ENERGY CONSUMPTION

Increased energy consumption due to increased asphalt production

Building and construction industry consumes considerable energy for, among other things, heating and drying. Veidekke's energy consumption in Norway was 275GWh in 2009, compared to 250 GWh in 2008. The total energy used in Veidekke increased slightly in 2009 compared to 2008. This is primarily due to record high asphalt production. The specific consumption per tonne of asphalt produced, however, decreased by approx. 5 per cent last year, after a reduction of 10 per cent in 2007. Veidekke Industry has further developed projects that were started in 2007 in connection with the industy's Klimaveien focus. 17 organisations associated with Road and Traffic set a goal to reduce emissions associated with transportation by 10 per cent until 2009. Veidekke has achieved 15 per cent, something we are very happy with.

The proportion of renewable energy used by Veidekke is increasing slightly as all fee-imposed diesel fuel now contains 5-7 per cent biodiesel. This corresponds to the use of ca. 260 000 liters of bio-products in 2009. Calculation for 2008 was 238 000 liters.

Energy consumption figures for Sweden and Denmark are considerably lower than for Norway since machines are largely hired-in for individual projects and companies tend not to own their own asphalt or crushed stone and gravel productions. We are committed to working on the emissions of our suppliers as well so that as of 2010, the actual consumption in these countries will be included in the statistics.

Remote heating is used to heat offices in Oslo, Gothenburg, Stockholm and Glostrup of Copenhagen. Heating demand met by remote heating, is estimated at 3 GWh, equivalent to 2007 consumption levels. Veidekke is working to expand the use of remote heating, including using it in the workmen's huts. The energy source for heating is largely biomass or waste-based, but with no use of heating oil or electricity, and mainly natural gas in Glostrup.

Irregular discharge

Veidekke's deviation system in Entreprenør operations in Norway, identified 50 deviations related to emissions in 2009. Here hydraulic system leaks are a major culprit. Others relate to waste and recycling (25 discrepancies), and a smaller number to dust and noise. Overall, the emissions are moderate, and those which result in contaminated soil are handled in accordance with current guidelines. No fines or payments for non-compliance or violations of environmental laws were registered.

Health and hazardous substances

A survey conducted by the Climate and Pollution Directorate (formerly SFT) in 2006, shows that the building and construction industry is at the very top of the list in terms of using the most number of products with health and environmentally hazardous chemicals. There are only chemical manufacturing players with several products on the list. This shows that working with health and hazardous substances is very important for our industry.

In order to maintain an overview of dangerous substances used, and to be able to make the necessary substitution evaluations, nearly all of our projects use the substance tracking system BASS (Building and Construction Industry's Substance Tracking System).

The Product Control Act requires businesses like Veidekke to take a greater responsibility in the prevention of harm from products containing health and environmentally hazardous chemicals. This is known as substitution obligation. Veidekke Entreprenør is working actively to reduce the use of "red-flagged products". These are products that contain substances on a priority and (about 30 selected POPs) and OBS list (about 250 particularly health and environmentally hazardous substances). In general, we are working to decrease the use of substances that have certain properties, such as those that are carcinogenic, affect fertility, cause hereditary disorders, fetal injury, damage the ozone layer or cause long term adverse effects on aquatic organisms. Red-flagged products must not be used if there are less harmful alternatives with satisfactory peformance. Today, approx. 2 300 chemical products are used in our production and 18 per cent of them are "red-flagged".

We are working to ensure that all our subcontractors also use BASS. Therefore, we have defined requirements in all contracts with subcontractors in addition to carrying out "substitution seminars" and dialogues on the issue. The dialogue meetings are held either one-to-one or with multiple suppliers. Examples of participants are construction contractors and concrete producers. Through these dialogues we are working with our suppliers to replace approx. 40 per cent of red-flagged products. Veidekke Entreprenør, however, sees a clear potential to be even better at including suppliers and subcontractors in BASS to better control and handle chemicals on each individual project.

Indoor environment - a new agreement with the Norwegian Asthma and Allergy Association

Ensuring a good indoor environment in the buildings we erect is important both for employees and for our end users. Creating a living and working environment healthy for end users, is something we are concerned about at Veidekke. We have recently signed a cooperation agreement with Norway's Asthma and Allergy Association to contribute to knowledge exchange on this topic. A concrete project has already been started in Årvoll, Oslo. The following measures are being considered in efforts to create healthy indoor and outdoor environments in the new residential area:

• Emissions. Which materials are used in constructing a building is very important. There are a number of gases that can cause allergic reactions so we actively use BASS, as well as Norway's Asthma and Allergy Association's competence.
• Ventilation. Good ventilation is important so we are now considering various options to find an optimal solution.
• Heating. We are moving away from panel heaters which burn dust, and instead are inserting alternative sources of heat or sealed panel heaters with no air flow, approved by the Norwegian Asthma and Allergy Association.
• Fixtures. We insert ceiling-high cabinets where it is possible so as not to create dust traps.
• Cleaning. How to conduct effective cleaning and maintenance (for example, by using micro-fiber products instead of detergents), is important to maintaining good indoor air quality. Here we are focusing on educating end users.
• Humidity. A building must be clean and dry so there is no risk of fungus or mold later on, which is highly allergenic.
• Planting. Outdoors we seek to find alternatives that are known not to cause allergies. We avoid, for example, birch trees and plants with poisonous berries.

The project in Årvoll is a pioneering project, where we are going far beyond what the law requires. We believe that the high level of competence in the Norwegian Asthma and Allergy Association combined with our technical building experience can produce very interesting results which we can transfer to other construction projects. The building will be ready in early 2011, and is not significantly more expensive as a result of the new solutions.

Quarries and asphalt plants

Operation of quarries and asphalt plants is demanding both in terms of relationships to neighbors and to users of the natural environment around the plants. We are, therefore, particularly conscience of the environment around our operations and the environmental effects of the products we manufacture. Kolo Veidekke is closely cooperating in this regard with neighbors and local governments.

In the manufacture of asphalt, we do not employ tar-containing binders or binders with a high content of organic gases (VOC). Kolo Veidekke has also actively contributed to the development of a much cleaner production process (WAM Foam); the environmental improvement of bitumen emulsions (the glue used in the laying of asphalt), which can now be produced without solvents; and the development of "adhesives" (bonds two layers of asphalt together) that do not stick to vehicle wheels. Kolo Veidekke has also greatly contributed to the development of asphalt surfaces with good abrasion resistance and thus less harmful road dust from tires wear.

The production process WAM (warm asphalt mix) was developed by Veidekke in collaboration with Shell in the ‘90s. It was a response to strict requirements of the United States on the concentration of gases that workers can be exposed to when producing and lay asphalt. WAM can be used to produce asphalt at 110 degrees Celsius instead of 150 degrees. The low temperature dramatically decreases evaporation during production, energy consumption by around 30, and odor problems. The WAM process can be used with some modifications to existing asphalt plants and laying equipment, but has not yet been used on a large scale in Veidekke (only 1 of 28 plants currently has this capability). The main reason is that contract award criteria in which Kolo Veidekke's currently competes on do not take sufficient account of this type of environmentally friendly solution. It is therefore difficult to argue for the investment that is needed. In the White Paper on Corporate Social Responsibility (St.melding 10, 2009) it is written, however, that the public should take the lead in setting requirements for sustainability from their suppliers in the coming years, which is also in line with international developments, and we hope to make good use of this process to better employ WAM technology in the years ahead.