MIT Technology Review‘s CLIMATE CHANGE advises that Soaring AC demand will threaten our power grids and accelerate global warming – unless we begin making major changes soon and that Air conditioning technology is the great missed opportunity in the fight against climate change.
As record-breaking heat waves baked Californians last month, the collective strain of millions of air conditioners forced the state’s grid operators to plunge hundreds of thousands of households into darkness.
The rolling blackouts offered just a small hint of what’s likely to come in California and far beyond. Growing populations, rising incomes, increasing urbanization, and climbing summer temperatures could triple the number of AC units installed worldwide by midcentury, pushing the total toward 6 billion, according to the International Energy Agency’s Future of Cooling report.
Indeed, air conditioning represents one of the most insidious challenges of climate change, and one of the most difficult technological problems to fix. The more the world warms, the more we’ll need cooling—not merely for comfort, but for health and survival in large parts of the world.
But air conditioners themselves produce enough heat to measurably boost urban temperatures, and they leak out highly potent greenhouse gases too. Plus, those billions of energy-hungry new units will create one of the largest sources of rising electricity demand around the world.
Without major improvements, energy demand from cooling will also triple, reaching 6,200 terawatt-hours by 2050—or nearly a quarter of the world’s total electricity consumption today.
Despite the magnitude of the mounting challenges, there has been relatively little funding flowing into the sector, and few notable advances in products in the marketplace. Aside from slow gains in efficiency, the basic technology operates much as it did when it was introduced nearly a century ago.
“The fact that window AC use continues to increase while the product largely looks and works the same as it has for decades speaks for itself,” says Vince Romanin, chief executive of San Francisco–based Treau, a stealth cooling startup developing a novel type of heat pump. “I think a lot of folks are excited for something new here, but there has only been incremental progress.”
There have been far larger improvements in costs and performance across other energy technologies in recent decades—like solar panels, batteries and electric vehicles—driven by public policies, dedicated research efforts and growing demand for cleaner alternatives. Treau is one of a number of startups and research groups now trying various ways to achieve similar advances for cooling.
But even if the global stock of AC units do become much more efficient, the projected leaps in usage are so large that global electricity demand will still soar. That will complicate the already staggering task of cleaning up the world’s power sectors. It means nations don’t just need to overhaul existing electricity infrastructure; they have to build far larger systems than have ever existed—and do it all with carbon-free sources.
Billions of new air conditioners
Perpetually cooling the vast volumes of hot air that fill homes, offices, and factories is, and always will be, a massive guzzler of energy.
The problem isn’t merely that more air conditioners will require ever more electricity to power them. It’s also that they’ll particularly boost the amount that’s needed during peak times, when temperatures are really roasting and everyone’s cranking up their AC at the same time. That means we need to overbuild electricity systems to meet levels of demand that may occur only for a few hours of a few days a year.
In Los Angeles County, rising temperatures combined with population growth could crank up electricity demand during peak summertime hours as much as 51% by 2060 under a high-emissions scenario, according to a 2019 Applied Energy study by researchers at Arizona State and the University of California, Los Angeles.
That adds up to about 6.5 additional gigawatts that grid operators would need to be able to bring online at once, or the instant output of nearly 20 million 300-watt solar panels on a sunny day.
And that’s just for one of California’s 58 counties. The world will see far larger increases in AC demand in nations where the middle class is rapidly expanding and where heatwaves will become more common and severe. Notably, the IEA projects that India will install another 1.1 billion units by 2050, driving up AC’s share of the nation’s peak electricity demand from 10% to 45%.
Cleaning the grid
The most crucial fix needs to occur outside the AC industry. Transitioning the electricity grid as a whole to greater use of clean energy sources, like solar and wind, will steadily reduce the indirect greenhouse-gas emissions from the energy used to power air-conditioning units.
In addition, developing increasingly smart grids could help electricity systems deal with the peak-demand strains of AC. That entails adding sensors, control systems, and software that can automatically reduce usage as outdoor temperatures decline, when people leave spaces for extended periods, or when demand starts to bump up against available generation.
The world can also cut the direct emissions from AC by switching to alternative refrigerants, the critical compounds within cooling devices that absorb heat from the air. Manufacturers have largely relied on hydrofluorocarbons, which are highly potent greenhouse gases that can leak out during manufacturing and repair or at the end of a unit’s life. But under a 2016 amendment to the Montreal Protocol, companies and countries must increasingly shift to options with lower warming impacts, such as a class of promising compounds known as HFOs, certain hydrocarbons like propane, and even carbon dioxide (which at least has less of a warming effect than existing refrigerants).
There are also clear ways to ease the electricity loads required for cooling buildings, including adding insulation, sealing air leaks, installing window coverings or films, and applying reflective colors or materials on rooftops. Creating such “cool roofs” across 80% of the nation’s commercial buildings could cut annual energy use by more than 10 terawatt-hours and save more than $700 million, according to an earlier study by the Lawrence Berkeley National Lab.
Avoiding the ‘cold crunch’
But ultimately, the growing number of AC units operating in homes and buildings around the world need to become far more energy efficient to avoid what’s known as the coming “cold crunch.”
One of the most powerful tools for bringing about those improvements is public policy. The IEA notes that the best technology available is more than twice as efficient as the average of what’s actually in use around the world, and three times better than the most inefficient products on the market.
The problem is that most people and businesses aren’t going to pay a lot more for more efficient systems just to help achieve global climate goals, particularly in poor parts of the world. But with mandates, incentives, or subsidies, nations can help ensure that more of the units being produced and sold are higher-efficiency models.
The projected increase in cooling-related energy use shrinks 45% by midcentury under the IEA scenario that includes such policies (and doesn’t assume any technological advances).
Even then, however, AC energy demand would still leap about 70% higher by midcentury. That beats tripling. But achieving significant additional gains could require more radical changes.
A number of startups are trying to push things further.
Transaera, cofounded by MIT energy professor Mircea Dincă, is attempting to significantly improve efficiency by tackling the humidity in air as a separate step.
In addition to cooling ambient air, conventional AC units have to dedicate huge amounts of energy to dealing with this water vapor, which retains considerable heat and makes it feel much more uncomfortable. That requires bringing the temperature down well beyond what the dial reads, in order to convert the vapor into a liquid and remove it from the air.
“It’s just incredibly inefficient,” Dincă says. “It’s a lot of energy, and it’s unnecessary,”
Transaera’s approach relies on a class of highly porous materials known as metal-organic frameworks that can be customized to capture and cling to specific compounds, including water. The company has developed an attachment for air-conditioning systems that uses these materials to reduce the humidity in the air before it goes into a standard unit. He estimates it can improve overall energy efficiency by more than 25%.
The materials are designed to emit radiation in a narrow band of the light spectrum that can slip past water molecules and other atmospheric compounds that otherwise radiate heat back toward the planet.
Placed on rooftops, the materials can replace or augment traditional building cooling systems. The company estimates the technology can reduce the energy used to cool structures by 10 to 70%, depending on the configuration and climate. SkyCool is in the process of installing the materials at its fourth commercial site.
The good news is that some money is starting to flow into heating, ventilation, and air-conditioning. The research firm CB Insights tracked just eight financing deals worth nearly $40 million in 2015, but 35 totalling around $350 million last year. (This includes loans, venture capital investments, and acquisitions.) And there have already been 39 deals worth around $200 million this year.
But the bad news is that the increased level of funding is tiny compared with the tens of billions pouring into other energy and technology sectors—and minuscule relative to the scale of the problems to come.
Sustainable development is a concept which has only recently been applied to the analysis of infrastructure megaprojects. Yet new built infrastructure has a crucial role to play in both the continued and future development of communities, societies and ultimately the world economy and global ecosystem. This paper discusses the meaning of ‘sustainable development’ and ‘sustainability’ in terms understood from its origins in the relationship between economic development and the conservation of the natural world. While the definition of sustainability has perhaps moved beyond its origins, it remains the case that no condition of sustainability can be conceived without bringing our relationship to the natural world into balance, and thus we work from this perspective from which we explore some of the ways sustainability might be applied to megaprojects. In so doing, we hope to open a discussion to which future contributions to this journal can contribute.
Our thesis is that both human economic and social activity, and the infrastructure that makes that activity possible must contribute to sustainable development. This is because the infrastructure that is installed especially via megaprojects not only has impacts on sustainability while it is under construction, it also locks in for long periods the impact on sustainability from the social and economic activities it either supports or restricts. Thus when we talk about sustainability and megaprojects we are concerned with more than just the infrastructure itself. Infrastructure for sustainable development must be concerned with what is built or not built, the processes that surround decisions to build or not build, the impacts of construction (socially, environmentally and economically), changes to governance and the institutions connected with the process of developing infrastructure. It also must be concerned with how, by whom and to what extent the infrastructure is used. In the perspective we elaborate here, all of these elements of society and economy taken together, megaproject individually and for megaproject development in toto, impinge upon the sustainability of human existence. For example, the German Advisory Council on Global Change (WBGU, 2016) points to the importance of infrastructure investment on efforts to move to a more sustainable human existence on the planet. The Council articulates three desirable ‘I’s: innovation, investment and inclusion in the following statement:
Complete de-carbonization of the world economy by 2070 at the latest can only be achieved by profoundly transforming energy systems and other high-emissions infrastructures. This transformation could inspire innovation and channel investment into sustainability and climate protection, e.g. into sustainable infrastructures that need to be established and expanded. At the same time, the transformation could combat inequality and promote inclusion within societies and globally, thus becoming an equity project. (WBGU, 2016: 1, emphasis added)
Plainly, however, embedded within this statement there is a question about how ‘sustainability’ and ‘sustainable development’ are to be understood. What, in particular, is the priority to be given to environmental sustainability within that understanding?
