Author: The New Economy

Arnaldo Navarro Machado on wind energy | Iberwind | Video

Posted on by The New Economy

Iberwind is a vital part of the Portuguese wind energy industry, and recently achieved very good results in a benchmarking study by McKinsey. The sector is making steady progress towards Europe’s 20:20 targets, but what is the future, and where is financial growth to be found? Iberwind CEO Arnaldo Machado weighs in.

The New Economy: You are in a truly exciting sector, wind energy, but it would seem many investors still need convincing of the business case for wind power. So, how would you sum it up?

Navarro Machado: I don’t really know if I completely agree with you regarding the need to convince investors of the business case for wind power. Look, we shall not forget that Europe is the leading continent regarding renewable energy. In 2009 the European Union adopted a new renewable energy directive which set the target of achieving 20 percent of the energy from renewable resources by 2020. This target established that by that time 34 percent of the electricity demand in Europe shall be from renewable sources, and that 14 percent has to come from wind.

Each European country has run up its national renewable energy action plan and it seems completely possible to achieve the targets stipulated by the European Union. In Europe around 40-50 percent of capital of wind farms belongs to utilities. But still at least another 50 percent belongs to private equities – pension funds, insurance companies or even private investors – and I think that the interest still exits.

Sooner or later the financial crisis will go away, and business will return to normal. And who knows if it will still be possible to achieve the dream of having in 2050, a Europe 100 percent powered by renewable energy.

The New Economy: So from a business perspective, where is the money going to be in the wind energy sector in the future? Will it be owning the real estate, building the turbines or distributing the energy?

Navarro Machado: This is not an easy question to answer. Let us try to foresee what the future will be like. In the on-shore wind business the good sides tend to become scarce. [The shore will be affected? 00:02:19] but turbines will tend to become more powerful; in other words, have a higher capacity and be more efficient. That means that to install a wind farm with a certain capacity we will need less turbines and a smaller area. In other words, the land may tend to become more expensive; but as we will need less land, I do not think that land will be where the money will go.

Recently a lot of the available money used to go to turbine manufacturers. The demand for turbines was much higher than capacity of suppliers. Today the situation is different, with the lack of financial resources it has been very difficult to install new capacity. In this circumstance the manufacturers have significantly lowered price. In the future, the distribution of money will depend a lot on the way business will progress. If demand will tend not to overtake supply capacity, then the manufacturer will have to split the margins with developers, and make operation and maintenance a complement of the margin they get from the sale of the turbines. I think that the offshore operation and maintenance will have a lot in developing this side of the business.

The New Economy: Iberwind is the market leader in Portugal, it is a great location on the Atlantic Coast, so what is Portugal doing to take a lead in renewable energies?

Navarro Machado: Portugal is one of the best countries in Europe as far as onshore wind is concerned with a load factor around 27-28 percent. The wind industry in Portugal already directly and indirectly employs around 3,500 people. Portugal has undergone impressive developments in recent years in all wind energy related activities. Today Portugal produces significant parts of major components for turbines for internal market and for export. And its National Renewable Energy Action Plan targets an installed wind generation capacity of 6.9 GW by 2020.

The New Economy: One striking feature of Iberwind is how lean the company is. That hasn’t happened by accident, right?

Navarro Machado: Right. These things never happen by accident. First you have to define a few things. How are you going to settle your corporate structure? Believe me it has a lot to do with administrative paperwork.

Next, how are you going to manage your main activity: operation and maintenance. Are you going to do it yourselves, are you going to subcontract all the activity, or are you going to choose a hybrid solution. How much of the data that you can receive from the wind farms do you want to process, analyse and study?

Finally you just have to act and try shape the company according to the characterisation and decisions previously taken. Honestly, it sounds easier than it really is.

The New Economy: Indeed; your efficiency has been recognised by consultants such as McKinsey; you came out with a lot of credit from a benchmarking exercise McKinsey carried out, what are the details there?

Navarro Machado: In 2010 we were invited to McKinsey to join seven other European wind energy producers to participate in a benchmark study. There were basically five criteria to be analysed. Two were related to technical performance: time and energy availability, and efficiency of the turbines. And three were related to economic aspects. In the end we got two first places, two second places and one third place. The result was good and the study was important because we were made more aware of our relative position among other relevant European players. And also because we became more aware of areas where we still need to improve.

The New Economy: So where is renewable energy going to be, realistically, in 10-20 years time?

Navarro Machado: Well, this is the type of question that we would love to know how to answer too! Today it is even more difficult to answer, as nobody seems to be able to foresee when the economic crisis is going to finish. But one thing we know is that oil and hydrocarbons are limited resources, and our reserves seem to be decreasing.

Europe today imports 50 percent of the energy it requires. If we do not change policies, by 2030 Europe will need to import around 70 percent of its needs. The emphasis is on renewable energy and the gradual transformation of the present economy into a much lower carbon consuming economy could be an answer to our problems. If that will lead to 100 percent renewable power system in Europe by 2050 I don’t know. It may be possible to achieve, but it is very hard to believe.

A fair combination of renewables, where wind and hydro energy will play an important role, together with gas, seems to me to be a much more realistic alternative.

The New Economy: Navarro Machado, thank you very much.

Peter Bond on underground coal gasification | Linc Energy | Video

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Linc Energy has been developing and operating underground coal gasification technology for 11 years – technology that can extract clean gas from conventionally inaccessible coal seams. Peter Bond discusses the benefits of the technology, as well as the synergy opportunities with enhanced oil recovery and carbon capture.

The New Economy: Let’s start with Linc Energy’s core business: clean energy. How is the business structured to tap into that growing sector?

Peter Bond: Linc is based around two or three core technologies, but basically underground goal gasification. It’s a way of creating a clean coal conduit. So, we can tap into stranded coal anywhere in the world. So for example in the north of England, Europe, Asia, Australia, North America; we can tap into deep stranded coal seems that aren’t going to get used in the next two, three, four generations, and we turn that into clean gas.

Clean gas can then be turned into clean fuel or power generation. So, the mainstay of Linc’s clean generation is through underground coal gasification. And our ownership of several billion tonnes of coal around the world has become the cornerstone of our being able to tap into that. So we are an energy company that uses underground coal gasification as a conduit to tap into that energy.

The New Economy: And it’s proven technology, because in fact you’ve been using it in Queensland for more than a decade?

