Chance to Make Infrastructure Climate-Friendly

As multilateral development banks, private sources and governments gear up to fill massive infrastructure gaps in Asia, we must not miss a unique opportunity. With trillions of dollars envisaged for constructing dams, bridges and roads, all with long lifespans, this is the chance to make infrastructure climate-friendly. Doing so will be in one's self-interest.

At current rates of greenhouse gas production, global average temperatures will, in a quarter of century, rise above 20 degrees C from pre-industrial levels, a threshold for avoiding catastrophic impact. To dodge this scenario, energy-related emissions alone need to fall by 40-70% below 2010 levels worldwide by 2050.

Industrial countries were responsible for the past carbon build-up. Developing Asia now is the source of some 37% of the emissions. It would, therefore, be strategic for countries to secure the growing volumes of climate finance and use it to enhance infrastructure investments.

A global target since the Copenhagen and Cancun climate talks is $100 billion for climate finance, including private, by 2020. To be effective, climate finance must be integrated with infrastructure investment. After all, energy and transport in the region contribute two-thirds of the emissions. By one estimate, Asia requires $8 trillion of infrastructure investment during 2010-20. In addition to private sources, multilateral lenders plan to increase funding for infrastructure.

The crucial question is how official and private financing can deliver local and global benefits by making infrastructure climate-harmonic.

First, fossil fuels need to give way to renewable sources of energy supply: solar, wind, wave, tidal, geothermal and biomass. But the variability in output from solar and wind sources is much higher than from coalfired generation plants. Solutions include battery storage, smart grids and demand measures, and integration of advanced weather forecast technology in renewable energy management is emerging, which can be used to enable the expansion of renewable energy.

Meanwhile, fossil fuel subsidies need to be reformed. Global subsidies for coal, the worst polluter, and for petroleum and natural gas are some $500 billion a year, and 10 times when environmental damages are also considered. Asia accounts for half of global fossil fuel subsidies. Eliminating them would promote cleaner energy, protect local environments and reduce the carbon footprint. India and Indonesia have started to cut the subsidies and adjust energy prices.

A tax that sets a price on carbon would reduce demand for high carbon-emitting fossil fuels, and increase the demand for renewable sources. Fossil fuel producers have opposed carbon taxes, and Australia abolished one in 2014. But China intends to launch a national cap and trade scheme in 2017, which will make the country the world's biggest carbon market. Recently India levied a carbon tax on fossil fuels.

Second, this is the chance to deal with the unacceptable levels of city pollution and congestion as in Delhi or Beijing. Ten of the world's 20 most polluted cities are in India. Fuel and engine efficiency can be improved, as in Busan, South Korea, charging higher licensing fee for trucks that do not comply with emission standards. City-operated bicycle shares, lowemission car rentals and sidewalkwidening can make cities more livable. Asian cities can be a market for renewable power generation equipment and electric vehicles.

There are options to address urban congestion. Intelligent transport systems, as in Seoul, inform passengers of the best routes for their commute. Multi-modal public transport around hub stations, as in Chennai and Bengaluru, can reduce congestion and pollution. A glaring problem is municipal waste, which will require investments in converting waste to energy, anaerobic digestion, recycling and reduced waste disposal.

Third, infrastructure finance ought to aim for climate, environmental and social protection. This involves strengthening transport networks, building in safer areas, improving drainage and flood barriers, and using early warning technology.

Retrofit technologies can be used for old structures, lowering maintenance costs. In addition to climatesmart agriculture, a top priority is to stop deforestation, whose damages are evident in Indonesia and elsewhere.

Infrastructure investments carry huge social and environmental risks. Regulation, compliance and independent monitoring are essential to avoid disastrous effects. Volkswagen's massive emissions scandal is the latest example. Financiers and countries must commit to safeguards that deflect risks that can damage communities, habitats and livelihoods.

More funding for infrastructure can promote growth, but not by doing more of the same. Only a switch to low-carbon and climate-resilient infrastructure will sustain growth locally and globally.

This post was originally published on the Economic Times Blogs of the Times of India, and has been re-posted with the permission of the original author, being Vinod Thomas, Director-General of Independent Evaluation, Asian Development Bank. The original blog post can be accessed here.