitment according to the International Emissions Trading Association (IETA)period. Consequently, uncertainty over the the basic supply and demand dynamics of the EU ETS market are unchanged as economic activity is weighed down by the debtfuture of the Clean Development Mechanism crisis, falling oil prices and an oversupply of emission allowances.(CDM) had been growing, but by the end Another problem facing the Asian carbon market is the EU’sof COP 17 and to the surprise of many restriction on CERs after 2012. Projects in Asia registered beforethe Kyoto Protocol was given a reprieve. 2012 can continue to supply carbon credits but after 2012 the only new projects eligible to supply CERs will be those registered in leastThe international climate negotiations took a major step forward developing countries (LDC). Consequently there is a rush to registerin Durban with all major emitters committed to a new legal projects in non-LDCs before the end of this year.instrument to be agreed by 2015 and implemented by 2020.The new agreement will have a major impact on businesses Nevertheless, Durban has delivered hope for the carbon market.around the world; however the impact on today’s carbon market By the time the new agreement is finalised, businesses, in additionhas been muted with the price of carbon credits continuing to fall. to the EU ETS, may well already be operating in national carbon markets in Australia, China, Japan and Korea as well as a host ofAgreeing a new global deal that commits the US, China and regional schemes from California to Rio de Janeiro. The fact thatIndia to cut emissions was a major breakthrough and enabled the Kyoto Protocol and CDM have been extended is a positivethe extension of the Kyoto Protocol (with its second commitment signal and provides a potential link between these markets. Theperiod to start from 2013). This means the CDM will continue to be key challenge remains though which is for governments to showavailable to project developers. This is good news for the carbon ambition and set reduction targets that stimulate the demand formarket, or at least better news than the lack of any commitment. carbon credits and release greater levels of low carbon investment.The main problem of Kyoto’s new commitment period though isthe same as its first, which is that major emitters (apart from the E robert.hansor@lrqa.comEU) have not committed to reduce their greenhouse gas emissions.The key market for Certified Emissions Reductions (CERs) –
  • 29. Insight March 2012 27 The long Joan MacNaughton, Senior Vice-President, Environmental Policies and Global Advocacy at Alstom, wait for talks to Martin Beaver about COP 17, CCS and power plant production efficiency.investment- Joan MacNaughton knows her stuff. She is an influential figure in the world of energy and climate policy, having worked in a variety of UK, EU and internationalgrade policy roles. She was Director General of Energy at the UK’s Department of Trade and Industry (2002–06), has chaired the governing body of the International Energy Agency, is the current President of The Energy Institute and works as a senior adviser to the engineering giant Alstom. And her verdict on COP 17? “Quite encouraging” – which is not exactly a ringing endorsement. On the plus side, she says: “All of the major emitters accepted for the first time that they need to make legally binding commitments. But not until 2020. “The establishment of a mechanism to transfer clean technologies and expertise to developing countries was a step in the right direction, as was the creation of the Green Climate Fund – though there were no real pledges of funding. “The previous COP agreements made at Copenhagen and Cancún have still not been implemented. From an industry perspective, we need to make these legally binding as soon as possible, otherwise we don’t have the certainty we need to guarantee investment.” However, making carbon capture and storage (CCS) eligible for Clean Development Mechanism (CDM) funding was a very important advance, she feels. “CCS is key to tackling climate change – and having it excluded from the CDM sent the wrong message.”
  • 30. 28 March 2012 InsightThe carbon capture option several hundred million pounds for a single Europe and the US. This not only reducesGlobal energy demand is predicted to CCS project seems indigestible, even if it the amount of resources (coal) thatdouble by 2030. And while both nuclear is clearly cost-effective over its lifecycle. they have to import and their carbonand renewables have important roles to emissions, but also increases their “Progress from demonstration plant toplay in the move to a low carbon energy industrial competitiveness. commercial scale is slow everywhere,”supply, they will not be able to provide MacNaughton says. “Canada is nearest “The EU, on the other hand, is onlysufficient reliable and affordable energy for to having commercial-scale operations, now considering moves to drive up thethe foreseeable future. Fossil fuels will still though the Chinese efficiency ofaccount for 60% of power generation in are now piloting European plants.2030, according to the International EnergyAgency (IEA). “As a result we will have to CCS. And once the Chinese decide to “It’s essential we increase And these are still at an early stage.”deal with the CO2”, MacNaughton says. move, they tend the efficiency of power“And CCS works – there are no insuperable The logic behindbarriers, either technical or financial.” to move quickly.” plants by improving the improving theCCS is not a cheap option. But, she says, Achieving power equipment they contain and efficiency of coal plant efficiency plants is equallywhether or not it is expensive depends on The Chinese are also performance they deliver.” applicable towhat you are comparing it with. “It is of leading in another renewablecourse an extra cost compared to simply area that can have a technologies.putting the CO2 into the atmosphere – significant impact on the causes of Generators “must continue to invest inthough by the mid 2020s, the cost of CCS, climate change – production efficiency. R&D and must continually innovate overin terms of CO2 avoided, would be offset the ways in which renewables are deployedby the payments required under the EU’s According to the IEA, 60% of the total – because they must drive out costs,”emissions trading scheme. Alstom’s own of CO2 emissions in 2030 will come from MacNaughton says. “There is hugestudies suggest that using CCS with fossil power plants that already exist today. potential for efficiency gains in hydrofuel generation is already cheaper than Therefore it is essential, MacNaughton plants, for example, where retro-fittingoffshore wind and solar power, and says, that we continually increase the is something of a ‘no brainer’. It enablescomparable with onshore wind. efficiency of these plants by improving you to generate more electricity without the equipment they contain and the“The real limitation is whether there using more land or more rivers.” performance they deliver.will be a market: and this depends on But attracting the necessary privatewhether governments will require power The World Coal Association says that investment and innovation to thegenerators to install it and make abatement the average global efficiency of coal-fired development and deployment of cleanmandatory. At the moment there is an power plants is 28% compared to 45% for technologies requires “investment-gradeabsence of policy.” the most efficient. The significance of this policy”. And for that, we are still waiting. is that these highly efficient plants notYet this is a bullet that needs to be bitten. only use less fuel, but also emit almostIf climate change is to be tackled, electricity Martin Beaver is a freelance writer who 40% less CO2 than the average. For eachwill cost more as a result of the colossal specialises in health and safety, and energy 1% improvement in efficiency there is ainvestment needed in nuclear power, industry issues. 2% reduction in CO2 emissions. And, asrenewables or CCS – whichever approach part of its Clean Power Today! strategy,is taken. Alstom is workingThe technology of on innovations thatCCS is proven. “We[Alstom] have done “CCS works – there are no aim toefficiency50%plant achieveit in the 30–50MW insuperable barriers, either and beyond.range, and have, forexample, retro-fitted technical or financial.” MacNaughton points out thata chilled ammonia some of the biggestsystem to a 58MW improvements have come in the so-calledcoal plant in the US.” But no one has BRICS countries – particularly in India andyet stepped up from demonstration scale China. “They have made concerted effortsto a fully commercial installation of several to increase the efficiency of their plants. Inhundred megawatts. China this has often meant closing smallerFunding is a significant issue. “It seems and dirtier plants and opening new ones.that you can find the money for small-scale In fact, the efficiency of the Chinese coalrenewable projects quite easily. But finding fleet is now higher than that of both
  • 31. 29 A people disciplineDuring his time at MTR Corporation in Hong Kong, Andrew McCusker oversaw a doubling of passenger numbers and a fivefold improvement in service performance. But, as he tells Claire Ruggiero, the assets he was most focused on were people not equipment.
