Building and operating traditional infrastructure constitute the biggest culprit in urban CO2 emissions, and thus, working towards sustainable infrastructure is no longer a luxury; but a survival necessity and a prerequisite to achieving all 17 of the United Nations’ SDGs goals, creating a safer, greener planet for a sustainable futute of humanity.
The world now needs to ‘walk the talk’ when it comes to sustainable infrastructure development. Despite numerous global initiatives, investment in such sustainable infrastructure is still faced by a myriad of structural, logistical, financial, and operational barriers. In terms of research and development on sustainable infrastructure, countries like the US, UK, Australia and China have the lionshare of creating effective solutions for sustainable building, with the rest of the world yet to follow in prioritizing this crucial issue.
Financing & the private sector
When it comes to financing, there remains an astronomical financing gap for sustainable infrastructure projects, amounting to an annual of $6.9 trillion globally – rendering national and global efforts to achieve sustainable infrastructure development futile. This could all be turned around with the help of the private sector, which is now having to take on a leading role in addressing such financing gaps and responding to market demands in order to fulfill the 2030 vision.
But the private sector can’t do it alone; facing the unprecedented financing challenges requires all hands on deck from both public and private sectors, working together to ensure achieving fundamental cornerstones of sustainable development. First of such cornerstones is identifying investment opportunities that are credible and guaranteed to yield satisfactory outputs.
Another important tool to enact sustainable infrastructure development strategies lies within investment institutions, like insurance companies, which can help enable governments to long-term financing of crucial infrastructure projects. Last, but not least, the use of technology can help catapult all these efforts forward, utilizing clean and cutting-edge technologies like Internet of Things (IoT) and Artifical Intelligence (AI) to build smarter, more sustainable cities.
Egypt: challenges & breakthroughs
Worldwide, there are numerous challenges standing in the way of adopting sustainable infrastructure development, however, each challenge can be turned into an opportunity provided the necessary will and technological tools. According to the Ministry of International Cooperation’s figures, Egypt is in need of $675 billion of investments over 20 years to achieve its goals in this regard. Particularly with the fast population growth, which amounts to 2 million births a year, the Egyptian government will need to move fast in order to find innovative solutions that address the increasing demand for clean water, electricity and energy without further exhausting environmental resources or increasing CO2 emissions.
That being said, Egypt hasn’t been too far off the global strive toward green transformation and sustainable infrastructure; over the past seven years, Egypt has been working to establish 38 new smart cities across the country, as such cities have become a crucial component in the global strategy to develop sustainable infrastructure powered by digital technology and artificial intelligence – fully in line with Egypt Vision 2030.
When it comes to identifying credible projects and investments, there is an opportunity to generate trust and enact fundamental changes with the use of technology that provides a safeguard needed by investors, through the use of the Internet of Things, Big Data, AI, Cloud, Blockchain, and many other tech tools that monitor the development of projects efficiently, accurately and transparently.
Standards come first
Agreed upon, industry-wide standards for sustainable development is the first step toward enacting wide-scale, sustainable reform. That’s why Egypt’s Ministry of Planning and Economic Development, in collaboration with the Ministry of Environment and related entities, has recently launched its ‘Environmental Sustainability Standards Manual’, a first-of-its-kind in the country. The manual aims at raising awareness on the sectors and interventions that directly contribute to a positive impact on the environment, directing public and private sectors to put their investments in such sectors.
Tech to the rescue
Many solutions to sustainable infrastructure development were unthinkable merely a decade ago, but today, technology can also play the role of an investor intermediary. A clear example of this is how digital marketplaces are becoming integral in connecting institutional investment entities with well-organized projects, thus easing the flow of financing from public and private actors in sustainable infrastructure projects. These platforms provide seamless automation, speeding up documentation processes and the flow of capital, making collaboration on environmentally-friendly projects faster, easier, and more transparent.
The ‘Finance to Accelerate the Sustainable Transition-Infrastructure’ (FAST-Infra) initiative is an example of this kind of digital platform. Created in 2020 by Climate Policy Initiative (CPI), HSBC, the International Finance Corporation (IFC), OECD and the Global Infrastructure Facility, FAST-Infra platform’s design and development is led by IBM.
FAST-Infra leverages technology, including blockchain and AI, to identify and evaluate infrastructure plans and match those that are sustainable with investors, with the aim of closing the multi-trillion-dollar sustainable infrastructure investment gap by turning it into a liquid asset.
What sets it apart is the fact it brings credibility to the space, using a global Sustainable Infrastructure (SI) labeling system endorsed by leading financial institutions including the G20’s Global Infrastructure Facility (GIF) and the Glasgow Financial Alliance for Net Zero (GFANZ).
This labeling function facilitates more accurate and efficient due diligence that helps to cut transaction costs and matches investors to the projects that will make a real impact. By transforming sustainable infrastructure into a mainstream, liquid asset class, the FAST-Infra platform will help scale-up private investment in sustainable infrastructure in emerging and developing economies.
Egypt: COP27 and moving forward
The Egyptian government is well aware of how fundamental it is to adopt green and sustainable infrastructure development in its approach, which is exemplified by its hosting of COP27 in Sharm El Sheikh in November 2022. All these efforts conspire to empower efforts to push back against climate change, gender inequality, and bolstering sustainable and inclusive infrastructure. What stands out in Egypt is the growing investments in sustainable energy, green hydrogen, and efforts to activate the full potential of the Suez Canal Economic Zone, as a premier investment zone for global capital.
How did Egypt get to a place where it can effectively, albeit partially, address challenges relating to financing sustainable infrastructure projects, and moving towards the green economy? The answer is that priorities were set straight, starting with the ones relating to sustainable energy which were set back in 2015 with the goal of luring private sector investors into sustainable and renewable energy in the country. These efforts have propelled Egypt 67 positions on the World Bank’s Access to Electricity report between 2014 and 2019. The conclusive strategy aims to increase the share of clean and renewable energy production in Egypt to 42% by 2035, complementing steps taken towards green hydrogen production, in collaboration with the European Bank for Reconstruction and Development (EBRD).
The fact of the matter is that the Egyptian experience has proven that sustainable and green infrastructure is the real driver of inclusive economic growth, increasing access to public services while reducing their cost. It also unleashes the full potential of structural and economic reforms, creating an environment that maximizes the private sector involvement in developing green infrastructure projects in the country, fighting back against climate change, and utilizing key international collaboration with Egypt’s key development partners.
Simply put; we need to invest and build a sustainable framework now to achieve a net-zero future and enable the survival of the generations to come. This demands the creation of strong foundations, and financial services that must aggressively tackle the sustainable infrastructure financing gap as well as the utilization of technological solutions and the data they provide, to ensure the right projects come to fruition.
* The writer is General Manager, IBM Egypt