Peter Bond: That’s correct. I mean, we’ve been operating for over 11 years now in Queensland, and it’s been very successful. We’re just rolling out a fifth generation, which is our commercial generation of the technology, which will be rolled out around the world. It’s an amazing technology; what we’ve done with it over the last five years is just phenomenal. We also own UROSIGAS, which is one of the original Russian technology brands that developed underground coal gasification. And that’s celebrating 50 years this year of using underground coal gas to run a commercial power station, so, there’s 50 years of thoroughbred potential here that the western world needs to start really focusing on. There’s a lot there we can do with it.

The New Economy: You’re on the acquisition trail in the US, particularly around enhanced oil recovery. What are the details?

Peter Bond: Well, one of the things we can do with UCG – underground coal gasification – is that we can either have a very small CO2 footprint, or we can have a larger CO2 footprint. When we look at some of our coal seams around the world, particularly in Wyoming, across the Powder River Basin, we have a lot of coal over the top of depleted oil fields. You start to be able to use the gas from UCG to be able to get enhanced oil recovery.

So, we started to buy up oil fields, originally in Wyoming, and now Texas and a few other locations. So we’re building out quite a large oil arm on the back of that.

The New Economy: And staying in the US, Alaska is a new frontier for you too. What’s the development there?

Peter Bond: Well Alaska’s very exciting, on the back of our oil front that we’re pushing. We’ve been able to gain a couple of resources. One of those is Umiat, where it’s got a billion barrels of oils in place. Now that’s very exciting, it could be worth many billions of dollars in the near future for Lincs. It’s one of the cornerstones of our future in terms of oil going forward.

The New Economy: With all your worldwide interests, it’s great to see you here in London. What are the company’s interests here in the UK?

Peter Bond: We’ve just opened a new London office, and I’m quite excited about that. That office will run pretty much our European focus. We’re taking a number of coal leases; predominantly in eastern Europe, we may take some in the UK as well. With the idea of our three focuses, which is underground coal gasification, coal, and oil. And focusing on that.

The New Economy: And in Europe you’re looking at a German carbon capture company. That’s an interesting technology, what are the prospects there?

Peter Bond: Well that particularly company has been doing research where the caverns that are left by underground coal gasification – because underground coal gasification is a bit like mining underground, where it actually takes the coal and converts it into gas, and leaves a cavity just like an underground coal mine. Well because of the heat involved, you end up with a charcoal cavern; effectively activated carbon. The university we’re working with has been able to discover that by pumping liquid CO2 down there, you can get up to 400 times more CO2 into that cavity than you normally would. Subsequently there’s a huge opportunity to create a carbon sink in Europe; so that’s one of the things we’re investigating.

The New Economy: Now Peter, I read on your website that you’ve driven a diesel car across Australia on your own ultra-clean synthetic diesel fuel, created from your own underground coal. That must have been quite a ride.

Peter Bond: That was fantastic! One of my goals when I floated Linc Energy on the ASX was to drill out the coal, develop UCG, and then turn that gas into clean fuels, clean diesel. And then use that to drive a car across Australia. So, to have proved the point that we indeed have drilled out the coal, have created the clean gas, and have created clean fuel in quite a large plan – if you have a look at the website, you’ll see it – and prove that by driving 6,000km across the country, in a car that drove better and faster, and more efficiently, than it would have if it was on normal diesel. That was a great achievement. And in fact I had my two sons in the car for half the journey, and it was a nice feeling. It was… yeah. One of the highlights.

The New Economy: So the momentum is building behind these technologies. Where do you see Linc Energy in, let’s say, five years time?

Peter Bond: Linc is building into a diversified energy group, where we have oil and growing oil opportunities, which have a couple of focuses on drilling and enhanced oil recovery. We are pushing our coal business and selling more and more coal. But predominantly the clean coal business, where I see that as having a massive medium-to-long term future, particularly in clean coal, and some of the other investments we’re making in that clean energy group.

So in five years time I want to be producing 100-150,000 barrels a day of clean fuels and oil, and I see Linc as being a significant contributor to the new energy economy.

The New Economy: Peter Bond, thank you very much.

Peter Bond: Thank you.

Fahad Al Gergaw on FDI | Dubai Foreign Investment Office

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For 40 years Dubai has been focused on becoming a global trade route, developing comprehensive and efficient infrastructures so as to capitalise on its strategic location and become an international economic hub. Fahad Al Gergawi explains how the Department for Economic Development works to implement policies supporting business growth.

The New Economy: Dubai is focusing on becoming new global trade root, what are the objectives there?

Fahad Al Gergaw: First of all Dubai chose to be this type of city a long time ago and has worked of the past 40 years to achieve what it needed to achieve up to now. This is one of the achievements but Dubai is still looking ahead for more and more to come. The objectives were to create a global platform for the entire region, where the city could generally move the entire region towards what it wants to achieve. There is part of it which is a vision, part of it is a reality of where we are and where we need to be. Part of it is leadership that brings it all together with the people.

The New Economy: What is the role of the Dubai department for economic development in attracting investment?

Fahad Al Gergaw: The Dubai economic department is a catalyst for change and economic development, supporting regulation changes, policy implementation and Dubai’s overall economic strategy. Within that Dubai economic department have 4 arms that really work it out. It is the foreign direct investment, the SME development, the export development and events and promotion of the city that grows globally. Within that, I think this is the dynamics of the city that the current department is looking to upgrade and really develop every time.

The New Economy: There is one statistic that really stands out and that’s that 2.5 billion people live within a 5 hour flight of Dubai, how does that figure into your strategy?

Fahad Al Gergaw: The strategic location of Dubai is known globally but there are other players next to us who have almost the same. What you do with your strategic location is the question. This is where Dubai leveraged it’s infrastructure and facilitation of businesses, and leveraged on the facilitation of easiness of doing business and growth to the entire region that Dubai covers. Part of that is being an easy accessible city but also being a very connected city within the entire region of where we are. That is why, without doubt, India is our largest trading partner and we are the largest trading partner with India. We run with 280 flights per week between the 2 countries. This is by far one of the largest globally, but there is connectivity throughout the whole region where businessmen from these region like to come and conduct business in Dubai, for exhibitions, conferences or even just come on vacation.

The New Economy: The big question is, what is the business case for investing in Dubai now?

