Professor Martin A Blake DBA MBA BSc Blake

Professor Martin A. Blake DBA MBA BSc. Blake Advisory Pte Ltd. , Singapore Strategic Advisor – Moss, Australia Strategic Advisor – Carbon Systems, Australia International Green Awards Brisbane, Australia 13 th August 2012 Su inab sta : the ility llars do e sens nd a © 2011 – 2012 Blake Advisory Pte. Ltd.

• Personal Context • Existing Built Environment • Marginal Abatement Cost Curves (MACC) and IRR Curves • Case Study 1: Royal Mail Group • Case Study 2: National Oil Company, Persian Gulf • New Buildings • Integrated Design Process • Case Study: United World College of South-East Asia • The Blue Economy • A Case Study Example © 2011 – 2012 Blake Advisory Pte. Ltd.

Personal Introduction • • • I am not a full time academic - but I have developed theory I have delivered big projects and employed consultants I have delivered internationally recognized energy projects I have significant Board level experience with fiduciary duties I speak the language of business in a sustainability context I love disrupting the status quo when it doesn’t work! New Paradigm Assumptions • • “Positive Deviancy” necessary to challenge herd mentality “C” words unnecessary! However, metrics are unequivocal Sustainability projects can exceed core business IRR Transactional vs. Transformational Paradigm © 2011 – 2012 Blake Advisory Pte. Ltd.

People Profit Planet Triple bottom line © 2011 – 2012 Blake Advisory Pte. Ltd.

The Business Case REDUCE • Environmental impact • Capital cost • Consultancy fees • Oversized servicing systems • Risk • Operating costs • Maintenance costs • Reliance on fossil fuels © 2011 – 2012 Blake Advisory Pte. Ltd.

The Business Case • Systems integration • Investor value • Customer interest • Property value • Profit margins • Resilience against future energy and water prices and volatility INCREASE © 2011 – 2012 Blake Advisory Pte. Ltd.

Existing Buildings – Retrofit and Refurbishment • De-bunking myths – there are significant paybacks! • You cannot create business cases without disaggregated data • Energy needs to be performance managed, not reported • KPI’s and devolvement of P&L Accountability key • Too many choices, technologies, manufacturers, derivatives, and therefore risks creates information overload and organisational paralysis! • Ranking projects methodically brings clarity • The use of Marginal Abatement Cost Curves and IRR Curves © 2011 – 2012 Blake Advisory Pte. Ltd.

Macro Level MACC (following Kyoto) © 2011 – 2012 Blake Advisory Pte. Ltd.

Below axis = positive Net Present Value per unit of energy saved Above axis = negative Net Present Value ✗ ✓ energy saving Width = amount of energy conserved Cost effectiveness © 2011 – 2012 Blake Advisory Pte. Ltd.

The Simple Arithmetic Behind the MACC Quantitative Data: Qualitative Data: Electricity, gas, Marginal fuel, LPG, Abatement etc Cost Curve Pumps, Boiler, HVAC, etc Cost benefit analysis of relevant intervention © 2011 – 2012 Blake Advisory Pte. Ltd.

Marginal Abatement Cost Curves and Cumulative IRR Curves • Provides absolute clarity with a highly compelling business case • Creates project rankings based on NPV • Unequivocal disclosure of ROI, IRR, PBP etc… • Therefore, creates sophisticated tool to get Board approval • Can be the basis of public disclosure on sustainability • Discloses fiduciary duty to deploy • Risks to deployment can be entered into corporate risk register • Mitigates multiple risks and creates opportunities with a single strategy © 2011 – 2012 Blake Advisory Pte. Ltd.

DATA © 2011 – 2012 Blake Advisory Pte. Ltd.

Carbon Systems – Technology Overview Automated Data Capture copies of electronic data files from smart meters, supplier reports, electronic invoices and your internal IT systems for automated upload to a secure database Manual Data Capture Quickly and accurately enter data manually via customised web forms or preconfigured spreadsheet templates Data Services Hubs Files in various electronic formats can be emailed to the services hubs for secure data extraction, verification and integrity testing Global database The secure SQL server manages your data and a database of global data formats, metrics and carbon emission factors for all major reporting regions around the world

Case Study 1: Royal Mail Group Real empirical case study 75 National and International Awards Most successful Energy Reduction Programme in Europe saving £ 30 million in fuel and energy costs per annum © 2011 – 2012 Blake Advisory Pte. Ltd.

