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Global leaders herald the urgency of infrastructure transition, but the research paints a contrasting image
From the streets of urban metropolises to the corridors of power in major corporations, a multiplicity of voices seek to influence the future of our infrastructure. And amidst these different voices lies a profound revelation: division.
The recent Infrastructure Transition Monitor 2023 report uncovers these divides, shedding light on the differences that might slow our collective race to net zero. As we push for the modernisation and decarbonisation of energy, buildings, mobility and industries, it is clear that the stakes have never been higher. The infrastructure transition—projected to span three decades—is the most ambitious and encompassing transformation in the history of infrastructure development.
Sadly, the research does not provide a clear map that we can use to chart our course to a cleaner energy transition as it unveils surprising discrepancies. While more than 50% of the 1400 executives surveyed see decarbonisation as a competitive advantage, less than half (47%) believe their countries possess an effective decarbonisation strategy.
Even more troubling, less than 50% of organisations anticipate meeting their decarbonisation targets by 2030.
THE TRANSITION BATTLEGROUND
While the urgency of the energy transition and industry decarbonisation is at the forefront, other forces like digitalisation, demographic shifts and unpredictable factors like technological innovations and political shifts are also at play.
The result is that innovation and integration are at a crossroads and debates surge over the feasibility of various solutions, such as carbon capture, green and blue hydrogen, energy storage and much more.
Business is divided on the likelihood of decarbonisation outcomes, with 46% of respondents saying they will likely accelerate decarbonisation efforts in the year ahead, but 31% saying it is unlikely.
The views are as polarising as many countries’ decarbonisation strategies. What we urgently need is alignment and collaboration. But if we are to believe the numbers, consensus remains elusive and divisive opinions threaten the momentum we desperately seek.
To better grasp where we are collectively in the transition, we must look at the different issues, challenges and opportunities the players face. We have created a view across three spheres of influence – regional, city and industry perspectives.
SPHERE 1: THE REGIONAL PERSPECTIVE
Different regions, with distinct socio-economic and political landscapes, offer diverse approaches to energy transition. While the urgency of energy transition is universally recognised, the strategies to achieve it are far from uniform.
The study’s data reiterates this divide, highlighting that less than half of executives are confident in their nation’s decarbonisation strategies, and 10% or less consider their region/country to be “advanced, fully integrated, full-scale” on the major energy goals of the infrastructure transition.
Decarbonising the world’s energy systems requires an overhaul of the infrastructure supporting it. And this is a multi-decade, $275 trillion shift in how we generate, distribute and consume electrical power, on top of the industrial processes, buildings, transport, governance, systems and structures that keep the world functioning.
Someone has to be responsible for advancing the infrastructure transition. When asked to allocate percentages by groups, regulatory authorities ranked highest at 31%, then the owners of assets, investors/shareholders at 25%, businesses at 17%, politicians at 13%, and citizens at 13%. The challenge is that each of these is interdependent, which calls for more action and better leadership.
SPHERE 2: THE URBAN ODYSSEY
Cities are on the front line in the battle against climate change. As urban populations boom, so does the demand for efficient transportation, building and energy systems. Yet even as cities recognise decarbonisation as a competitive advantage, they grapple with the very real challenges of implementing wide-scale changes within their complex infrastructures.
Let’s look at the figures: For electrification and decarbonisation of heating and cooling, 24% of survey respondents consider it as mature or advanced; 22% for city-wide smart grid implementation; and 21% for the expansion and integration of renewable energy.
Then there is the debate around electric vehicles, the infrastructure required to support them, and the rebates to use them—all of which are now highly politicised. And where there could be quick wins like mobility-as-a-service, the digitalisation of essential services, and better use of 5G and the cloud, the wheel of progress seems to be stuck in third gear.
To tackle the issue head-on, cities need to become more co-ordinated in their efforts. Public-private partnerships must become the norm and citizens must feel involved; the data from smart systems must be used to make smart decisions and leadership needs to become more decisive.
SPHERE 3: CRAFTING TOMORROW’S EDIFICES
The industrial sector is under immense pressure to decarbonise its business models, assets and infrastructure.
To achieve these goals, it is also a sector that needs diverse funding resources, better risk management, skills development, supply chain innovation, regulatory collaboration and better deployment and adoption of digital, automated, and data-driven solutions.
This is also a sector where socio-economic factors have the most impact. And with only 17% of the executives surveyed confident their revenue or profitability will grow in the year ahead—we have a chicken and egg scenario.
Executives know that decarbonisation will cost less in the long run. Still, the coffers are not in a position to support the immediate investment, while the one factor more than any other that threatens to stall the energy transition is a recession.
An important step for industry is improving the energy efficiency of buildings, which is also critical, as according to the World Green Building Council, buildings contribute 39% of energy-related carbon emissions.
The obvious choice is to retrofit existing buildings with modern solutions, but supply chain challenges are playing a significant factor in holding back progress, with 46% of the executives stating they are likely to accelerate decarbonisation in the next year also saying that the one thing that will stall this is the inability to secure the equipment needed to do so.
No matter how you look at it, infrastructure transition is urgent and the consequences of delay are severe. Global warming needs to be reversed or, at the very least, slowed down so we can become more resilient to climate change.
This will happen through the rapid transformation of infrastructure at scale and better and greater alignment, collaboration and standardisation. Globally we are sitting on a treasure trove of technology and digitalisation solutions to help the process. Yet, they are not being leveraged to their full potential due to various concerns, from cost to expertise.
With the current rate of progress, achieving global decarbonisation goals becomes increasingly challenging. As stakeholders in this monumental transition, the path forward needs harmonized action as it is no longer just about recognising the importance of the transition; it is about unified, strategic and immediate action. •
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