Identifying and managing environmental risks in the maritime sector Incentra council meeting Kjersti Aalbu, 28.08.2012 Kjersti.aalbu@dnv.com
1. Environmental risks in shipping 2. Managing your risks 3. Three things you need to know 2
Environmental risks in shipping A challenging decade 3
Shipping has a significant environmental impact EXHAUST GASES EVAPORATION (VOC) WASTE DELIVERED ASHORE HAZARDOUS MATERIALS SEWAGE AND GARBAGE BILGE WATER ANTI-FOULING PAINTS BALLAST WATER OIL OPERATIONAL/ ACCIDENTAL 4
Environmental issues are key strategic drivers Demands for environmental performance Regulations have a high impact on business High levels of uncertainty Where should you place your bets? Getting it wrong can become expensive 5
Main environmental issues in today s market Emissions to air Ballast water discharge Grey water, waste handling, ship recycling and noise pollution as runners up 6
What drives action? Must do Can do Like to do Rules and regulations Customers and public Performance Ticket to trade Differentiation Competitiveness National and local laws International conventions Class rules National and international standards Rating and incentive schemes Beyond compliance performance Efficiency Reliability 7
Emission control areas - difficult choices ahead What investment decisions do I need to make and when? Will there be enough capital and resources available? What will future regulations look like? How will they all be enforced? 8
What will your response be? Identify alternative solutions Evaluate technical and financial risk Assess the environmental gains Benchmark system suppliers Strategy for meeting future requirements 9
Decision-making tool 10
It will be difficult to avoid entering ECAs in the future 11
Shipping: 2.7 % of global CO2 emissions If international shipping was a country its emissions would be on par with Germany 12
International shipping is in the spotlight Shipping as key source of climate change mitigation and adaptation funding Industry wide, global agreements SEEMP, EEDI, EEOI Cut shipping CO2 emissions by 40% by 2050. Regional regulations 13
What is the most cost efficient? Now? In the long run? Ship design measures Ship operation measures Port operations Alternative power concepts Speed reduction 14
Ballast water introducing invasive marine species Maintain safety and stability at sea 3500 mill tonnes moved every year Introduction of invasive marine species Disruption of eco-system Human health and industry activity 15
Implications of the ballast water management convention Convention enters into force 12 months after ratification Requires: Ship-specific Ballast Water Management Plan Ballast Water Record Book on board Ballast water exchange (Regulation D-1) An approved ballast water treatment system (Regulation D-2) An International Ballast Water Management Certificate Confusion in the market Yard capacity could be a problem 16
Ship recycling - a challenging process Structural complexity Environmental, safety & health issues Media attention 17
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Increasing responsibilities for different actors Ship builders Ship owners Recycling facilities Parties to the convention Current speculations regarding entry into force: 2015-2020 19
Inventory of hazardous materials industry best practice DNV identified around 80 m3 of asbestos on-board this vessel 20
Managing your risks 21
What is risk? A measure of how likely & how serious an incident can be 22
Developing a risk based approach to the environment Likelihood of environmental aspect Consequence of environmental aspect 23
The new environmental risk reality Environmental risk is not what it used to be Media threats Zero tolerance New business opportunities 24
Key business questions for environmental positioning Will we be regulated, when, and what for? Will we win or lose in a carbon-constrained world? Do we face brand, customer, or other stakeholder risk? How much will compliance cost? Can a positioning strategy manage risks/uncertainties? Are we making the right technology decisions? What are the risks of acting too early or too late? Can we create a competitive advantage for our company, and how? 25
Identify and manage your risks Know where you re exposed and take control where you need Environmental risk and materiality assessment Identify measures Beyond compliance Competency Improvement programme 26
Setting up an environmental management system Policy Management review Planning Checking & corrective action Implementation & operation 27
Environmental risks in the supply chain evaluating suppliers Product What are the environmental impacts of the product? How does the product compare to alternatives? Operations What are the key environmental risks in the company? Does the company have an environmental management system in place to manage these risks? Does the company evaluate its own suppliers? 28
Clients are demanding environmental excellency Corporations worry about their supply chain 40 60 % of a manufacturer s emissions originate in the supply chain Environmental requirements in contracts Differentiate yourself 29
Example: Reporting on CO2 emissions Increased client demand to respond to CDP Supply Chain information request CO2 emissions data Climate risk and its effects on the business environment Opportunities arising from climate change GHG emission abatement measures 30
Sustainability reporting be honest Clients, investors, and regulators would like to know how you perform Increased demand for sustainability reports Reporting systems GRI, Global Compact, ISO, OECD, CDP, FTSE4G, DJSI an organizational report that gives information about economic, environmental, social and governance performance. - Global Reporting Initiative 31
3 things you need to know 32
Regulations on emissions to air will only become stricter - Start preparing now 33
Be proactive Use it to your advantage 34
Think beyond the next quarter 35
Safeguarding life, property and the environment www.dnv.com 36