In what follows we first address this question and reach a conclusion. We do so not to lay down a definitive truth, but in order to invite serious debate about sustainable development. We acknowledge that diverse valid answers are possible depending on alternative views about the potentially conflicting priorities of maintaining, restricting or regulating economic growth, of supporting economic enterprise, of maintaining market freedom, of reinforcing social cohesion, of reducing social inequality and of protecting the Earth’s biodiversity. After setting out our normative understanding of sustainable development we outline one way in which the contested diversity may be analysed. We then turn our attention to the application of our analysis to the development of mega infrastructure projects.
Before moving on, however, let us just clarify how we use the terms ‘sustainability’ and ‘sustainable development’. Sustainability, the noun, is the property or quality of being able to be sustained – a property of a thing, a species, a process, a culture, a society etc. Sustainable, the adjective, is the measure of the degree to which something can be sustained. In proper use then, sustainability requires an identification of what is to be sustained and a normative idea of how and to what extent it should be sustained. This is why it is impossible to talk about sustainability without including a normative element in the discussion and defining what is to be sustained. Something can only be said to be ‘sustainable’ if it is measured against some criteria, and those criteria will be based on normative principles.
We find that the term ‘sustainability’ is frequently couched in statements such as ‘sustainability requires that (something should be done)’. When used in this way it is important to read carefully what the author is saying should be sustained and how its ability to be sustained is to be measured. Often enough ‘sustainability’ is used interchangeably with ‘sustainable development’. But in such discussions it is frequently difficult to tell how ‘development’ is defined, what kind of ‘development’ is to be sustained, and over what time period.
In approaching our answer to the question of how sustainable development is to be understood, we first undertake a brief historical overview of how the concept of sustainability entered into, and persisted in, the vocabulary of economic and social development. We then argue that ‘environmental sustainability’ should be regarded as a normative principle for humanity that is as powerful, and as necessarily contested, as democracy and justice. Yet, because the principle is contested we need to be aware of the range of ways in which it can be interpreted.
A historical overview of the concept of sustainable development
The need for a form of economic development that was ‘sustainable’ developed from an awareness of the fact that continued economic growth depended on continuing inputs from the natural environment. As Thiele (2013, p. 15) tells us, ‘A German mining administrator of the time [1770s], Hans Carl von Carlowitz, became worried about the loss of forests in his region. The smelting of ores to produce metals required large amounts of wood to fire the furnaces’. The destruction of forests in Saxony for fuel threatened the mining industry, so von Carlowitz devised methods of sustainable (nachhaltende, literally meaning ‘lasting’) use of forests. From the start, then, the term ‘sustainable’ connected the concern for preserving economic growth and its social benefits over the long term with an awareness of the limits of natural resources on which growth depends.
Two hundred years later (in the 1970s), driven by growing scientific knowledge of global environmental limits to economic growth, the idea of sustainability came to be applied to the need to contain and direct economic development. The concept of sustainable development was presented as a way to prevent economic growth from eroding and ultimately destroying the environmental supports on which the economy and the welfare of societies depends.
The authors of the influential book entitled Limits to Growth expanded the concept of sustainability from local to global environments and ecological systems, and attempted to model a world that was sustainable ‘without sudden and uncontrollable collapse’, and which was at the same time capable of satisfying the basic requirements of all its people (Meadows, Meadows, Randers, & Behrens, 1972, p. 158, and up-dated to 2005). In awareness of the social and economic needs of the developing world, the authors saw that efforts at environmental protection had to be reconciled with the aim of generating economic growth as a pathway for lifting populations of the developing world1 out of poverty.
These concerns became embedded in the discourse of ‘sustainable development’ following the Brundtland Commission Report (World Commission on Environment and Development [WCED], 1987) which addressed sustainable development in the following terms:
Humanity has the ability to make development sustainable to ensure that it meets the needs of the present without compromising the ability of future generations to meet their own needs. The concept of sustainable development does imply limits – not absolute limits but limitations imposed by the present state of technology and social organization on environmental resources and by the ability of the biosphere to absorb the effects of human activities (WCED, 1987, para 27).
Reading the definition without its fuller context can give a false impression that the WCED Report was all about sustainable growth in the developing world. Consider, however, the introductory words of the Chair of the Commission, Gro Harlem Brundtland:
The environment does not exist as a sphere separate from human actions, ambitions, and needs, and attempts to defend it in isolation from human concerns have given the very word “environment” a connotation of naivety in some political circles. The word “development” has also been narrowed by some into a very limited focus, along the lines of “what poor nations should do to become richer”, and thus again is automatically dismissed by many in the international arena as being a concern of specialists, of those involved in questions of “development assistance”. But the “environment” is where we all live; and “development” is what we all do in attempting to improve our lot within that abode (WCED, 1987: Chairman’s Foreword).
This approach to sustainable development became embedded in subsequent declarations of the United Nations such as the Millennium Development Goals (MDGs)2 in 2000 and the Sustainable Development Goals (SDGs)3 in 2015. Although, in these UN statements, the underlying concept of sustainable development followed the Brundtland philosophy, the implementation of sustainable development was subdivided into goals for its achievement, for instance eight goals in the case of the MDGs and seventeen in the case of the SDGs. Goal 7 of the MDGs was ‘Ensure environmental sustainability’. ‘Climate action’ was Goal number 13 of the SDGs. Unintentionally, in our view, this reduction of a core philosophy into the managerial idea of ‘goals’ fed the notion that ‘sustainable development’ itself was a divisible concept, with environmental sustainability being but one among a number of ‘goals’ of equal worth.
The managerial approach was developed by Elkington (1997) who conceived the idea of the ‘triple bottom line’, an approach frequently applied by companies, governments and their consultants to the evaluation of projects in which different criteria of equal weight are applied to arrive at an overall ‘sustainability’ outcome (see discussion below). But, as with the UN statements, triple bottom line accounting can be misunderstood (ibid: p. 71). Elkington, citing management theorist Stuart Hart (1997), argues that ‘sustainability’ goes beyond ‘greening’ understood as ‘making business more efficient and trimming costs’4. As Hart remarks, ‘the challenge is to develop a sustainable global economy: an economy that the planet is capable of supporting indefinitely’. There is a lexical, or nested, order of environmental, social and economic imperatives identified here: Society, Elkington (1997, p. 73) states, ‘depends on the economy – and the economy depends on the global ecosystem, whose health represents the ultimate bottom line’.
A normative principle: ‘what should be sustained and made sustainable’
From this brief historical overview of the concept can we derive a normative principle of sustainable development? The clearest conceptualisation of ‘sustainability’ consistent with its origins in the history of the use of the term ‘sustainable development’ comes from the economist Herman Daly (1996). Daly begins by examining the basic assumption of conventional economics, and macroeconomics in particular: that the economy is a ‘closed system’ with a circular flow of exchange of goods and services and factors of production between firms and households (ibid: p. 47). As Daly remarks of this conceptualisation of economics:
What is truly flowing in a circle can only be abstract exchange value – exchange value abstracted from the physical dimensions of the goods and factors that are being exchanged. Since an isolated system of abstract exchange value flowing in a circle has no dependence on an environment, there can be no problem of natural resource depletion, nor environmental pollution, nor any dependence of the macro-economy on natural services, or indeed anything at all outside itself (ibid: p. 47).
We have seen, as Daly argues, that economies actually exist within an environment. Conventionally, of course, environmental issues have not been ignored, but regarded as ‘externalities’ which, as the term implies, are ‘external’ to the model of economics and must be dealt with by laws or politics, and with other arguments which Daly addresses (but for reasons of space in the journal we cannot go into). Daly’s contribution is to bring human society and the natural environment into a new vision of economics. The macro-economy (at any geographical scale) must, in the light of this vision and of the concept of sustainable development, be viewed as an ‘open system’ with inputs from its environment (resources and human labour) and outputs into it (of waste products) into the same environment and beyond. The conventional vision of market economics is accurate so far as it goes and does its job very well, that of ‘allocation’ of investment to aggregate demand, in short making sure that what is produced, and in what quantity, matches what people want and can pay for. But sustainable development requires a new vision, central to which is the scale of the economy in terms of its impact on environmental sources of raw materials and sinks for waste products.
Daly (1996, p. 50) explains what he means by ‘scale’:
The term “scale” is shorthand for the physical scale or size of the human presence in the ecosystem, as measured by population times per capita resource use. Optimal allocation of a given scale of resource flow within the economy is one thing. Optimal scale of the whole economy relative to the ecosystem is an entirely different problem (a macro-macro problem).