  • 32. 30 March 2012 Insight Yet its origins date back only to the late 1970s and the system has spent most of the 30 years since trying to keep pace with the city’s rapid growth. Even by the mid 1980s, when the population was around five million, MTR’s system still only consisted of three lines and pressure was mounting to deliver an extended, high-quality network that matched the city’s ambitions. It was at this point that McCusker was brought in from a background in the energy industry. His brief was to bring new ideas to all aspects of the business and help craft a smarter, more efficient operation.Andrew McCusker is adamant: Such a challenging, multifaceted briefAt its heart, asset management required a clear-minded, strategic approach:is a people discipline. “I have always followed a practice of looking ahead at regular intervals and constructing a vision of what the business would look like in 10 to 15 years”, he explains “then asking the question: how can I support my staff to be ready to meet the new challenges.Following 24 years at the delivery-end A cultural shift requiring the ‘buy-in’of the rail industry – most recently as of every area of the business. “As an ‘outsider’ to the industry it wasOperations Director for MTR, the company important that I understood the nature “It is critical that businesses bring their of a business that moves large numbersthat runs Hong Kong’s rail services – people with them every step of the way” of people from A to B on time at anMcCusker is better placed than most to he says, “it’s a mistake I fear many affordable cost.appreciate how railway businesses must companies make because they areadapt in order to remain successful. “Railways are asset-intensive, low- out of tune with today’s needs”.McCusker’s time at MTR coincided with return businesses that require enormous A city wedded to its investments in infrastructure and significanta period of dramatic change, one that transport network land use. Leaving aside initial build costs,saw unprecedented growth in passenger As one of the most densely populated few railways cover their long-termnumbers from two million to some 4.5 corners of the planet, Hong Kong relies operational costs or earn sufficientmillion per day; the consolidation of the city’s heavily on its transportation system. revenues to fund regular programmesrailways into one organisation; the opening Ninety per cent of all journeys across the of modernisation or replace assets.of new lines and extensions that more city are made by public transport – one ofthan doubled the network size; and the “I quickly came to the conclusion that the highest ratios anywhere in the world.replacement of the entire signalling system. the key to unlocking our potential lay The backbone of this network is an with the people and the culture. It is aBut of the many changes he brought to the extensive urban rail system that stretches view that remained a constant throughoutbusiness, he believes his most important across a complex geography of islands my 24 years in the rail environment.”legacy is more cultural than physical. and mountainous terrain. Today the MTRAnd the rationale is simple: McCusker felt Corporation operates metro and light rail Creating a shared understandingthe priority was to change the business’s services, as well as connections to mainland “We needed to break down silos and giveown outlook from one that was intuitively China and the airport express link. staff the confidence to embrace change.technical to one that was customer-led.
