BY JENS-PETER SAUL, CEO, RAMBOLL
The Danish companies’ advantage in the global export market is at the same time their disadvantage: We offer solutions that are sustainable and effective, which is the result of many years of development efforts. Now, other countries may question whether it is not too expensive or difficult to transfer these solutions. Therefore, it is crucial to communicate that the techniques and the other elements are not tailored to Denmark, but that they are universal and can be adapted to local conditions.
13.5 trillion dollars. At least. This is the amount of money that needs to be collected up to 2030 in order to ensure that countries all over the world can live up to the promises declared in the climate agreement from Paris, according to the International Energy Agency among others. And this number does not even include the several billions that the UN’s goals on sustainable development predict, a number which, according to consultants such as KPMG, should make the international companies reconsider their core strategies.
It is a great opportunity for Danish companies, because we have been working with sustainability for decades, and are already doing well in sales abroad: exports of green energy technology have increased and there was a double-digit growth in both 2013 and 2014. Moreover, many of the Danish companies have already incorporated sustainability into our core strategies. But this advantage can in some cases also paradoxically become our disadvantage – and could create barriers when we in the coming years will more determinedly try to export the solutions we have developed. I will return to the barriers. Let me first look at what is particularly relevant for Danish companies in the Paris Agreement and the sustainability goals.
OIL CRISES GOT DENMARK ON THE GREEN TRACK
The climate agreement must keep global temperature rise below two degrees compared to pre-industrial levels and aim to limit the increase to 1.5 degrees. This requires that the use of resources is optimized – most importantly that resources to a greater extent are recycled – and it requires a substantial restructuring of the energy system; from traditional fossil fuels to renewable sources like solar and wind, as well as comprehensive energy efficiency optimization. But it also requires an adaptation to the climate changes, which will inevitably come. And in Denmark we are very well prepared to meet these demands. Denmark was forced to become energy efficient, when Western countries were hit by the oil crises of the 1970s. Until then, the vast majority of Danish energy consumption was based on oil imports from more or less unstable regimes. Denmark slowly became more self-sufficient, based on concerns for the economy and the energy supply – and eventually the environment – and a few decades later we started replacing oil and coal with less polluting gas. We commenced what later on became an export fairytale for wind turbines. And we began optimizing our energy usage. We isolated the houses and were overall good at recycling surplus energy from one area to another – especially in the district heating system. Denmark was, in other words, already in the process of ‘greenifying’ our energy system, when the climate issue became the issue on the political agenda in the new millennium.
CLIMATE INVESTMENTS CAN CREATE ADDED VALUE
It was also during the first years of the new millennium that Denmark got a taste of the more severe weather conditions that climate change brings. The year before I came to Ramboll, Copenhagen on record experienced the most devastating flood ever. On that July night in 2011, the water was only a few millimeters from turning off emergency generators at the National Hospital of Denmark and the Hvidovre Hospital. Thousands of basements were flooded and motorists were stranded on the highway, some places with water up to the roof. The total material damage amounted to more than a billion dollars. But the cloudburst accelerated Copenhagen’s climate initiatives. The municipal council realized that the price of doing nothing is far from zero. It is far more expensive to let torrential rain and other extreme weather events hit than to develop a climate resilient city. At the same time, investments in climate projects can have a significant added value to the welfare and quality of life – and property prices – if the cities dare to have an innovative approach. In Copenhagen, they are trying, when possible, to keep the torrential rain water above ground, rather than having to extend the sewers underg- round, and thus gray stone bridge and asphalt is transformed to bluish green areas with recreational value. To name one project – the conversion of Skt. Jørgen’s Lake to a beach park – can potentially save tens of millions of dollars compared to a traditional solution where you only expand the capacity of the underground pipes. Ramboll is involved in this project – and many others; in partnership with not only municipalities and utility companies but also other private companies, associations and foundations such as Realdania.
Copenhagen and companies such as Ramboll experience a rising foreign interest in these climate solutions. But we are still often met with the view that the Nordic climate solutions we are trying to sell are … too Nordic. Or even worse; too Danish. There may be differences in the way of doing politics; with the division between public and private property, the market not being quite ready to jump from a traditional technology to a very modern solution – or on a more practical level; the price of the technology may be perceived as too high in relation to the country’s standard of living.