The normative principle to which Daly’s vision of sustainable development points is simply this: the scale of an economy must be held to the level of inputs (human and environmental) and sinks for waste products that can be sustained indefinitely, meeting the needs of the present population without, as Brundtland puts it, ‘compromising the ability of future generations to meet their own needs’. In Daly’s terms, the principal goal of sustainable development is to maintain ‘a scale of the economic subsystem that is within the carrying capacity of the ecosystem’ (Daly, 1996, p. 166)5.
Daly described himself as an environmental macro-economist. But insofar as economists today accept the reality of climate change and other environmental constraints on real economies (at global and national levels) and moreover try to build economic instruments into their models such as carbon taxes or carbon trading systems, they too have to be considered ‘environmental economists’. Alternatively, Herman Daly might today be considered merely ‘an economist’.
Of course Daly’s vision is by no means shared by all, or perhaps even a majority of economists. Daly himself cites his disagreement with Laurence Summers, then chief economist of the World Bank, who allegedly dismissed the book by Meadows, Meadows, and Randers (1992) as ‘worthless’ (cited by Daly, 1996, p. 6). More recently, the day after publication of the Intergovernmental Panel on Climate Change’s (IPCC) advice to governments of the cost of global warming, the ‘contributing economics editor’ of The Australian newspaper, Judith Sloan (2018), writes: ‘Here we go again, a group of like-minded, henny-penny scientists telling us the world is about to be transformed in a bad way unless we act’6. She continues, ‘Mind you the IPCC report released yesterday ain’t (sic) science. It doesn’t set out refutable hypotheses and test them. In fact, we don’t even have reliable data on global temperatures’. Yet on the same day of the IPCC Report, the 2018 Nobel Prize for economics is announced for Nordhaus and Romer for ‘integrating climate change and technological innovation into economic analysis’7. These economists join earlier Nobel laureates Krugman (2009) and Stiglitz (2016) who appear to be in broad agreement with Daly at least on the matter of climate change.
However, while we agree with Daly that the normative principle derived from the conceptual history of sustainable development is correct. It should be clear that debates about sustainability and sustainable development are both contemporary and on-going. Research into infrastructure megaprojects can reveal the discursive assumptions of the personnel involved in case studies of such projects. In what follows we discuss one way in which interpretations of sustainability might be analysed in the field of mega infrastructure development.
Interpretations of sustainability and sustainable development
If, as we have postulated, ‘sustainability’ is a contested concept, it is open to multiple interpretations. It is important to note here that discursive assumptions almost always contain both positive (what is) and normative (what should be) elements. As has been argued elsewhere, these discursive assumptions constitute ways of being of the actors in the politics of megaprojects, especially those concerned with the planning, development and analysis of such projects (Sturup, 2010). As researchers, and therefore also actors in megaproject politics, we cannot ourselves avoid having a value position, and we have made our position clear in the above two sections. But, as researchers, it is also our business not to judge but to observe and describe the assumptions of participants in megaproject development and production. We want to be able to say: ‘This is what the people involved in the project thought, believed or assumed about it’. In this ‘observer’ role we are not making judgements (as we have in the preceding section) about what the people thought or ought to have thought.
Some research questions we need to ponder are: ‘How has the term “sustainable” been used in the discourse of the megaproject, and ‘What did those involved in this megaproject mean when they used the word “sustainable”?’ These are questions about what was the case, rather than questions about what ought to have occurred. But there is an irreducible normative aspect of such questions as Dobson (1998) argues.
In this respect, Dobson (1998, p. 61) points out, first, that there is an important distinction between ‘sustainable development’ and ‘environmental sustainability’. Sustainable development he claims is fundamentally an anthropocentric concept. It is about how humans can thrive and the human economy prosper when the limits imposed by the natural environment are included in the economic model. The viewpoint is that of humanity, a single species, not of the species at large of the natural world.
The impact of the human species on Earth is so vast that a term has been created to describe the era of human dominance: the ‘Anthropocene’. An assessment was recently made of the composition of the distribution of biomass on Earth – all forms of life – which seeks to quantify human impact on Earth (Bar-On, Phillips, & Milo, 2018). The study found that farmed poultry makes up seventy percent of all birds, farmed livestock makes up sixty percent of all mammals, with just four percent being wild mammals. ‘Since the rise of human civilisation’, the authors write, ‘eighty three percent of wild mammals have been lost, fifty percent of plants, fifteen percent of fish’. The Anthropocene human existence displaces other species and destroys wild habitat in what some scientists describe as the ‘Sixth Mass Extinction’ or the ‘Holocene Extinction’. Ceballos and Ehrlich (2018, p. 1080) comment that the rate of species extinctions in the period of human dominance is about one hundred times greater than the loss of species throughout prior geological time.
So sustainability viewed from the perspective of the Earth’s species as a whole (‘environmental sustainability’) cannot be exactly the same as sustainability viewed from an exclusively human perspective (‘sustainable development’). This is not to deny that the concept of ‘sustainable development’ pays attention to the environmental consequences of economic growth, for as Thiele (2013, p. 3) argues human development is intimately connected with the sustainability of the planet as a whole, whereby ‘sustainability concerns the global, long term impact of our practices, relationships and institutions because we live in a connected world’.
On the other hand, there is a view that the free market economy will of its own accord advance the sustainability of human society, and no valuation of Nature is acceptable other than Nature’s function for human welfare. So how can different approaches to the wider concept of sustainability be systematically analysed?
Dobson (1998) provides an example of the kind of work still needed in the contested conceptual space of ‘sustainability’. He identified different conceptions of ‘environmental sustainability’ and approached his inquiry by seeking answers to three questions:
What is to be sustained?
Why should it be sustained?
How should it be sustained?
His analysis of the literature (up to the late 1990s) led him to posit four conceptual types of ‘sustainability’, namely: a Cornucopian kind, an Accommodating type, a Communalist kind and a Deep Ecology type which he describes as follows:
The Cornucopian Type:8 This is where the natural world consists of resources for human use. The environment is just another form of capital: natural capital. Human-made capital may be substituted for natural capital if it is feasible and good for us. Our future lies in human improvement by means of human ingenuity. Where substitutability is not possible, the advancement of technological innovation will allow ‘critical natural capital’ to be sustained: ‘natural capital whose presence and integrity is pre-conditional for survival’ (Dobson, 1998, p. 43). The only valid ethical purpose is individual human welfare in aggregate. The first object of concern is the present generation of human needs and desires. In Dobson’s view this concept is not one of ‘environmental sustainability’, nor, in our view, one of ‘sustainable development’.
The Accommodating Type: This is where natural ecosystems critical to human survival – and for which there is no human substitute – must be sustained. Human welfare depends on the ‘health’ of these ecosystems: ‘The idea that animates [this conception], simply, is that what should be sustained are aspects and features of non-human nature whose loss would be irreversible’ (ibid: p. 47). But the ethical principle expressed in this conception is concern not just for the human species but for some aspects of the natural environment ‘for their own sake’ whose loss would be irreversible (ibid: p. 49). Human welfare comes first, not just material needs but also spiritual and aesthetic needs. Because our own welfare is tied in with that of non-humans, their welfare must also be considered. This conception is consistent with one kind of vision of sustainable development.
The Communalist Type: This conception further extends the ethical valuing of ecosystems whose evolved natural creations should, in some cases, be protected for their own sakes from irreversible processes of destruction. Dobson notes that in this conception, ‘if faced with the prospect of the irreversible loss of a species here and now, that loss should be carefully weighed against any putative benefit to future generations by incurring that loss (both to humans and non-humans)’. Humans have a custodial or ‘stewardship’ responsibility for the whole of Nature. We do not exercise that role just for the purposes of human welfare, but because we have a duty to Nature to do so. We humans are not the only creatures to count morally, but we are the only species in creation with the capacity for and therefore duty of care9. This conception is also consistent with a vision of sustainable development.
The Deep Ecology Type: Finally, in this conception, Nature has a right to exist independently of human beings. The non-human world is to be valued consistently in its own right. What is handed down and maintained for the future needs to retain in the process something of its original form and something of its identity. The natural world has intrinsic value even if there were no humans on the planet to value it. Dobson cites Holland (1994, p. 180) and Goodin (1992) in arguing that what is handed down to humans through the eons of ecological evolution needs to retain ‘something of its original form and something of its identity’. This is what, in Goodin’s terms, is a green theory of value: ‘which traces the peculiar value of naturally occurring properties of things to the history of their creation by processes outside ourselves’ (Goodin, 1992, p. 61). This eco-centric vision stretches the ethical imagination beyond ‘sustainable development’.
Dobson’s research, employing what he terms ‘an analytical typological’ approach, though published almost thirty years ago, remains instructive and valid. His work is one of the very few attempts to create a typology of the different ways in which ‘environmental sustainability’ as distinct from ‘sustainable development’ can be understood. The two middle types/categories earlier cited, but not the first and possibly not the fourth, could encompass the meaning of ‘sustainable’ in ‘sustainable development’.
There are of course many ways in which research on the normative meaning of sustainability and sustainable development might develop in relation to mega infrastructure projects. As a contested concept, one thing that seems to be needed now is an interrogation of the use of the terms ‘sustainability’ and ‘sustainable development’ in the practice of creating, justifying and deciding upon actual megaprojects. Therefore, a challenge for researchers of megaprojects is systematically to investigate case studies with a view to identifying a comparable typology from practice. Avenues for research might pursue the question of which of the above understandings of sustainability could be most useful in studying mega infrastructure projects, either in their development or in analysing their impact; and of course what ‘most useful’ might mean in these contexts and in particular cases. Such research might also lead to different analytical typologies.
