China International Contractors Association Chairman writes for Infrastructure Global about how sustainable infrastructure has now become the common language.
The COVID-19 pandemic, increased prevalence of global natural disasters and climate change have intensified their impact on human kind and this has in turn strengthened global green cooperation.
Many countries, including China, are members of the Paris Agreement and have made commitments to net-zero and defined carbon reduction targets. In this background, especially in the context of the United Nations Framework Convention on Climate Change (COP26) and the 2030 Agenda for Sustainable Development, the infrastructure industry, as one of the most essential parts of economic and social life, is duty-bound to tackle climate change, promote green development, and achieve sustainability.
Sustainability has been a hot theme in the past decade, even before the recent global change, in most cases advocated by multilateral development banks (MDBs) and NGOs. Whereas recently, awareness and attention of climate and disaster finance for climate change mitigation and adaptation and disaster risk reduction is rising.
“The unevenness between countries, regions and sectors still exists. The basis of the world economic adjustment recovery is still fragile” Fang Qiuchen
Sustainable infrastructure has now become the common language and shared goal that brings together policymakers, private business, financial sectors, MDBs, international organisations, civil society organisations, and all other relevant stakeholders. Meanwhile, new infrastructure construction represented by digital and intelligent technology has provided new momentum for economic recovery and development against the pandemic.
Sustainability in various aspects
Besides infrastructure itself, poverty responsiveness, customer focus and people-contentedness, shared incentives, inclusiveness and resilience, sound financial mechanism, risk management, supply chain management, and especially environment and resource protection, are crucial to enhance inclusive and sustainable development in all countries.
Environmental, social and economic impact is of concern at every phase, from planning, engineering, construction, till delivery and operation, short-term to longer-term. New energy and clean energy infrastructure, such as wind power and photovoltaic power projects are also gaining more popularity.
“Innovation in each aspect will unleash its respective advantage for common benefit and chieve tangible outcomes” Fang qiuchen
In Ghana, the Bui Hydropower Station not only significantly cut local carbon emissions and boosted local employment, but also grew Ghana from a power importer to exporter. In Kenya, completion of the railroad from Mombasa to Nairobi tremendously enhanced connectivity by shortening travel time from over ten hours to less than five. In Morocco, the Noor II 200MW IPP Concentrating Solar Power plant provided one million local households with clean power, cut 300,000 tons of carbon emission and introduced advanced management and technologies to local industries.
Joint action by all stakeholders
Strong commitment from all stakeholders is the guarantee. Sustainability is never about any one party’s own responsibility. New and innovative policy and regulatory options is necessary to enhance domestic and external resources for sustainable infrastructure financing. It requires significant efforts to reform in technology, tools, materials and equipment throughout the process. Innovation in each aspect will unleash its respective advantage for common benefit and achieve tangible outcomes. And the infrastructure sector shall fully seize the development opportunities of digitisation, networking and intelligence, and actively explore new growth momentum and development paths by using high and new technologies such as big data, internet of things and artificial intelligence.
At the 12th International Infrastructure Investment and Construction Forum (IIICF), the annual infrastructure gala held by CHINCA in Macao China, Mr. Wang Haihuai, General Manager of China Communications Construction Group Ltd. shared their experience of building corporate carbon assets management platform and management system, conducting research on innovating carbon reduction models and solving technical bottlenecks in the whole life cycle of infrastructure construction projects.
“Financing such targets would need unprecedented coordination and cooperation between the public and private sectors.” fang qiuchen
Green financing to leverage
Although interest in conventional and innovative options is growing among public and private sectors, the investment needed continues to remain underfunded. Given considerable financing gaps in developing and under-developed countries, we need to mobilise additional financial resources in support of the pursuit for sustainable infrastructure.
Financing such targets would need unprecedented coordination and cooperation between the public and private sectors. Countries can undertake innovative approaches through strengthening and diversifying financial flows that may be mobilised, by increasing domestic resources, partnering with the private sector through Public-Private-Partnership (PPP), and enhancing international development cooperation.
This clearly suggests that in addition to national efforts, there is a need to strengthen regional, bilateral or multi-lateral cooperation to facilitate the achievement of the sustainable development goal through adequate financial resource mobilisation. Efforts for international development cooperation through official development assistance (ODA) and south-south cooperation can also scale up for green financing, through various sources such as taxation and fiscal budget, commercial banking, capital markets, non-bank financial schemes, climate finance.
“Increasing the collaboration at both global and local levels, also requires us to address the barriers that constrain channelling finance towards sustainable development” Fang Qiuchen
Mr. Lin Jingzhen, executive vice president of Bank of China pointed out that ¨It can be predicted that infrastructure projects in line with the concept of green, low-carbon, sustainable development will be more popular in the financing side.¨ While, Ms. Guo Lei, the vice president of global finance from China Development Bank (CDB) proposed that they were willing to gather all forces to build reliable investment and financing models, and provide financial supports in new infrastructure fields such as telecommunication, new energy, and rail transit construction. Sir Danny Alexander, vice president & corporate secretary of the Asian Infrastructure Investment Bank (AIIB) also called for joint efforts with CHINCA in enhancing industrial collaboration and establishing financing partnership for green infrastructure and green transition.
FIDIC and CHINCA Play Vital Roles
Increasing the collaboration at both global and local levels, also requires us to address the barriers that constrain channelling finance towards sustainable development and leveraging opportunities to increase investment in sustainable infrastructure at scale. The FIDIC Global Leadership Forum (GLF) is an important exchange platform to promote cooperation between the infrastructure and engineering business communities, to enhance sharing knowledge and best practices among the participants to facilitate.
To enhance sharing knowledge and best practices among participants, CHINCA has been committed to promoting sustainable development of the industry over the past decade. Joining hands with MDBs and other international organisations, CHINCA, by setting industry standards, compiling guidelines and handbooks for member companies, organising seminars and workshops on sustainability-related topics each year, and collecting best practices and pilot programs of sustainability, has been enhancing disclosure of sustainability-related information and fostering international exchanges.
“Against the global economic backdrop, we all are facing increasing need for infrastructure investment and growing challenges and risks” Fang qiuchen
In addition, CHINCA is also an active player in the signing of international sustainable development agreements such as the Green Investment Principle(GIP), making it the only industry association among the signees. These activities have, over the years, introduced integrity compliance policy, environmental and social safeguards to CHINCA membership companies and levelled up sustainable development capacity of the enterprises.
Move to be moved
Against the global economic backdrop, we all are facing increasing need for infrastructure investment and growing challenges and risks. The unevenness between countries, regions and sectors still exists. The basis of the world economic adjustment recovery is still fragile, with commodity prices in the international market rising sharply, and the risk of stagflation in major economies remaining high. Joint efforts by all is the path to fight against uncertainties for a more sustainable future and high-quality development.
The 13th IIICF to be held on May 26-27, 2022 in Macao has a theme of “Jointly build high-standard, sustainable and people-centred infrastructure”, to address cutting-edge topics in global infrastructure industry, and pool global wisdom to bolster regional inter-connectivity, improve diversified investment and financing mechanisms, synergise initiatives throughout industry chains, lead green, sustainable and digital development in infrastructure, and strengthen international cooperation in infrastructure.
