WÄRTSILÄ SERVICES BUSINESS WHITE PAPER

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1 WÄRTSILÄ SERVICES BUSINESS WHITE PAPER ENVIRONMENTAL EFFICIENCY GREATER EFFICIENCY, LOWER EMISSIONS AND AN ENHANCED REPUTATION An environmental strategy as a way of improving the efficiency of business operations WARTSILA.COM

2 THE PURPOSE OF AN ENVIRONMENTAL STRATEGY IS NOT TO APPEAR GREEN, BUT TO MAKE OPERATIONS MORE EFFICIENT AND REDUCE EMISSIONS. AN ENHANCED REPUTATION COMES AS PART OF THE PACKAGE. PERFORMANCE OPTIMIZATION ENVIRONMENTAL EFFICIENCY THE UNEXPECTED PREVENTING Contents An environmental business strategy is a must... 3 Objectives of an environmental strategy... 4 The equilateral triangle of an environmental strategy... 5 Regulation management: both internationally and locally... 6 Operations management: lower emissions, greater efficiency... 7 Reputation management: good deeds lead to better results... 8 Environmental strategies are implemented through environmental deeds... 9 Case study Solutions for implementing your environmental strategy

3 AN ENVIRONMENTAL BUSINESS STRATEGY IS A MUST Integrating environmental issues to business strategies can achieve considerable competitive advantages No matter how much environmental issues have been discussed over the years, sufficient attention is still not being paid to them. Companies often separate environmental issues from their actual business operations. As a result, their environmentally friendly actions remain little more than token measures that are recognized as such by stakeholders, including the media and customers. And what s worse, when environmental issues are removed from other activities, they fail to promote the company s business and can even become a hindrance or obstacle. Successful companies, on the other hand, have adopted environmental thinking as an integral part of their business strategies and actual operations. The main drivers behind this change have been climate change, increased environmental regulation, cost efficiency and growing environmental awareness among customers and other stakeholders. 3

4 OBJECTIVES OF AN ENVIRONMENTAL STRATEGY An environmental strategy can mean many different things depending on the line of business. For some, the main objective will be to manufacture products that stand out from the competition on the basis of their environmental attributes. Others will strive to operate as environmentally friendly as possible to prevent their customers from abandoning their products. Still others will be content to save paper and avoid unnecessary business trips. In the marine and power plant sector, the objectives of an environmental strategy are very tangible; they are a question, above all, of reducing emissions and environmental impacts. A good environmental strategy can nevertheless achieve much more. When a company integrates environmental thinking with its key activities, it also improves operational efficiency while enhancing the company s reputation. 4

5 THE EQUILATERAL TRIANGLE OF AN ENVIRONMENTAL STRATEGY The more a company pays attention to environmental thinking, the greater the business benefits Regulation Management A company s environmental strategy can be illustrated by a triangle representing regulation management, operations management and reputation management. This triangle can be viewed in two ways. Firstly, the more a company pays attention to environmental thinking, the greater the business benefits derived from its three components. Reputation Management Environmental Strategy Operations Management Secondly, it can be viewed as an equilateral triangle that expands evenly in all directions. Accordingly, the more a company focuses on regulation management, the greater the value of the other two components. 5

6 REGULATION MANAGEMENT: BOTH INTERNATIONALLY AND LOCALLY Regulation management is made easier when a company relies on partners who keep themselves up to date about changing and increasingly stringent regulations, and who tailor their solutions The marine and power plant industry is subject to a long list of environmental regulations: both local and global. Moreover, both national legislation and international legislation, such as the regulations imposed by the International Maritime Organization, are expected to be even more stringent in the future. Regulation can cause a lot of headaches or perhaps not regulation in itself, but rather the uncertainty about the stability of regulations, the constant changes being made to regulations, and the broad scope of differing regulations around the world. For this reason, regulation management is a key factor in any company s environmental strategy. If regulation management does not function seamlessly, a company s operations can be paralyzed as it surrenders to uncertainty and ceases to act methodically. Conversely, the better a company understands and benefits from regulations, the greater the competitive advantage it will achieve. It should also be remembered that the jungle of regulations is so dense that regulation management is not always possible in all areas without outside assistance. It is therefore essential that a company relies only on partners who can truly understand regulatory activities both globally and locally, and who can tailor their service solutions accordingly. 6

7 OPERATIONS MANAGEMENT: LOWER EMISSIONS, GREATER EFFICIENCY The best results are achieved when operations are optimized according to both present and future demands. Operations management is an integral part of a company s environmental strategy. Since the purpose of operations management is to increase efficiency by using resources as sparingly as possible, there is a two-way relationship between the environmental strategy and operations in the marine and power plant industry. 1. Often times reducing the environmental footprint will help improve energy efficiency. 2. Improved fuel efficiency will help reduce the environmental footprint. Choosing the right partners is also essential in terms of operations management, as a good partner seeks to work in both of the above-mentioned ways. A good partner is able to offer solutions that are not only optimized according to the current situation. Instead, the ideal solutions are also optimized according to future demands in terms of both the environmental and operational efficiency. 7