We turn now from the normative focus central to Dobson’s work to a discussion of another kind of research into sustainability and infrastructure that addresses questions of a more positive nature that can be posed in analysing specific projects. How is the term ‘sustainability’ used? What does the use of ‘sustainability’ do to the process of analysis, development and implementation of infrastructure? In what sense is the infrastructure sustainable?
Applying the concept of sustainable development to impacts of infrastructure megaprojects
What sustainability perspectives mean for the impacts of infrastructure megaprojects is twofold. First, the construction of such projects creates an impact extending out from the local space in which the project takes place to the wider region and in certain respects, to the globe. Second, infrastructure megaprojects are designed to accommodate and sustain particular kinds of human activity. That activity may have an impact on the Earth over time and space, posing the question: is the activity itself sustainable?
Infrastructure megaprojects are very large constructions, typically with a price tag in excess of US$1 billion involving a variety of stakeholders and businesses with impacts on the wider economy of cities, regions and nations, and even on the global economy. They can potentially generate employment and profits in particular sectors and in particular places over time. They are often formulated and supported by governments. They look to open up social and economic opportunities and impose local and global costs. They also act to disguise or make automatic particular ways of living, for example lighting that is available at the flick of a switch dulls our comprehension of the resources used, and the environmental consequences of using electricity.
There is no doubt that economic and social development requires building infrastructure to facilitate physical mobility, provide water supply, conduct sewage away and process it, provide energy to homes and businesses, accommodate social services and house people in healthy conditions. The model of development of the industrialised and post-industrialised world has involved very large scale infrastructure projects whose construction has made profligate use of the environment as a source of materials and a sink for waste involving the construction of immense dams for water supply and energy generation, centralised sewage treatment plants and massive power stations fuelled by coal, gas and nuclear energy, plus road and rail projects contributing to high speed transport corridors, and even giant tower blocks for housing and social services.
A feature of this approach is what might be called ‘concentration-distribution’ or the ‘big project’ model. These are megaprojects that concentrate resources on a particular part of the system, backed up by widespread networks to disperse the value generated by the megaproject. For instance, a motorway or high speed railway concentrates resources to provide high speed mobility along a particular route, but their effect on overall mobility depends on the capacity of the whole network of local roads and railways, footpaths and cycle-ways to carry people to their desired destinations. A dam for water storage requires a reticulated water supply system, a sewage treatment plant and a sewerage network. A power station requires an energy grid to deliver electricity to homes and businesses. Educational, health and even housing megaprojects concentrate people in particular places for specific purposes: creating origins and destinations of travel.
Building industries and the employment they generate (at least in the short run) thrive on infrastructure megaprojects. But there are also social and environmental costs associated with their provision. Every megaproject in construction produces a certain quantum of greenhouse gases emitted to the atmosphere. These projects often displace other land uses: green open space, social movement networks, agriculture, local ecologies. Megaprojects both in construction and operation generate waste10. The distribution of waste products from megaprojects (both in construction and operation) can also create issues of environmental injustice (see many of the essays in Agyeman, Bullard, & Evans, 2003). Infrastructure megaprojects of all types furthermore can dramatically change local environments (not often for the better), and they are frequently opposed by people living in their shadow.
Socially and environmentally undesirable life-style habits can be ‘sustained’ by long-lived megaprojects. Because of their long life, projects such as these which influence human behaviour patterns negatively can create path dependencies that are ‘locked in’ to patterns that become barriers to sustainable development in the terms discussed above. The concept of path dependence has been explored in depth for transport systems by a number of authors. Curtis and Low (2012, pp. 27–40) identify technical and institutional aspects of path dependence in the context of road and rail infrastructures that amplify mobility thereby have a determining effect on urban and regional development, dispersing origins and destinations, inducing and increasing travel in urban systems, and thus (when most of the world’s transportation is still fossil fuelled11) increasing GHG emissions. Institutional path dependency means that political interests and communities of expertise gather around certain perceived ‘solutions’ which then become seemingly acceptable norms for addressing mobility problems.
Imran (2010) has argued that the path dependent transfer of the Western-style ‘road development model’ to the neglect of local transport alternatives more suited to conditions in Pakistan occurred because of the type of intervention advocated by international institutions in the pursuit of economic, social and environmental development goals. ‘This large gap in awareness is due to a complex range of path dependencies that arise as barriers to the development of a (suitable) sustainable transport system in Pakistan’ (ibid. p. 261).
While it seems likely that the concentration/distribution model of mega infrastructure development of the kind outlined will over time be spread to the poorer nations of the developing world as noted above, there are signs that the model itself may be on course for transformation in the developed world. The idea that essential services provided by megaprojects can only, and therefore should always, be provided on the concentration/distribution principle is beginning to be reassessed.
For example, in the transport sector, the proposition that building motorways relieves traffic congestion without giving proper attention to the distribution network of local roads and paths has been challenged (Metz, 2008). Second, in the static energy sector the mass production of rooftop solar generation, together with advanced batteries, is giving individuals, communities and businesses the choice to leave the electricity grid and its centralised power stations, not for reasons of ideology but of economics. For power station owners and investors this development is a vicious circle: the fewer the consumers, the higher the price of grid-based electricity and the greater the incentive for those consumers who can afford the investment in rooftop solar plus batteries to leave the grid12. It has been demonstrated that even in the heart of an Australian city such as Sydney, a terrace house in an ordinary street can gather or recycle its own water, process its own sewage, and generate its own electricity (Mobbs, 1998).
This raises the question of which is more environmentally sustainable: a large-scale cooperative response to infrastructure under the concentration/distribution model or a distributive model of infrastructure. The concentration/distribution model, with its associated infrastructure megaprojects will undoubtedly continue to serve the needs of populations for transport, energy, water and urban services worldwide for the foreseeable future. But it is as well to remember that it is not the only, nor necessarily the most appropriate or the most sustainable model for all contexts. Moreover, the sustainability of megaprojects in the terms discussed above must now be part of any evaluation of such projects.
Sustainability and the problematics of measurement
If the concept of sustainability is to be brought to bear on planning, deciding on and choosing infrastructure megaprojects, it would seem that some measurable criteria need to be applied. However, such a proposition is beset with pitfalls, and it is as well to recall the dictum attributed to many writers including Albert Einstein: ‘Not everything that counts can be counted, and not everything that can be counted counts’. Sustainability counts! But can it be counted, measured?
There are those who have proposed different methods of measurement (see Bell & Morse, 2003; Shen, Wu, & Zhang, 2011). But the concept of sustainability itself is contested and its aspects intertwined and even potentially conflicting in terms of economic, social and environmental dimensions. It is entirely possible that a megaproject can enhance material prosperity and economic growth while simultaneously doing serious damage to the global ecology. Such a project may also enhance social cohesion and welfare (or not).
Though the question of measurement will no doubt occupy future columns of this journal, it is too complex to discuss here in any detail. In some sense, it would be like trying to measure ‘democracy’ or ‘justice’. There are nonetheless two points worth stressing. First, unsustainability may be simpler to measure than sustainability. There is at least one specific indicator of unsustainability that is highly relevant, measurable, usable, specific and reasonably available: greenhouse gas emissions13. Fong et al. (2014) among many others have reviewed the means of assessing and reducing carbon emissions from transport in particular. Because climate change is such an all-embracing factor in every dimension of sustainability, it is fair to say that a megaproject that adds to (rather than diminishes) the flow of greenhouse gases into the atmosphere is unsustainable. Today such a proposition may still be considered debatable by some but, as global warming proceeds unchecked, for how much longer?
The act of measurement is often interpreted to mean breaking ‘sustainability’ down into its various components. Thus, Shen et al. (2011, p. 449) break the concept up into nine ‘economical’ aspects, five ‘social’ aspects and seven ‘environmental’ aspects. Each aspect is then scored for a particular project and the totals summed to give an overall measure of what the authors call ‘sustainability’.
We contend that these indicators measure environmental, social and economic impacts but not sustainability at all. There is a major difference. Impacts can usefully be measured separately. However, aggregating the separate impacts (even with weightings) does not measure sustainability within the historical meaning of the concept. Sustainability, as we have shown above, is a holistic concept which addresses the impact of economic growth (among other aspects) on the Earth’s critical natural systems. To reiterate Daly’s point: the goal of sustainability is to maintain a scale of the economy that is within the carrying capacity of the Earth’s ecosystem. This definition suggests there is a definitive point at which things become not sustainable, something which indicators designed to rank relative sustainability are not capable of measuring. There is, therefore, as Thiele (2013) argues, an urgent need to consider further the relationship between sustainability and the indicators chosen for it and to discover new ways to consider these matters as a whole. Unfortunately, as Bell and Morse (2003, p. 57) warn, ‘Projects geared to generating SD [sustainable development] indicators tend to become myopically focussed on technical issues (what indicators, how many, how to aggregate them etc.) rather than really consider usage to bring about change’.