NEW YORK WANTED DOUBLE EXPERTISE
Some Americans have for example been sceptical of whether the solutions are too tailored for Denmark, because there is a widespread perception that the government and local councils over here can just tighten the tax fee screw – and practice something that is similar to a planned economy. But Danish solutions can often be adapted to local conditions, and fortunately New York’s environmental authorities realized this when they had to choose a consultant for a pilot project in America’s largest city. A team of experts from Ramboll is during these months diving into canals and other waterways in the New York borough Queens to prevent the consequences of the more severe cloudburst that have come with climate change. Besides taking a closer look at the water flow, Ramboll will also calculate the positive effects of various types of climate adaptation for the 400,000 inhabitants of this area of Queens. What does this mean for the health, well-being and quality of life of the inhabitants, if channels, parks and other blue-green infrastructure are used to evacuate water from basements and stores? And to what extent do Ramboll’s water solutions strengthen social equality and diversity in the area? New York’s environmental authorities have told us that it is explicitly the combination of expertise in water engineering and economics – and cost-benefit analyses involving environmental, social and economic consequences – that are the reasons why the city’s environmental authorities chose us as an advisor on the project. The results will be used in other parts of New York.
HOLISTIC UN SUSTAINABILITY GOALS
However, in some places in the world there is no point in talking too much about quality of life and landscape architecture. In fact, it will not make much of a difference to talk about the Paris Agreement and climate problems. There is still poverty and more mundane problems one has to battle. And this is when the UN sustainability goals really come into play, because they, even more than the Paris Agreement, aim towards sustainability in a broader sense. According to the goals, everyone should be lifted out of poverty, and the promotion of renewable energy must not be at the expense of other developments in the poorer part of the world: Goal 7 states that the future of energy should not only be sustainable, but also modern and reliable – and affordable. Goal 6 is about access to water and sanitation for all, and goal 9 is to build robust infrastructure, promote sustainable industrialization and create innovation. These goals are spot on in engineering enterprises such as Ramboll that has buildings and transport as their key competencies, and generally prioritize technical expertise. One can say that the UN goals are more pragmatic and holistic than the Paris Agreement – and by all accounts are closer to reality in many of the governments and city governments that need to set the course for the coming years. The UN member states have pledged to spend 0.7 percent of their GDP to achieve the objectives – and both the rich and the poor countries should make it more attractive for companies, pension funds and foundations to invest in solving drinking water, waste or climate challenges. This is why the Global Green Growth Forum (3GF) in Copenhagen earlier this year found that the sustainability goals – in addition to helping create a better and more just world – are a trillion-dollar business. is is especially true for companies like ours, as our values for decades have been built and developed from an ethical view on society and humanity that is very close to these targets.
IMPORTANT WITH DEEP LOCAL KNOWLEDGE
Ramboll and other Danish companies have a special advantage in relation to the UN goals because successive Danish governments have been good at creating a comprehensive approach to solving these environmental, social and economic chal- lenges and even implement them in our society. No other country can likewise present a concrete and holistic solution to the massive sustainability issues, which are present in cities all around the world. Denmark is a social economic entity which has been working on this agenda for long, so we learned how to do it. We have learned from our technical errors. And we have learned that government departments often focus on their own areas – thinking in silos. is requires the effort of a giant to connect the various disciplines and different layers of the city; connecting sewer systems, parks and buildings, to work across different disciplines and sectors – because only then will you be able to create a holistic solution. This is the knowledge and experience that other nations and cities are interested in. But we still need to be very aware that the solutions will not be perceived as too global, and that we need to focus on both ”Global Knowledge” and ”Local Presence”. When we, for example, offer water treatment and other water services in Germany, traditionally small providers are performing a part of the supply – and then our local presence is very important. The same applies even more so in a country such as China. In the spring, we succeeded in taking a big step into this world’s largest market for wind turbines by winning a contract worth more than DKK 30 million. We were the first non-Chinese consultant to design an offshore wind farm of 100 turbines with a total capacity of 400 megawatts – the equivalent of about 350,000 Danish homes’ electricity consumption. A large part of the explanation is the Danish experience with wind turbines and Ramboll’s special expertise in offshore foundations, where we are involved in nearly two thirds of the entire world’s foundations – the park will be established 22 kilometers from the coast in Jiangsu province in an area affected by earthquakes and very so seabed conditions. Denmark as a wind showcase our technical expertise would not have been enough if we had not had employees with a deep understanding of the Chinese language, business culture and political landscape.
IMPORTANT REFERENCES AT HOME
Also in the United States, you must have air for the language, culture and politics. It does not make sense to start talking about how the authorities should require water conservation to reduce the consumption – or that the state simply can lay heating pipes in the road so that the energy system can be streamlined. Both are politically sensitive subjects. In this kind of situation we must respectively be content to, for example, highlight our experience with 3D surveys, where it is most cost effective to collect surface water – and begin by providing district heating to universities or other places where large areas have the same owner, and therefore can create an integrated, efficient mini-energy system. We succeeded with this strategy at MIT (Massachusetts Institute of Technology) which, like another American Ivy League college Dartmouth in New Hampshire, has chosen Ramboll as consultant in converting their old steam heating system to a more modern European district heating system. Another way to sell district energy systems is to focus on cooling. Here we have a very good reference in the Saudi Arabian city of Makkah, where we advise on one of the world’s largest plants – although cooling does not neccesarily need large scale plants. But we lack references on a large scale at home, because there are political barriers – despite the fact that district cooling, according to several reports, can create jobs, improved competitiveness and increased exports. This political barrier becomes an export barrier.
