A MEConstructionNewsANALYSIS by Andrew Skudder, CEO. CCS, Guest Author, warning construction firms of the risks of not digitising operations, posted on April 25, 2019, is republished here for its obvious benefits to the MENA’s development.
With the Middle East construction sector under growing pressure as a result of a tightening economy, construction companies should be looking at ways to streamline their business processes, improve cash flow management and tighten risk management. Those that sharpen internal processes and systems today will be best positioned for an upswing in government and private sector investment in the years to come.
The sector faces numerous challenges – challenging economic growth, shrinking margins, skills shortages, rising resource and labour costs – which means it’s under pressure to start innovating.
Investment in tech is behind the curve
The challenges the industry faces are compounded by the fact that many construction groups have not digitised operations such as cost-consulting. This means they lack visibility into – and control over – the many variables, changes, people and equipment involved in any construction project.
Middle Eastern construction companies should be looking for ways to use technology to drive higher productivity, achieve cost-savings and improve project management to weather a tumultuous time for the industry. However, the lean years of late, have seen IT spending in the construction industry stagnate, despite the accelerating pace of innovation around the world.
For example, adoption of wearables, 3D printing, driverless heavy vehicles, drones and building information modelling is rising in the global construction sector. To take full advantage of these advanced technologies, many local construction companies will first need to modernise their core back-office systems.
They should be looking towards tried and tested solutions for estimating, project control, enterprise accounting and operational costing. These solutions will enable them to drive down the costs of maintaining legacy applications, help them to become more agile and give them clearer real-time visibility into business performance.
Breaking down silos
Construction performance and progress cannot be monitored on financial data alone; engineering information is just as critical. Engineering control includes generating and managing allowable and actual quantities of resources, wastages, manhours of labour, production of equipment and time for construction activities.
Without digitisation, an organisation has no clear indication of the status of the contract because it doesn’t have real-time visibility into these factors. Today’s business solutions can break down the silos, enabling estimators and accountants to produce real time-reporting, and yet continue to work in the language that is meaningful to them.
Integrated back-office systems spanning procurement, project control, cost estimation, sub-contractor management and accounting give construction companies one source and view of the truth, enabling them to manage an entire project with real-time visibility into costs and performance.
Using this data can help construction firms make better strategic and operational decisions. Data-driven insights can enable them to better manage cashflow and project risks, so they can better predict and mitigate payment delays, rising costs and other challenges. It can also help companies to drive higher levels of profitability through better project planning.
Building a foundation for the future
Looking to the future, a robust business solution is also a foundation upon which construction companies can layer drones, robots, Internet of Things (IoT) sensors, artificial intelligence (AI) and other advanced digital technologies. Such solutions enable construction companies to manage and analyse big data produced by sensors, devices and workers so they can drive productivity and innovation – AI, for example, can help them rapidly process the data to find key insights.
Construction companies should embrace digital transformation to drive higher productivity, improve efficiency and gain a competitive advantage. Transforming their core business with a proven solution will help them prepare for the future, with a possibility that infrastructure spending will show signs of life again in the near future. Now is the time to lay the foundation for the next wave of growth.
Whenever I visit the Sahara I am struck by how sunny and hot it is and how clear the sky can be. Aside from a few oases there is little vegetation, and most of the world’s largest desert is covered with rocks, sand and sand dunes. The Saharan sun is powerful enough to provide Earth with significant solar energy.
The statistics are mind-boggling. If the desert were a country, it would be fifth biggest in the world – it’s larger than Brazil and slightly smaller than China and the US. Each square metre receives, on average, between 2,000 and 3,000 kilowatt hours of solar energy per year, according to NASA estimates. Given the Sahara covers about 9m km², that means the total energy available – that is, if every inch of the desert soaked up every drop of the sun’s energy – is more than 22 billion gigawatt hours (GWh) a year.
This is again a big number that requires some context: it means that a hypothetical solar farm that covered the entire desert would produce 2,000 times more energy than even the largest power stations in the world, which generate barely 100,000 GWh a year. In fact, its output would be equivalent to more than 36 billion barrels of oil per day – that’s around five barrels per person per day. In this scenario, the Sahara could potentially produce more than seven times the electricity requirements of Europe, with almost no carbon emissions.
