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At the Global Infrastructure Leadership Forum, Geoffrey Spence, who heads up Infrastructure UK, the Treasury body that oversees the UK’s infrastructure plan, gave an overview of the National Infrastructure Plan of the UK. The fact that Geofffrey Spence was a personal economic adviser to Chancellor Alistair Darling during the last banking crisis, gives some indication of how seiously the UK Government is treating infrastructure.
In 2011 the Government released its National Infrastructure Plan, which outlines a plan to invest about £250 billion in the next five yrs and £ 400 billion in the 10 yrs on infrastructure including high speed rail, energy (especially nuclear and wind), aviation, water and wastewater, roads and highways, and high speed broadband. This is a considerably higher spend than in the past and signals a change in focus from social infrastructure such as hospitals and government facilities to economic infrastructure. Perhaps the most revolutionary aspect of this plan is the intention that 70% of the funding will come from the private sector.
The Institution of Civil Engineers (ICE) has said that it supports the vision as expressed in the Plan and that it believes that it would enable the UK to compete in the global economy. It specifically recommended that HM Government assign a senior minister with responsibility for monitoring performance against Plan, create a simple set of performance measures for infrastructure that are independently assessed, and develop a two year pipeline of infrastructure projects to help the private sector to improve efficiency. The ICE also suggested ways to asist the Government to attract private investment.
Geoffrey Spense said that the Government wants full transparency for the infrastructure effort, so that business will know where they should focus its efforts over the next ten years. It intends to maintain an open pipeline of projects for the next several years so that, for example, companies specializing in tunneling will be able to see for all tunneling projects in one place, whether they are for rail, sewers, or nuclear power plants. He said that there is a multi-ministry subcommittee that meets regularly to identify where blockages are occurring between ministries and to work colaboratively to streamline infrastructure projects where multiple ministries are involved.
The critical challenge in realizing the Plan is reducing the financial burden on government. The UK Government recognizes that traditional funding mechanisms such as bonds, traditional public-private partnerships (PPP), and long term loans from banks are not longer viable. As a first step the Government is planning to reform PPP policy, and has just completed a public consultation on this.
The second problem is that banks are charging unprecedented rates, 3-4% over Treasury rates, and it is hard to find long term loans longer than seven years. The Government is looking at how best attract the banks and at ways of encouraging banks to take on some of the risk in the early stages of projects. The Government is also looking at different models for low cost, long term financing. For example, in Canada pension funds have been a source of long term infrastructure funding. Another option is off-shore investors such as China.
At the Global Infrastructure Leadership Forum, Rosemary Feenan of Jones Lang Lasalle made the point that most of the world's private investment in commercial real estate projects goes to a relatively small number of cities. Her list for 2010/2011 of the top 30 cities for direct commercial real estate investment for 2010-2011 and the total amount invested in billions is interesting.
London $43 billion
New York $27
Hong Kong $18
Washington DC $13
Las Angeles $10
San Francisco $8
Rio de Janeiro $5
San Diego $5
Sao Paulo $4
It is interesting that the top 10 includes Singapore and Toronto, both relatively small from a population perspective. According to a recent report, Toronto leads other cities in North America by a considerable margin in number of tall buildings under construction, most of which are residential.
At the Global Infrastructure Leadership Forum, a very interesting presentation was given by two consultants from McKinsey on the major trends in global infrastructure development and some suggestions of ways to address some of the challenges they have identified.
First of all they are anticipating a massive spend on infrastructure, something on the order of $7 trillion annually. The infrastructure spend in the developing countries market is just as large as in the developed countries market. But infrastructure spending growth is significantly higher in the developing countries market. In many countries there is a shortage of infrastructure funding from governments, which sets the stage for greater private investment. Complex regulations and politics together are slowing infrastructure development. For example, in the US it can take 12-20 years to build a new transmission line. There are significant impediments preventing private capital from playing a greater role in funding infrastructure. For example, several speakers expressed doubts about the future of private-public partnerships (PPP), suggesting that a new paradigm for private investment is required. McKinsey singled out poor construction productivity as an important factor in eroding returns on infrastructure and making infrastructure less attractive for private investment.
McKinsey says that construction productivity has stagnated or declined in many countries and gave historical construction productivity data for the European Union, Korea, Japan, and the U.S.
McKinsey suggested that governments and infrastructure investors could reduce risks and increase returns by focussing on three areas,
Improving priductivity of existing and new assets
For example, by tuning the regulatory and market structure to improve efficiency and expand capacity.
Making the economic model more attractive to investors
By being smarter about matching capacity expansions to demand and finding additional sources of revenue.
Reducing cost and risk by improving project delivery
By allowing more competition, pushing more risk on to contractors, and encouraging engineering, procurement and construction (EPC) companies to increase their build capabilities.
Several speakers reiterated that one of the major problem in the infrastructure sector is the lack of data for comparing efficiency of construction and operation across projects.
