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Daily Telegraph: Industry is energised about climate challenge

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Demonstrators demand action outside the United Nations Conference on Climate Change in Bali

By Ingar Skaug
Last Updated: 2:35am GMT 13/12/2007

Two recent events, thousands of miles apart, have heightened global fears about the link between energy consumption, industrial output and the environment.

On Monday, Al Gore, the former US vice president, was in Oslo collecting a Nobel Peace Prize for his wake-up call on global warming, highlighted in the documentary An Inconvenient Truth. Meanwhile in Bali, delegates at the United Nations Conference on Climate Change have been urging steps to safeguard natural resources.

In both places, industry has been cast as part of the problem rather than part of the solution. But a group of leading international companies is this week joining forces to address the energy crisis and share innovation to reduce their environmental impact.

Ten industrial groups including: India’s Tata, Gazprom of Russia, Shell, Pacific Gas & Electric of the US, Norway’s DNV & Yara, the Norwegian Shipowners’ Association, The World Trade Association and the commercial shipping operator Wilh. Wilhelmsen have agreed to collaborate on projects to improve energy efficiency and reduce emissions. Together, we are today endorsing that effort under the umbrella of “Total Energy Management”, a scheme to deliver more sustainable business models in every part of the value chain, from raw materials to consumers.

That scheme will be co-ordinated through the Global Leadership and Technology Exchange, the international forum set up last year by Xyntéo, the Anglo-Nordic enterprise group. GLTE, is where I act as co-chairman together with Alexander Medvedev, Gazprom deputy chairman, and Dr JJ Irani, director of Tata Sons. By doing so, we are endorsing Total Energy Management as a potential breakthrough for companies around the world.
It would be easy to dismiss this effort as a cosmetic gesture or window-dressing. Critics might also judge the participant companies as energy exploiters, and not champions of sustainability.

They would be wrong. The companies joining forces today have committed billions of dollars to research and development that will reduce both emissions and energy costs, while preserving the distribution and access to power that is vital in a globalising economy. Teams from participating companies have already begun preliminary work together and are seeing encouraging results.

We at Wilh. Wilhelmsen, one of the largest operators of ocean-going car transporters, have found we can realise savings of up to 30pc by changing ship design and by changing a number of operational parameters.

Up to now, such innovation has been inconsistent. Too many industrial breakthroughs have been “held captive” by the companies that make them. In the past, for example, global car makers saw little business logic in sharing battery technology or agreeing an industry standard for hydrogen fuel cells. Aero-engine manufacturers coveted technology that extended the range of their engines or reduced consumption. In other sectors, such as commercial shipping and logistics, companies had little incentive to share energy savings between suppliers and customers. Instead, they tried to retain any financial benefits centrally rather than across the supply chain.

Today, the scale of the energy challenge has forced a rethink. There will be far greater savings if we collaborate – from initial supplier to end customer – rather than by pursuing partial steps. Failure to agree a joined-up solution will only delay new technologies.

Put simply, companies can no longer innovate in isolation. They cannot expect to retain the bottom line benefits for themselves. Instead, Total Energy Management could be a solution that fosters innovation and savings that can be spread between many different companies and between different industrial sectors. To be successful, this must be about more than good corporate citizenship. There must be tangible financial rewards for those companies that take the risk.

If companies can realise bottom-line benefits from collaboration, then Total Energy Management will help address the current imbalance between energy costs and spending on innovation. Already, industrial groups as diverse as GM, Volvo, IBM and Deutsche Bank have expressed interest in the concept, and we are confident it will gain further momentum.

On its own, it will not provide solutions to avert the sort of climate catastrophe feared by Al Gore. Nor will it mollify the participants gathered in Bali at the UN conference. But we believe it will pool industrial expertise and technology to better utilise and supply the valuable energy resources on which the corporate world depends.

Participating companies will derive a bottom-line benefit from such an initiative, simply by reducing operating costs and improving energy efficiency. They will also sign up to a business culture built on mutual collaboration rather than supplier-customer tension. Such a breakthrough is long overdue. But it is still not too late, and we start today.

The author Ingar Skaug is group chief executive of Wilh. Wilhelmsen ASA and its sister websites,,,,, and are all owned by John Donovan. There is also a Wikipedia article.

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