What’s more, the Sahara also has the advantage of being very close to Europe. The shortest distance between North Africa and Europe is just 15km at the Strait of Gibraltar. But even much further distances, across the main width of the Mediterranean, are perfectly practical – after all, the world’s longest underwater power cable runs for nearly 600km between Norway and the Netherlands.
Over the past decade or so, scientists (including me and my colleagues) have looked at how desert solar could meet increasing local energy demand and eventually power Europe too – and how this might work in practice. And these academic insights have been translated in serious plans. The highest profile attempt was Desertec, a project announced in 2009 that quickly acquired lots of funding from various banks and energy firms before largely collapsing when most investors pulled out five years later, citing high costs. Such projects are held back by a variety of political, commercial and social factors, including a lack of rapid development in the region.
More recent proposals include the TuNur project in Tunisia, which aims to power more than 2m European homes, or the Noor Complex Solar Power Plant in Morocco which also aims to export energy to Europe.
There are two practical technologies at the moment to generate solar electricity within this context: concentrated solar power (CSP) and regular photovoltaic solar panels. Each has its pros and cons.
Concentrated solar power uses lenses or mirrors to focus the sun’s energy in one spot, which becomes incredibly hot. This heat then generates electricity through conventional steam turbines. Some systems use molten salt to store energy, allowing electricity to also be produced at night.
CSP seems to be more suitable to the Sahara due to the direct sun, lack of clouds and high temperatures which makes it more efficient. However the lenses and mirrors could be covered by sand storms, while the turbine and steam heating systems remain complex technologies. But the most important drawback of the technology is its use of scarce water resources.
Photovoltaic solar panels instead convert the sun’s energy to electricity directly using semiconductors. It is the most common type of solar power as it can be either connected to the grid or distributed for small-scale use on individual buildings. Also, it provides reasonable output in cloudy weather.
But one of the drawbacks is that when the panels get too hot their efficiency drops. This isn’t ideal in a part of the world where summer temperatures can easily exceed 45℃ in the shade, and given that demand for energy for air conditioning is strongest during the hottest parts of the day. Another problem is that sand storms could cover the panels, further reducing their efficiency.
Just a small portion of the Sahara could produce as much energy as the entire continent of Africa does at present. As solar technology improves, things will only get cheaper and more efficient. The Sahara may be inhospitable for most plants and animals, but it could bring sustainable energy to life across North Africa – and beyond.
Renewable energy could become the dominant source of energy across the world, provide up to 86% of global power demand under a scenario in which deeper electrification means that electricity’s share of final energy consumption jumps from its current levels of 20% to 50% by 2050.
A new report published by the International Renewable Energy Agency (IRENA), this week at the Berlin Energy Transition Dialogue and entitled Global Energy Transformation: A Roadmap to 2050, charts a pathway to accelerating the transformation of the global energy mix to meet climate objectives, create jobs and foster economic growth.
IRENA says stepping away from reliance on fossil fuels like coal, oil, and gas is key to this transformation, and electrification delivers the best pathway. This includes the move to more electric vehicles and to using electricity for heating and cooling, which can be supplied by wind and solar.
IRENA says that under this scenario, energy-related CO2 emissions would decline 70% below today’s levels – of which, 75% can be achieved through renewable energy and electrification technologies.
Renewable energy sources would provide the bulk of global power demand, under such a scenario, with as much as 86% of demand, driven by as many as 1 billion electric vehicles and electrified heating & cooling, as well as the emergence of renewable hydrogen.
Under such a plan, then, renewable energy could supply two-thirds of final energy consumption.
“The race to secure a climate safe future has entered a decisive phase,” said newly-installed IRENA Director-General Francesco La Camera. “Renewable energy is the most effective and readily-available solution for reversing the trend of rising CO2 emissions. A combination of renewable energy with a deeper electrification can achieve 75 per cent of the energy-related emissions reduction needed.”
The pathway laid out by IRENA would also have significant economic benefits, saving the global economy between $65 trillion and $160 trillion – or, put another way, between $3 and $7 per each $1 spent on the energy transition – helping the economy to grow by 2.5% in 2050.
