The dawn of a new era: Careful planning and investment will be required to ensure the sustainability of activities such as energy production and transportation. Credit: Filip Bunkens / Unsplash
To “build back better”, governments must oversee the creation of new infrastructure to decarbonize their economies. At a recent webinar, senior officials from the Organization for Economic Cooperation and Development in Estonia and the Czech Republic discussed how best to fund and manage these changes – and to what extent COVID-19 has changed its target pages. Catherine Early Reports
Changes in infrastructure and the built environment are a large part of governments’ efforts to transform their economies to “pure zero” by 2050. But contrary to what you might expect, “building anything is an ideal scenario,” says Dr. Kim Yates, Head of Sustainability in the United Kingdom, Europe and Climate Change at Mott MacDonald, design and engineering consultancy.
Yates said that while total UK carbon emissions are declining, emissions from building materials such as steel, concrete and asphalt are still on the rise. She noted that one of the problems is the lack of a policy to achieve net zero. When Yates realized quickly, he said that engineers needed to circumvent compliance in order to build green infrastructure.
Sustainability must be viewed long before construction: Yates argued that significant benefits in reducing carbon and environmental emissions could be achieved if these factors were taken into account at the start of projects. “He’ll look at what you’re building. Can you restore an existing asset?” She said, “Do you really need it?”
Thinking about what – even if – you had to build, this was just one topic discussed in a webinar on green infrastructure managed by the World Government Forum with support from knowledge partner Mott MacDonald. High representatives of the Organization for Economic Cooperation and Development (OECD) and the governments of Estonia and the Czech Republic discussed policy approaches, how to design financing systems and use private sector investments to finance them, and whether the COVID-19 pandemic may change the challenges facing innovators, policymakers and project managers.
Cut, adjust and rejuvenate
According to Anna Pashkova, Director of Environmental Policy and Sustainable Development at the Ministry of the Environment, the Czech Republic is adapting infrastructure as part of its decarbonization strategy rather than building a new one. Since 2009, it has reported that the retrofit program has made 36,000 buildings more energy efficient by providing homeowners with insulation grants. The next phase of the program will also provide financing for solar thermal systems, green roofs, and water saving technologies.
According to Eva Janiso, Head of the Construction and Housing Division of the Ministry of Economy and Communications, the Estonian government’s strategy has been to step back from energy production and focus on smarter use. “We really want to use the cheapest energy potential that is saved in energy,” he said.
Building renovation is a major aspect of this approach. Janisso said that about half of Estonia’s energy consumption comes from buildings, compared to the European Union average of 40%. He said the country’s long-term reconstruction strategy plans to increase the annual modernization of government, residential and commercial buildings from the current level of around 500,000 annually to nearly 2,500,000 by 2035..
Janisso said that in addition to saving cost, energy and carbon, energy efficiency in buildings can improve indoor air quality, legacy of old buildings and the flexibility of spaces to adapt to different uses in the future.
Estonia is also experimenting with how real-time data can manage energy efficiency. Janisso noted that real-time energy consumption data could lead to a vibrant market for energy efficiency services and products. “Real-time consumption data opens the door to a real-time carbon footprint, so any building owner can see potential savings when thinking about building improvements,” he said.
Green infrastructure financing
But even when efficiency is embedded in projects, governments still have to fund it from disrupted pandemic stocks. Many people use a combination of public and private funding.
Paskova said the Czech Republic is financing the modernization of green infrastructure through several European funds, including the European Union’s Structural Funds and the Modernization Fund, which supports low-income member states through decarbonization. Funding will support programs including energy supplies, renewable energy, new heating plants, clean mobility and water infrastructure.
She said the country will also use money from the European Union’s Equitable Transition Fund to support its work in decarbonizing former coal mining areas, which will also reduce inequality. The European Commission has also stipulated that the investments of member states must pass the “do no harm” test to the climate and the environment. She added that this could change the game in which countries think about how they invest financing.
Dirk Rutgers, a green finance and investment policy analyst at the Organization for Economic Co-operation and Development, said governments should also create an enabling environment for institutional investors to support green infrastructure financing. He noted that pension funds and insurance companies usually spend a very small portion of their investment portfolios on infrastructure.
According to research by the Organization for Economic Cooperation and Development, the four largest types of institutional investors in infrastructure, such as transportation, energy, waste, water and construction, have $ 1.04 trillion. But it pales against $ 64 trillion in corporate stocks and bonds, and only $ 314 billion of the total can be considered green infrastructure.
A recent study by Rutgers shows how policymakers can encourage investors to make their portfolios greener. He suggested that governments intervene or work to regulate financial markets to increase investment from institutional funds, citing the need to ensure the availability of project funds that meet policy objectives, such as money that can be spent on investment.
Governments should also ensure that they do not prevent unintended investment by blocking certain financial instruments, such as YieldCos: investment vehicles that the parent company creates for its own operating assets. “It’s a really good tool and flair for institutional investors, but it’s not allowed in all countries. Similar tools only focus on fossil fuels.”
“Make sure anyone from a private party who wants to invest in these projects can do so, whether it’s a really big investor with huge amounts of financing or a really small investor like your saver. Governments should give private financing an opportunity to meet their needs.” Rutgers.
However, investing in green infrastructure doesn’t have to be just institutional investors. And A recent analysis by the Organization for Economic Cooperation and Development Rutgers said he revealed that governments are spending as much money on recovering green investments as they have on passive investments.
“For governments that focus on these investments, it might be useful to have transparent information about what they are actually investing in, set targets for how much to invest in environmental measures, and be very clear about what they are not investing in,” he said. . . He added that these types of guidelines were only drawn up by the European Commission.
Other members of the team were more optimistic: Yates said it had not seen more activity than ever before around low-carbon technologies in the infrastructure sector. “We’ve seen an increase in inquiries and actions, certainly when Biden arrived,” she said. “I can’t imagine it on the agenda, because I don’t think the citizens will allow it.”
However, once the deadline for COVID-19 is over, the public’s needs can change dramatically, and many people anticipate the future of hybrid work. Rutgers noted that public transportation systems may need to be rethought because people are already moving to the suburbs because they are not required to be in the office five days a week. He suggested that the networks would now be less dense in densely populated areas, but that they would continue to expand.
“There may be a paradigm shift based on what we still need for other climate and environmental reasons. These are fun times,” he said.
Others were more cautious. Baskova noted that the impact on office use in the Czech Republic should not be overestimated, given that only 30-50% of administrative staff work from home during the lockdown. In addition, the decrease in emissions from reduced mobility could be offset by increased household supplies, she said. Here, as with the sustainability program, many of the keys to success lie in a better understanding of the evidence for the relationship between economic change and environmental impact. “We will have to verify the data,” she concluded.