Royal Mail Group context Single largest employer in the UK - c. 176, 000 employees Handle 75 million items every working day 113, 000 collection points 28 million delivery addresses 33, 000 vehicles travelling 1. 8 million miles a day 135 million litres of diesel annually 12, 000 retail outlets. © 2011 – 2012 Blake Advisory Pte. Ltd.

Royal Mail – Gross Energy Footprint (Circa 2004) © 2011 – 2012 Blake Advisory

The Philosophy of Energy Conservation 1. Avoid and Reduce fuel and energy consumption 2. Replace existing fuels with zero/low C equivalents and finally… Priority 3. Offset and sequestrate residual emissions through sustainable projects. © 2011 – 2012 Blake Advisory Pte. Ltd.

RMG Energy Reduction Programme Communications + Employee Engagement (project 1) Fuel and Transport - Light Fuel and Transport - Heavy (Project 5 A) (Project 5 B) Buildings New Buildings Current (Project 6 A) (Project 6 B) Policy, Risk + Regulation (Project 7) Innovations (Project 2) Commercial Opportunities (Project 3) (AVOID) (REDUCE) (REPLACE) MACC Creation KPI’s, Data +Reporting (Project 8) Supply Chain (Project 4) Offsetting/Sequestration (Project 9) (OFFSET) Report to Board quarterly: 1, 5 A, 5 B, 6 A, 6 B, 8 Report on rotation: 2, 3, 4, 7, 9 © 2011 – 2012 Blake Advisory Pte. Ltd.

Europe’s First Enterprise Marginal Abatement Cost Curve © 2011 – 2012 Blake Advisory Pte.

Not just for Buildings!! Apply the Same methodology to Transport and Logistics © 2011

Fleet – 60% of the RML footprint © 2011 – 2012 Blake Advisory Pte.

H 2 - ICE conversions H 2 Fuel Cell Electric 7. 5 t Petrol

Car Derived Nos. Miles p. a. Lifecycle yrs: 15, 197 14, 000 3 Crew/Post Bus Nos. Miles p. a. Lifecycle yrs: 3, 257 10, 500 5 Small Panel 4, 538 17, 000 4 Heavy Small 2, 191 48, 000 5 Medium Panel 1, 277 16, 500 4 Heavy Medium 345 54, 000 5 Large Panel Sml People Carrier 1, 558 21, 500 4 Heavy Large 1, 351 83, 000 4 1, 253 13, 000 3 Trailers 2, 448 7 © 2011 – 2012 Blake Advisory Pte. Ltd.

Co 2 by Vehicle Type © 2011 – 2012 Blake Advisory Pte. Ltd.

Transport MAC Curve © 2011 – 2012 Blake Advisory Pte. Ltd.

Case Study 2: National Oil Company, Persian Gulf in association with Booz & Co. Demonstrating how to eliminate 16 mt of Carbon and add USD $1 billion a year to the profit margin with an IRR of 14%! © 2011 – 2012 Blake Advisory Pte. Ltd.

Quantify savings opportunities For each initiative, the abatement potential was calculated and costed… Capture and use CO as feedstock in urea processing Abatement Cost USD$ per t. CO 2 e CO 2 capture from hydrogen plant Optimization of heater/ furnace/ burner/ boiler / combustion efficiency Flare gas recovery Optimization of steam systems Optimization of motor systems CCS w/ EOR Optimization of heater/ furnace/ burner/ boiler / combustion efficiency Optimization of motor systems 2 Site-wide process integration and optimization of heat requirements Optimization of motor systems Site-wide process integration and optimization of heat requirements O&M optimization and continuous emission control program Flare gas recovery Replace captive small-scale power generation with grid power Optimization of heater/ furnace/ burner/ boiler / combustion efficiency Flare gas recovery Abatement Potential Mt CO 2 e Company-Wide Marginal Abatement Cost Curve 2030 Abatement opportunities O&M optimization and continuous emission control program Optimization of heater/ furnace/ burner/ boiler / combustion efficiency Optimization of motor systems © 2011 – 2012 Blake Advisory Pte. Ltd.