Fahad Al Gergaw: Dubai has developed itself to be a business friendly city, a genuine one. The free zones have played a strong part in that, but again the infrastructure that facilitates business to come and makes it easier for business have leverage and flourish from Dubai. Having growth to the entire region that we cover is the key answer to that.

The New Economy: Dubai has many friends and business partners around the world, what kind of countries do you think might become potentially even closer business partners as your global trade route develops?

Fahad Al Gergaw: We have seen relations with India and China growing in the 10 ten years, with India even centuries ago. What we are seeing is a strong impact coming in with a strong relation and economic focus from Latin America. It started with Brazil which is obviously know as one of the BRICS countries. We are seeing a stronger relation coming in with Mexico as well. We think it is a very promising country to have a stronger bilateral relation with Dubai, with so many opportunities available for both countries to develop.

The New Economy: You have had some inward investment success stories recently, tangible signs of progress?

Fahad Al Gergaw: The fundamentals of Dubai’s trade and hubbing and the structure of that is the services. Dubai has a tremendous service industry that supports that. We used to have regional headquarters of companies coming in to cover the Menasa region, we are seeing a new trend of companies who would like to cover their global operational headquarters. One of those is the Cleantech Industry called Robinous who moved it’s headquarters from Denmark to Dubai and it is operating globally from Dubai and has multi-billion dollar businesses all over the world.

The New Economy: So finally, as well as one of the worlds iconic skylines, Dubai is also blessed with a lot of resilience and potential?

Fahad Al Gergaw: It is about the fundamental of the city. The city is fundamental, regardless of what we saw of certain sectors come in and up. I think it is the trade and the services. This is what the fundamentals of the city are and they have been there for a long time. This is what is good about the city and this is what will continue to be good about the city. Leveraging and adding more sectors to the city is always the story but it is the first adapter of best practices from around the world, this is what the city is good at. Also creating that harmony for the international business community from all over the world, the 200 nationalities, to come to live and conduct business. This is what created what Dubai is all about and what we are seeing now is the stepping stone of the next economic cycle that we are very optimistic about.

The New Economy: Fahad Al Gergaw, thank you very much

Fahad Al Gergaw: Thank you

Clemens Miller on green glass | NSG Group | Video

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Modern glass is vital in the fight against climate change. Not only is it integral to solar energy products, but fitting energy efficient glazing to new and existing buildings could save the EU 97m tonnes of CO2 equivalent a year. Clemens Miller explains the way forward for green development and the role of NSG Group.

Clemens Miller: Founded in 1918 in Japan NSG acquired the leading UK based glass manufacturer PLC in June 2006. Today the enlarged company has combined sales of approximately 600 billion Japanese Yen with manufacturing operations in about 30 countries, sales in 1 of the 30 countries around the world and employing around 28,000 thousands people world wide. The groups’ focus is in flat glass providing glass for buildings, architectural. For technical applications. Also glass for solar energy generation, for automotive products and some special applications. Geographically about 40% of our sales are in Europe, 25% in Japan, about 15% in North America and the rest primarily in South America, South East Asia and China.

The New Economy: So you are a company with an established pedigree in glass making, how are you responding to the new low-carbon world?

Clemens Miller: With enthusiasm, and that is not because it is the flavour of the day. It is because we are fully committed to sustainability, we have been for as long as we have existed, because we deal with glass. Our strategy and policy underline the unique contribution our products can make, to addressing climate change and the challenges we face in improving our own energy usage and resource management. Glass in fact has an important role to play in helping to reduce greenhouse gas omissions and mitigating the effects of climate change. We have been producing and promoting glazing solutions which, significantly contribute to reducing building energy consumption and therefore C02 omissions and we still do. At the same time we have successfully developed stronger glass for cars which results in significantly reduced glass thicknesses, and lighter cars means less fuel consumption and therefore less carbon emissions. The latest glass innovation for the new low-carbon world are glass panels for photovoltaic? energy generation and solar mirror production. These new high tech glass panels form the back bone of photovoltaic modules and mirrors. Literally there is no commercially available photovoltaic module and no concentrator mirror for solar energy conversion in the world, that does not contain a significant amount of high performance glass. We are proud of being a key industry for making our world better, that means less energy consumptive and less carbon omitting.

The New Economy: Given that buildings account for round half of the energy consumed in the EU, what role can glass play in reducing consumption levels?

Clemens Miller: In essence, glass can help to reduce heat loss in buildings by providing better insulation and it can also reduce energy consumption from cooling systems by minimising solar radiation into the buildings. Fortunately building regulations in most developed countries demand today’s state of the art glazing for new constructions, and consequently they help to reduce our carbon footprint. The challenge now lies in improving the performance of existing building stock, especially in our developed countries. The majority of these buildings were constructed at times when energy efficiency was not a concern for architects and designers. An independent study on performance of state of the art low emissivity glazing shows, that within the EU alone, fitting energy efficient glazing to new and existing buildings could save up to 97 million tonnes of C02 emissions annually by 2020. This equates to almost a third of the annual carbon emissions reduction targets set out but the latest EU directive.

The New Economy: What are the glass technologies and products that Pilkington has been developing in this area?

Clemens Miller: Let me start with good news for the legislators and the consumers; most of the glass solutions required to save this enormous amount of energy have already been developed. They are available off the shelf in all developed countries around the globe. This is an important advantage, particularly in comparison to other technologies aimed at reducing our C02 omissions. For example electrical cars, where a lot of expensive development work still needs to be done successfully before the first ton of C02 can be saved. The important product rules for glass in buildings are low emissivity, that means insulating glass, and reflective solar controlled glass. In both cases the end cases the product is an insulating glass unit consisting of 2 or 3 glass panes. 1 or more of the glass surfaces in this glass assembly, are coated with a very thin invisible high-tech coating. Depending on the type it helps to reduce energy losses from the inside to the outside, or it helps to shield the inside against radiation from the sun and therefore prevents the building from heating up. These key features can combine with each other but also with all functionalities of modern glazing like safety, security, noise insulation, fire protection, self cleaning, colour, decoration, what ever you want.

The New Economy: Of course cost is always the main concern for businesses and house holders, do you think cost will be a barrier to the adoption of new glass products?