“The shift towards renewables makes economic sense,” La Camera continued. “By mid-century, the global economy would be larger, and jobs created in the energy sector would boost global employment by 0.2 per cent.
“Policies to promote a just, fair and inclusive transition could maximise the benefits for different countries, regions and communities. This would also accelerate the achievement of affordable and universal energy access. The global energy transformation goes beyond a transformation of the energy sector. It is a transformation of our economies and societies.”
Unfortunately, at the same time as it lays out a pathway forward, the IRENA report also warns that current action is lagging well behind what is necessary.
The authors write that, “Despite clear evidence of human-caused climate change, support for the Paris Agreement on climate change, and the prevalence of clean, economical and sustainable energy options, energy-related carbon dioxide (CO2) emissions have increased 1.3% annually, on average, over the last five years.”
Their conclusion? “The gap between observed emissions and the reductions that are needed to meet internationally agreed climate objectives is widening.”
“The energy transformation is gaining momentum, but it must accelerate even faster,” concluded La Camera. “The UN’s 2030 Sustainable Development Agenda and the review of national climate pledges under the Paris Agreement are milestones for raising the level of ambition.
“Urgent action on the ground at all levels is vital, in particular unlocking the investments needed to further strengthen the momentum of this energy transformation. Speed and forward-looking leadership will be critical – the world in 2050 depends on the energy decisions we take today.”
The authors of the report urge national policymakers to focus on zero-carbon long-term strategies as well as boosting and harnessing systemic innovation such as fostering smarter energy systems through digitalisation and coupling end-use sectors – particularly the transport and heating & cooling sectors – with greater electrification.
The report also found that, while additional investments needed is $15 trillion by 2050, this is nevertheless 40% down compared to IRENA’s previous analysis “due in large part to rapidly falling renewable energy costs as well as opportunities to electrify transport and other end uses.”
The world is undergoing an energy transformation, from a system based on fossil fuels to a system based on renewable energy,in order to reduce global greenhouse gas emissions and avoid the most serious impacts of a changing climate.
How does this transition have the potential to reshape the geopolitical landscape and how does it compare to the impact of the last transition from traditional biomass energy 200 years ago?
Adnan Z. Amin, Director-General, International Renewable Energy Agency
The last transition created an energy system that was based on resources that are geographically concentrated. This allowed the exercise of geopolitical power around the distribution of those resources which, in turn, had economic advantages for those countries that extracted those resources.
But we are now moving from an energy system of scarcity to one of potential abundance for almost every country around the world. This is because almost every country will have some degree of energy independence in the new energy system we are moving to since almost every country will be able to harness renewable energy.
This shift is a fundamental change for the world and it’s going to have a profound impact on the global economy. That’s why I believe that the energy transition we are going through is going to be as consequential, if not more, than the last one we experienced 200 years ago.
One of the greatest challenges that the energy transition presents is for fossil fuel-producing countries, many of which are countries that have run their economies on these resources in the past, to adopt a new, diversified, economic model.
We are beginning to see the emergence of this around the world. In the United Arab Emirates, for example, there is an energy strategy in place that is calling for 70 per cent decarbonization and 44 per cent clean energy power generation by 2050. This is at the base of an economic diversification strategy to move away from their reliance on one particular resource – which currently is oil.
I think this is a critical challenge for many countries who are in the same situation. For example, although Saudi Arabia is trying to diversify its economy, it faces immense challenges, although it’s Vision 2030 strategy points the way towards moving in a positive direction.
But there are other countries that are unprepared. If you think of the possibilities that a fast-moving energy transition has for the prices of fossil fuel resources, and the impact it could have on countries like Nigeria, Angola, Gabon and others that are highly dependent on these resources, then unless they have ambitious strategies of economic diversification, they could face some severe challenges in the near future.
In terms of the geopolitics, the trade in oil and gas has been at the base of the geopolitical system we have today, but if you think of the fact that we are moving away from these resources into a much more electrified world with power movements across borders based on electricity from renewable energy, there is an enormous opportunity for fossil fuel-producing countries.