  • 33. Insight March 2012 31Much of my initial attention was invested maximising value from their assets while to keep those trains in continual serviceon driving a cultural shift and building meeting the demands of the market – securing parts, reducing unplannedcompetencies across the majority of and customers.” maintenance – while ensuring they canstaff – not just an isolated cadre such as adapt to changes in society, such as Having established a new customer-ledmanagement or the leadership pipeline. improved access for passengers with culture giving the business direction, limited mobility or extended WiFi“We launched a number of programmes McCusker turned his attentions towards connectivity. Today’s demand mustto get the business thinking how it could managing the physical assets: how the be served by major investments madeprovide a better quality of service for the trains were serviced; how the control room several years ago. Trains can’t becustomer. One of the most successful was was managed; handover times between replaced every five years.an incentive scheme for frontline staff maintenance and operations.based on rewards and recognition – “How you manage assets in the railway “We recognised that we had valuableuncommon within the industry at the time. environment can make the difference assets and needed them to deliver for between success and failure in this“We also introduced annual training to give the company through better deployment. business.” But, he warns, “Assetpeople the skills to view their work from This meant being smarter about how we management fails when we onlydifferent perspectives, from those of both operated, how we approached system think of maintenance.”colleagues and passengers, and have the safety and how we dealt with integratingconfidence to suggest their own ideas.” new and old assets. Solving tomorrow’s problems After more than 20 years in Hong KongA new internal ‘language’ took hold “Such major challenges were successfully McCusker has moved to a new role asacross the business, one that cut through overcome largely due to my introduction of Director of Rail Infrastructure at thesilos and provided a shared understanding systems assurance, and the first application University of Wollongong’s SMARTfor when decision-makers in disparate of systems engineering within the company”: Infrastructure Facility, which providesparts of the organisation met to resolve essentially dealing with the assets as an various industries with powerful modelling,conflicts and agree priorities. It’s a culture integrated system and recognising the research and analysis tools. In addition he isof openness so successful that it has been interactions between the different parts supporting Lloyd’s Register Transportationexported to MTR’s interests abroad of that system throughout the lifecycle of to develop a leading-edge assetsuch as in Melbourne and London. the asset – in brief ‘asset management’. management philosophy.McCusker feels such an approach will The benefits of this systems approach McCusker is currently building up a newbecome more important than ever for were quick to fruition: trains were released rail division bringing his deep operationsany business as a new generation steps in. earlier by the maintenance teams; rolling and business experience to projects such stock was no longer stuck in the workshops“With Generation Y coming in, employers as helping freight operators work more during peak times; and the purchase ofin any sector will be dealing with different efficiently on lines shared with passenger new rolling stock could be delayed by,mindsets and personalities. Will future services. “Helping them do more with in some cases, up to seven years.staff be so committed to one organisation? what they have” he says, a phrase that willWill they be prepared to go the extra mile? The business also became a fast learner be familiar across many industry sectors.How will they be motivated? These are within construction projects andquestions that managers everywhere particularly their influence on current More details about the SMARTwill have to address.” or future operations. In a period of Infrastructure Facility can be found at just two to three years McCusker and www.smart.uow.edu.au/Engaging these new people in the his team delivered a turnaround inbusiness and retaining knowledge from train performance of some 250%. Claire Ruggiero is Lloyd’s Register’sthe experienced leavers will become amajor challenge in the coming years. Yet he believes that across the wider rail Transportation Growth & industry there is insufficient understanding Innovation Manager.Still about the bottom line of just how pivotal asset management is.As in any railway business, there is still E transportation@lr.orga bottom line to deliver. “Operations “The overall lifecycle of a train is aboutmanagers live in a profit and loss world,” 40 years, with a refurbishment aroundhe explained, “they have to focus on the 20-year mark. It’s a major challenge
  • 34. 32 March 2012 Insight T o remain the valuable business system that it currently is, ISO 9001 needs to continue to evolve, ensuring that organisations of all sizes, complexities and location see a clear connection between their strategic objectives and their quality management system (QMS). It is not just about meeting the requirements of a standard to get certification; it needs to be embedded in everything that the organisation does. ISO 9001:2000 – a defining moment Mike James, LRQA’s In 2000, there were far-reaching changes made to ISO 9001, Managing Director, the international quality management system standard. These changes were based upon an extensive International Organization looks at the need to for Standardization (ISO) user survey but were also made at a evolve the international time of widespread criticism of the standard and the third-party quality standard certification industry. The resulting changes proved to be a defining moment, resulting in a clear ‘before and after’. Prior to 2000, ISO 9001 was purely a conformity assessment standard; however following the changes, which were rooted in key quality management principles, the standard became not only this but also a framework for managing and assessing organisations against accepted management best practice. In fact, given that now over one million organisations in over 150 countries use the standard to manage their key value-creating processes, it’s arguably the most influential piece of business management literature ever written. Uncovering an organisations self-knowledge These changes not only raised the bar for the companies using the standard but also for the third-party certification industry that conducts the independent assessments.ISO 9001:Business managementliterature’s mostinfluential work?
  • 35. Insight March 2012 33Assessor competence defines the certification industry. Assessors 15 years. This could mean that it lags so far behind today’s modernnot only need to understand the industries they work in and the business practice that its relevance could be called into question.businesses they assess but they also need to be able to apply Possible changes aheadthis knowledge in a way that unlocks the intrinsic value in the With the existing agreement on the common structure and text forassessment process. They need to be able to speak both the future revisions on all ISO management systems standards, there islanguage of the shop floor and that of the boardroom. room for speculation about likely changes for the next version ofIndependence and transparency are of pivotal importance to ISO 9001. For instance, acknowledging the fundamental purposethe certification industry; as providers of certification we add of all management systems standards, currently numbering invalue through structured and measured questioning, known excess of 40, is to prevent things from going wrong. Therefore,as Socratic questioning. This provides assurance to our clients, if prevention is to become the defining