Clemens Miller: Let me take 2 examples and then come to an answer. I will start with photovoltaics which I have already mentioned as a very important application of glass. Everybody agrees that in general electricity generated from photovoltaics can not compete cost wise with energy produced from fossil fuels. Already some time ago some governments have started to incentivise the use of photovoltaics modules through subsidies of feed-in tariffs. This has led to a real boom in demand of photovoltaics in the last few years. As a consequence, production technology has progressed, mass production as been set up and therefore the cost of making and installing photovoltaics modules have come down tremendously. Already today in some parts of the world, the cost of photovoltaic generated electricity equals the cost of conventional electricity. With crude oil and gas becoming more expensive over time, and with module prices continuing to fall today, a photovoltaic age without subsidies is in sight. In this case of environmentally friendly glazing of buildings, we to differentiate between two cases, new builds and existing stock. Standards of new buildings in developed countries are generally high but unfortunately building activity is rather low. Therefore our governments need to convince the developing countries, particularly China and Russia with high building activity, to implement revised building regulations which raise the standard of their new buildings.

The New Economy: So finally, what needs to happen in the market for these new technologies to be widely adopted.

Clemens Miller: The keys are in the hands of the glass industry and the governments. We try to deliver our part by continuing to develop even more sophisticated glazing solutions for buildings, for cars, as well as improved functional glasses for carbon free energy generation. Like, for example, photovoltaic modules. We would very much appreciate more ambitious governmental legislation for new buildings in developing countries, but also for the existing housing stock in our developed economies. In some cases, governmental intervention might mean some temporary incentives. The growth of photovoltaic energy generation and the development of a capable photovoltaic industry, supplying very much improved products at significantly reduced costs demonstrates how incentives can work to deliver the right glazing solutions in buildings.

The New Economy: Clemens Miller, thank you very much.

Clemens Miller: Thank you.

Fernando Calloia | Banco de la Republica Uruguay | Video

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Like many South American countries, Uruguay’s economy is growing rapidly. President Fernando Calloia explains the evolving role of public bank Banco de la Republica Uruguay, and its successful environmental and social policies.

The New Economy: Why is there a public bank in the Uruguayan banking system?

Fernando Calloia:The importance of the Banco de la Republica as a public bank has been changing over time. Originally, it was a bank that gave stability to the financial system, later it gave abundant credit when this product was scarce, and lately it is focused on the issues of social and environmental sustainability as key aspects of its mission.

The New Economy: What would you say distinguishes your bank from your competitors?

Fernando Calloia:What distinguishes the bank from its competitors is fundamentally its vision in terms of the economic and social development of the country. It is the only bank of national capital that Uruguay has. Therefore, it focuses its activity mainly on the economic and social development of the country.

The New Economy: And why the emphasis on sustainability?

Fernando Calloia:Sustainability is an essential element, not only for the bank, but also for the country. The country has focused its politics as a country that defines itself as ‘Natural Uruguay’. Therefore, the bank follows that policy with emphasis on everything to do with social and environmental sustainability in the financing of investment projects.

The New Economy: Stability is in itself an achievement in this difficult economic climate, but, what would be your other achievements recently?

Fernando Calloia:The results, fundamentally, had an impact on the social sphere. Everything offering financial services to the whole population, and this has achieved extraordinary results, to the extent that 25 percent of the population has some dealings with the Banco de la Republica, that is from a social point of view on the basis that economic development is achieved not only with specific social policies, but also with financial policies that help the financial inclusion of the population.

On the subject of environmental policies, adhesion to the principles of Ecuador, and the agreement of the United Nations have been the main objectives reached in the last years.

The New Economy: Looking in more depth at your strategy, what would you identify as the most important projects you’re working on?

Fernando Calloia:The most important projects that we have for the next few years are, first and foremost, everything relating to micro-finance. Reaching the global objectives as a bank we found that Uruguay has a deficit in financing micro businesses, and for that reason we have created a specific business that is dedicated to all the financing of the micro and small businesses, with products and instruments defined in those areas. That’s what we’ve done regarding micro-finances.

With regards to global matters of social and environmental sustainability, we want to go as far as possible in everything relating to financing and participating in businesses that have to do with policies that help social integration and looking after the environment as the essential elements of the policy of a public bank in the coming years.

The New Economy: Certainly these are challenging times in every region; what then would be your expectations for your bank, and for the whole Uruguayan economy?

Fernando Calloia: In the last few years the Uruguayan economy has had a high growth rate, one of the highest in South America, and that has characterised the country. It has had a very important flow of foreign investment and the Banco de la Republica is trying to ensure that this growth happens in an economically sustainable and socially fair way, in keeping with the process of economic and social development that has characterised the country over the last few years.

Livio Gallo on smart grids | Enel SpA | Video

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There has been a lot of talk about the benefits of smart grids for the last few years – but how many consumers are actually benefiting from the innovations they offer? Livio Gallo explains Enel SpA’s €2.5bn investment into the largest AMM system in the world, with more than 32 million smart meters running on one system.

The New Economy: What is Enel’s vision for sustainable development of the energy industry and what is the contribution of smart grids?

Livio Gallo: Enel is significantly involved and focused in implementing effective measurable programmes and plans with the objective of contributing to National and European community targets, for reducing in-house green house gas omissions, increasing energy efficiency and for integration renewable energy resources. To this extent, with transformation of electricity network into a smart grid, is considered to be the enabling factor for implanting key measures to achieve these objectives. The smartness of an electricity grid mainly consists in a large amount of distributed intelligence needed to first maintain the electricity distribution safely and reliably, also in the presence of distributed energy resources. Secondly to provide an efficient operation in reducing C02 commissions. Thirdly, to enable new services and enable reactive participation of several reactors, customers, to the electricity market. Finally, to address a higher complexity of Eneto management due to the need to collect an analyse an increasing amount of dispersed information.

The New Economy: How can smart grids help meet the EU’s 2020 objectives on green house gas omission reduction and renewable energy?

Livio Gallo: Smart grids enable to achievements of the 2020 European objectives, as proposed in the technological plan plan of the European commission. Only a single, stronger and smarter European electricity grid is able to accommodate the result in massive deployment of renewable and decentralised energy sources, to reach European energy and climate change targets. To this extent we work with other European distribution companies in the development markets on a European scale to avoid unnecessary duplication of efforts, to promote the replication of new developments and the exchange of best practices amongst new member states. Enel has joined the EDSO (European Distribution System Operators) for smart grid association which, together with the ENTSO- E association, the European network of transmission system operators plays an important role in European grid initiative. It is a 9 year European research and development and demonstration programme, aimed to accelerate innovation and the development of electricity networks for future renewal.

