By Jon Phillips, Director of Corporate Affairs
After such a difficult year for many, including those involved in infrastructure, it is pleasing to be able to end the year with a sense of optimism. We will enter 2021 with the prospect of a Biden administration committed to Build Back Better and unlocking the political impasse on US infrastructure; the European Commission has set out its plans to deliver its Green New Deal and the UK has published its long awaited National Infrastructure Strategy as a vital step towards delivering on its Net Zero targets.
Here in the UK, private capital has helped to develop new energy infrastructure for decades, illustrated by the largest installed capacity of offshore wind in the world, with nearly £19bn invested in UK offshore wind energy between 2016-2021. With a legally binding commitment to reach Net Zero emissions by 2050, the UK appears strongly placed to attract the investment required to decarbonise not just its energy sources, but all sectors of the economy, including buildings and transport.
Infrastructure investment will also lay the foundation for a sustainable recovery to the pandemic, delivering on the ‘Levelling Up’ agenda. This is because infrastructure investment delivers multiples of the original investment in terms of its wider economic returns, with projects distributed across the country.
However, PwC’s new report Unlocking Capital For Net Zero Infrastructure, commissioned by GIIA, identifies that £400 billion of investment will be needed over the next 10 years to achieve Net Zero commitments – twice the current rate of investment. That is why the UK Government and Regulators need to think hard about how to create the right investment environment to attract the international capital necessary to deliver such an ambitious programme. And, according to the latest Global Infrastructure Index (a survey of 20,000 people from around the world published by Ipsos MORI in partnership with GIIA) the general public agrees. The 2020 survey found that public sentiment supports the positive role that private investors can play in renewing and rebuilding our infrastructure.
In Great Britain, 82% of those surveyed agree that investment in infrastructure is vital to the country’s future economic growth, whilst 69% of responses favoured the prioritisation of infrastructure in the government’s planning for the post COVID-19 recovery. Two thirds of the population do not believe we are currently doing enough to meet our infrastructure needs as a country, and support for private investment is strong with those in favour of private investment if it means the country gets what it needs, outnumbering those against by 7 to 1.
To ensure investors have the confidence to deploy private capital in UK infrastructure, it is critical that the government sets out a clear, sector-by-sector roadmap and strategic regulatory guidance from which investment can be steered cohesively towards achieving long-term policy objectives, whilst at the same time striking the right balance between consumer interests today and in the future. GIIA’s recent report; The Future of Regulation sets out some recommendations which we hope will be helpful in shaping that future regulatory framework and building on what has been a tremendous success for the UK over the last 40 years.
The much-anticipated release of the National Infrastructure Strategy, including the creation of a new National Infrastructure Bank, is a welcome step forward. There are exciting times ahead for those with an interest in financing and managing sustainable infrastructure for the benefit of future generations and no time to lose!