McKinsey suggested that more private sector involvement in infrastructure projects could result in an estimated 30% improvement in construction productivity over 5-10 years, resulting from the combination of 5-15% reduction in the cost of design and planning, 5-10% in engineeering, 5-10% in materials purchase and sub-contracting, 3-5% in construction, and 3-5% from organizational enablers. They estimate that this would translate into a 20% reduction in overall infrastructure spend.
The Open Geospatial Consortium (OGC) is inviting interested parties to a Smart Grid Location Standards Meeting to be held on March 20 from 8:00-10:00 a.m. at the OGC Technical Committee Meeting in Austin, Texas, USA. This meeting is sponsored/hosted by the OGC, in cooperation with the University of Texas at Austin. The OASIS eMIX (Energy Market Information Exchange) standard uses the OGC Geography Markup Languate (GML) Encoding Standard. The International Electrotechnical Commission (IEC) CIM (Common Information Model) standard is "harmonized" with WXXM (Weather Information Exchange Model), which is an industry profile based on GML. More standards coordination and development, however, is required to enable efficient geospatial communication within smart grids and between smart grids and "neighboring" activities such as emergency response, disaster management, urban planning and building energy management. Many of the OGC's domains of activity – sensor webs, weather, indoor/outdoor location integration, 3D city models, location services, data fusion and others – have significance for the Smart Grid. Many OGC members have a stake in the Smart Grid information technology market, the growth of which depends on the evolution of a standards infrastructure that includes location standards.
This meeting (an "ad hoc" meeting in the OGC's formal meeting nomenclature) has been set up to assess the level of interest in the community to tackle open geospatial standards for the Smart Grid. The Smart Grid Location Standards Ad Hoc meeting is open to the public and admission is free, but Smart Grid Location Standards Ad Hoc Meeting attendees who don't plan to attend other OGC Technical Committee sessions must register via email at email@example.com.
Just came across a fascinating documentary on urbanization, which in the last 200 years since the industrial revolution has been occurring at an exponential rate and represents the largest impact humans have had on the planet. Some of the statistics are mind-boggling
52% live of world's population live in cities.
There are 200 000 new urban dwellers every day.
By 2050 6 billion people, equivalent to today's total population, will live in cities.
On average over the next 30-40 years, a million people will move into cities every week.
Cities are responsible for 70% of the world's energy use.
The documentary focuses on the need to better understand how cities work, to develop a serious science of cities in Geoffrey West's words, because althought the major problems we are facing are generated by cities, cities are creative and we should expect that the solutions to these problems will also be generated in cities.
The documentary makes the point that ICT, which enables real-time monotoring, control and automation, will be central to making citiies work, and work sustainably, in the future.
A fascinating example of how technology can be used is an MIT Senseable City Lab project "Trash Track" described by Carlo Ratti in which a micro device was attached to 3000 pieces of garbage and used to track what happened to this stuff after people threw it away. Incredible to see the diverse places all over the country where stuff we throw way ends up.
An interesting analysis of job creation by the "App Economy" has been conducted for TechNet by Dr.Michael Mandel of South Mountain Economics LLC. This includes employment at pure App startups; large companies such as Electronic Arts, Amazon, AT&T, and Autodesk; App infrastructure jobs at Google, Apple, Facebook, RIM, and Microsoft, and spillovers to the rest of the economy.
As of December 12, 2011, the Apple App store lists 529,550 active apps, uploaded by 124,475 active publishers. Google's Android Market lists more than 300,000 apps. The App Economy generated almost $20 billion in revenue in 2011, including app downloads, in-app revenues, sales of virtual goods, and sales of physical goods and services.
A study of app-related jobs just on Facebook estimated the number of employees employed by third party developers to be 53,434. With the spillover to the rest of the economy, this suggests182,744 full time jobs.
The majior platforms in the App Economy are • Android (Google) • Apple iOS (Apple) • Blackberry (RIM) • Facebook • Windows Phone and Windows Mobile (Microsoft)
The Technet analysis suggests that there were 155,000 tech jobs in the App Economy as of December 2011 including developer and tech support jobs at both dedicated app developers and at large companies who create apps for them or for others. This implies that there are roughly 311,000 jobs in App Economy firms, including tech jobs, which require app-related skills, and the corresponding non-tech jobs. With spillover included, the total number of jobs created in the App Economy is estimated at 466,000 jobs since the iPhone was introduced in 2007. A geographic breakdown suggests many of these were created in California
The U.S. Administration has proposed a budget of $8.344 billion for the U.S. Environmental Protection Agency (EPA) for FY 2013, $105 million below the EPA’s budget for FY 2012.