The New Economy: What are the key elements for developing a successful smart grid?

Livio Gallo: Enel has already taken the first steps to a smart grid with implementation of innovative solutions for the automatic meter management. Based on the deployment of the largest AMM system in the world with more than 32 million smart meters up and running in 1 system. With installing and managing a network remote control and automation solution, implementing War force Management Systems and advanced asset management. Thanks to this investment of more than 2.5 billion euros the innovation described above led, and will lead, to a dramatic reduction of cash costs per customer and an increase in quality of service.

The New Economy: Looking ahead, that are Enel’s objectives and goals in the next 3 to 4 years?

Livio Gallo: We see our group in the next coming years as a strong International, world leading group, generating and distributing and selling energy around the world. From a DSO, Distribution System Operators, perspective we see ourselves as a lean DSO company, excellent in processes, in planning and managing the network, applying its best practices in all the grids we manage world wide. A strong collaboration with the other DSOs in order to modernise the European grid and in a potion to be able to explore, and exploit, new business opportunities.

The New Economy: Livio Gallo, thank you

Livio Gallo: Thank you to you.

Carlos Danel on financial inclusion | Banco Compartamos

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Financial services aren’t just for the wealthy. The micro-financing industry was born 20-30 years ago, providing access to services we take for granted to lower-income clients; and during the recent downturn, when income streams are lower and less predictable, these services have been vital in Latin America.

The New Economy: What is the roles of the micro-financing industry in the economic landscape that we have now, post down turn?

Carlos Danel: Post the down turn the role of the micro-finance industry is actually more important than ever. I think in the core what the micro-finance industry is doing is financial inclusion. In the developing world what you see is a financial sector that is in a way incomplete. We seem to think that financial services are only for the top segment of the socio-economic pyramid, where in fact the products and services that a lot of us take for granted are also products and services that the lower ends of the pyramid can actually benefit from. What the actual micro-finance industry is doing is financial inclusion. So providing financial services for low income clients and in that way bringing them into the financial sector with products that enable them to save, or to have credit when they need it for different purposes, or to cover some risks like insurance or so on. In a down turn where people not only go through a period where their income streams are probably lower, but also more infrequent or less predictable, I think access for financial serves and financial inclusion play a bigger role than ever. I think it is an industry that was born some 20/30 years ago but now as we come into this down turn I think the role of it, being it now not a mature industry but an up and coming industry, is bigger than ever.

The New Economy: You are Co-founder of Banco Compartamos, one of the largest micro-finance institutions in Latin America. What would you say is your organisations mission?

Carlos Danel: I would say our mission in Compartamos is actually to provide opportunities of development for low income house-holds in Mexico through innovative large scale models that enhance peoples lives. Back in the early 1990s when we were founding Compartamos we thought that our intervention by providing financial services to our clients would in fact drastically and absolutely change peoples lives. We still believe that access to financial services is something that provides great wealth and great value to the clients lives but slowly what we have come to realise is that what we are bringing to the table is no more than a tool. It is a tool that enables them to manage better there cash flow or cover the risks. It is the clients that actually do the work, it is the clients that take that tool and take it to a different level. The results of the micro-finance, or the impact that the micro-finace industries having on clients lives sometimes varies. On average I think they bring a lot of value to providing these tools to these clients. Some people will do better and some people will do not as well, but having access to financial services is an opportunity for them to take on their own lives and to add value to them. We started out talking a lot about a solution to poverty or poverty alleviation in the communities that we work at. I think today most people in the industry realise that yes micro-finance does important things and provides important tools for those house-holds, but there are a lot of other things that need to come into play to really have an impact on poverty. Access to good quality health services, infrastructure, housing, education, all of that is part of all the tools that are needed in the developing world for the low incomes communities and these low income families to improve their livelihoods. So financial services is just a part of it and as an industry we need to make sure that we know exactly what it is that we do for the clients and what kind of impact we have on them but clearly the promise of the silver bullet, if you will, to end poverty is not what micro-finance is about. Micro-finance is really about financial inclusion and giving the tools to those clients for them to change their own lives.

The New Economy: The IPO was a major land mark for Compartamos, what makes it a sustainable institution though long term?

Carlos Danel: Long term when Compartamos thinks about sustainability we think about continually adding value to all of our stakeholders. So first and foremost the clients, the house-holds that we serve and the communities where we serve them. We need to make sure that to be sustainable through time our products are products that they can benefit from. One of the things that is clearly a condition in any up and coming industry is that at first we are very concerned about how we can provide these products and services to the people that we serve. It is a supply driven industry. We are now into a period in which we are trying to look more in details exactly what it is about our products that works best with these families. Then we can provide them with good tools, good products, good quality low price, good access. In that sense just keep giving them options and tools of products and services that can help them manage their cash flows and their risk. First and foremost is adding value to those clients and also to the communities that we work with. When a bank like Compartamos or any other micro-finance institution comes into a low income community, we want to make sure that the whole community and not just the clients that we are tending to benefit from that. Access to financial services should then have an impact in the whole community. Second of all, also adding value to the staff. Compartamos as of today has almost 10,000 people working full time and these are people that are walking the streets, in the house-holds and in the market places where we do our business and with the people that we serve. We also want to provide an opportunity for those people working within the bank to become better people, to become better individuals and better professionals. For many years we have been named one of the top companies to work for, last year we were voted the best company to work for in Mexico. So thirdly, value to also the stakeholders of investors. We want to provide investors an opportunity to invest in a profitable, sound, growing micro-finance institution and industry in a way that they themselves can also explicitly target not only financial goals but also social goals in what they are doing. Long term sustainability for us is really providing long term value for our stakeholders within our community and within our company.

Beatriz Espinosa on responsible oil and gas | Petrobras | Video

Posted on by The New Economy

Petrobras is a vast organisation, operating in 28 countries in all segments of oil, gas and energy. Recently it announced plans to double its oil production to over five million barrels per day by 2020 – but can it achieve this goal while maintaining its own energy efficiency and carbon strategy? Beatriz Espinosa explains the company’s approach.

The New Economy: How important is it for a company that is the size of Patrobras to have an effective carbon reporting methodology?