purpose of an ISO 9001their customers and wider stakeholders in society. This is not management system, this must inevitably lead to the considerationthe same as consultancy which strives to add value through of risk; not a risk management system which focuses solely on risk,the provision of expert advice. but the systematic control of risk through the management system, which is subtly different.The role of accreditationTransparent and credible governance of certification bodies Another area links into the changes in modern organisationalthrough the accreditation process needs to remain at the heart design. One of the changes in the modern business world has beenof independent assessment and certification. It is central to the breaking down of traditional organisational boundaries fromstakeholder confidence by ensuring the competence of assessors vertically integrated companies to whole industries characterisedand the impartiality of the decision-making process are maintained. by outsourcing, thereby creating ‘demand networks’ commonly referred to as supply chains. The collaborative, interdependentThe speed and growth of ISO 9001 certification coupled with nature of the way in which these relationships are managedthe evolution of management systems standards have also should be addressed in the new version of the standard.required changes in the accreditation process – changes whichare reflected in today’s accreditation system. Finally, the common text and structure needs to define the need for an organisation to consider changes relative to both its externalISO/IEC 17021: 2011 is the standard for certification bodies. and internal environment. This will focus the organisation and itsIt ensures that the regional or country-specific accreditation certification body on the alignment of its quality objectives withinbodies, such as the United Kingdom Accreditation Service (UKAS) its overall strategic goals.and ANSI-ASQ National Accreditation Board (ANAB), assess thecertification industry against a consistent standard. It has also Into the futureextended the competence requirements to encompass all staff There have been numerous independent studies over the yearsengaged in the certification process. For these reasons ISO/IEC demonstrating the benefits from implementing ISO 9001; one17021 offers tangible, consistent benefits that translate into of these is a recent article published in a prestigious peer-reviewedincreased trust and confidence for all stakeholder groups. academic journal from Harvard Business School. The article1 encapsulates some of the key organisational benefits for ISO 9001Matching business developments certification stating: ‘ISO adopters have higher rates of corporateWhen ISO 9001:2000 was revised, one of the key changes survival, sales and employment growth.’was more generic language to extend its use into service activitiesas well as manufacturing. This change, particularly in industries The ISO 9001:2000 update was the most significant evolutionarywhich are highly concentrated and where there is a high degree of step to date. Internal and external QMS stakeholders eagerlyspecialisation, has meant that customised versions of the ISO 9001 await the direction the next ISO 9001 update will take.standard have become more attractive. Rather than point to any Robust and relevant services and products that inspire confidencedeficiencies in ISO 9001, sector-specific versions for the automotive, and drive organisational resilience, competitive advantage andfood and aerospace industries are a testament to the management growth are the real value in independent assessment. With thatprinciples that underpin the standard, supported by its acknowledged goal in mind, the certification industry, through innovation,capability to solve quality problems. independence, training and the technical expertise of assessorsThe revision process for ISO 9001 is just beginning and will represents a valuable service to the business world and societybe subject to a number of different influences including the at large both today and into the future.latest ISO user’s survey and the inevitable tension in the votingphase between those who want radical change versus a more E mike.james @lrqa.comevolutionary approach. Given the minimal nature of the changesin 2008 there needs to be some meaningful change. Otherwise, A version of this article first appeared in Quality World.come 2015, the standard will not have significantly changed in1 Quality Management and Job Quality: How the ISO 9001 Standardfor Quality Management Systems Affects Employees and Employershttp://www.hbs.edu/research/pdf/09-018.pdf
  • 36. 34 March 2012 Insight A patch of East London wasteland has been transformed into the hub for the 2012 Olympic and Paralympic Games.London’s bid to host the 2012 Olympic and Paralympic Games promised to deliver thebest games ever. At the Royal Academy of Engineering’s 2011 Lloyd’s Register EducationalTrust Lecture, and later to Insight, Sir John Armitt, Chairman of the Olympic DeliveryAuthority (ODA), described how the ODA has helped to meet that promise.The construction work for the Olympics 499 events across 20 sports. And for him wide experience in civil engineeringhas been compared to building two each event the ODA determined whether and industrial construction projects.Heathrow Terminal 5s in half the time. existing facilities could be used – the Raising the barHaving to build 2,818 apartments in just Games will make use of many pre-bid The Olympic project was recognised astwo years was in itself an enormous venues in and outside London – or, if not, an opportunity to raise the bar in theexercise. This was just one element of whether to build a temporary or a construction industry. The ODA setthe project which required the ODA, set up permanent new venue. standards across six key themes: health,in 2006, to deliver the site’s infrastructure, The scale and complexity of the project safety and security; employment andvenues, Olympic Village and transport links, might have seemed overwhelming. But skills; sustainability; equality, diversity andas well as devise and implement effective John Armitt exudes the quiet authority inclusion; legacy; and design and accessibility.transport plans. All this had to be done to of someone who is used to getting thingsdeadline, on budget and in a sustainable An early challenge to the ODA’s done according to plan. Before joiningmanner to leave a lasting legacy. sustainability credentials was the heavy the ODA in 2007, a succession of posts as contamination of the 600-acre site of theAround 17,000 athletes and officials will chief executive of Union Railways, Costain, Olympic Park in Stratford, the result oftake part in 302 events covering 26 sports Railtrack plc and lastly Network Rail, and hundreds of years of waste from industry.in the Olympics; the Paralympics will offer 27 years working for John Laing, had given
