In the media

Learning how to juggle: Decarbonisation in an uncertain and complex world

By Nick Short

Assets Magazine

04 July 2022

This article was first published in Assets Magazine

The modern world is an uncertain and complex place, making effective long-term planning for the transport asset manager challenging. But decarbonisation cannot wait, so what must the asset manager do now to juggle cost, carbon and customer? They will have to incorporate carbon costs within total cost of ownership, achieve a step-change in innovation and efficiencies, and effectively quantify and communicate carbon costs and opportunities, to fulfil their role in achieving a zero-carbon future.

Infrastructure asset management, particularly in the transport sector, has always been driven by the bottom line and long timescales – neither of which lend themselves to rapid adaptation and innovation. Nor has there been – generally speaking – any perceived need. Progress was safe, steady and slow, taking place over decades. The cost measured in pounds and pence, tons of concrete and steel. It wasn’t the infrastructure asset manager’s job to adapt, to experiment, to risk trying new ideas (and fail at many of them). It was their job to provide a solid, reliable foundation on which goods and people could travel further, faster.

While that second role may still be true, the former is no longer sustainable. In light of events such as Brexit, COVID-19 and the war in Ukraine, massive increases in disruption across the globe have led to the cold realisation that we live and operate, more than ever before, in an uncertain and complex environment.

Times are changing
Oil prices bouncing up and down (but mostly up). Supply chains disrupted by ships stuck in canals and empty containers piled high on docks. Borders shut, then opened, then shut again. Trade wars, even between friends. Workforces, production and lives disrupted by pandemic, fuel prices, chip shortages, skyrocketing materials costs, seemingly never-ending flooding. Geopolitics half a continent away turning millions of lives and global economies upside down in a matter of days.

Historically, all a decent infrastructure owner had to worry about were issues like the price of concrete and steel and the pounds and pence. The simple fact is decarbonisation cannot be paused – those days are gone. There is a societal imperative to decarbonise, while we still can.

Maintaining the status quo is no longer adequate, the same old ways of working will not be good enough – probably ever again. A safe, steady, comfortable pace to ‘net zero’ will be far too slow to prevent catastrophic warming. This is inarguable. Indeed, the asset manager can no longer leave the decarbonisation to ‘someone else’ – they cannot just keep up with the pack, but must now lead from the front, championing the decarbonisation agenda both within and beyond their organisation, if there is any hope to achieving the necessary change.

Some might think it’s time to throw money at fixing the problem, but there isn’t enough of that to do what needs to be done. And there’s still those pesky potholes to fill, customers waiting for that train or plane. The ‘same old’ hasn’t gone away. So how can the asset manager decarbonise their operation, while maintaining their assets and ensuring those assets are resilient to whatever the future may bring … all whilst preventing riots by angry users and shareholders? How can they juggle cost, carbon and customer?

The truth, the whole truth and nothing but the truth
For decarbonisation to succeed, each aspect of this cost, carbon, customer triangle must be addressed.  Cost and carbon will increasingly need to find themselves sharing space on the corporate balance sheet with the asset manager ensuring they are both part of all business decision making.  To make this happen, a new form of “total cost of ownership” will need to be considered – where the full asset management and material cost through to (and beyond) disposal are included, and where total cost of ownership includes a resilience to, or a risk-based acceptance of, climate driven failure.  This will need some difficult discussions, with the asset manager being unafraid to speak the unvarnished truth, backed up with hard data and evidenced recommendations.

To inform these conversations, the asset manager will need to make clear the effects on the environment of different methods and tools for construction, operation, and maintenance.  Integrating the whole-life carbon cost when pricing up the building and operating of infrastructure will provide other lenses to assess the viability and feasibility of different construction materials.

Profit and not-for-profit companies have designed carbon tools to evaluate and manage whole life carbon emissions, to reduce carbon and price up solutions. Frameworks such as the 6 capitals and circular economy are furnishing asset managers with tools that can align capital and operations activities to create value over time.  The beauty of these theories is that organisations can quantify natural and social impacts and improve their risk / opportunity management and decision making, achieving the greatest net benefit to customers and wider society by marrying top-down and bottom-up approaches to managing their assets.

The transport asset manager must harness similar tools to help them communicate with their stakeholders in the new language needed to deliver decarbonisation.

Harnessing the cold winds of change
The environment in which our infrastructure exists is changing ever more quickly. The infrastructure will need to be able to adapt, and the asset manager will face bigger challenges than ever before. Here, however, the pace of change is surprisingly our friend and ally – the asset manager must harness it, lean into it. One of the biggest and fastest moving areas of change is technology – the asset manager must turn innovation into infrastructure through fast learning, sharing best practice and leveraging partnerships. They will have to collaborate across industry, academia and government to share lessons learned. They will have to prepare their stakeholders for small failures, in order to win themselves the space to innovate. Testing new materials and methods must happen quickly at small scale, and those proven to work scaled up rapidly – and then shared aggressively across organisational boundaries.