Finally, an important addition to the problem of measurement is the fact that, for the most part, what is measured is risk. As Dimitriou, Oades, Ward, and Wright (2008) argue, risk, uncertainty and complexity are characteristic of all megaprojects and related decision-making.
Becker (2014, p. 135) describes analysing risk as ‘the practice of structuring risk scenarios and comparing them with the preferred scenario, making a risk analysis in answer to three questions: What can happen? How likely is it to happen? And, if it does happen what are the consequences?’ But, as he recognises, risk is attended by uncertainty. Following Wiek, Withycombe, and Redman (2011), Becker (2014, p. 136) suggests ‘sustainable development requires us to:
analyse the current situation;
define our preferred expected scenario;
analyse potential deviations from our preferred expected scenario [risk scenarios]; and
design and implement sets of activities that maintain our development trajectory along the preferred expected scenario’.
In this sense, the sustainability of megaprojects is about their contribution to scenarios of human behaviour.
Kahnemann (2011, pp. 140–141) offers the insight that risk assessment should be something like a dialogue between experts and the public. Citing Slovic (2000), he says, ‘When experts and the public disagree on their priorities, he [Slovic] says, “Each side must respect the insights and intelligence of the other”’. Again citing Slovic, Kahnemann (2011, p. 141) states that ‘”Risk” does not exist “out there”, independent of our minds and culture, waiting to be measured. Human beings have invented the concept of “risk” to help them understand and cope with the dangers and uncertainties of life. Although these dangers are real, there is no such thing as “real risk” or “objective risk”’.
Thus research into infrastructure megaprojects and sustainable development has a number of things to consider when dealing with issues of what is being sustained in the megaprojects we build, and how constructing and operating the megaproject will contribute to sustainability. Analyses of which options reduce the risk of unsustainability, and in what respect, are critical in evaluating megaprojects.
Some principles for evaluating the sustainability of megaprojects
With the above considerations in mind, is it even feasible to measure the sustainability of megaprojects? This must remain an open question and one that should be debated. While, as noted above, it is beyond the scope of this article to engage with the technology of measurement (i.e., indicators, weightings, risk assessments etc.), we can think through some principles that might be used to guide such technology. These include the following:
Recognising the lexical order: It is necessary for infrastructure developments (of all scales) to respect the lexical order inherent in the concept of sustainability. Put simply, human systems are ultimately dependent on natural systems. What we call ‘human society’ is a system for exploiting nature and distributing the product for human use (the economy) and for sustaining human relationships at every scale (global, national, local, society/community). So as a first priority, global human society must prevent nature from being exploited beyond its capacity to sustain human life, and some argue the biodiversity of all life in the long term. Dobson’s second and third concepts (above) are helpful in applying ‘sustainability evaluation’ to infrastructure. Global human society is represented by international environmental agreements under the auspice of the UN such as the Paris Agreement on Climate Change or the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES) and the UN Sustainable Development Goals (SDGs). So investments in a mega infrastructure project must answer to how the project advances the goals of these accords. For example, an energy megaproject such as a power station or wind farm or solar array must show how it advances the goal of ‘affordable and clean energy’. In a rich country like Australia, in order to comply with UN SDG 7, the investment must demonstrate: ‘the increased use of renewable energy through new economic and job opportunities crucial to creating more sustainable and inclusive communities and resilience to environmental issues like climate change’ (UN SDG 7). A positive instance of such an investment is the AU$1.5 billion wind farm in rural Victoria (Australia) which has now been approved, but reduced in scale by about twenty percent in order to protect the nesting grounds of the Brolga, an endangered species of native bird (Hall & Carey, 2019, p. 4).
Reducing human inequality: This recognises that human society is severely stratified economically between nations (Edward & Sumner, 2013; Woodward, 2015) and within nations (Piketty, 2014). The UN SDGs give prominence to reducing global inequality, especially Goal 1, No Poverty, and Goal 2, Zero Hunger. The SDGs do not embody the above lexical order; if anything they reverse it, with SDGs 1 and 2 as, seemingly, the first priority. This is justifiable in that it recognises that, for poor nations, providing food, sanitation and safe water supply must take precedence over global environmental conservation. However, SDG 12, Responsible Consumption and Production (which specifically refers to infrastructure), seems to fudge the priority and fail to recognise the potential conflict between ecological sustainability and ‘providing a better life for all’ or ‘strengthening economic competitiveness’. Consider the damaging ecological impact of palm oil plantations in the poorest countries that mainly serve the consumption of the populations of rich countries. If infrastructure (e.g., roads and water supply) serves the palm oil industry we do not consider that investment ‘sustainable’ even if, in a global market it improves the competitive position of the producer nation. An even more egregious example would be forging such major infrastructure through the Amazon rainforest for agricultural or mining purposes, as seems now to be on the political agenda in Brazil.
Including the technological system containing the project: The concept of sustainability embodies ‘systems’ thinking: that is awareness of the system-wide effects of specific actions. From the environmental perspective, ‘system-wide’ means natural ecological systems (such as the climate system). Such thinking, however, should also be applied to technological systems, for instance the impact of a particular infrastructure project on the technological system it becomes part of. The wind farm example earlier mentioned above must be seen as part of an energy generation and supply system, one that includes aging coal-fired power stations, a variety of new ‘clean energy’ technologies and a myriad of individual investments in production and use of rooftop solar generators. It is the total impact of the technological system that is significant for natural ecological systems. Indeed, it is ultimately the total global economy which must fit within the ecological constraints of the planet.
A negative example comes from the same government that promoted renewable energy in the wind farm mentioned above. The Government of Victoria has approved a twelve lane motorway and tunnel from the growing Western suburbs of Melbourne to places of growing employment in and around the central business district. There is evidence from an earlier report (see Eddington, 2008) that the travel demand exists (Eddington, 2008). The motorway was pitched to the Government by a private toll-way company which, given the cost of the construction is to be shared with the Government, certainly believes the project to be profitable. There have been substantial criticisms of the project from political, economic and environmental viewpoints which we will not address here. Our point is that the decision to approve the project was made without evaluating its effects on the whole transport system for metropolitan Melbourne, and without the project and similar toll-way projects being part of analysis and planning for that system to respond effectively to future travel demands as the city grows in population14. Moreover, while the climate impact of energy systems has been vigorously debated in Australia in recent years, there has been little debate about the climate impact of transport systems even though each transport project is (individually) subject to environmental impact assessment – which, as we argued above, is not the same as sustainability assessment.
In short, what the above three sets of principles suggest is that if an infrastructure megaproject is to respond to the requirement of sustainability it must be able to show how it addresses the lexical order prioritising critical natural systems, how it reduces human social and economic inequality and how it is embedded within its technological system which in turn impinges on both the above.
How the politics of sustainability is affecting mega infrastructure development
Finally, a brief discussion is needed of the rapidly shifting context of infrastructure development (particularly as regards megaprojects) in which changing technologies are in certain ways interacting with political positioning. The awareness of the danger of climate change is already driving a sustainability transition15. Energy systems are rapidly being revolutionised with the use of rooftop solar, solar energy farms and wind power as well as other renewable energy sources coupled to storage batteries – from individual households to entire urban regions16. Vast centralised fossil-fuelled power stations with nationwide distribution grids are beginning to look vulnerable and perhaps obsolescent.
Several European countries are planning to phase out the use of the internal combustion engine entirely for transport, with the result that electrical recharging points will come to replace petrol stations. New companies and new production methods are developing to meet new demands. Regulatory vehicle and fuel taxation policies will have to catch up. As efforts to combat climate change continue to reshape industries, effects will begin to be seen in national economies, particularly for those countries dependent on export of fossil fuels.
There is a struggle within the business sector between those business elites and corporations that accept the climate change science, fear global warming and see opportunities for growth in low carbon technologies, and those corporations wedded to old carbon-based technologies. A report by the Melbourne Sustainable Society Institute (Wiseman, Edwards, & Luckins, 2013) cites Pricewaterhouse Coopers (2012): ‘The only way to avoid the pessimistic scenarios will be radical transformation in the way the global economy currently functions: rapid uptake of renewable energy, sharp falls in fossil fuel use or massive deployment of Carbon Capture and Storage, removal of industrial emissions and halting deforestation. This suggests a need for much more ambition and urgency on climate policy, at both the national and international levels. Either way, business-as-usual is not an option’.
Mega infrastructure developments are, of course, contested in the political arenas of regions and nations throughout the world. While there is not space here to discuss these in any great length, it is clear from the preceding discussion that the varying models of sustainability earlier discussed will continue to be deployed in political defence of interests both venal and ethical, at the political grassroots and in the upper echelons of government. The questions of infrastructure megaprojects are especially subject to the governance models in play in particular locations. Such models integrate private and public sector actors, local and regional governments in a wide variety of different ways (see Butterfield & Low, 2017).
While national political economies may vary greatly in providing the context for struggles over sustainability, there is a global dimension in which these national economies are connected to a web of political economic institutions framed by the forces of ‘globalisation’ and the ‘global economy’ (Stiglitz, 2002). Since the global financial crisis of 2008, the sustainability of the global economy itself is being questioned. The focus here is both social and environmental. What is occurring in particular national and local contexts cannot be entirely separated from what is happening in the global political economy. In this regard, both global and local economic developments have significant impacts upon megaprojects and their impacts on – as Steffen et al. (2018, p. 1) put it – the sustainability of ‘biosphere, climate and society’.