CONVERSION MUST HAPPEN GRADUALLY
As previously mentioned, it may also be a barrier if Danish companies refer unilaterally to examples from the home market. This may lead customers to think that the system is created to cater to Danish needs only and cannot easily be transferred. So you have to balance between emphasising that the strength of Danish companies is to offer system solutions – and on the other hand, emphasise that single elements can be adapted to the client. If clients for political, practical or other reasons are not interested in the large systems (yet) such as district heating or the big integration of the energy system – then you have to start small. Fortunately, here it is an advantage that an effective smart energy system need not contain all of these many components. A fully edged smart energy in principle includes all stages in the supply chain (from production via distribution and storage to renewable energy consumption), all parts of nal consumption (electricity, heating, cooling, transport, process) and all types of renewable energy resources (wind, solar , biomass, biogas, waste, water, sewage, waste heat). It should however not be constructed at the same time, but can and should be expanded gradually as an the share of fluctuating energy increases. The language used should not be too Danish. When talking about e.g. green transition, some decision makers will become uncomfortable because how green does a transition have to be in order to live up to the expression, and can they afford this? In some places they may be able to afford it, in the long-term perspective, but you might not feel that you can afford to the long term perspective glasses? Several organizations believe that the host country for this year’s UN climate conference Morocco should invest more heavily in solar energy. And it may seem obvious as the country of course has a large part of Sahara at its disposal. But the authorities themselves feel that it is too big a mouthful to go directly from being dependent on oil imports and renewable energy. Therefore, the country is to some extent banking on natural gas – among other things because of the argument that it will improve security of supply and reduce CO2 emissions and the fact that gas is less polluting than oil and especially coal. Ramboll supports this, and is therefore a player in Morocco’s gas-to-power project which will cover a large part of the increasing electricity needs in the coming years.
REFER TO PROJECTS IN SEVERAL COUNTRIES
Morocco’s gas project is an example that developing countries too can decouple pollution from growth, and this is an experience that Ramboll has made in other areas as well. This is something that we can put to use in India which has the highest growth rate among the G20 countries, and in a few years will overtake China as the most populous country in the world. The flow of people moving from rural to urban areas puts the infrastructure under tremendous pressure. The Indian government’s plan is to create 100 Smart Cities with a total investment of almost six billion dollars. The goal is to promote sustainable urban growth, and Ramboll has taken the first steps to play a central role in the initiative with a pilot study in the historic city of Udaipur in Rajasthan. The pilot study is designed to gain an understanding of the challenges and explore how international experience, for example from the Nordic countries and Singapore, can benefit Indian cities. Especially to uncover whether the techniques that Ramboll and others have used to decouple pollution from growth can be transferred. The experience from our work in 35 countries across the globe suggests as already hinted that it can. The popular perception is that the world is incredibly diverse, but when it comes to sustainability, the basic challenges are often strikingly similar. A few years ago, Ramboll made a cost-benefit analysis of the price for failing to take action against increased air and water pollution and other environmental issues in the Saudi city of Jeddah. The conclusion was that it would cost 2-4 percent of the city’s GDP ; 1-2 billion per year. Ramboll was one of the main advisers on Jeddah’s environmental and social master plan for the nearly four million people, and we can now use this reference when we are negotiating with, among other things, our Indian customers. Similarly, we don’t just refer to Copenhill – Bjarke Ingels innovative slope-shaped plant on Amager in Copenhagen, when we talk about waste incineration. Reference projects in the home market are, as previously mentioned important – especially when we are a world leader in energy efficiency of waste incineration. But it is not always enough which is why we also refer to other projects. For instance we are helping get the waste o the streets in Lebanon’s beleaguered capital Beirut, which is building a plant with the capacity of 600,000 tons per year. Or mention a project in Singapore, where we are helping design the world’s largest integrated plant for converting waste and wastewater into energy.
Let me summarize briefly here: It can be an advantage to have Danish roots, because Denmark for historical reasons has evolved to be a showcase for many areas of sustainability. But it is very important that you do not sell the solutions as purely Danish – and in all aspects ensure that clients do not perceive our solutions as tailored to only Denmark and its neighbouring countries. For many export clients it might seem too expensive or difficult to transfer solutions due to differences in e.g. culture, politics and economy. Here it is our and other Danish companies’ task to communicate that sustainable energy systems, climate protection and urban development can be built up gradually, that we have the global vision and local knowledge and that our techniques are so universal that they can be adapted and used globally.
This article was originally printed in the magazine Udenrigs that is published by The Danish Foreign Policy Society. This special issue on global urbanization was published in relation to the conference Urbanization and Exports that was hosted by Realdania and The Danish Foreign Policy Society.