Beatriz Espinosa: Patrobras is an integrated energy company operating in 28 countries in all segments of oil, gas and energy. The company produces the equivalent of 2.5 million barrels of oil per day, it has 130 platforms, 15 refineries, around 7000 gas stations, 18 thermoelectric plants, 4 bioelectric plants among other installations. For the next year we plan to spend 224 billion dollars and we also announce that we will increase oil production from 2.5 to 5.3 million barrels a day in 2020. So we will double the oil and gas production and as a consequence we will increase the energy consumption and the C02 omissions. In this context we need to use energy in the most efficient ways we can, and have an effective carbon strategy. A foundation for a carbon strategy is a consistent omissions inventory in an effective carbon reporting methodology. By having such methodology it is possible to manage carbon omissions in order to improve the performance of your business units. That is the importance of having an effective carbon reporting for Pertrobras, to support the fast growth projected in our business plan was environmental sustainability.

The New Economy: So how do you measure the key components, the omissions inventory and quality attributes?

Beatriz Espinosa: Since 2002 Petrobras has developed and implemented a system called SIGEA, system for air emissions management which integrates all the company’s activities with more than 30,000 sources registered which provide an inventory on green house gasses and air pollution. Petrobras reports the emissions inventory in the sustainability report every year, as well as initiatives which contribute to climate change mitigation. The inventory is verified by a third party in that is in compliance with international guidelines as GHG protocol provided by the World Resources Institute and World Business Council for Sustainable Development. Also it is in compliance with American Petroleum Institute guidelines. The system supports business areas and operational units, to manage their omissions and increase their performance. All operational units provides data to the system which allows us to follow the results on a monthly basis. Additional to this, in 2002, we promoted training to our employees on emissions management in the sister news. So far we have trained more than 1,500 people in order to build a consistent inventory, that we understand is essential for our effective carbon reporting.

The New Economy: In a company the size of Petrobras, more than 100 platforms, 15 refineries, more than 7000 service stations, how do you roll out the implementation process?

Beatriz Espinosa: First of all we needed a top leadership commitment to the process,in order to engage the organisation at all levels. With this proposal Petrobras made it clear in it’s strategic planning, the commitment to sustainable development and it’s social and environmental responsibility. It is also clear in our business plan, our objectives to achieve excellence in energy efficiency and technology, in the renewable development and production. These are the important pillars for our carbon strategy. In order to deploy this strategy a corporate programme was designed and a governance was put in place, with the participation of all business areas, to follow up the initiatives implementation as well as emissions performance. Additionally, voluntary goals for our wider C02 emissions in our operations have been set since 2005. Our visible commitment has been a key element for helping to roll out the implementation process from the corporate to operational levels.

The New Economy: The Kyoto Protocol introduced us to the clean development mechanism, or CDM, what are the companies initiatives on CDM?

Beatriz Espinosa: Petrobras is a company with major operations and production in Brazil, has opportunities in the CDM mechanisms established by the Kyoto protocol and seeks to develop them. We also have huge investments in energy efficiency, fuel reduction, process optimisation, new technology and renewable energy. Some of these projects are measurable to CDM and we have a dedicated team to work on these opportunities. So far we have got to choose two gates from the UN, one is a wind power plant and the second relates to a project that aims to reduce nitrous oxides omissions in a fertiliser plant. We also have a further technology packed into the Petrobras named HBO which has had it’s methodology accepted by the UN, we are just waiting for the final certification. This process aims to reduce green gas omissions by using a vegetable and mineral oil mixture for hydrodis authorisation unit in our refineries. We will continue to look for new opportunities in the carbon market and we are also engaged in National and International initiatives and corporations, to better understand the climate change policies and science, and contribute to promote the transition to a low carbon economy.

The New Economy: How do you communicate your results to stakeholders?

Beatriz Espinosa: We openly communicate our results to stakeholders through several means. The main one is our sustainability annual report which has a high level of transparency and tailored information regarding performance from economical, social and environmental dimensions. In this report we publish the emissions inventory as well as our strategies and initiatives in climate change mitigation. It is available on our website, and our annual report has received a great amount of international recognition from institutions such as GRI (Global Reporting Initiative), UN Global Compact, Investor Relations Magazine among others. And now from The New Economy, for Best Carbon Reporting in Brazil. One of the results of this effort is that Petrobras has been part of the dow jones sustainability index since 2006. Another way of communicating our results is the Carbon Disclosure programme that we have applied since 2004. These relevant tools for quantifying and comparing companies carbon emissions, management and strategies impacts on corporate performance. I would say that open communication and dialogue with the stake-holders is part of our values, and is the basis for our business.

The New Economy: What lessons would you say could be learned from the experience of carbon reporting, from a company of this scale?

Beatriz Espinosa: Building a carbon reporting process in a company as big and diverse Petrobras requires a huge effort. It represents a challenge, not only for Petrobras but also to the energy industries. It helps Petrobras in increasing the performance and also learning and sharing with other companies, the experience of this issues. Carbon reporting allows us to show to our stakeholders how we manage our omissions and in addition to that, the process allows the engagement of and organisation at all levels. It promotes the awareness of the employees and the connections between the company’s strategies and operations. We realise that carbon management and climate change mitigation are complex and urgent issues that require contributions from all parts of societies, governments and companies in different countries. Energy is at the centre of this debate, so an energy company like Petrobras has a big challenge and a key role in this contribution, but as we are used to saying in Petrobras; challenges are our energy.

The New Economy: Beatriz Espinosa, thank you very much.
Beatriz: Thank you very much. We are really happy and appreciate this recognition. We congratulate The New Economy for their initiatives; you give us more enthusiasm to improve our performance.

Kersti Strandqvist | Svenska Cellulosa SCA | Video

Posted on by The New Economy

For many organisations, environmental sustainability is a recent aspiration, and however passionate its proponents may be, it is easy for sustainability to become just another target. SCA is a hygeine and paper company and the largest private forest owner in Europe. We hear about the projects and systems that have woven sustainability through the company since its founding in 1929.

Philippe Delorme on the energy challenge | Schneider Electric

Posted on by The New Economy

As developing nations advance further and faster towards full industrialisation, the energy sector faces a significant challenge: how to double its capacity while also meeting the environmental efficiencies demanded by increasingly green prosumers. Philippe Delorme tells The New Economy how smart grid technology can help.

The New Economy: Everyone’s talking about smart grids, what’s driving their development?