In drawing this paper to a close, we need to ask whether we are today building the physical infrastructure, especially mega infrastructure projects, for a fair, prosperous and sustainable society: one which does not deplete natural resources faster than they are regenerated; one which does not destroy its own social foundations; one which delivers widespread economic benefits to both current and future generations? Or are we continuing to build the infrastructure for a society of the past whose institutions and practices are unsustainable?
These questions demand answers. They in turn imply/pose a range of important subsidiary questions:
What is the kind of infrastructure, especially mega infrastructure, required for a sustainable society?
How do we ensure that it is built?
What is stopping us building it?
How do we build it in the most economically efficient and socially fair manner?
How do we know that what we are building is the infrastructure we need for a sustainable future, and furthermore, how do we know it is sustainable?
The first part of this paper examined the origin of the concept of sustainable development and, explored the normative dimension of sustainability. It concluded that a sustainable society would be one in which the use of the natural world for economic and social purposes would be contained within the limits of natural sources and sinks. An examination of the application of this perspective to mega infrastructure in the latter part of the paper raises the question of what kind of infrastructure best contributes to sustainability, noting that the ‘big project’ model of infrastructure is not the only model and possibly not the most sustainable.
1 The ‘developing world’ is shorthand for the poorer nations of the world seeking to catch up economically with the older post-industrialised nations. There are other epithets, (such as the ‘Global South’) none of them more accurate.
4 Hart, at the time was Director of the Corporate Environmental Management Program at the University of Michigan. (Page reference not cited by Elkington).
5 Daly goes on to argue that the present profile of global economic growth must end, and that sustainable development requires a steady state economy with potential implications for the infrastructure industry. We are not in a position to take the argument that far, yet. But we hope that others will take the opportunity to examine Daly’s ideas critically and in greater depth than is possible in the present paper.
6 Sloan, J. (2018) ‘If disaster is nigh, at least we’ll be spared this amateur-hour claptrap’, The Australian, 09/10/2018: 4. The newspaper, part of the Murdoch stable, is Australia’s only national daily. When discussion of global warming is reduced by their opponents to childish language, we might conclude that ‘environmental economists’ have won the debate.
8 As in an infinite cornucopia or ‘horn of plenty’.
9 Thus, as referred to above, Steffen et al. (2018, p. 1) state, ‘Collective human action is required to steer the Earth System away from a potential threshold and stabilize it in a habitable interglacial-like state. Such action entails stewardship of the entire Earth System – biosphere, climate and societies’.
10 In this respect, nuclear energy is sometimes regarded as non-polluting (in terms of CO2). But the problem of safe, long term storage of radioactive waste from nuclear power plants has not been solved (Risoluti, 2004; Blowers, 2016).
12 Note, however, that the environmental costs of photovoltaic solar plus battery production may remain a serious problem.
13 The list, though incomplete, is taken from Bell and Morse (2003, p. 31).
14 Note that we are not arguing that the project is unsustainable, but that without the wider technological context we cannot know whether it is or not.
15 The overuse of carbon sinks (in land, sea and atmosphere) is of course not the only depletion of a natural resource by an unsustainable economy as Steffen et al. (2005) point out.
16 Hydrogen is being re-examined in Australian climate conditions as a means of storage of energy generated from renewable sources, this time not in use in vehicles but in huge farms linked to solar power for electrolysis, and a substitute for large scale batteries.
Construction is the well-known process for men of building houses with some unskilled labours. Thank you for reading the misconcepted sentence. Yes, It’s often seen with an eye of simplicity and frivolous job, which isn’t. We are in much of society’s mindset that a myth is more nurtured than a fact.
Call me old fashioned, but I believe there’s something to be said for doing good, honest work. Construction is sort of the unsung hero of our culture; vital to our infrastructure. Skilled tradesmen build the places we work in, the homes we live and play in, the roads we commute on, and more. Economy’s strength is tightly linked to the construction industry keeping country to move forward. A construction site is moreover different from a person sitting in front of laptop obeying a 9 to 5 cubicle job; it’s an area of daily new challenges to pass on to the next level. It requires a diversity of skills employing everyone deserving to choose as a career.
This is a technical journey of any structure or thoughts right from the foundation to finishing and external works. In building construction, we study how the civil works are carried out in the field after they have been planned by an architect and structurally designed by an engineer. A toddler whenever points his finger towards the swinging tower crane enjoying like the dance of a robot, it’s the duty of the project team to work successfully building block by block over heights.
As we are talking about the heights, so let me take you to the most heighted man-made structure! No required nominees, it’s Burj Khalifa, Dubai (or you can even argue with one of the most famous buildings because 830 metres is really a good number).
Heard about World One? A structure finding it’s place to be the tallest residential skyscraper, yet under construction of Lodha group, Mumbai.
I’ve my stomach full with all these heights as you will mostly get in my next blog; until then let’s see some amazing constructions. The great man-made river project in Libya has listed as the biggest irrigation project in the world. Underneath of the Sahara Desert, it consists of 2800 pipes carrying 6.5 million cubic metres of freshwater every day.
The most beautiful building in Jakarta, Regatta Hotel complex was designed by Atelier Enam. The project’s centrepiece is the aerodynamic hotel itself that overlooks the Java sea. Now wondered that struggle to be in top 10 beautiful buildings!
But, who knew that continuous endless building of structures would permit to cease for a no while. Because of the nature of his projects, all industries and companies are surged down to a force majeure. The workers are avoiding the work at construction sites due to fear of coronavirus infection. Threatening situations are discovered due to this pandemic endangering future of the construction world.
People are particularly trying to reach out finding alternatives as I mentioned in my previous blog (A virus outside the computer). Also, many cities have adopted a definition of essential construction that allows any work necessary to build, operate, maintain or manufacture essential infrastructure without limitation construction or the constructions required in response to this public health emergency, hospital constructions, etc.
According to the industry body, there are around 20,000 ongoing projects across the country and construction work is being undertaken in around 18,000 of them i.e. involvement of workforce of about 8.5 million in construction work alone! These numbers are breath-taking when health concerns. The scenario implies that the construction work will be slow, pushing costs upward given the interest and debt servicing needed for that extra period. Definitely it will have its own consequences but would be better far than doing nothing. Hoping the same as everyone to defeat this monster, hiding myself from the fact that I’m bored writing about it ; )
In the face of new global energy changes, going through these traumatic times, and after 60 years, what future for OPEC, can we expect of this organisation.
OPEC was established on September 14, 1960 and celebrated its 60th anniversary with a declining share in both energy decision-making and global marketing. With the coronavirus outbreak despite a substantial drop in production, prices are struggling to recover to 2019 levels. With a crisis like no other, since the 1928/1929 crisis, at a time when the interdependence of economies was low, no expert, able only to develop scenarios, can predict whether consumer and investment activities will be able to rebound, depending on the control of the epidemic. However, a high growth rate in 2021 compared to a negative growth rate in 2020 would mean it recovers, and in any case, the level of 2018/2019 will not be reached until 2022. However, the growth of the world economy and the future energy consumption model for 2020/2025/2030 are the fundamental determinants of the price of oil/gas, as the market has experienced ups and downs have not yet reacted favourably to the various OPEC decisions.
OPEC was created on September 14, 1960, at a Baghdad conference mainly on the initiative of the Shah of Iran, the Saudi Abdullah Tariki and the Venezuelan Juan Pablo Pérez, with initially only five member countries: Saudi Arabia, Iran, Iraq, Kuwait and Venezuela. Other producers joined such as in Africa, Algeria joining in 1969 was the first country to nationalise its hydrocarbon production; Angola: member since 2007. One of the largest areas of exploration, mainly conducted as production by the major oil companies of the OECD; Congo: the last member country to join the organisation (in the summer of 2018); Gabon: a member who left the organisation in 1995 and rejoined it back in July 2016; Equatorial Guinea, a country that joined OPEC in May 2017; Libya: member since 1962. Immense potential for untapped exploration due to the conflict in that country; Nigeria: OPEC’s least nationalised oil industry. In South America: Venezuela a country with the world’s largest oil reserves thanks to its oil sands resources but currently experiencing a severe political and economic crisis; Ecuador, which was a member of OPEC between 1973 and 1992 and then again in 2007 In the Middle East: Saudi Arabia as a founding member. The traditional leader of OPEC and the second-largest producer in the world with the largest conventional reserves; the United Arab Emirates, a member since 1967, a significant producer; Iran, founding member, OPEC’s second-largest producer and fourth-largest exporter of crude oil in the world before sanctions; Iraq: a founding member with the world’s largest open-air reserves; Kuwait:a founding member, a unique deposit whose peak production is declining. Qatar, a country that announced that it would leave the organisation in January 2019, officially to focus on its gas production.
Since 1982, OPEC has had a system for regulating production and selling prices using a total amount of production (slightly more than 30 million barrels of crude per day). This volume of production, defined according to member countries’ reserves, is adjusted according to the needs of the consumer countries. The system of production quotas by member country was agreed in 2011 and negotiations have been expanded since the end of 2016 with other non-OPEC producers, Russia, produces as much as Iran, Nigeria, Venezuela, Algeria and Ecuador combined. However, the functioning of this regulatory system is affected by fluctuations in the price of the dollar, the transaction currency of oil: the purchasing power of producing countries decreases when the dollar falls and vice versa.