  • 37. Insight March 2012 35“Traditionally such soil would be dug Engineering challengesup and transported to landfill and clean Preparing the Stratford site posed a seriesmaterial imported,” said Armitt. This, of engineering challenges. Bound andhowever, would have meant extensive criss-crossed by roads, railway lines andlorry movements on the local roads, a canal, it is also bisected by the River Lee.landfill, and the use of raw materials. Across the site, 52 pylons supported NationalSo it was decided to clean and recover Grid power lines; a project to bury thesethe contaminated soil. Two million tonnes lines in two six-kilometre tunnels, alone,was treated primarily by soil washing; 95% cost £300 million.of the soil was recovered with only 5% A network of roads and bridges wasgoing to licensed landfill. constructed, a site-wide sewage system“The health and safety of site workers has been installed and a combined cycleis the top priority in everything we do – energy centre provides 90MV of heating,that culture was established at the outset,” 52MV of cooling and 12.3 MVA of electricity.said Armitt. “Good management and “In fact we’ve spent more money onleadership has resulted in our accident infrastructure than stadia,“ said Armitt.frequency rate being far lower than the The Aquatics Centre proved to be “quiteindustry average across what is one of the a challenging building,” said Armitt. At thelargest construction projects in Europe. bid stage, the iconic design by Zaha Hadid“The accident rate is 0.15 accidents per captured the imagination. The original challenge. A capacity of at least 80,000100,000 hours worked. To put this in design was scaled down to cater for 2,500 is required for the Games, but afterwardsperspective, only 120 reports have been spectators with two temporary wings to only a few events or premiership footballreceived by the Health and Safety Executive seat another 15,000 during the Games. clubs could fill this number of seats.in relation to over 75 million hours of work The wings are not airtight, which caused Wembley could have been used, buton the project to date, equating to one a significant challenge for the engineers moving hundreds of athletes and officialsincident every 77,000 days. Around to meet very strict environmental across London made it impracticable.two thirds of these incidents relate to requirements. The huge roof structure,common injuries such as twisted ankles weighing 2,800 tonnes, was built before The London bid had promised thatand sprained backs.” the construction of the pools and main part of the legacy would be a new building. Later it had to be raised as a international-standard athletics stadium.He said the project thus far has been whole to enable additional work to A unique decision was made to builddelivered without a fatality, a major reduce the load an 80,000-seatachievement, illustrating the robust on underground stadium, whichhealth and safety culture. power lines. One of the main goals could later be “A tense moment,” recalled Armitt. in the design and build reduced to a 25,000-seat athletics “The 6,000-seat was to leave a legacy. facility. The 2017 World Athletics velodrome is the Championships most energy-efficient will now be held there, so a 60,000– and, for many, the most beautiful building 80,000-seat stadium is likely to be the in the Olympic Park,” said Armitt. Its immediate legacy. compact design minimises the heated volume of air in the main cycling arena and The ODA has published some 300 separate uses entirely natural ventilation. Plenty of papers that identify the lessons learnt from natural light reduces the need for electric this major programme across 10 industry lighting. The designer is confident it will themes such as health and safety, be one of the fastest cycling tracks in sustainability and project management. the world. These can be found at www.london2012. com/learninglegacy; this data bank will Legacy continue to be developed after the ODA One of the main goals in the design and has completely wound up. build of the Olympic site was to leave a legacy for the benefit of the local and wider community. The main stadium was a major
  • 38. 36 March 2012 InsightOn time and under budget remarkably smoothly; a credit to the programme management – for example,The delivery of the venues and UK engineering and construction industry. provision of centrally sourced concrete,infrastructure for the Games has been on The Aquatics Centre was the most difficult, aggregates, fuels and waste servicesor ahead of schedule and under budget. and that came in on time. Maybe everyone helped to ensure that the ODA exceeded put their ‘A’ teams in – no one wanted to the target of at least 50% of bulk materialsArmitt considers one of the ODA’s greatest be the one who failed.” being transported by rail or water freight.achievements was establishing a realisticbudget from government. Everything else Clear client leadership was another The final countdownthen followed; for example, a robust important factor. The ODA appointed The ODA handed over the site to LOCOG,financial and contracting platform/system a delivery partner, CLM, to manage the the London 2012 organising committee,was established to go with it. construction projects. In its client role, on 9 January. For LOCOG, an intense period the ODA set the specification for the of activity includes installing 16,500 fixed“The ODA has saved over £910 million venues and infrastructure, let the main telephones and 7,000 internet stationsto date, with our anticipated final cost contacts, set the standards required across across 894 locations; 75,000 volunteershaving gone from £8.1 billion to £6.85 billion. six key themes from safety to employment will need to be recruited and trained; andThis has helped keep the remainder of to sustainability, dealt with the external 65 hectares of tents erected for retail,the project in line with the £9.3 billion stakeholders, and delivered the catering and back-of-house facilities.public-sector budget,” said Armitt. transport plan. “There is much to be done,” said Armitt.It was not without its problems, unsurprising Armitt also attributes the success to “But I am confident that in July Londongiven its scale and complexity. But all cross-party political support, a rigorous will be ready to host the greatest showthe challenges have been surmountable, approach to programme control and on earth.”according to Armitt. “I don’t do sleepless change management, and strongnights,” he said. assurance and risk management. Sir John Armitt was a member ofThe financing of the Olympic Village Lloyd’s Register’s General Committee The procurement strategy and operationcaused the most anxiety because the ODA from 2003-2006. also helped to keep the project on trackhad to step in when the 2008 financial and within budget. A contract packagingcrisis upset plans for it to be built by the E kathy.davis@lr.org strategy supported the delivery andprivate sector. “The rest has gone
  • 39. Insight March 2012 37 Is London’s That same visitor may also be struck by improvements to some of the main stations too. International services were moved from Waterloo to the gloriously refurbishedtransport network up St Pancras station in 2007, and when neighbouring King’s Cross pulls down the scaffolding later this year to reveal its to the Olympic job? stunning new concourse, London will boast two grand, historic stations the equal of any in the world. With more than 80% of spectators expected to arrive by train, most Olympics- centred developments were concentrated around Stratford, which will act as the Andrew Foulkes asked our gateway to the Olympic Park. New platforms, ticket halls and entrances have Transportation team in London for been added to the existing stations, along their thoughts on this question. with improved walkways and disabled access. A special ‘Javelin’ service will zip between Stratford International and St Pancras during the Games themselves, carrying around 25,000 people per hour. Transport was always the worry for There will doubtless be the occasional organisers of London’s Olympic bid. disruption that makes headlines, but as Even after it was awarded the Games, home to two national sports stadiums and whenever the International Olympic host to large events almost every weekend, Committee delegations were in town London will be better prepared than most. to check on progress there would be a collective holding of breath that the The biggest disruption could be the city’s maligned transport networks Olympic Route Network – the stretches would be on their best behaviour. of reserved lanes and restricted roads that will allow athletes, officials and media to Given the demand placed upon it, London’s dash across the city’s main thoroughfares. transport is never as bad as its residents Organisers have spent several years trying would have visitors believe. However it to raise awareness of the routes and is currently enjoying a period of almost impact on daily routines but no one has unparalleled transport investment. So much really yet been paying attention