DNV GL’s CEO Remi Eriksen is glimpsing a LowCarbon, Digital Future
“I firmly believe we are on the cusp of a technology-led revolution, a new renaissance of industrial progress,” said Mr Eriksen.“In the coming years automation and data-driven insights will acquire real meaning and scale.”
“Most of the technologies will be known to us, what’s new is the combination of advanced technologies from previously separate domains like physical, biological and digital. New combinations and the speed of implementation are the building blocks of the fourth Industrial Revolution.”
Part of DNV-GL’s responsibility is to forecast and it believes over the next 10 years, the future will be electric, and decarbonisation and digitalisation will be the dominant drivers. By 2025, renewable energy will have a major role as a source of electricity generation as a disrupter, potentially outstripping coal as an energy source. The company thinks renewable energy will be responsible for half of the additional power-generating capacity added over the next decade.
“There will be a strong decrease in coal and oil consumption by 2025,” he said. “Around two-thirds of the reduction in oil consumption will come from the transport sector, which is what we mean by decarbonisation.”
“Digitalisation will involve realtime data generated from massive deployment of sensors and will increase control, enhance resilience, reduce cost and open new opportunities for the implementation of energy efficiency in a wide range of sectors.
“There are two trends that I strongly believe will influence our future energy consumption. First is the use of alternative fuels in the transportation sector, specifically in shipping. Second is digitalisation in the power sector.”
Shipping transports 80% of the world’s goods by volume and does so in a more energy-efficient way than any of the other options. Only 2.5% of global greenhouse emissions can be attributed to shipping. But shipowners and their clients will expect the sector to do its part, said Mr Eriksen.
“The UN Environment Programme believes the shipping industry must decrease its emissions by 30% from present levels in order to help stay below the two-degree warming ceiling,” he said. “One solution is the use of a different fuel type. Historically shipping has preferred one fuel type, which is currently oilbased. In the future there will be no silver bullet solution, but instead a higher degree of diversification. We believe each shipping sub-section will choose its fuel based on safety, affordability, reliability and sustainability.”
“Today the leading alternative fuel for ships is liquefied natural gas (LNG). There are about 75 ships operating using LNG now and another 85 under construction. More container vessels and oil and chemical tankers are starting to use the fuel, showing LNG bunkering infrastructure is expanding beyond shortsea shipping.
“One recent example of the promising development of LNG as a marine fuel is an agreement between Qatargas, Shell and Maersk Line, which are the largest LNG facility, the largest LNG producer and one of the largest shipping companies. The trio signed a memorandum of understanding to explore the use of LNG as a marine fuel in the Middle East. This shows there is a momentum building for significant change.
“Singapore is well positioned to benefit from this shift as a major trading and shipping hub that recently invested in a LNG regasification terminal.”
Mr Eriksen said LNG has the obvious advantage of eliminating sulfur oxides, reducing nitrogen oxides and particulate matter and cutting greenhouse gases. But LNG does not sufficiently reduce CO2 emissions to allow the 60% reduction required by the climate agreement.
“Another technology that holds significant promise for energy efficiency and a smaller environmental footprint is ship electrification,” he said. “Today there are 34 vessels sailing with batteries on board, of which three are fully electric. We think fully electric is the most realistic solution for short-sea shipping, with an electric hybrid for used for deep-
“As with LNG, infrastructure is key. Building infrastructure for the charging of ships can also catalyse the use of cold ironing, meaning ships can utilise shore power while in port. This can lower emissions and improve human health in urban areas surrounding ports.
“A few years from now, power grids will have omnipresent sensors, providing real-time data that allows them to learn and adapt to the use of renewable energy sources. These grids will have self-configuration for resilience, loss reduction and self-adjustment for voltage variations. They will also dispatch automated demand-response actions to avoid capacity limitations in the grid.
“In effect, power grids will become cyber-physical systems: physical entities managed by local, digital control systems. Singapore has started this journey already, hosting a living lab to test new ideas for smart energy infrastructure using sensor networks and big data analytics.”
In order to accommodate an increasing share of renewable energy, electricity will need to be transmitted over increasingly longer distances, said Mr Eriksen. High-voltage DC is the lowest-cost solution for this task.
“In 10 to 20 years, we will see supergrids that combine ultra-highvoltage DC and AC systems,” he said. “This will allow integration of renewable energy while ensuring security and sustainability of the grid operations.”
“In the meantime, there will be hybrid grids that see an uptake in flexible AC and high-voltage DC. We are seeing the development of this already in the US, Europe, India and China. But hybrid grids also involve increasing levels of complexity, such as combining slower, mechanically controlled AC systems with faster, electronically controlled high-voltage DC systems. To do this you also need high-voltage DC circuit breakers, which DNV-GL is partnering with 33 energy players to test.
“History tells us there is always a time lag between the breakthrough technology discovery and large-scale uptake. But we believe the lag between the current innovations and uptake will be shorter than usual, so we must be agile to act on these new technologies.
“I believe the key ingredients of the future energy technology innovation will be invented here in Asia. A McKinsey report projects a USD 7 trillion shortfall in infrastructure in Asia until 2030. The fact that the region’s infrastructure is not that advanced here can provide opportunities in the energy sector to leapfrog a couple of technology iterations straight into the next generation. Because there is not a heavy investment in the current infrastructure, I think it’s a benefit to Asia going forward.”
DNV-GL spends 5% of its budget on research and development, which is currently EUR 120 million. In the next five years, Mr Eriksen believes it will have to spend half of that on the digitalisation trend.
“I would recommend shipping and oil and gas industry follow the same R&D budget allotment,” he said. “We don’t know where this R&D journey will take us, but for sure it has to be baked into your organisation’s culture and DNA. It has to be a part of your value proposition.”
“Our company in the future may not provide the same services we do now because the platforms and technologies are changing. Though it may sound extreme that we can quickly change from shipping and oil and gas, which make up 70% of our revenue, to more energy grids and digitalisation, but we have already acquired many of these competencies from previous acquisitions. And we think these synergies can be easily transferred to other sectors.
“While we think the time lag will be shorter for new energy technologies, most economies are going to need to use oil and gas for many years to come. At some point the oil price will eventually rise because it is all related to supply and demand. I think right now the low price is partially related to low activity, meaning there is less demand for oil.”