National Fuel Economy and Greenhouse Gas Standards Program - Increase
In November, 2011, the EPA and the National Highway Traffic Safety Administration (NHTSA) issued a joint proposal to extend the National Program of greenhouse gas and fuel economy standards to model year 2017 through 2025 passenger vehicles. The comment period for the proposal for the proposal ended February 13, 2012. In addition the EPA and the NHTSA have announced the first program to reduce greenhouse gas (GHG) emissions and improve fuel efficiency of heavy-duty trucks and buses for model years 2014-2018.
The budget contains a $10 million increase to the EPA’s National Vehicle and Fuel Emissions Laboratory for certification and compliance testing programs and to evaluate new biofuels technologies.
Hydraulic fracturing - Increase
The impact of hydraulic fracturing on water quality is getting a lot of attention. In collaboration with the Department of Energy and the US Geological Survey, a total of $14 million investment will begin to assess potential impacts of hydraulic fracturing on air quality, water quality, and ecosystems. The EPA plans to release an Interim Report on the Impacts of Hydraulic Fracturing on Drinking Water Resources in 2012.
Harmful Chemicals - Increase
Late last year the EPA issues the Mercury and Air Toxics Standards (MATS) for thermal power plant emissions. EPA is proposing $68 million, an increase of $11 million over FY 2012, on chemical pollution, to reduce chemical risks, speedup chemical hazard assessments, and provide greater public access to toxic chemical information.
Chesapeake Bay and the Great Lakes - Increase
EPA is proposing $73 million, a $15 million increase, to fund the Chesapeake Bay program’s implementation of the President’s Executive Order on Chesapeake Bay Protection and Restoration. Funding will support bay watershed states to implement plans to reduce nutrient and sediment pollution in an effort to restore this economically important ecosystem.
EPA is proposing $300 million for the Great Lakes Restoration Initiative continuing a three year initiative.
State Revolving loan Funds (SRFs) - Decrease
State Revolving Funds are a major source of funding for municipal water and wastewater projects, including funding the massive settlements (consent decrees) with the EPA to reduce combined sewer overflows (CSOs) and sanitary sewer overflows (SSOs) in cities like Cleveland, Atlanta, Chicago, and many others.
The FY2013 budget provides $2 billion for Clean Water and Drinking Water State Revolving funds (SRFs). The EPA says that this will allow the SRFs to finance over $6 billion in wastewater and drinking water infrastructure projects annually.
According to the American Water Works Association (AWWA), the proposed FY2013 budget would cut spending for the drinking water state revolving loan fund (SRF) program by 7 percent (from $918 million in 2012 to $850 million) and the clean water SRF program by 20 percent (from $1.46 billion in 2012 to $1.17 billion).
The budget also proposes some policy changes in administration of the SRFs. In 2012, not less than 10 percent of the drinking water SRF funds were to be used for green infrastructure, water or energy efficiency or other environmentally innovative activities, at the discretion of each state. For 2013, the Administration would make that 10 percent figure mandatory.
Also for 2012, not less than 20 percent but not more than 30 percent of drinking water SRF capitalization funds were to be used for additional loan subsidies, such as forgiveness of principal, negative-interest loans or grants. For 2013, that language would be removed. On the clean water side, the 2012 language said not less than 20 percent or more than 30 percent was to be used for such subsidies. For 2013, the “not less than 20 percent” floor would be removed.
Science to Achieve Results (STAR) grants are funded at $81 million to conduct research in key areas such as hydraulic fracturing, potential endocrine disruptors, and green infrastructure.
In 2010 ten sites were given apporval for new nuclear power plants in the UK. Since then the UK Government has reduced the number to eight (Bradwell, Essex; Hartlepool; Heysham, Lancashire; Hinkley Point, Somerset; Oldbury, Gloucestershire; Sellafield, Cumbria; Sizewell, Suffolk; and Wylfa, Anglesey), all of them adjacent to existing nuclear power plants.
Generic Design Assessment (GDA) process for new nuclear reactor designs
At the end of last year, generic designs for two nuclear reactors, EDF and Areva's UK EPR and Westinghouse’s AP1000, were granted interim design acceptance. For both designs, the Office for Nuclear Regulation (ONR) has issued interim Design Acceptance Confirmations and the Environment Agency (EA) has issued interim Statements of Design Acceptability. These were granted after Step 4 of the GDA process was completed for each of these reactor designs (UK EPR and AP1000).
A number of design issues identified during the GDA process will need to be resolved before either of these reactor designs can be implemented in the UK. The scope of the Step 4 technical assessment did not include Fukushima as the accident occurred after the Step 4 submissions were provided to ONR and EA. To ensure that the lessons learned from the Fukushima accident are considered within the GDA, ONR formally added a GDA issue specifically to address lessons learned as a result of the Fukushima accident, In response both Westinghouse and EDF and AREVA have provided plans to address the lessons learned from the Fukushima accident. This issue as well as other GDA issues will have to be resolved before the GDA process is considered complete.
Last week France and the UK signed a joint framework for cooperating in the development of civil nuclear energy including education and training, research and development, and security.