OPEC manages a quantification instrument: the OPEC basket (ORB) which sets a benchmark price based on the costs of fifteen crude oils type (one per member country). The different qualities type reflect the major crude exports of member countries (e.g., the “Arab Light“ of Saudi Arabia). This basket is competing with the WIT and the Brent, whose prices are usually only a few cents different. Production and price management is extended by periodic assessment of available reserves. For all these countries, oil and gas revenues contribute significantly to their development through taxation. Still, these being very fluctuating over time and depending on the number of inhabitants of a country. For example, according to the EIA (2019), oil revenues in 2018 amounted to $14,683 per capita in Kuwait (nearly 4.2 million inhabitants), compared to only $212/hab for Nigeria (-200 million inhabitants). When the dollar falls against other currencies, OPEC states see their revenues decline for purchases in different currencies, which reduces their purchasing power as they continue to sell their oil in dollars. Local constraints (political instability, wars) or international crisis (embargo, sanctions) also affect the availability of the oil resource and thus its price. Always according to the IEA, in 2018, OPEC states as a whole benefited from a total of about $711 billion in oil revenues compared to $538 billion in 2017, due to higher average crude oil prices and higher exports, where Saudi Arabia benefited of $237 billion in 2018, ahead of Iraq with $91 billion.
OPEC decisions have, for some time, had some influence on the world’s oil price. Beyond the economic context, OPEC’s action on oil price developments is closely linked to the geopolitical environment. The organisation’s influence, however, has diminished since the 1990s, as has its share in world oil production. 55% in 1970, 42.6% in 2017 and about 38/40% in 2019 and indeed an even lesser rate is expected in 2020. One example is the oil crisis of 1973 during the Yom Kippur War: OPEC’s embargo on Western countries that support Israel caused a fourfold increase in the price in five months from October 17, 1973, to March 18, 1974. However, this historical version of the first oil shock is highly questionable.
On the other hand, from 1983, the price of a barrel collapsed, and from then on, would no longer be controlled by OPEC for several years. The London futures markets (ICE) and New York (NYMEX) playing an increasing role in determining prices, took over the pricing process away from OPEC. Recall that on September 28, 2016, OPEC met in Algiers with a historic decision to limit crude oil production to a level of 32.5 to 33 million barrels per day. On November 30, 2016, in Vienna, its output from 1.2 million barrels per day to 32.5 million with an effective agreement as of January 01, 2017, and Russia’s commitment to reduce its production by 300,000 barrels per day. In May 2018, the Vienna meeting, the members signed the integration of another country: Equatorial Guinea, which then officially became the 14the member of OPEC (the sixth African country). It was in a particular context that on April 09 2020, the group of oil-exporting countries, comprised of the 13 of the OPEC and ten-member partner countries, negotiated a new agreement on a joint reduction in production: a 22% reduction in output from the ten non-quota-exempt OPEC countries (i.e. OPEP without Iran, Venezuela and Libya) and their 10 OPEC partners, the final agreement covered 10 million barrels per day less on the market during May and June, with reductions up to 8 Million Barrel per Day (MBD) between July and December 2020, and then to 6 MBD up to January 2021. The effort will be supported mainly by Saudi Arabia and Russia, the second and third largest producers in the world behind the U.S., which would each cut nearly 2.5 Mbj from a reference production smoothed to 11 MBD. The remaining 5 million barrels to be cut would be distributed among the other 18 countries in the agreement, depending on their production level over a typical reference month, which is October 2018. According to experts, discussions focused on this reference period, with each measuring its actual production capacity, having to decide whether or not to take into account condensates (hydrocarbons associated with natural gas deposits) in the reference period can also play on final quotas. The organisation hopes that the United States, the world’s largest producer, and other countries such as Canada, Norway and Brazil, will reduce their production to a total of 5 MBD. This is only a wish since the United States has indicated that it will not participate in this reduction,(the majority being private companies, U.S. laws prohibiting executive directives in the management of the private sphere) as the U.S. Department of Energy has declared that the country’s production is already declining, because the majority of marginal deposits, which are the most numerous, although costs have fallen by more than 50% in recent years, shale oil is no longer profitable below $40 per barrel
During the 1990s, OPEC’s influence with the importance of Saudi Arabia on oil price resulted in prices declining for three reasons: a) internal divergences and the violation of production quotas by some of its members, b) the failure to extend its zone of influence to new producers (Russia, Mexico, Norway, United Kingdom, Colombia) and c) the impact of the London and New York markets that significantly drive prices.
So sixty years after its founding, OPEC faces also three significant challenges that have persisted since the 1990s.
First, the resolution of new internal conflicts: the rift between pro and anti-American members exacerbates these conflicts. Saudi Arabia, a traditional U.S. ally, is facing Iran and Venezuela, two of the most overtly anti-American countries in the world, challenging its influence on the organisation. Beyond ideological differences, there are therefore two trends between countries for which OPEC must above all be the facilitator of a commodity market and those wishing to make it a more political weapon.
Secondly, the rise of Russia, wherewith more than 11.3 million barrels per day, produces as much as Iran, Nigeria, Venezuela, Algeria and Ecuador combined, having pledged since late 2016, alongside OPEC to cap its production to raise oil prices.
Third, the growing production of unconventional hydrocarbons in the United States, which makes it the world’s largest producer in 2019 with more than 12 million barrels per day, has reduced OPEC’s influence. However, its hydrocarbon reserves are announced as the world’s first. Still, it will all depend on the price vector and costs that may have large reserves but are not economically profitable. New deposits discovered, particularly in Canada or off the coast of Brazil, could disrupt the global distribution of these reserves and thus significantly reduce OPEC’s share. But the critical medium and long-term decline in its influence is the new model of global energy consumption that is emerging.
Years 2020 through 2040 could be impacted by the Coronavirus, as already shown by the reorientation of public investment in Europe. As per B.P.’s recent statement of September 11, 2020, companies should redirect their investments towards other alternative energies with the combination between 2025/2035 of renewable energy and hydrogen, the cost of which will be widely competitive compared to conventional fossils.
By 2030, lower dependence on oil is expected by industrialised countries. In contrast, conversely, OPEC countries remain highly dependent on oil, mainly due to the absence of a sustainable economic model that can replace the oil industry. Oil revenues account on average more than half of their Pia developed a “Vison 2030” to diversify its economy. The combination of these factors weakens the geopolitical influence of the OPEC institution and acts on the price level.
The price of oil in 2020/2021 is as always fundamentally dependent on the growth of the world economy.
For China, which is heavily demanding hydrocarbons and dependent on external markets at half-mast, industrial production is recovering very modestly. Such a decline is unprecedented in China since the country turned to the market economy in the late 1970s. According to the Asia-Pacific report released on April 8, 2020, the world’s second-largest economy could see its GDP growth limited to 2.3% over the whole of 2020, or, as per a darker scenario, be almost nil, at 0.1%. It is not to be compared to its 2019 estimated 6.1% for a population exceeding 1.3 billion requiring a minimum growth rate of 7 to 8%. As far as India is concerned, the demand for hydrocarbons will also be low because its economy is geared towards globalisation. The impact on its growth rate is evident and is still in a declining trend in 2019. After falling to 4.5% from 7.5% in 2018, it is accompanied by an increasing rate in unemployment. In addition to all potential health and social crises, its economy paralysis could lead to the breakdown of the supply chain of many global companies. India, with more than 4 million low-cost employees (Indian I.T. engineers are paid up to 5 times less than their Western counterparts) is the leading player in ICT outsourcing. Almost all of the major international groups delegate part of the management and maintenance of their digital tools to Indian companies. For the Euro area, dependent on more than 70% on hydrocarbons, the PMI (survey of business purchasing managers) saw the most significant drop on record, after reaching 51.6 in February 2020. This index is a figure that if it is below 50, it indicates a contraction, but if above, represents an expansion of activity. For instance, the President of the European Central Bank stated “In the economies of the Euro area, for each week of Lockdown, GDP‘s are shrinking by 2 to 3%. The longer it goes on, the bigger the shrinking of the economy.” Growth in the euro area and the E.U. generally will fall below zero by 2020. This necessitated a $1 trillion bailout from the ECB, plus $500 billion for all ancillary institutions. For the two leading European economies, according to officials, in France, the notices give less 9%. In Germany, the leading economic institutes have forecast that Germany, which plunged by 9.8% in the second quarter of 2020, double the co. Recorded in the first quarter of 2009 following the financial crisis. For the United States of America, the job market is deteriorating at an unprecedented rate, despite the government’s injection of more than $2 trillion. With data contradictions showing the extent of uncertainty, Morgan Stanley sees GDP fall by 30%, Goldman Sachs by 24% and JP Morgan Chase by 12%. The bailout package, which is more than 9% of U.S. GDP, is a mix of non-refundable aid and hospital loans, a massive increase in unemployment insurance for individuals. But this raises the whole problem of the health care system in the United States. According to the Kaiser Family Foundation, which specialises in health issues, the average cost of family insurance in 2018 was $19,600 (about 18,000 euros), 71% funded by the employer. To keep it, a sacked employee will have to support it in full. To avoid a significant increase in the number of uninsured (about 28 million in the United States), a dozen states, mostly Democrats, have relaxed the rules for subsidised insurance underwriting. For the global economy as a whole, and according to several international institutes, including the Institute of International Finance (IIF), Global Financial Sector Association, a note dated April 7, 2020, highlights the global economy is expected to contract by 1.5% in 2020 in the context of the COVID-19 pandemic, lowering its forecast from 2.6% to 0.4%. According to the report, I quote “our global growth forecast is now -1.5%, with a contraction of 3.3% in mature markets and growth of just 1.1%” in emerging markets, adding that there would be “enormous uncertainty” about the economic impact of COVID-19.” Over the full year, the IIF expects growth rates in the United States and the euro area to contract by 2.8% and 4.7% respectively. For its part, the IMF anticipates a “partial recovery” in 2021 provided the pandemic subsides in the second half of this year. That containment measures can be lifted to allow for the reopening of shops, restaurants, a resumption of tourism and consumption. According to the IMF, low-income or emerging countries in Africa, Latin America and Asia “are at high risk” where we have seen capital outflows from emerging economies more than triple that for the equivalent period of the 2008 financial crisis.
