Creating the Digital Infrastructure for a Sustainable Economy

The economic downturn, which started with a credit crisis in the world’s largest economy, has spread worldwide and created the largest economic crisis since the Great Depression.  Governments around the world are undertaking massive stimulus spending in the multi-trillion dollar range. 

But an economic downturn like this has a siIver lining.  In the industrialized countries, there has been an awareness for some time of the challenge of crumbling, energy inefficient infrastructure, but until recently there has not been the political will to do something about it.  In emerging economies, the challenge is booming infrastructure, the rapid development of new infrastructure.  

Stimulus Spending on Infrastructure

One the important impacts of the economic downturn is a massive increase in infrastructure spending by all levels of governments which is creating a unique opportunity is take advantage of this moment in history to create a sustainable infrastructure for energy, water, transportation, communications, and buildings, as the foundation for a new energy efficient, sustainable world economy.  

The G-20 group of nations, which represents about 90 per cent of the world’s gross national product,  concluded their meeting at the beginning of April of this year with an announcement of  a multi- trillion dollar stimulus package to be delivered by the end of 2010.  A recent report on stimulus spending in the G-20 by Eswar Prasad and Isaac Sorkin of the Brookings Institution points out that almost all countries in the G-20 have a fiscal stimulus plan.  Countries with large stimulus plans include China, Saudi Arabia, Spain, Japan, and the US.  Countries with modest stimulus plans include Germany, Australia, Canada, Indonesia, and South Africa.  In 2009 the total stimulus for the G-20 countries is about US$692 billion or about 1.4 percent of the G-20 GDP.  In 2010, for some countries the stimulus increases as a proportion of GDP.  The U.S. stimulus package is expected to be 2.9 percent of the US 2008 GDP, China’s 2.3 percent, and Germany’s 2.0 percent of their respective GDPs.

Investment in Sustainability

According to a recent survey of 2,164 Americans conducted  by researchers at George Mason and Yale Universities, a large majorities of Americans support policies for addressing climate change and renewable energy.  And they are willing to put their money where their mouth is.   Most of the respondents said that they were prepared to pay more to support renewable energy policies.  For example, 72 percent supported a renewable portfolio standard that would require electric utilities to produce at least 20 percent of their electricity from wind, solar, or other renewable energy sources, even if it cost the average household an extra $100 a year.

The most widely known report on the economic effects of global climate change is the The Economics of Climate Change, The Stern Review by Nicolas Stern.  Its conclusions were that the effects of global warming will reduce the world's economic growth by 20 per cent or more if no action is taken.  The report estimated that the cost of action to reduce greenhouse gas emissions to avoid the worst impacts of climate change could be limited to around one per cent of global GDP each year. 

In 2008 a study lead by Ross Garnaut in Australia which examined the impacts of climate change estimated that the gross cost to the Australian economy of mitigation targeting 450 to 550 ppm of CO₂ to be 1.9 to 3.3 per cent of GNP.  In 2008, Stern revised his estimate of the cost of mitigation to keep greenhouse gases below 500 ppm upward to 2 per cent of global GDP.  

In March a study entitled Towards a Global Green Recovery, Recommendations for Immediate G20 Action by Ottmar Edenhofer of the Potsdam Institute for Climate Impact Research and Lord Nicholas Stern of the Grantham Research Institute On Climate Change and the Environment  of the London School of Economics was released.  The report, which was prepared on behalf of the German Foreign Office, compares reported on green funding as a share of the total national stimulus package and as a share of 2008 GDP for selected countries of the G-20. For China, South Korea, and Saudi Arabia stimulus green funding approaches or exceeds two per cent of 2008 GDP.  The US green stimulus funding is nearly one per cent of GDP.  Of the approximately US$600 billion that China is planning to spend as part of its economic stimulus program, US$30 billion or about 5% of the stimulus could be allocated to renewable energy, including solar and wind.  Of the estimated €200 billion EU Economic Recovery Plan, €5 billion is targeted on energy infrastructure such as a new European supergrid and wind generation. 

According to the Environmental Information Administration (EIA) in the United States alone, buildings account for 40% of total energy use, 72% of total electricity consumption, 39% of total carbon dioxide emissions, and 13.6% of potable water consumption.  Globally, buildings are the primary source of CO₂ emissions, followed by transportation and industry.   Green buildings can reduce energy use by 24-50%, CO2 emssions by 33-39%, water use by 40%, and solid waste by 70%.  According to McGraw-Hill Construction SmartMarket Trends Report 2008, there were $12 billion worth of green building projects in 2008.  This is expected to grow to $60 billion in 2010, driven by government initiatives, more residential demand for green construction, and improvements in technology.  It is estimated that by 2010, 10% ($23 billion) of construction starts will be green.   As reported in Bright Green Buildings by CABA in North America many commercial facilities have adopted green technologies in order to earn green and sustainable certifications. The green buildings certification process has accelerated in the last few years. The growth in the number of projects certified by rating systems such as Energy Star and LEED has nearly doubled in size.  The chart depicts the forecasted growth in green building certifications 2007-2015 by rating systems such as LEED, Energy Star, Green Globes, and BOMA Go Green.