This is because many of them are rich in renewable energy resources too so there is a chance for them to remain as energy players. However, it needs leadership and it needs vision to make it happen.
How are emerging economies across South America, Asia and Africa responding to the global energy transition at a time that they are seeking to develop their economies?
One of the most exciting things is that they are already responding well. What has happened over the last four years is that renewables have formed the majority in new capacity addition to the global power sector – which is remarkable.
Furthermore, the majority of renewables capacity addition has been in emerging economies and developing countries, so some of these countries are really pointing the way towards a very exciting future.
You have leaders in this field, like Morocco, which is coming from a 90 per cent energy import dependency to a target of having 52 per cent renewables in their electricity mix by 2030 – which is an extraordinary achievement. I’ve seen some of their installations and they have state-of-the-art technology and low-cost power generation that’s competitive with any fossil fuel power generation in the country.
Chile, too, has some of the lowest prices for renewable electricity in the world and it’s quickly moving to a zero-carbon energy economy.
What these countries are showing, is that this is the development strategy of the future, especially for emerging economies. It’s not merely about the replacement of one fuel for another – it’s a whole new paradigm of development that is emerging based on the current global energy transition.
In a recent report, the transition to renewables is said to be set to reduce the risk of energy-fuelled conflicts, and as such, you recently said that renewable energy is the ‘defence policy of the future’.
Can you explain this in more detail particularly given the increasing security concerns posed by climate change?
Fossil fuels, particularly oil, have had a marked imprint on patterns of conflict over the last 100 years. As the world shifts to renewables, and the relative importance of fossil fuels declines, a geopolitical shift in the frequency and location of conflict is likely to occur.
The risk of confrontation over contested hydrocarbon reserves, such as in the Middle East or in the South China Sea, may diminish. To this extent, the global energy transformation could generate a ‘peace dividend’.
Climate change poses an existential security threat to humanity but renewable energy serves as a defence policy for the future as it plays an essential role in all strategies to combating climate change.
Renewables have the added potential to mitigate against wider socio-economic stresses and shocks that can lead to conflict too: by improving access to energy to the 1 billion people who are energy-poor, by creating jobs, reducing local pollution, promoting sustainable development and alleviating competition over scarce natural resources.
The renewable energy sector has achieved a number of milestones and currently employs over 10 million people globally. Are there any challenges presented by the global energy transition that need to be considered, for example, safeguarding those currently working in fossil fuel industries?
There is a lot of discussion about the disruption of the energy transition, which is correct, that’s why I think it should be a priority for policymakers and decision-makers to understand how the transition to renewable energy will impact everyone.
If the energy transformation begins to permeate into industrial sectors that have traditionally been dominated by fossil fuel energy, there could potentially be severe social disruption, and we are currently seeing the fear of this disruption playing out in the coal industry.
However, there are some innovative models, like a model that has recently emerged in Spain to enable a just transition in the coal sector. Social arrangements have been made to accommodate Spanish coal workers in the future as the country moves towards its renewable energy transition.
But then if you think about how technology is beginning to reshape the global economy, if we move rapidly into the renewable energy-based electrification of the economy – where major sectors like mobility become increasingly electric – then you could see the whole supply chain of conventional vehicles, that employs millions of people around the world, with hundreds of billions of dollars of investment, very quickly begin to experience significant challenges.
So there is a lot of work to be done in terms of developing a cross-understanding of industrial policy and social policy. For example, understanding the scale of this energy transformation, how it will affect significant sectors in the economy, what kind of coping strategies there are and how we can create a workforce fit for the future which will involve reskilling the present workforce. I believe this has to be at the centre of thinking for policymakers and decision-makers today.
I wholeheartedly believe that we have the opportunity to move to a decarbonized society that can at least keep us below 2°C. But, unless we have the will at different levels of society – from politics to industry – that incentivizes investment in low-carbon growth, then I fear we may not achieve the goals of the Paris Agreement.
As per the World Bank in its latest announcement, “Growth has picked up across the region and is projected to strengthen over the next few years. And almost all MENA countries have moved to reduce or eliminate energy subsidies, identify new sources of non-oil revenues, and expand social safety nets to shield the poor from adverse effects of change.”