so you so, in fact, that the building works themselves can expect plenty of Londoners to take have eclipsed service levels as the commuter’s to the radio phone-ins to vent their favourite antagonist-in-chief. Some projects frustrations this summer. have been driven by the July 2012 deadline, but much was happening in any case. Most importantly for London, however, is that these projects are not solely about the The Underground, for example, had Games, with the improvements continuing already embarked on a substantial long after the athletes have left. Currently modernisation programme to bring popping up across central London are the improved services, new trains and building sites for a new East-West line that refurbished stations across the network. has been talked about since the 1970s. Too The works, which must fit around the late for 2012, but it’s a substantial transport 3.5 million journeys the network carries investment and one that will be integral to each day, will take up to 30 years to the city’s long-term success. complete, but the initial fruits are bearing through. Anyone visiting for the first time in, say, five years will not fail to notice the Andrew Foulkes is Lloyd’s Register’s shiny new fleets and improved ambience Transportation Communications Manager. on some previously notorious lines. E andrew.foulkes@lr.org
  • 40. 38 March 2012 Insight In the financial industry, opportunities for massive growth abound as the growing A country middle class seeks out banking services. Experts expect a rise in the number of investor accounts in Brazil, from 800,000 to five million in the next five years. The country is also a major manufacturer and exporter of petrochemicals and provides transformed significant quantities of lumber, iron ore, tin and other natural minerals to the global market. Potential for oil Since deregulation of the oil industry began in 1995, oil production in Brazil has increased from 800,000 barrels per day to 2.1 million barrels per day. More recently, the discovery of major offshore oil reserves 300 kilometres Brazil’s rapid economic growth and off the country’s Atlantic coast could propel prospects is charted by Rebecca Moran. it into the top league of oil-exporting nations. “The find lies in what all Brazilians now know as the ‘pre-salt area’ – so called because the oil and gas is located beneath several thousand meters of water, rock and salt,” says José Ferreira, Lloyd’s Register’s Brazil Country Manager. “Brazil hasB razil has been a popular tourist growth over the next several years – discovered billions of barrels of oil in destination for many years. a perfect environment for an emerging the last few years, mostly in these deep, It boasts a diverse cultural economic giant. pre-salt fields off its south-eastern coast.” heritage with celebrations “Petrobràs, Brazil’s majority owned oil Today, Brazil ranks as the world’s sixth largestand festivals that have become known company, explores in this deep water hoping economy and the eighth largest in purchasingaround the world, dazzling beaches and to boost Brazil’s production of oil to five power parity. And, for the first time inrainforests, and travel friendly weather. million barrels per day by 2020. The Brazilian history, an increasing number of BraziliansBut as an economic power, Brazil seemed oil company raised US$70 billion in 2010 to are in the middle class as others move fromto be headed in a direction that few develop the new fields in the world’s extreme poverty to low-income status, andcountries would envy. largest ever public share offering.” domestic consumerism has become anJust 40 years ago, the country was important driver of Brazilian growth. Today, there are approximately 77essentially a closed economy and Brazilian companies, 36 of them foreign, involved Contributing to the country’s boomingdebt to the International Monetary Fund in exploration and production activities economy is one of the most advanced(IMF) and other international lenders was in Brazil where ‘local content rules’ are industrial sectors in Latin America boastingspiralling. Inflation was the untameable integral to success. Local content rules involvement in industries such as automobile‘dragon’, as it was called in Portuguese call for companies to procure a minimum and parts manufacturing, machinery andslang, and totalled an approximate percentage of goods and services from equipment, textiles, shoes, cement,quadrillion per cent cumulatively in local sources. Government officials computers, aircraft and consumer durables.the 20th century. believe that these rules will ensure the The agriculture sector is also remarkably development of jobs and economic growthBut today, as many countries in the dynamic. For two decades, this sector while fortifying domestic industry sincedeveloping world struggle, Brazil is rapidly has kept Brazil among the most highly many companies and suppliers willemerging as an economic powerhouse productive countries in areas related to be tempted to establish manufacturingpossessing some long-term advantages the rural sector and it is believed that Brazil operations within the country.over other countries. Most importantly, has not yet tapped its potential for foodthe country’s disciplined, market-friendly But Brazil’s economic boom is not without production. More farmland can easily bemacroeconomic policy and its stable its blemishes. Brazil’s growth rate remains created and the climate allows for thedemocratic governance have created a the lowest of the four BRIC countries – rotation of three crops per year, insteadfoundation for steady and predictable Brazil, Russia, India and China; the country of the usual two.
  • 41. Insight March 2012 39is plagued with a tax burden of nearly35% of GDP and the government hasmoved at a slow pace to implementkey economic reforms. Additionally,government spending is growing fasterthan the overall economy and many arguethat the money is being spent on thewrong things. Federal government payrolls,social security and pension spending areincreasing but the investment in educationand infrastructure is lacking.Can the country maintain its momentumand overcome the existing roadblockstowards growth? Only time can accuratelyanswer the question. But there are strongindicators that Brazil has just begun itsascent as a global economic giant.Platform for businessThe government plans to invest billionsof dollars in offshore oil, hydropower, andother infrastructure sectors over the nextfew years. Preparation for the World Cupin 2014 and the 2016 Rio Olympics isprompting improvements to roads,airports, sports facilities and other areas.The government is encouraging familiesto keep children in school by paying thema monthly stipend. Policies are being setin place to tighten fiscal spending. Foreign “Brazil hasdirect investment flows are second onlyto those of China, and the country’s discovered billionsinternational reserves exceed US$350 billion of barrels of oil in– which serve as a cushion to protectthe country against economic crisis. the last few years,Employment and wages are on the mostly in these deep,rise and there has been significantimprovement in income distribution. pre-salt fields off itsThese and many more investments, as south-eastern coast.”well as proactive policy management bythe government shows a relatively stable,growing platform for business. Predicted tobe one of the five largest economies in theworld in the decades to come, there is littledoubt that key players from all industrieswill be contemplating their future role “There are strongwithin this emerging economy as Brazilcontinues to transform from an unenviable indicators that Brazilmember of the global market to a top has just begun itscompetitor in the economic world. ascent as a globalRebecca Moran is Lloyd’s Register economic giant.”Americas’ Communication Manager.E rebecca.moran@lr.org
  • 42. 40 March 2012 InsightCHINA Rise of leisure ships in The country’s cruise ship and yacht markets are taking off.
