Post-Fukushima: the future energy mix

Inside• Future fuels for marine• Offshore wind industry• Climate data verification• A perspective on

South Korea’s development• Qatar’s transport

challengeinsightThe Lloyd’s Register Group magazine Issue 3 September 2011

Inside Issue 3:Contents in full:2 Rebuilding public confidence after

Fukushima4 Q&A with Professor Sir John Beddington,

UK’s Government Chief Scientific Adviser6 The lessons of Fukushima, Dr Mike

Weightman, UK’s Chief Nuclear Inspector8 Availability, efficiency and sustainability:

The future energy mix debate14 Future fuels for marine16 Focus on fleet efficiency – Peter Curtis,

Vice President, Seaspan Shipmanagement18 The wind of change – the ultra-reliability

challenge for offshore wind farms20 Better prediction of extreme marine

weather events23 Preparing for a low carbon economy26 Organisational integrity: Key to a better

safety culture27 Open to change and innovation –

focus on South Korea30 A transport transformation in Qatar 32 Design a second Industrial Revolution

– Dr Michael Braungart on the ‘Cradle to Cradle®’ concept

35 Beyond regulation in the manufacturing industry

36 Focus at design stage reduces failures38 CCS pace too slow40 News update

2Civil nuclear power after FukushimaIncluding contributions from experts Professor Sir John Beddington and Dr Mike Weightman

8The future energy mix debateComments from leading figures in the energy industry

14Future fuels for marineThe shipping industry stands on the cusp of change in propulsive power

22Preparing for a low carbon economyThe case for climate data verification

27Open to change and innovationSouth Korea’s astounding development journey

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

Insight is our magazine for decision-makers working in the marine, energy and transportation sectors. Care is taken to ensure that the information in Insight is accurate and up to date. However, we accept no responsibility for inaccuracies in or changes to such information. The views expressed do not necessarily represent the position of the Lloyd’s Register Group.

Copyright © Lloyd’s Register 2011. All rights reserved.

Image credits: 14 Wojciech Zwierzynski, Gdansk, Lloyd’s Register EMEA 22 Gerard Gaal, Houston, Lloyd’s Register Energy Americas, Inc. 32 Sung-Yeop Jung, Busan, Lloyd’s Register Asia

The magazine is produced by Group Communications, designed by C O N R A N D E S I G N G R O U P

and printed by Pureprint.

Editor: Kathy Davis

E kathy.davis@lr.orgT + 44 (0)20 7423 2654www.lr.org

Madlen King, LRQA’s Global Head of Climate Change & Sustainability has worked closely with the Carbon Disclosure Project in developing a new verification white paper. Here, using extracts from Verification of Climate Data, she explains how robust, independently verified data can help to drive competitive advantage.

Climate change related issues are becoming an increasing focus for many companies. Senior management recognise that robust, complete and comparable greenhouse gas data is crucial. Demand for information is growing among employees, shareholders, regulators and customers to allow them to understand a company’s strategy, risks and growth opportunities in a carbon restricted economy.

Miscalculation or misjudgement in these areas has the potential to have serious repercussions on the long-term viability of an organisation and how it is judged and valued by its multiple stakeholders. Compliance with current and future regulation is a key benefit of verification.

Market mechanisms are growing in numbers, for example the EU Emissions Trading Scheme (EU ETS), the Californian Air Resources Board, or Tokyo’s metropolitan trading scheme. These regulatory schemes depend on the

integrity, robustness and quality of the reported greenhouse gas (GHG) data and require companies to be accountable for the underlying emissions data. Verification enables an organisation to submit and register independently verified annual GHG emissions and, within trading schemes, trade any surplus. It also demonstrates compliance against regulatory obligations, helping to avoid penalties and, where regulation is yet to be enacted, prepare organisations for future requirements.

Climate change issues are increasingly incorporated into day-to-day business decisions, driving the need for transparency in this area. The growing market demand for robust, complete and comparable data stems from the integration of climate and sustainability issues into organisational supply chain considerations and into investment decisions.

low carbonPreparing for a

economy:The case for climate data verification

Insight September 2011 23

As global prospective buyers and institutional investors increasingly want proof of performance claims, verification is becoming a market access issue. Through an independent verification, companies can manage this potential risk inherent in the investment and procurement process.

The case for verification is clear. Benefits can be derived from a number of channels and include: responding to increasing market demand to demonstrate transparency and commitment to climate change mitigation projects; improving external perceptions; increasing reliability through improvements to internal processes; and identifying risks and opportunities. Another benefit is competitive advantage through internal and external benchmarking against international standards such as ISO 14064, the environmental management systems standard concerning GHG emissions.

Carbon Disclosure Project “The CDP (www.cdproject.net) was launched in 2000 to accelerate solutions to climate change by putting relevant information at the heart of business, policy and investment decisions” says Joanna Lee, CDP’s Chief Partnerships Officer. “The CDP furthers this mission by harnessing the collective power of corporations, investors and political leaders to accelerate unified action on climate change and LRQA has been working closely with the CDP in the development of its verification strategy to support organisations around the world.”