Meanwhile the World Economic Forum informs that the MENA region hosts the world’s elite today and tomorrow by the Dead Sea shore, to try and debate some of the region’s current issues. Jordan has already held the WEF’S gathering in the recent past; refer to MENA-Forum.
ByMirek Dusek, Deputy Head of the Centre for Geopolitical and Regional Affairs, Member of the Executive Committee, World Economic Forum
For thousands of years, the Dead Sea has attracted visitors from far and wide, drawn by legends of its power to heal and rejuvenate. On 6-7 April, 1,000 key leaders from government, business and civil society will gather on its shores for the World Economic Forum on the Middle East and North Africa (MENA). Over two days they will confront the issues facing more than 400 million people.
A region of two opposing systems
The Arab world is a region of two contrasting systems. One system features a dynamic private sector, digitally native youth and open economies. The other has a bloated public sector and closed, controlled economies.
Most people in the Middle East and North Africa (MENA) interact with both systems, facing a mixed reality. Wealth sits side-by-side with poverty; an exciting entrepreneurial culture struggles with leaden bureaucracy; and an insatiable appetite for the new is balanced with a reverence for tradition.
How these two systems interact – and whether the dynamic, forward-looking system can thrive while respecting the traditions of the Arab world – is among the most important issues the region is facing today.
Five key questions
The following five areas will determine whether the Arab world can successfully move towards the system of innovation and competitiveness.
1. Can the Arab world develop a new, sustainable economic and social framework?
The social contract in much of the Arab world has relied on state-provided employment. This is unsustainable. Nearly half the population is under 25, and a quarter of those are unemployed. Add the biggest gender gap in the world, and it’s clear a new framework is needed.
2. Can a mechanism for conflict resolution be developed?
Ongoing humanitarian disasters in Syria, Yemen and Iraq require immediate attention, as do the longer-term projects of rebuilding fully functioning states. The region has been home to long-standing tensions, and unless these are mitigated, a thriving, competitive region will be hard to realise.
3. Can an ecosystem of entrepreneurship and innovation be developed?
The stories of individual success in the region are too often ones of thriving despite the economic framework. An ecosystem that nurtures innovation and encourages firms to flourish and grow is needed.
4. Are countries prepared for the Fourth Industrial Revolution?
Changes in the way we work are happening more quickly than most societies are prepared for. There is a short window for establishing the right regulatory environment, and reskilling people to make sure they – and the larger economies – can capture the opportunities of technology.
5. Will addressing corruption and transparency be a priority?
Governance reform is a “must do” issue in the region and disillusionment caused by perceptions of corruption is particularly strong among young Arabs.
Global questions, Arab answers
While other regions have grappled with similar questions, the Arab world needs Arab solutions, that capitalize on the unique strengths of the area while accounting for its important sensibilities. There are good examples of this starting to happen.
The UAE is playing a leading role in integrating the region into the global economy. The new Emirates Centre for the Fourth Industrial Revolution, run by the Dubai Future Foundation in partnership with the World Economic Forum, is working to shape governance and capacity issues in the MENA, and it could shape data protocols across the world as a whole. Europe is enforcing strict data protections and regulations, while the United States is taking a more liberal approach. The Arab solution being developed may not just be a better fit for the region, but for elsewhere as well.
Saudi Arabia already has an influential voice as part of the G20, and it’s a voice that can grow. In 2020, it will host the Riyadh Summit, presenting an opportunity for greater impact on the regional and global agenda. A forward-looking programme that strengthens the MENA economies and the global economy as a whole will be an important step toward long-term success for the area.
Actions not words
There is a dire need for a new collaborative platform that brings governments together with businesses and other stakeholders in private-public cooperation. This is the aim of the World Economic Forum’s summit in Jordan. By convening members of the public and private sectors, and bringing new voices into the arena, such as the 100 Arab Start-ups, we hope to facilitate forward-leaning dialogue that understands and respects the values and culture of the region.
In effect, three ways cities can help feed the world . . . without costing the Earth, per Silvio Caputo, University of Kent seem to be one of the few options remaining for life on earth to carry on.
