Annemarie van Doorn en Elisabeth Post: ‘Direction Needed In Sustainability Efforts’
Mega-sized ‘block boxes’ – or distribution centres – mushroom along the highway. It is a trend which leads to much public criticism. ‘Build them underground and create housing above. That is not only a solution to the housing shortage, but also contributes to the energy transition. To combine living and working reduces commuting and allows companies and households to exchange energy among themselves.’ The idea transpires during a conversation between Elisabeth Post, Chairman of the board of trade association ‘Transport en Logistiek Nederland’ (TLN), and Annemarie van Doorn, Director of Dutch Green Building Council (DGBC). Both women, each in their respective sectors, are working hard to encourage entrepreneurs to become more sustainable. 15 years ago, Van Doorn co-founded Dutch Green Building Council, a foundation that aims to make the built environment more sustainable. DGBC now plays a crucial role in the world of sustainable building and has developed, for example, the BREEAM certification system, which measures and rates how green buildings are. DGBC is also the driving force behind the Sustainable Renovation Delta Plan, a programme that aims to make shops, offices, hospitals and logistics centres ‘Paris Proof’ as early as 2040. By that year, CO2 emissions must be zero. A hundred parties have already committed to the programme.
While Van Doorn has the tailwinds in her favour – after all, due to higher energy prices, it pays to become more sustainable – Elisabeth Post needs to be more persuasive to get transport and logistics entrepreneurs to make more sustainable choices. The will is there, but grid congestion poses major challenges for the sector. ‘Entrepreneurs sometimes really are at a loss,’ says Post. ‘They might buy a diesel generator in order to electrify trucks.’ Post and Van Doorn talk to Frank Meens, Head of Commercial Operations at Vattenfall, about grid congestion, energy scarcity and future prospects.
The war in Ukraine caused energy prices to increase substantially last year. What impact did that have on your sector?
Post: ‘When Europe decided to boycott oil imported from Russia at the end of May, it caused great concern to the transport sector. Normally, about half of Russian oil is used to make diesel. The industry feared sky-high prices. Many of our members had fuel clauses that allowed them to pass on increases in price to customers – but not all had such clauses. There were also fears of a diesel shortage. We immediately knocked at the door of the Ministry of Economic Affairs and Climate to discuss a diesel distribution plan, should there be dire shortages.
In addition, the war in Ukraine made LNG very expensive. This led to grim situations for the handful of entrepreneurs who had already invested in LNG-powered trucks. Having no fuel clause, they ran into big problems. They sometimes had to pull over their trucks to the side of the road. As an industry association, we lobbied hard to get a compensation scheme for them. That this failed is upsetting. These entrepreneurs stuck their necks out by becoming more sustainable. I am afraid that from now on, as a result, these frontrunners will be the last of the bunch when the next sustainability initiative comes along. For entrepreneurs in the logistics sector, energy prices only increased later in 2022.’
Van Doorn: ‘The higher energy prices made our task much easier. While we have been making efforts for the past 15 years to encourage business owners to make buildings more sustainable, the energy crisis meant we do not need to be as persuasive. There was money to be made by taking sustainability measures. But we are far from there yet. At the same time, we continue to push hard for the social component; we need to make sustainability possible for everyone, not just for those with deeper pockets.
The energy transition is currently still creating great inequality. It is a challenge to include people in social housing. Sometimes people who have been living somewhere for 20 years have to move because they can no longer afford the rent after a sustainability project. That is a sad and unjust fact. In addition, I think the government, but also energy suppliers, could do far more to bring attention to affordable measures to become more sustainable – like LED lighting for example. People tend to think that sustainability always is expensive.’
The government introduced several measures to compensate consumers and businesses for the high prices. How did those measures impact your sector?
Post: ‘For entrepreneurs who have a fuel clause, the reduction of excise duty did not make any difference. After all, that clause stipulates that both a price increase and a price decrease will be passed on to the principal, that is, the shipper. But there was an additional effect. Higher energy prices created a new trend in the logistics sector. Cold stores introduced energy clauses. They, insofar as they could, passed on the rising energy prices to customers. That was not the case before.’
How sustainable are entrepreneurs in your sector? What is needed to make the sector more sustainable?
Post: ‘Entrepreneurs are fully engaged in sustainability. Large companies especially are working on it. It is more difficult for the midsized and smaller one-man businesses. A truck is expensive, while an electric truck including charging infrastructure can be 3.5 times more expensive. If your neighbour continues to drive diesel, while you you make the choice to electrify now because you are active in the city centres, you will spend three times as much on depreciation alone without subsidies. What does not help is grid congestion. To give an example, I was recently at the home of a businessman with 400 trucks. I asked him about his sustainability plans. He told me that he is due to get a bigger connection in two years’ time, but it is not guaranteed that the connection would deliver electricity. In the meantime, the entrepreneur plans to install solar panels. Due to lack of roof space, this will allow him to charge only eight trucks, which leaves him with 392 trucks that cannot be electrified.