The CDP gathers corporate climate data from over 3,000 companies globally, of which over half currently verify their data. The disclosure process provides companies with insights into their systems, helping to identify risks and opportunities to their business. The reported data in turn allows data users, such as investors or large buying companies, to make informed investment and procurement decisions.

Measurement and disclosure is a key first step for a company to take on the path from data collection to carbon management and reduction – if you don’t measure, you can’t manage.

Verification is awarded a high proportion of points in the CDP scoring for both disclosure and performance due to its importance to data users and to increase the number of companies verifying their climate data.

Paying dividends Monitoring and reporting of GHG data represents an investment of time and resources but it does pay dividends and the time required will vary from client to client. The value of climate mitigation projects is greatly enhanced by verification since it provides an independent and informed view of a company’s system, adds credibility and builds trust. On the next page, aircraft-manufacturer Embraer testifies the value of the verification process to its business.

A consistent message emerging from investors, customers, regulators, non-governmental organisations and other stakeholders is that the right independent assurance not only significantly enhances the credibility of climate related data, but positively supports organisations in managing and optimising their data systems. This will ultimately help drive efficiencies that will put companies in an advantageous market position and can also be leveraged to reduce a company’s climate impact. Increased data quality through verification carries internal as well as external benefits to a company that can range from enhanced brand value through to greater preparedness to handle increased demands from potential clients, investors and shareholders.

From the data gathered by the CDP it is clear that while many companies have already embedded verification into their systems, a large number still have to take this step forward. While verification requires certain measures to be in place before data can be assured, it is worth investing time and resource into this process in order to prepare for a low carbon economy.

The content of this article is largely taken from the Carbon Disclosure Project’s verification white paper to which LRQA contributed, along with other certification bodies. For a full copy of Verification of Climate Data, visit https://www.cdproject.net/Documents/Verification-of-Climate-Data.pdf

Madlen King Global Head of Climate Change & Sustainability, LRQA.

E enquiries@lrqa.com

The terms verification and assurance are both used to describe the process of checking climate data as well as related data collection and management systems. Verification is defined as a systematic, independent and documented process for the evaluation of climate data against a set of predefined criteria. While assurance can be used in the same context, it describes the result, in other words, the degree of confidence that is provided in the data through the process and the provision of an assurance opinion. The verification or assurance process is undertaken by an independent third party and examines:

• the system or model that forms the basis of a GHG assertion – for example, set boundaries or equipment calibration

• the data and information included in an assertion – a factual and objective declaration made by a company.

24 September 2011 Insight

Embraer is one of the world’s main aircraft manufacturers, a position achieved due to its determined pursuit of full customer satisfaction. With a global customer base and important internationally renowned partners, Embraer has been contributing for more than 40 years to world integration through aviation, shortening distances between people and offering the most modern technology, versatility and comfort in airplanes. Embraer has a global presence with units in Brazil, USA, Europe and Asia.

Embraer in numbers

Number of employees (Dec 10) 17,149

Firm order backlog (4Q10) US$15.6 billion

Net sales (3Q10) US$1,043 million (US GAAP)

Net income (3Q10) US$99 million (US GAAP)

There are few industries in the world where environmental sustainability is seen in such a relevant way as in the aircraft industry. As a result of its commitment to climate change mitigation projects, Embraer works across different work fronts, covering its whole supply chain.

In its operations, GHG emissions are one of the main environmental impacts that Embraer monitors closely, and where it has targeted reductions. Embraer understands the need for transparency and shows its commitment to being an environmentally responsible organisation by demonstrating the effectiveness of its climate change mitigation actions through independent verification against ISO 14064-1.

The route to external verification Embraer’s management process of GHG began in 2007, when the service of a specialised consulting company was contracted to help them build their data and requisite inventories to support their climate mitigation projects. Embraer then developed and implemented management processes based upon the international standard ISO 14064-1:2006.

In 2010, to assure the accuracy of such data and information Embraer appointed Lloyd’s Register Quality Assurance to audit the related 2009 base year GHG inventory against ISO 14064-1:2006. This was an important step towards Embraer’s commitment to reduce its carbon dioxide equivalent (CO2e) emissions and aligned perfectly with their corporate sustainability practices. Embraer is now going through independent verification of their 2010 inventory with LRQA.

Embraer has found that throughout the process – which took about six months in the first year – it was able to benefit by using information to correct and improve its processes as well as being able to integrate diverse areas of the business.

The external verification process was of particular importance to Embraer as it allowed the company to demonstrate the credibility of the organisation to external stakeholders through independently verified and accurate data. In addition, Embraer was able to develop robust internal mechanisms for quantifying and reporting its GHG emissions in future.

Benefits

• Improved quality of information and meeting the deadlines for preparing the annual GHG inventory.

• Defining and implementing a GHG emissions management system, based on ISO 14064-1.

• Increased awareness across all administrative and operational areas.

• Increased transparency with key stakeholders thus demonstrating Embraer’s commitment to being a greener organisation.

• Minimising the environmental impact by mapping significant aspects and impacts of the GHG processes, enabling Embraer to establish reduction targets.

www.embraer.com

Embraer’s verification success

In 2010, to assure the accuracy of such data and information Embraer appointed Lloyd’s Register Quality Assurance to audit the related 2009 base year GHG inventory against ISO

verification

Insight September 2011 25

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