PwC helps you deliver sustainable, resilient and inclusive capital projects and infrastructure in an uncertain world.
Infrastructure is critical to achieving the world’s climate goals. According to the United Nations Office for Project Services (UNOPS), approximately 80% of the world’s current greenhouse gas emissions come from infrastructure.
Our clients—whether they are policymakers, construction contractors, financiers or corporates—have a critical role to play in delivering and maintaining sustainable, resilient and inclusive infrastructure. We understand the unique challenges of your industry, and are ready to help you manage these challenges and capture the opportunities that change brings.
Recent events are having a real impact on infrastructure investment and delivery, creating both challenges and opportunities. The biggest factors driving change include increasing technology adoption, the urgent need for sustainability and growing requirements for operational resilience and security.
BNP Paribas estimates that 70% of the increase in future greenhouse gas emissions will come from infrastructure that hasn’t yet been built. Infrastructure investment needs to focus on reducing carbon consumption by pivoting from fossil fuels to renewables and alternative fuels. It should also provide incentives for greener construction methods and promote environmentally friendly modes of transport.
Another factor to consider is ‘just transition’ costs, such as compensation of displaced workers and workforce reskilling.
Facing increased pressure from stakeholders, many infrastructure investors are strengthening their environmental, social and governance (ESG) focus, and looking to invest in environmentally sustainable assets. In addition, several standards and frameworks have emerged to integrate climate-related factors into investment decisions and redirect capital to more sustainable projects. As ESG reporting becomes more mainstream and policy pressure increases, expect growing demand for such assets.
Today’s reduced infrastructure capacity and rising costs could drive asset owners and project managers to accelerate their adoption of technologies such as artificial intelligence and robotics. There is also an opportunity to reduce capital expenses for maintenance using technologies including intelligent drones, which reduce the need for onsite workers and can increase safety. As well as saving costs, such technologies can dramatically improve preventative maintenance, inspecting and scoping work faster than existing methods and providing more detailed information about necessary repairs.
More broadly, the shift to remote working arrangements across many industries has underlined the growing need for secure, resilient, cloud-based technologies and connective infrastructure.
The global COVID-19 pandemic brought operational resilience into sharp focus, particularly by exposing the fragility of supply chains. Supply chain challenges continue, with inflation hitting material, equipment and energy prices. Other ongoing issues include labour market shortages, the urgent need for steel and cement industries to decarbonise and reporting requirements for Greenhouse Gas (GHG) Protocol Scope 3 emissions. Developed under the guidance of the World Resources Institute and the World Business Council for Sustainable Development, the GHG Protocol is a set of global frameworks for measuring and managing greenhouse gas emissions. The Scope 3 Standard is used to determine an organisation’s emissions impacts from activities beyond its internal operations—for example, emissions linked to the goods and materials it buys.
The security of critical infrastructure is also increasingly in the spotlight. Critical infrastructure—such as power-generating facilities, gas pipelines and water supplies—faces risks from natural disasters, human-caused disasters (such as terrorism or theft) and accidental or technical disasters (for example, system failures). Cybersecurity threats to operational technology are also a significant concern.
The war in Ukraine created a humanitarian crisis impacting food supplies, energy markets and prices around the world. The estimated cost to support and rebuild Ukraine amounts to $411bn over the next ten years, according to a joint assessment from the government of Ukraine, the World Bank Group, the European Commission and the United Nations1. The war has also sharpened governments’ focus on energy security. This will likely lead to an acceleration of renewable energy projects to reduce dependence on fossil fuels, as well as energy storage projects to manage the intermittent nature of renewable energy sources.
In the short term, some governments have responded to the war's impact on energy security by temporarily recommissioning fossil fuel generation plants and storage facilities to ensure supply. As a result, the trilemma of balancing affordability, supply and carbon reduction has never been more stark.
These developments highlight the importance of capital projects and infrastructure in the global energy transition.
