Oil slump leading towards Sustainability

Whilst low oil prices are believed to ‘offer chance to spur G7 energy transition’

According to Reuters published on May 3rd, 2016  a piece on the G7 Energy ministers of the leading Western economies meeting in Kitakyushu, Japan to discuss ways to create opportunities from the current oil slump.  Is the current  Oil slump leading towards Sustainability?

The G7 in a nutshell are pushing towards more green sources of energy.

This whilst on the other side of the seas, in the meantime, driving green energy is also being taken up in top exporting nations.  With oil at below $50 a barrel, countries such as Saudi Arabia, Russia, Iran and Kuwait are looking to curb domestic consumption subsidies and maximise export profits whilst investing in wind and solar power, according to government officials meeting in Abu Dhabi.

Visitors to the Abu Dhabi Sustainability Week 2016 where global leaders in policy, technology and business discuss new ways of shaping the future of renewable energy and sustainable development.

McKinsey who in an article back in March 2016 and in view of both sides of the sea, see in the renewables some sort of panacea, the ensuing development of all related infrastructure could become the main headache for everyone.  Here it is :

The next generation of infrastructure

Written by  Aaron Bielenberg, Mike Kerlin, Jeremy Oppenheim, and Melissa Roberts  and published by McKinsey & Company .

Sustainable projects will add trillions to the world’s infrastructure costs. Our report finds that private-sector investors must look at new ways to fill the gap.

The international consensus on sustainable economic development gained momentum in 2015, culminating last December in Paris with a broad global accord on reducing the level of greenhouse gases.  A new McKinsey report—Financing change: How to mobilize private-sector financing for sustainable infrastructure—examines a key element of progress: ensuring that the transport networks, energy networks, and waste and water facilities in demand across the globe, notably in middle-income countries, will be climate resilient, be socially inclusive (by diminishing poverty or increasing employment), and reduce carbon emissions.

While business groups, development banks, and governments have all pledged significant increases in funding and research for sustainable infrastructure, the scale of the challenge is enormous: from 2015 to 2030, global demand for new infrastructure could amount to more than $90 trillion,1 almost double the estimated $50 trillion value of the world’s existing stock. That means we will literally be rebuilding our world over the next 15 years. Moreover, while such investments promise to multiply economic and business opportunities, a number of barriers must fall to attract the necessary finance.

Making it happen

The world needs to find $7.7 trillion annually over the next 15 years, up from $3 trillion today, to pay not only for additional infrastructure but also for sustainable projects, which are typically more expensive than traditional ones (exhibit). Our projections show that this sustainability “premium” could add $14 trillion to overall infrastructure costs between 2015 and 2030. Corresponding declines in investment for fossil-fuel projects and the lower cost of investing in densely configured urban areas will offset some of that. The bottom line: we estimate that an additional 6 percent in up-front capital will be required to raise the level of the new infrastructure to the sustainability standards achieved, for example, in Colombia’s recent Fourth Generation roadway expansion and Kenya’s Lake Turkana wind-power network.

 

 

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