The 2030 Challenge, an initiative of the American Institute of Architects (AIA) and architect Ed Mazria, seeks to eliminate the use of fossil fuels in the construction and operation of new and renovated buildings by 2030. Three-quarters of structures in 2030 are expected to be either newly built or recently updated, so improving design guidelines in the near term could dramatically reduce future energy use and help combat global warming.  The 2030 Challenge has been embraced by the U.S. Conference of Mayors and by cities and private firms around the world. The plan sets aggressive milestones for using sustainable design, clean energy, and renewable energy credits to transform built environments. For the next three years, architects and builders are asked to cut fossil fuel usage by half. In 2010, the target increases to 60 percent less than the baseline. In 2015, the target is a 70 percent reduction, and by 2030, buildings could reach carbon neutrality. 

Stimulus Investment in Technology

In the US an IDC Report predicts that the Federal Government's economic stimulus program (ARRA) will generate more than $100 billion in revenue for technology companies.  Of this, energy technology investments including smart-grid and clean energy programs will generate $77.6 billion in sales.  The largest part of the energy spending is $66 billion for renewable energy such as wind and solar. $8.6 billion will be spent on smart-grid technology, smart meters for consumers and smarter transmission and distribution grids.  $3 billion will be spent on conservation technologies such as programmable thermostats and energy-management systems for commercial buildings.   The Gridwise Alliance believes that "the total flowing to Smart Grid-related project will easily be twice the amount projected by IDC."

According to the EWEA the energy committee (ITRE) of the European Parliament has voted on the Energy Recovery Plan which includes €565 million is specifically for offshore wind projects.  The EU Economic Recovery Plan is encouraging investments in offshore wind, CCS (carbon capture and storage) and electricity and gas infrastructure.

Stimulus Investment in Infrastructure

In June 2008 Senator Obama, then the presumptive Democratic candidate for President, made a speech to the US Conference of Mayors annual meeting in Florida where he talked about "rebuilding America’s essential but crumbling infrastructure", that the US needs "to do more, not less," and promised to "launch a National Infrastructure Reinvestment Bank that will invest $60 billion over ten years and create nearly two million new jobs."   Obama said that Federal money should be invested in a world-class transit system, green energy technology, ports, roads, and high-speed rail.  

Since becoming President Obama has publically announced that he is targetting creating 3.5 million jobs through infrastructure spending.  In February of this year President Obama signed the American Recovery and Reinvestment Act (ARRA), which includes $111 billion for infrastructure and science to create a framework for clean and efficient American energy, to transform [US] economy with science and technology, and modernize roads, bridges transit, and waterways and includes $30 billion for energy efficiency initiatives including the smart grid and $20 billion for renewable energy and energy efficiency.

As I have outlined in a recent paper, other countries have also made major investments in infrastructure.

New Design Technologies

To enable architects, engineers, and owners and operators of buildings and infrastructure to address these challenges, architects, designers, and engineers are adopting new technologies.  The business drivers for these transformative technology advances are productivity and efficiency in the entire lifecycle from design, build, through operate and manage.  As I have outlined in a recent paper, these technologies include model-driven design notably building information modeling (BIM), geospatial enabling, 3D visualization, and sustainable design.

Historically, economic slowdowns have had a positive impact on efficiency and tend to accelerate the adoption of technologies that improve effciency.  For example, contsruction contractors are increasingly seeing BIM as a way to improve their productivity. Recent surveys have shown that  40% of the ENR top 400 contractors are using BIM on more than 10% of their work.

Opportunity to Create the Digital Infrastructure for a New Sustainable Economy

The coincidence of technical advances and stimulus spending motivated by the economic downturn has created a unique opportunity to replace crumbling infrastructure in the developed world and to create new infrastructure in the emerging world. Governments around the world are already undertaking a massive investment in infrastructure of capital into infrastructure. There is a unique opportunity is take advantage of this moment in history to create a new sustainable infrastructure for energy, water, transportation, communications, and buildings, as the foundation for a new energy efficient and emissions reducing world economy.  The new technologies that engineers, architects, and designers are increasingly using to design new infrastructure including geospatial-enabling, model-driven design, and 3D visualization, provides the digital foundation for infrastructure modeling of entire urban environments.

Comments

[Akum Gill]

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