Climate change is underway, and human activities such as urbanisation, industrialisation and food production are key contributors. Food production alone accounts for around 25% of global carbon emissions. Ironically, the changing weather patterns and more frequent extreme weather events resulting from climate change also put the world’s food supplies at risk.
Food production drives deforestation, meaning there are fewer trees to absorb carbon dioxide, which contributes to the greenhouse effect. What’s more, the fertilisers and pesticides used to protect crops have caused a dramatic decline in insect populations, and in soil fertility, by affecting the microbial organisms that enrich the soil and enable plants to gain nutrients.
At the same time, the world population is rising and there are expected to be more than 9.5 billion people on Earth by 2050. In response to these projections, the UN’s Food and Agriculture Organisation (FAO) is campaigning for a 60% increase in food production by 2050, by intensifying agriculture to be more productive and use fewer resources, all without increasing the amount of farm land.
It’s not yet clear exactly how this “intensification” should happen. Alternative methods, such as organic farming, are respectful of soil ecology and insect life and can restore soil fertility. But they cannot, at present, produce as much food as industrial agriculture.
Yet the idea that we need more food is debatable. Although, according to the FAO, there are 821m people globally suffering from hunger, the world produces 50% more food than is needed to feed the global population. Another estimate from biologist and author Colin Tudge suggests that the current food production can feed as many as 14 billion people. But one third of this food is wasted because of distorted supply systems, unjust food distribution and unhealthy and unsustainable diets.
So, the efforts of experts in the food sector should not concentrate on agriculture intensification, but rather on strategies to change patterns of consumption and waste at a local and global level. My own research on urban agriculture and sustainable cities suggests there are three main areas where effective changes can be made.
1. Recycling food waste
Food consumption needs to become “circular”. This means that organic waste such as food scraps does not go to landfill, but is instead transformed into compost (which will be needed in a transition to organic agriculture) and biogas.
At present, organic waste is only recycled to a small extent, with some countries such as Germany and the Netherlands leading, while others including Italy and Belgium lag behind. But there are new technologies emerging to make this process easier.
For example, the Local Energy Adventure Partnership (LEAP) has created an anaerobic digester designed for an urban context: this machine can transform organic waste from residential or commercial buildings into compost and biogas that can fuel urban food growing.
Some experts also suggest that some food waste – if treated properly – could be used as animal fodder: a practice currently forbidden on hygiene grounds. If reinstated, this measure could reduce the environmental impact of grain cultivation, as less is grown to feed livestock.
2. Urban farming
Another option is to decrease demand for agricultural land by growing food in cities, where more people need it, thereby reducing the distances food has to travel. This would also allow producers to map and match consumers’ demand more effectively, by producing close to the places where food is consumed.
There is a lot of research on urban agriculture and how cities can support it, spanning from vertical farms – hydroponic systems enabling cultivation on vertical surfaces – to principles for planning cities that facilitate the use of land, rooftops and other spaces to grow food into a continuous green infrastructure.
In this area, too, it’s possible to find innovations designed to make urban farming easier and more sustainable. For example, The Farmhouse is a modular housing system suitable for vertical stacking that enables all residents to grow food. And Blockchain Domes is a patented system that uses excess heat from computer servers to provide optimal thermal conditions for greenhouses in colder climates.
3. Changing diets
The third option is to encourage people to change their diets. Growing middle-income groups in developing countries are consuming ever higher quantities of meat, cheese and eggs. In China, since 1990, consumption of beef and poultry has quadrupled. But the diet of farmed animals is heavy in grains, which instead could be used to feed people more efficiently. Also, cattle farming requires vast quantities of water and grassland, sometimes obtained through deforestation.
Getting people to eat less meat will help to ease the pressure on the world’s food system. In cities, governments, research institutions, communities and businesses can collaborate on food initiatives to give people healthier, cheaper and more sustainable choices – but this requires political will and organisation between different levels of government.
Clearly, each of these approaches has a limited scope of action, compared to agricultural techniques or strategies which can be deployed at an industrial level. But with so many promising proposals, there can be a many-pronged approach that that makes efficient use of the existing resources in cities, while also changing consumers’ habits. Together with these three changes, more effective policies for food justice and sovereignty can establish fairer food supply chains and more just distribution of food around the world.