8 REPUTATION MANAGEMENT: GOOD DEEDS LEAD TO BETTER RESULTS Both environmental strategies and reputation management are founded on deeds. A company s reputation is one of its main success factors there is a direct connection between reputation and financial results. Reputation, and above all its financial benefit, (Return on Reputation), consists of many components, one of them is a company s environmental practices. When mentioning reputation, however, it should always be remembered that profitability is still the key factor. If a company is unable to operate profitably, it will not need a good reputation for very long. Two aspects should be kept in mind about the relationship between reputation management and an environmental strategy: 1. Reputation and image are built on deeds rather than words. A company does not become environmentally driven simply by saying so. In order to be environmentally driven it must perform concrete deeds that are genuinely environmentally driven and connected with its main activities. All else will be considered whitewashing or rather greenwashing. 2. A better reputation should not be the sole aim of an environmental strategy it should be its end result. If a company adopts an environmental strategy only to improve its reputation, it will be missing an enormous opportunity. If the focus is on reputation, the actions taken will represent little more than the pursuit of quick environmental gains. Since the objective of a company s environmental strategy should be financial success, environmental investments must be linked directly to making the company s main operations more efficient. When the focus is on improving operational efficiency, both financial and environmental targets will be met. Return on Reputation has a positive impact on Return on Investment. 8

9 ENVIRONMENTAL STRATEGIES ARE IMPLEMENTED THROUGH ENVIRONMENTAL DEEDS Strategies become realities only when they are integrated fully with operations. Since business today is based on networking, a company must ensure that its partners are able to comply with the objectives of its environmental strategy. Within the marine and power plant industry, attention should be paid to the following questions when selecting a partner: 1. Is the partner able to reduce your company s environmental footprint without reducing your operational efficiency? 2. Is the partner able to deliver solutions on a turnkey basis? 3. Does the partner offer comprehensive solutions in terms of both reduction of air pollution and water processing? 4. Does the partner offer multiple solutions for reducing air emissions? 5. Is the partner able to verify the amount of emissions and reductions with sufficient accuracy? 6. Does the partner s water processing solutions cover both ballast water and oily water? 7. Is the partner able to handle optimizations to reduce fuel consumption? 8. Does the partner fully master IMO and other international regulations? 9. Does the partner fully master local legislation around the world? 10. Does the partner offer quaranteed compliance with regulations? 11. Is the partner global? 9

10 CASE STUDY: A MARINE SCRUBBER REDUCES BOTH THE ENVIRONMENTAL FOOTPRINT AND FUEL COSTS USD/MWh The installation of scrubbers is a major step in the introduction of exhaust gas cleaning technology for maritime applications. The Wärtsilä scrubber will enable the vessel to meet future emission requirements in Sulphur Emission Control Areas (SECA) in an economical way. Fuel and Scrubber Operating Costs: HFO vs. MGO price MGO 1065 $/ton (Rotterdam ) HFO 659 $/ton (Rotterdam ) Scrubbing cost with 2,7% S in fuel: 6,2 $/MWh for caustic soda, pumping, maintenance, water) Wärtsilä, the marine industry s leading ship power solutions provider, has signed a turnkey contract with Containerships Ltd Oy of Finland. The agreement covers the retrofitting of a Wärtsilä fresh water scrubber for the vessel Containerships VII, which is equipped with a Wärtsilä W7L64 main engine. Scrubbing is an attractive means of meeting the increasingly stringent International Maritime Organization (IMO) and EU regulations. Scrubbers efficiently reduce exhaust gas emissions such as sulfur oxides and particulates, and slightly also nitrogen oxides. The Wärtsilä fresh water scrubber technology will meet both environmental and commercial requirements for our operations. We see it as a clear advantage that Wärtsilä, with its long experience in emissions abatement technology, delivers the scrubber solution, says Sigurjon Markusson, CEO, Containership Ltd Oy. 10

11 SOLUTIONS FOR IMPLEMENTING YOUR ENVIRONMENTAL STRATEGY Wärtsilä Services offers turnkey solutions to minimize your environmental footprint. Moreover, these solutions also help improve operational efficiency and enhance reputation. Our environmental services provide products and solutions that range from reducing air emissions (NOx, SOx, CO, VOC) and adapting to different fuels to ballast water treatment and other water solutions. The portfolio includes a range of products, solutions and services aimed at both land-based power plants and ship installations. As part of the portfolio Wärtsilä offers catalysts (SCR) that reduce nitrogen oxide (NOx) emissions and scrubbers for removing sulfur oxides (SOx). Both are harmful emissions with detrimental effects for humans and nature. We can also offer complete oily water treatment systems for power plants and marine applications that meet the most stringent standards, as well as ballast water treatment (BWT) systems which are vital to prevent organisms from one ecosystem upsetting the ecological balance in another. Our offerings cover total service packages, including start-ups, installations, engineering work, and maintenance and repairs. Responsive Solutions Prompt supply of services Preventing Solutions Proactive supply of services Optimizing Solutions Improving operational efficiency Want to know more? Contact us: service.solutions@wartsila.com 11

12 Wärtsilä Services Optimizing your operations and preventing the unexpected is our shared passion We serve you whenever, wherever. For more information visit WÄRTSILÄ is a registered trademark. Copyright 2011 Wärtsilä Corporation WARTSILA.COM