Philippe Delorme: I would say the first thing and the most important is really around the energy challenge. By 2030 the electricity demand will double while in the same time we have to be two times more efficient when it comes to CO2 so overall the energy challenge about being four times more efficient through big disruptive approach within the full energy chain. Second point we see consumers that are becoming prosumers. They want to have a choice, they want to be greener they want to be more efficient and they are stretching their energy supplier to be greener and to be more energy efficient. The third point is about volatile demand. In a mature economy more and more issues of peak dealing with peak at 7pm when everybody’s getting back home which is a big challenge and in a new economy a growth erased after the energy capacity just because all the economies are growing, growing and growing. Fourth point energy deregulation and the fact that energy markets are getting more open and in the same time some regulation to push more green and more flexibility within the grid and the last point is about technology. More and more software, more and more communication available at low cost that is opening doors for the smart grid to really pop up and operate.

The New Economy: So what does all this mean in practical terms?

Philippe Delorme: At Schneider we try to be practical and what we see on the smart grid space are four things happening all along the energy chain. First one is renewable sources popping up everywhere. Popping up on distribution network, popping up in buildings, in homes. And disturbing the network. Second point is energy efficiency everywhere which means there is energy efficiency everywhere which means energy visability for users, and means to act. Ways to control energy, which makes consumers more prosumers. Third point is about electric vehicles. It is about energy storage. Just to be straight on electric vehicles; the amount of energy that is used to power two hundred kilometres of an energy vehicle, is the equivalent to twenty four hours to power a full electric house. So that means that today and tomorrow we will have more and more energy storage, the amount of energy that we will be stored in batteries, that will circulate in the city and disrupt the day we deal with energy. All of this is driving the grid to be much more flexible. That means more communication, more software, that will force the grid to be flexible to respond to those demands.

The New Economy: So what are the smart grid solutions for the future?

Philippe Delorme: So you said solutions, with an s, and I buy that. There is no single answer to smart grid. First of all they are differently set up in different countries. Second there is no single player who can give a single answer to this very complex issue. So the key point that we have in mind when finding the answers. First one we need to make sure that demand side users. That the users are absolutely a cornerstone to the transformation of the smart grid. The second point, we need players who can play both on the supply side and the demand side so that you can get the system view about the full ecosystem thats moving. Third point solution will come from collaboration. Solution will come from equal system of company which will be working together to imagine the solution of tomorrow. And the fourth point is about experimentation. Because in this market in the making where there is a lot of things we still don’t know. We need to experiment, learn and scale up. So today what we are doing, we are developing those solutions for energy efficiency everywhere. Easy charge infrastructure, renewable sources of energies, flexible distribution, preparing the field for demand response so that we can use practical answers with our network of partners to the dilemma and to the challenges of the smart grid.

The New Economy: What are the messages about smart grids that we should take into the future?

Philippe Delorme: So smart grid for us is a big challenge and I think for us collectively it is a big challenge and for Schneider electric we see it as an amazing opportunity. An opportunity to innovate, an opportunity to change behaviours, to make the world greener, more efficient. And we see that really going forward probably the key point to succeed will be to put the end users within homes, in buildings, in industry, in data centre and infrastructure, at the centre of this transformation so that we embark people within this change within the full eco system of partners that will come from everywhere.

Myriam Cohen-Welgryn on ESG issues | Danone | Video

Posted on by The New Economy

Forty years ago Groupe Danone founder Antoine Riboud said: ‘The responsibility of the company does not stop at the factory gate.’ General Manager for Nature Myriam Cohen-Welgryn speaks with The New Economy about measuring the company’s impact on society, its employees and the environment, and reporting on CO2 emissions in the same way the company reports profit.

The New Economy: Danone’s green vision isn’t a recent development, how far back does it go in the company’s history?

Myriam Cohen-Welgryn: Danone started to work on those subjects about 40 years ago under the vision of one man Anton Tabut he is the founder of the group. Basically he was saying that the responsibility of the company does not stop at the factory gate. A company has to go for growth and profit obviously but it also has to be aware of it’s impact on the society, meaning the life of it’s employees but also it’s impact on nature. Today the philosophy is that the company needs to work on the areas where it has a significant impact which of course means working on C02, but it also means working on water, packaging, sustainable agriculture and biodiversity.

The New Economy: How have you woven environmental responsibility into the heart of Danone’s corporate culture?

Myriam Cohen-Welgryn: Danone’s mission is to bring health through food to the largest number of people. The vision here is that you can not deliver that mission if you do not take care of nature. Just because we sell food which is just transformation of nature, if you do not have a healthy planet you can not have healthy food to sell to the people. It is in the gene of our mission and the gene of our culture; to be able to sell healthy food we need a healthy nature.

The New Economy: Looking in more depth at your green vision, how important is reliable measurement of carbon omissions?

Myriam Cohen-Welgryn: We treat carbon omissions just like we treat any business project. In any business project you need to first measure to understand where you start from and to understand how you progress along the objectives that you have set yourself. This is why for us the key step has been to develop a measure. We created an internal tool, which we call the ‘Danprint’, that allows us to measure from the upstream to the delivery to stores what the real footprint is of our products. Tomorrow we will be reporting the carbon just like today we report the profit, so we have been working intensively on how you integrate that into the system of the company. We have started our first pilot in Spain and are confident that within 2/3 years we will be able to achieve that goal.

The New Economy: You have an ambitious plan to slash your carbon footprint by 30% per kilo by 2012, how is that progressing?

Myriam Cohen-Welgryn: We are on track to achieve that objective. Roughly speaking, we started around 2008 and we are now around -17% so far. We will reach about 7% this year so happy to have achieved that. Obviously achieving the 30% means maintaining that trade for the 2 coming years and the easiest things has been done, so to achieve that we need to generate breakthrough ideas. So to answer your question, for 2011 the plans are there and we have breakthrough things to achieve that. For 2012 we are still working on it to make sure we deliver that objective.

The New Economy: So a lot of hard work ahead in the next 2 year?

Myriam Cohen-Welgryn: A lot of hard work ahead and that requires the mobilisation of all. That is also why we have put the carbon reduction in the bonuses of the 1,400 Managers and Directors and General Managers of Danone to make sure that it is really achieved and that further confirms it is treated as any other business project.

The New Economy: So how do you then reduce emissions in a company of your size and worldwide scope?