  • 43. Insight March 2012 41Multiple berth: (left to right) Royal Caribbean Cruises International (RCCI) owned Rhapsody of the Seas;Xin Jian Zhen, ferry owned by China-Japan International Ferry Company; Dawn Princess, owned byPrincess Cruise and classed by Lloyd’s Register; and the Fred Olsen Cruise Lines-owned Balmoralline up at Shanghai Cruise TerminalAcross Asia many see their business into cruise vessel building. skilled labour force and brings key This may be for the Chinese market to knowledge and techniques to the industry.cruising as a key target start with but they will aim for the US In China, there is also a very good supportarea for future tourism. and European markets as builders and network of specialist manufacturers ofShanghai, with its population designers gain experience in this specialist marble, glass, woodwork and furniture,”of 23 million – and growing, shipping segment. As the world’s leading said Liang. classification society for cruise ships, Lloyd’scould soon become a leading Register is in discussion with several “Most Chinese-built yachts are exportedglobal cruise terminal. Several rather than sold to the domestic market,” Chinese and foreign industry partners to says Zoe Zhou, of Lloyd’s Register’s Marinemajor companies are eyeing support the development of this unique Business Development team. “However,its cruise terminal’s huge market in China. rising average income per capita andpotential and both Costa It’s not just the cruise market that is taking demand for leisure and high-end luxury off in China. A booming economy, a spate products in China – yacht tourism isCruises and Royal Caribbean of wealthy local entrepreneurs with a taste considered the golf of the sea – couldCruises International (RCCI) for luxury yachts and growing demand well guarantee a bright future for thehave been using it as a from global owners and operators for internal market.home port. more construction outlets, has led to a “Chinese yachtbuilding is expanding. rapidly expanding network of ChineseIn fact many Chinese companies want to China’s builders have a slightly different yacht builders.enter the cruise market, but it is not easy to approach to other countries in terms offind the right cruise ship formula, which is One of these is Kingship Marine based at finance and business plans. The infrastructurelikely to involve shopping facilities, attractive Zhongshan city in Guangdong province, is there and it is only a matter of time beforeexcursions and an onboard casino, all of southern China. Company founder, Roger yachtbuilding starts to catch up with otherwhich need development time. Because Liang, said he opted to base the company types of Chinese ship construction.”of the complexities involved, the Chinese in China after looking at potential sites indomestic market will need to evolve its Vietnam, Malaysia and Australia. E china-bdt@lr.orgown business models and approach. “China is very mature as a shipbuildingWith the Shanghai Cruise Terminal now nation, the workers are well trained andan established cruise hub and with other it has the largest number of engineersChinese ports already following its lead, graduating each year from university.the country’s shipyards are keen to diversify This provides a solid foundation for a
  • 44. 42 March 2012 Insight Committing to a food safety culture Training employees and transforming the individual Vel Pillay, Food Safety Program Manager – Americas, LRQA
  • 45. Insight March 2012 43Safe food is key. Consumers want genuine food safety culture, “[behaviour- It is critical to understand that thereassurance, organisations are based] food safety managers have figured effectiveness of any training programmeworried about brand reputation and out a way to go beyond accountability. is contingent upon getting buy-in fromshareholder value, and governments They’ve figured out a way to get all employees, and the first step is tolack sufficient resources to thoroughly employees at all levels of the organisation understand the inner workings of theinspect every morsel of the food to do the right things, not because they’re organisation, its vision and objectives,supply chain. And, the media ensures being held accountable, but because they strengths and weaknesses.that every incident and outbreak is believe in and are committed to food Experience shows that where such anreported as front page news. safety. They create a food safety culture.” approach has been taken, the systemThe industry has come a long way in The collective food safety practices used is more robust and effective. Theits practices to ensure that the supply of within an organisation are achieved by organisations that engage employeesfood is safe, and organisations such as the taking into account both food safety in their food safety management systemGlobal Food Safety Initiative (GFSI) have culture and food safety management (FSMS), such as FSSC 22000, are betterbeen instrumental in promulgating and according to Professor C J Griffith, Emeritus able to obtain buy-in and are more likelybenchmarking food safety programmes Professor Cardiff School Health Sciences, to succeed in creating a food safety cultureto ensure consistent application. However, Operational Food Safety Performance. driven by awareness.E.Coli and salmonella have become common Griffith defines food safety culture as “Cargill’s approach to the deployment ofhousehold words, and the number of food ”the aggregation of the prevailing relatively FSSC 22000 across over 850 plants in 67recalls continues to grow year-on-year. constant, learned, shared attitudes, values countries has been to engage employeesMore needs to be done to gain confidence and beliefs contributing to the hygiene from the beginning,” says Roger Bont,and trust in the supply chain. behaviours used in a particular food Global Quality Assurance Director at handling environment” and one mustCould a culture-based approach to Cargill. “Our approach, supported by a “provide staff with a common senseeducating and training employees help strong internal training programme, has of food safety purpose.”change this landscape? fostered an environment where employees Considering both perspectives, it must think about and justify their actions. ThisFood safety culture be understood that for training to truly awareness has helped improve our foodTraining plays a critical role in enhancing support a food safety culture, it needs safety systems and strengthen ourfood safety. We can take our cues from to be delivered in a format that enables food safety culture around the world.”recent work done by the GFSI. In an an individual to contribute to his or herattempt to raise the bar on food safety An effective training plan employer’s business strategy and foodprogrammes across the globe, the GFSI An organisation’s training implementation safety objectives.developed a tool kit to help food suppliers plan is absolutely important. From the start,meet GFSI benchmarked schemes. During The whole picture an organisation must leverage first-handseveral pilots conducted in Egypt and other The food sector is at a crossroads. The knowledge of its employees and managerscountries, 65% of participating food current method of teaching rarely takes who will be directly involved in implementingcompanies failed to meet basic requirements into consideration the holistic approach. and maintaining the FSMS. A solid trainingestablished by the GFSI; however, after a Many organisations still operate in silos implementation plan that is reviewed anddedicated training period with employees and in a compartmentalised way. revised along the journey is critical, andof those same food companies, 45% of the ability to gear training accordingly In numerous cases, we see disconnectthe previously failed organisations met is an absolute necessity. between corporate, business units andthe requirements set out in the pilots. manufacturing sites in writing policies and For this to happen, training and educationThere are other factors that we need to procedures without consulting each other. must be raised to a higher level. Whenconsider when we look at how to enhance To raise the bar, training must evolve to a designing a plan for training, one musttraining. Two critical components are food deeper level of understanding ‘the whole’. consider ‘the whole rather than the parts’;safety culture and food safety management. employee involvement and buy-in are Employees must not only be made aware crucial at instilling a food safety culture,In an article that appeared in the December of the big picture, but must also understand and because of the holistic approach2010 edition of the GFSI newsletter, Frank the vision and objectives of the organisation taken while designing the FSMS standard,Yiannas, Vice-President Food Safety at and their responsibility vis-à-vis food safety. one should model training to mimic theWalmart, talked about the importance of A well-thought-out management system to FSMS approach.creating a behaviour-based food safety help achieve this objective is crucial. A goodculture rather than focusing on just starting point is to understand how aimplementing a food safety programme. well-planned management system can E enquiries@lrqa.comYiannas described the critical difference help bring focus on a holistic approachin an organisation that has adopted a that transforms the culture.