What are the prospects for the price of oil?
Global oil consumption in 2019 was around 99.7 million BDD globally, according to IEA data, and OPEC countries accounted for only 40 per cent of global crude oil production. China on a global consumption for the same period imported 11 million barrels or about 11/12% of world consumption. According to energy experts, a drop or rise of a dollar in the price of oil would mean an impact between 500 and 600 million dollars. If you take a median average of 550, the shortfall from this decision is $5.5 billion per day per year. It will therefore be a matter of establishing a currency balance of the net gain of this decision, assuming that, if the price falls to $30 or less, before this reduction, allowing the market price to be between $40/45 per barrel. If the barrel were less than $30/35, this decision would have had a very mixed impact. In September 2020, it seems that the market is reacting timidly after this reduction, knowing that the price increase will depend mainly on the return or not to ‘growth’ in the world economy. The primary determinant of demand, because the reduction of 10 million barrels per day is based on the assumption that global demand market declines by only 10/11% while the coronavirus epidemic has caused a drastic fall in global demand, up to 33% or about 30 million BPDs.
Can net-zero carbon emission targets be met without crashing the economy? wondered Cornelia Meyer in her article.
Can net-zero carbon emission targets be met
July 09, 2021
The campaign for net-zero emissions by 2050 is gaining momentum ahead of COP26 in November
Divestment of assets may burnish image of oil companies, but will not lead to desired decarbonization
BERN, Switzerland: Global warming was on the international agenda long before the UN Framework Conference on Climate Change produced the Kyoto Protocol in 1997, widely seen as a landmark for the environmental movement. But it was the Paris Agreement, signed by 196 parties at COP21 in December 2015, that promised to be the game-changer.
The agreement stipulated that any rise in temperatures by the end of the century must be limited to 1.5 C above pre-industrial levels. Scientists believe that in order to achieve this the world must reach net-zero emissions by 2050, which necessitates a 45-percent carbon-emissions reduction between 2010 and 2030.
According to the World Resources Institute, 59 countries, which between them are responsible for 54 percent of global emissions, have committed to binding net-zero targets. The UAE is reportedly considering its own net-zero goal by 2050, which would make it the first OPEC state to do so.
China, the world’s biggest CO2 emitter, has pushed back its net-zero deadline to 2060, as has its neighbor Kazakhstan. Russia and India, together responsible for 11.5 percent of global CO2 emissions, have yet to make any commitment.
There is, nevertheless, considerable momentum ahead of the COP26 summit in Glasgow this November. The majority of the countries that so far have committed to net-zero targets did so in 2020. The US followed suit in 2021.
Countries and multilateral entities such as the EU have the legislative power to drive change. But if net-zero targets are to be met, civil society plays a significant role.
Greta Thunberg is a case in point. The Swedish activist’s school strikes galvanized young people around the world and influenced the political agenda of many countries. So much so that parties have had to sign up to the green agenda in order to garner votes.
However, it is undeniable that the required changes will permeate every aspect of our lives. Action is needed to eliminate coal-fired power stations; install more renewable energy sources; retrofit buildings; decarbonize cement, plastics, aviation and shipping; expand public transport networks; and shift road traffic to electric vehicles. The list goes on.
All of the above will require huge investment. Indeed, the US intends to plough a good proportion of its post-pandemic infrastructure spending into green finance.
In the GCC, Saudi Arabia is leading the way with the Saudi and Middle East Green initiatives, which aim to reduce carbon emissions by 60 percent with the help of clean hydrocarbon technologies and by planting 50 billion trees, including 10 billion in the Kingdom.
These steps were recently acknowledged by John Kerry, the US climate envoy, who had high praise for Riyadh’s plan to invest $5 billion in the world’s largest green hydrogen plant in NEOM — the smart city under construction on the Red Sea coast.
The EU’s Green Deal will similarly be financed by €600 billion from its Next Generation pandemic-recovery plan and the European Commission’s seven-year budget. The plan is aggressive in setting out how to decarbonize the economy. Given its environmental dimension, the Green Deal’s carbon border adjustment mechanism has the potential to revolutionize tariffs worldwide.
The price of carbon may also rise by 50 percent to €85 per ton by 2030. This is a step in the right direction, but carbon pricing will only be truly effective if it is applied globally. In which case it can become a mechanism for directing actions and allocating investments.
This is the story for rich nations with the funds and technology needed to implement rapid change. But what about the developing world, which faces significant climate threats but has limited means to adapt?
The Kyoto Protocol, the Paris Agreement and the UN’s Green Initiative obliged wealthy nations to fund climate-adaptation costs in developing countries. The Paris Agreements’ Green Climate Fund, in particular, was groundbreaking in this respect.
However, Antonio Guterres, the UN secretary-general, has had to call on rich nations to meet their $100 billion-a-year pledge to fund mitigation and adaptation measures in developing nations. According to The New York Times, only a third of this sum has actually been met.
* Net-zero will be achieved when all global greenhouse gases released by humans are counterbalanced by their removal from the atmosphere.
Then there are the private sources of funding behind net-zero initiatives, which are particularly important because finance is a cornerstone of the Paris Agreement, binding as it does global providers of capital into the agenda.
Environmental, social and governance (ESG) principles — the non-financial factors that investors look at when identifying risk and growth opportunities — constitute the fastest-growing asset class in the world. Deloitte expects some 50 percent, or $34.5 trillion, of all professionally managed money in the US will flow into ESG-compatible investments by 2025.
On July 7, Aviva Investors and Fidelity International, alongside another 113 investors overseeing assets worth $4.2 trillion, urged 63 of the world’s global banks to up their game on climate change, including the publication of short-term climate targets compliant with the International Energy Agency (IEA)’s net-zero scenario before annual shareholder meetings.
While this is an encouraging sign, there remain several questions about standards and so-called greenwashing. So far there are no universally agreed ESG standards, although several institutions, including the World Economic Forum (WEF), are working to create their own benchmarks.
The drive towards ESG investments channels funds towards green companies and has diminished the investor base for oil, gas and coal.
Most big companies have subscribed to net-zero 2050 targets and many European oil majors have defined themselves for some time now as ‘energy firms’ rather than oil giants, with aggressive plans to shift their activities toward renewables.
While these developments will lead to higher greener-energy production, they can also be misleading. Oil majors increasingly divest assets, which other entities, particularly in the private equity space or national oil companies, snap up on the cheap.
Shuffling the deckchairs might help improve the image of publicly listed oil companies, but it will not necessarily move more carbon out of the system.
The purists, meanwhile, want to defund hydrocarbons altogether. In May, the IEA issued a report, titled “Net Zero by 2050,” which recommended no new investments in upstream oil and gas assets after 2021.
It says clean-energy investment needs to triple to $4 trillion by 2030. Although well-intentioned, the proposal is much more feasible for developed countries, which can afford measures like the electrification of road traffic. But in developing countries, where almost 800 million people have no access to electricity, gas is still needed as an affordable transition fuel.
The IEA report also said the new green economy could create 30 million jobs. It was unrealistic, however, when it calculated job losses of 5 million. In some of the world’s developing countries, many more than this number work in the coal sector alone.
Also, many Western governments underestimate the role that carbon capture, use and storage (CCUS) will play in decarbonization of the economy. The concept of the circular carbon economy, which will reduce reuse, recycle and remove carbon, and which was endorsed by the G20, could be better appreciated by decision-makers.
Furthermore, nobody has yet compiled a full environmental and economic analysis of the life cycle of various sources of energy. A failure to understand their impact could lead to policy failures and the misallocation of funds.
In all of the above, clear and predictable regulatory frameworks are essential if initiatives are to win the backing of investors. In other words, expect the journey to net-zero to be bumpy, occasionally acrimonious, and not as straightforward as many would like.
* Cornelia Meyer is a Ph.D.-level economist with 30 years of experience in investment banking and industry. She is chairperson and CEO of business consultancy Meyer Resources. Twitter: @MeyerResources
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