Myriam Cohen-Welgryn: The first thing I have to say to answer your question is that there is not one single project that allows us to do that. It is a full pipeline of many projects, all along the chain, that allows us to achieve that very big reduction. So we work, in the plant for instance, we mainly on the reduction of energy use. To give you a perspective from 2000 – 2009 we reduced the energy by 45%. While, since we started that project in 2008, we have managed to really significantly increase the rate. In 2010 we did only -11%, 2009 we did only -11%. We also work on the packaging and there we have a lot of ideas where we can take out unnecessary packaging. We also invented, for instance on a dairy pack, you add air into the plastic which reduces the density which significantly reduced the plastic. We have also developed recycling. On our PT bottlewe have organised a whole chain, how you collect the packs, how your transport them, that also requires helping the upstream to be developed. Also in transportation, switching from truck to train has a very significant impact on carbon.

The New Economy: Offsetting the carbon is the final part of your plan. What is the rational for that?

Myriam Cohen-Welgryn: Most of the experts say that reducing carbon won’t be enough to maintain the level of C02 at the range that is needed to prevent climate change to happen. So we also need to help nature to absorb more carbon that what nature currently does. We want to do our share of that work and we want to do it in a way that is as strategic as possible, working on projects that are more or less linked to our activity. I will give you one example because it is the first pilot that we have developed, it is on our Evian brand. Basically we have decided that Evian brand would be neutral in 2011, so of course we reduce and that is the prerequisite for carbon offset. We considered that we first need to reduce before starting to say we offset. So Evian must reduce it’s C02 by 40%, even more than the other objectives. Then the remaining carbon we can offset by investing in programmes that allow nature to absorb more. For example last year we invested together with a local NGO in planting trees, we planted 35million [type of tree 00:07:25] and those trees while they grow will absorb carbon. So for instance within 2011 we will have the equivalent of 150 kilotons of C02 to ensure that the whole brand of Evian is completely neutral.

Jim Sinopoli on smarter architecture | Smart Buildings

Posted on by The New Economy

Better, more efficient buildings are more complex and costly to build – aren’t they? Jim Sinopoli of Smart Buildings LLC explains how intelligent architecture and IT control systems can in fact make buildings cheaper, safer and easier to construct, occupy and own.

The New Economy: What is your definition of a smart building?

Jim Sinopoli: A Smart Building has historically been thought of as a combination of building automation and telecommunications. The first mention of a smarter, more intelligent building was around twenty five years ago when PCs came onto the market place. The telecommunications industry was deregulated and some advances had been made in building automation. The smart building has several uses of technology to enable several things. From a building owner and building management to be able to construct and operate the building more efficiently to occupants, visitors and tenants who can be more productive and be in a heathy and safer environment.

The New Economy: What do Smart Buildings do that conventional buildings can not?

Jim Sinopoli: Smart building at a technical level is having systems tied to each other and integrated so you get more functionality out of the systems and therefore better performance in the buildings.

The New Economy: You have been consulting in this area for decades, what have been the landmarks for your company and what would be a typical client for you?

Jim Sinopoli: The landmarks, in terms of getting to designing the buildings and the systems, have been some of the major advancements in technology which have now enabled the smart building over the last five of six years. The clients we have been involved with have been both new construction and existing buildings. We have been fortunate enough to work with companies such as Microsoft, Cleveland Clinic, major developers in Central America and governments such as the Ministry of High Red in Saudi Arabia.

The New Economy: There is a preconception that Smart Buildings are not just more complex, but more costly. Is that correct?

Jim Sinopoli: I believe the perception is correct but the reality is slightly different. One of things Smart Buildings does is to put the systems in more efficiently, recognising the commonality that the systems all have. For example cable, cable pathways, they need room, they need power, they need system administration terminals. If you can recognise that, you can put the systems in more efficiently and save some construction dollars. It is similar to what is going on with the Green Buildings where people have ideas that there is a premium to be paid for Green Buildings, over time it becomes part of the practice of architects and engineers and they really don’t cost anymore to produce.

The New Economy: That is an interesting point that you raise, are Smart Buildings the same as Green Buildings?

Jim Sinopoli: There is a major overlap of the two. The systems that Smart Building are related to such as the air ventilation system the lighting system and the plug load are the main energy consuming control systems. The are both related to a Green Building and a Smart Building. Green is a little different in that it also deals with sustainabilities, so your interest is in recycling, materials and sustainable sights.

The New Economy: What are the key technologies used in Smart Buildings?

Jim Sinopoli: What has happened over the last the last ten or twelve years, is that the infrastructure of a typical data network has penetrated other systems. We now have telephone systems which are basically network appliances on a data network. The same has happened to surveillance cameras which are now network appliances on IT networks. So you are starting to see the penetration of that IT infrastructure in each of the building systems at each level.

The New Economy: What would you sight as examples of best practice in Smart Buildings?

Jim Sinopoli: There is probably three or four best practices that I see. One is to actually know, from a consulting stand point, what the business and the building is being used for. The business owner may have finical objectives which you have to take into consideration. Each building use is slightly different. There is going to be a common core of systems but you are going to have specialty systems for healthcare, education and commercial office buildings. The second thing is to be involved with the smart building approach very early in the design, (early participation). You also want to set expectations with the owner as to what is possible and what is practical. Coordinate with the other design team members, who may not have been involved with a Smart Building design, and coordinate with them on their designs. Then finally we feel it is important if the focus, which is sometimes difficult in new construction, is really on building operation. Seventy-five percent of the life cycle cost of a building is on operations. There are many times during construction of a building where the focus is on first cost construction budget so if you take a longer term view of how the building should operate and perform, you will be better off in the long run.

The New Economy: Where can we go for more information on Smart buildings, if we want to find out more about them?

Jim Sinopoli: There are several sources. I would start in the UK with the University of Reading (‘who have’ 05:42) an educational program on Intelligent Buildings. There are organisations in North America such as The Continental Automated Building Association. Organisations in Asia include the Asia Intelligent Building Institute. There are books, I have a book out called ‘The Smart Buildings Systems for Architects, Owners and Builders’. There are newsletters available. I think the idea of getting educated and being trained is important in this arena. The focus on energy and green and sustainability has really transformed the way we are deigning, constructing and operating buildings. Part of that is a change in skill sets and knowledge that is needed by building owners, designers and building management.