  • 46. 44 March 2012 Insight Northern Rail’s energyNews update efficiency from ISO 50001 Following Northern Rail’s 2011 certification by LRQA to the new international energy management system standard ISO 50001, preliminary figures have demonstrated reductions in electricity use by over 11% and gas consumption by over 15%. Since implementing ISO 50001, one of the key initiatives has seen the UKs Northern Rail undertaking a large amount of work on data collection with the installation of a metering programme at almost 300 sites across its network. As Gareth Williams, Northern Rail’s Energy Solutions Manager explained: “The metering programme provides Northern Rail with accurate monthly invoice data and access to half-hourly information which in turn has allowed better management at site level. ISO 50001 helps us to establish a systematic approach by embedding processes to improve energy performance, including energy efficiency across the whole of the organisation.” E enquiries@lrqa.com Support to Valemon topside EPC project The engineering phase of the Sandvika, Trondheim and Kuala Lumpur Valemon topside EPC (engineering, offices. So when the project left for Kuala procurement and construction) project Lumpur, the organisation accepted our has moved to Kuala Lumpur and our proposal to keep supporting them in Scandpower team based there is now managing the functional safety for the continuing its safety integrity level platform until August 2012. (SIL) study work for the project. Valemon is a gas and condensate field in Scandpower has supported the Grenland the Norwegian North Sea. The Valemon Group and Technip project from its initial field will feature a fixed steel platform to stages, with involvement from the separate gas, condensate and water in the well stream, and will be predominantly unmanned after the drilling phase. E fadlina.zainal@scandpower.com
  • 47. Insight March 2012 45John Wishart Nuclearis new Energy industryDirector personnelOur new Energy Director is John Wishart swapwho joined the organisation in December Lloyd’s Register’s new agreement with2011 from GL Noble Denton. Wishart is Magnox Ltd paves the way for the transferbased in London and brings a wealth of of qualified personnel between our twoexperience to the job, having spent more leading organisations of the UK’s civilthan 30 years in the industry. nuclear sector. It will help ensure we will“Rising energy prices, stricter emission both have access to expertise appropriate He joins our energy team at a time whenstandards and the complexities of exploring to our work-cycles. the division is enjoying strong incomenew energy sources are increasing the growth – 15% in the last fiscal year – New-build companies and the nuclear supplytechnical assurance needs of companies by enhancing its specialist technical chain are anticipating an increased demandoperating in the energy supply chain,” expertise in the traditional sectors through for people at a time when Magnox isWishart said. “I am very much looking acquisitions and further expanding its entering a decommissioning programme thatforward to the challenge of growing the capabilities in the renewable and nuclear will affect many of its skilled and talentedenergy business of the Lloyd’s Register energy sectors. people. Our alliance will help to ensure thatGroup in all its dimensions – upstream, we will continue to have the safety engineersdownstream and the conventional, E energy@lr.org we need to support our clients’ globalnuclear and renewables sectors.” growth ambitions while allowing Magnox to transition its workforce from power generation to the various decommissioningISA role for new Ras Al Khaimah Port Saqr projects it has on the horizon. E energy@lr.orgrailway in UAE Sharjah Dubai Khor Fakkan New bulk Jebel Ali Fujairah Abu Dhabi Khalifa PortLloyd’s Register has carrier’s 14% Abu Dhabi Musaffahbeen appointed as the Ghweifat Abu Dhabi Ruwais ICADindependent safety Al Ainassessor (ISA) for the To Saudi Arabiaextensive new1,200-kilometre rail To Oman drop in fuel oil The MV Aquila is the first in a new seriesline to be constructed Liwa Shah of supramax bulk carrier designs optimisedacross the UAE, stretching to burn less fuel oil. The efficiencyfrom the Arabian Gulf to the Indian improvements have been achieved byOcean. As the ISA, we will help to ensure carrying out a number of straightforwardthe safety of passengers, operating staff and members of the public at every stage – but effective – changes including:of the development of Etihad Rail, from design through to the start of freight services derating the main engine, a new propellerin 2014 and passenger services soon after that. design optimised for the derated engine,Mike Elliott, Middle East Rail Business Manager, said the award reinforced our position as and fitting a mewis duct. The ship wasa leading ISA in the Middle East, having fulfilled similar roles recently for the Dubai Metro, delivered in China in January 2012 tothe Al Mashaaer Al Mugaddassah Metro in Mecca and the Personal Rapid Transport operator Delphin at Jiangsu Hantong (HTS).system at Masdar City, Abu Dhabi. Lloyd’s Register supervised the design“We have built a strong understanding of the safety processes that support the planning, appraisal, build and sea trials, verifyingimplementation and commissioning of new railways in the Middle East, experience that the performance of the 57,000 dwt ship,will be invaluable to this project.” based on ship designer’s SDARI design.E transportation@lr.org E nick.brown@lr.org
  • 48. Drivingsustainabilityfor a saferworld.How do you create a truly sustainable future for your business?For us, it’s all about seeing the big picture. We offer intelligent, balancedadvice that will help you meet your operational and commercial challenges,as well as environmental and regulatory obligations.Learn more about our global network –go to www.lr.orgLloyd’s Register, LRQA, Scandpower and ModuSpec are trading names of the Lloyd’s RegisterGroup of entities. Services are provided by members of the Lloyd’s Register Group.For further details please see our web site www.lr.org/entities