Success will mean sharing the significant but finite resources of innovation programmes not just within but across sectors. For instance, a nuclear operator in the UK has successfully used digital twins, automation and artificial intelligence to predict maintenance needs – this has helped them prepare for the time when the site needs to purchase steam power and work towards reducing nearly 100,000 tons of CO2 generated each year. This innovative solution will protect workers from unnecessary radiation exposure, help restore the environment and deliver the site purpose more cost-effectively.

Transport asset managers must find ways to discover, use and disseminate tricks such as these learned elsewhere, without having to reinvent them from scratch, and in turn share their own innovative methods, whilst embracing and collaborating into wider investments in (for example) hydrogen and battery technology. In doing so, the asset manager can demonstrate ‘doing the right thing’ as they help to create the vision to net zero.

Working smart, not just hard
The asset manager must also squeeze out more efficiency from their systems without compromising effectiveness.

They will have to integrate and simplify existing asset systems – standardisation of infrastructure components and prefabricated structures, built under fewer constraints and in controlled environments meaning fewer faults, faster manufacturing and familiar maintenance environments across infrastructure. This may take significant changes to cultures and ways of working, but it will also mean, for example, new bridges built overnight with minimal disruption to services, and to quality standards that would be fundamentally unachievable onsite. Leveraging advances such as the Internet of Things and integrated (but simple) sensors will mean much earlier and more sophisticated understanding of impending failures, reducing maintenance costs and disruption.

On-site and downstream re-use of waste materials have been demonstrated to work and add value, creating more with proportionately less. Recycling substrates, whether from within the local project or from an entirely different sector, can provide additional side-benefits beyond cost savings of disposal – likewise finding innovative or profitable uses for waste products elsewhere. See for example the use of used tyres and dirty nappies in more resilient surfacing materials, or the surprising market value of old railway sleepers.

The canny asset manager will also look to opportunities to share infrastructure and therefore costs – for example, leveraging satellite or mobile comms networks to reduce the need for massive cabling installations, by offering to host telecoms trunking or masts. Even coordinating maintenance and building projects with other likely interested parties could result in significant cost savings and much-reduced disruption to the end-user – for example, digging a road up once to lay or repair water pipes, electricity cables and telecoms fibres, instead of each asset owner digging the same patch up separately.

This is not about doing less, cutting corners. It is about doing more, better.

Getting from here to there
A decarbonised future is unlikely to be cheap to deliver. In the current financial climate, any actions will have to be carefully justified. The asset manager will have to take the responsibility for the costs of decarbonising assets falling on their own shoulders in the short term. This will require new forms of investment, reduced delivery costs or passing those costs onto the end-user. The disastrous costs of failing to decarbonise will be borne out in the medium and long-term but the asset manager cannot leave these issues for their successors to address.

They must instead look to disrupt the firewalls of different transport modes, to a create a vision, for the end-user and wider public, which is driven by integration of asset systems – a consolidation of freight logistics or a seamless passenger network of private, long-distance public and local public transport networks. The sector as a whole must design itself into communities, as part of a sustainable system that decarbonises and creates shared value. By finding the social value of decarbonisation – the value to whole communities –the transport sector becomes attractive, connected and sustainably affordable.

The asset manager must quantify and publicise environment improvements, increasing stakeholder interest in environmental impact whilst showing the potential of investments in terms of customer value and lower total carbon cost.

A guiding hand
Can the transport asset manager do this alone? They have a key role to play, but their work as laid out above will have to be supported by a wider ecosystem that recognises it.

The banking sector have had ESG (environmental, social and governance) criteria in place for decades to determine potential investments and whether they will be able to get a good return. This framework is finally becoming a widely used reference for socially and responsible investing, and investors of all sizes can now direct funds to opportunities that match their ethical choices. The water sector is also now looking to integrate these criteria when evaluating companies’ requests for funding.  It is expected that this shift will promote more sustainability strategies as a natural response from companies. Government and regulators could seek to support the sector by leveraging this shift, and potentially in doing so create a further virtuous cycle.

To create the right behaviours, all policies and legislative bills will have to consider sustainability in a cross-cutting manner. Regulation that enforces consideration of the environment and inclusion of carbon costs in total cost of ownership, and incentivises more business ethics, innovation, and collaboration will create more sustainable value. 

This system shift will have to happen at a nearly unprecedented pace, but it can be done, and the asset manager has the opportunity now to use their voice in guiding the system to make that change.  The asset manager can help visualise the desired future state, the opportunities, and the obligation. And there can be few more qualified to lay out the route to getting there.

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