Investment Return Curve for Energy Conservation and Carbon Abatement Projects Internal Rate of Return (log scale) 1000% IR R Cumulative IRR of individual initiatives 4. 5 Mt p. a. CO 2 reduction with a 51% IRR 0 1 2 3 4 5 6 7 8 9 10 11 12 CO 2 capture from hydrogen plant 1% Site-wide process integration and optimization of heat requirements 10% 16 Mt p. a. CO 2 reduction with a 14% IRR Flare gas recovery 20% Optimization of heater/ furnace/ burner/ boiler / combustion efficiency 30% Optimization of motor systems (compressors, pumps, fans, etc. ) O&M optimization and continuous emission control program Optimization of steam systems 100% 13 14 15 16 Mt. CO 2 p. a. Abatement © 2011 – 2012 Blake Advisory Pte. Ltd.

New Buildings Integrative Design Process (IDP) and the work of Amory Lovins and the

Traditional Hierarchical Approach © 2011 – 2012 Blake Advisory Pte. Ltd.

Collaborative integrated design team approach Site design specialists: soils, geoscientists, ecologists Program user groups: employees, students, residents Green Building rating system expert (e. g. LEED) Building design/simulation specialists: acoustics, thermal, comfort, daylighting Architect IDP champion / facilitator Cost consultant Valuation / appraisal expert Real estate expert / marketing Prime consultant team: Mechanical, electrical, structural, civil engineers; landscape architect Contractor Sub-trades, product suppliers, and manufacturers Building operator, utilities, and maintenance staff Project manager Community advisory panel / academic experts Regulatory authorities: government agencies, planners, code officials Client Systems specialists: commissioning agent, control system and security experts © 2011 – 2012 Blake Advisory Pte. Ltd.

Case Study 1: United World College of South East Asia Exemplary Singapore development achieving

The Results Reference Model (k. W/h) UWCSEA Model k. W/h) Modelled Savings 3, 729, 537 1, 844, 571 50. 54% 815, 452. 399 539, 222. 70 33. 87% Equipment (8%) N/A N/A Ventilation (6%) 541, 634 275, 547 49. 10% Lifts and Escalators (4%) 32, 797 29, 518 10. 00% 7, 194, 957 4, 112, 997 42. 84% Area of Interest Space Cooling (60%) Lighting (18%) Total Building modelled Energy Consumption © 2011 – 2012 Blake Advisory Pte. Ltd.

Maximise indirect natural daylight, minimise solar heat gain © 2011 – 2012 Blake Advisory

High thermal mass surfaces Naturally ventilated external stairwells © 2011 – 2012 Blake Advisory

Minimizing Frictional Losses optional vs. 99% 1% Boolean pipe layout 99% 1% hydraulic pipe

High efficiency chillers 45 o angled ductwork © 2011 – 2012 Blake Advisory Pte.

The Final, Unequivocal, Empirical Results!! (in a tropical climate) • Budget SG $230 m • SG $30 m under budget • 10 months ahead of schedule • Over 50% measured energy reductions • Still ongoing monthly improvements from continuous re-commissioning © 2011 – 2012 Blake Advisory Pte. Ltd.

A Case Study from the “Blue Economy” © 2011 – 2012 Blake Advisory Pte.

Coastal & Island Agriculture Free water, cheaper food & increased land value © 2011

Coastal low pressure desalination Eliminates investment in expensive reverse osmosis, saves energy, produces high quality organic food. Creates local jobs, increases local food security and increases the value of marginal arid coastal land © 2011 – 2012 Blake Advisory Pte. Ltd.

Thank You!! © 2011 – 2012 Blake Advisory Pte. Ltd.

Contact Details: Dr Martin A. Blake Advisory Ltd. www. martinblake. com Email: Skype: blake@blake. sg martin_a_blake Linked. In: http: //sg. linkedin. com/in/martinblake 2010 © 2011 – 2012 Blake Advisory Pte. Ltd.