What is frustrating in this respect: some 80 kilometres away, a large logistics service provider has enough space, and he too would prefer to fill his roof with solar panels. But he does not do so because he is not allowed to feed back to the grid. Instead, he installed only the number of solar panels to produce sufficient electricity for his own business. He enquired if he could install a battery to supply neighbouring businesses or households with sustainably generated electricity, but there, too, laws and regulations get in the way. That is where his sustainability efforts ended. I view examples like this as missed opportunities. It is incredibly important that there is a party that takes the directive role. How do we ensure that entrepreneurs who have a surplus of sustainable energy can, and are allowed to, supply to entrepreneurs or consumers who need it?’
Van Doorn: ‘A few weeks ago, I had the opportunity to lead a session on the theme of grid congestion. That was at the Science Park in Eindhoven. I understood that some 400 small companies have already left for Germany and Belgium because they could not get a connection to the electricity grid, and as a result could not meet their energy needs. I agree with Elisabeth: the directive role is very important. It would be especially valuable at the local level. The sustainability ambitions on industrial estates can be linked to a far greater extent.’
As an energy supplier, we see the frustrations of business owners about grid congestion. Many customers run into problems as a result. It is important that grid operators follow through on expanding capacity in the grid. The electricity grid may be full in some places and at certain times, but apart from capacity and expansion, there should also be opportunities to make better use of the available capacity. However, this requires a directorial role, which is still lacking. We see companies in the market conceiving creative solutions to become more sustainable. What examples do you know of from the sector?
Post: ‘Many operators in our sector are legally obligated to make the transition between 2025 and 2030 already. From 2025, transport companies in some 40 cities will only be allowed to enter cities with zero-emission vehicles. While one-off exemptions would be possible, it will be expensive. Many entrepreneurs struggle with this enormously. Their dilemma: if they buy an electric truck, they cannot always charge it. At the same time, without electric transport, they cannot access the city.
I do not want to advocate postponement at all, because by doing so, you will disadvantage entrepreneurs who already made the switch and already made the investment. Yet you see some cities backtracking. I think that is unwise. You should not move the goalposts during the game. As a result, entrepreneurs who are already electrifying lose faith in the government. Incidentally, I note that entrepreneurs sometimes take emergency measures. They would buy a diesel generator to charge their electric trucks. That, of course, is the last thing we want.’
Van Doorn: ‘As DGBC, we strongly believe in a local approach. We seek out more and more business parks to talk to entrepreneurs about sustainability opportunities – how they can go about greening their buildings. We also involve InvestNL, the public investment fund that finances promising innovations by entrepreneurs. Local businesses can work together much better. But that needs to be directed and facilitated. I believe we should not wait for the government to take a directive role; the local market should take care of it. With firm ambition and the will to think outside the box, we can take important strides.’
How could thinking outside the box benefit society?
Van Doorn: ‘We could merge residential, work and recreational functions in the urban environment to a far greater extent. I know of plans where a distribution centre is built underground, with housing and a park above it. I found that amazing. We became so used to areas and even buildings having only one function, but why? For a long time, we had the luxury of building housing in places where we did not work. We cannot afford that luxury anymore. We need to go back to the 1960s and 1970s, when people lived much closer to their jobs. Not only does that reduce the housing shortage, but it also speeds up the energy transition. Companies and households can complement their energy supply and demand to each other.’
Post: ‘I am familiar with the plans for underground distribution centres. They were launched as an alternative to logistics real estate along the highway. The condition is that residents should not be inconvenienced by the coming and going of trucks. For instance, transporters should only drive into such centres on one side, and reversing should only be done indoors. I agree that we need to build much smarter. In the Netherlands, we need 53 per cent of available space for agriculture, 34 per cent is water. The remaining 13 per cent of land is left for living, working and recreation. We need a Delta Plan that involves all sectors of the economy to think about how we can make better use of our space. I am cynical, though, about the extent to which matching energy supply and demand locally is enough for our total energy needs. That is a cobbled-together solution. It may help to remove the most urgent need locally, but in doing so you are just relieving the biggest bottlenecks. It is not only the transport sector that is running into grid congestion, so is industry, logistics centres and the housing market. The wait is for grid reinforcement, which will take several years.’
The conclusion may be that we are in a transition phase. In many sectors, there is a will to become more sustainable, it is just that the system is not yet prepared for it.
Post: ‘It is a challenging period. I experience that we are all pushing vehemently towards 2030. It feels as though we have to cross a threshold, but that it should be easier after that.’
Van Doorn: ‘It is also very important that we maintain our ambition. We must not slacken because some goals seem difficult to achieve now. I think that would be disastrous.’
This article was published in Management Scope 10 2023.
This article was last changed on 21-11-2023