Around the world, we help our clients plan, finance, manage and deliver large-scale capital projects and infrastructure. Combining engineering, technology, industry and finance experience and knowledge, our teams work with companies throughout the full lifecycle of their capital projects. Our clients are from both the public and private sectors and include investors, contractors, owners, shareholders and users.
Many countries have long underinvested in infrastructure and must now also repay increased debt accrued during the COVID-19 pandemic. Infrastructure projects will need to be affordable for taxpayers and users, and will need to be stable, or investors won’t be interested in financing them.
Private capital remains plentiful, and regulations and reporting requirements are driving the availability of sustainable financing products. But a majority of infrastructure capital has yet to be invested as investors look for lower-risk opportunities. More private finance is particularly needed in emerging markets. This creates challenges around how to make projects investable and how to create income sources to repay private capital, particularly for climate resilience projects.
PwC can help clients design incentivisation and commercial models and public-private partnerships (PPPs) to help overcome these challenges. We can also help prepare investable projects and finance using a range of financing methods, such as PPPs or blended finance.
PwC can help clients assess ESG compliance with reporting disclosures (such as Task Force on Climate-related Financial Disclosures (TCFD) and Sustainable Finance Disclosure regulation) and provide monitoring and reporting systems.
We can also help companies with emissions goals that hinge on capital projects. In such projects, success depends on addressing complexity and managing collaboration. Outcomes need to be measured in environmental and social as well as economic terms.
Project delays can put climate and other ESG goals at risk, as can projects that are delivered on time but don’t deliver on their promises to reduce climate impacts. The result: wasted money, reputational damage and disappointed investors, customers and other stakeholders. To meet science-based targets, it’s vital to minimise the time between conceiving a project and putting it into operation. This requires alliances, teamwork and novel approaches to contracting.
PwC helps clients to develop roadmaps to decarbonise infrastructure assets and operations, and to plan, procure and execute successful capital projects to meet time, cost and quality metrics.
A wide range of technologies are available to optimise how infrastructure is maintained and operated—from Internet of Things (IoT) applications for real-time oversight to data analytics for predictive maintenance and robotics for conducting on-site inspections in remote or hard-to-access locations. PwC can help clients to digitally transform capital projects and infrastructure and overcome technological, organisational and data barriers.
Cybersecurity also continues to be a significant threat, and concerns are growing about the potentially catastrophic impacts of cyberattacks on critical infrastructure. The consequences of such breaches go far beyond financial loss. They include the potential for prolonged outages of essential services and, subsequently, impacts on health, safety and even national security.
PwC can help clients understand their supply chain risks and develop business continuity and security strategies to protect infrastructure from physical and cyber threats.
Market trends are leading to increased uncertainty in the infrastructure sector, with growing competition for low-risk sustainable investments, uncertainties in demand, unpredictable/reduced revenues, emerging tech innovations and rising attention to ESG. As a result, infrastructure owners need sophisticated strategies to preserve and create value.
PwC can help clients create sustainable value within their infrastructure portfolios by identifying actions to better align the risk-return balance to their target levels. We can also support clients’ ESG ambitions and objectives for their investment portfolios. In addition, our global community of solvers can provide comprehensive transaction support through services such as lead advisory, financial and commercial due diligence and associated tax and accounting services. We can also help clients divest from assets that do not support their ESG ambitions.
This analysis of global commitment to delivering green infrastructure shows pathways for private financing amid a known divide between rich and poor countries.
Affordability of the global infrastructure transition should be at the top of the policy agenda. Tackling climate change means radically transforming the vast network of infrastructure that makes the modern world turn. We can’t afford not to act, yet the cost of this transition is difficult to quantify.
The infrastructure sector sits at a collision point of global disruptions, including a shift in capital availability, evolving social and environmental priorities and rapid urbanisation. Explore our series looking at the overarching forces that will influence the future of the infrastructure industry.
Cities are the engine of the global economy, accounting for approximately 80% of global GDP. By 2050, the current urban population of around 3.9 billion is expected to grow to roughly 6.34 billion—that’s 70% of the total global population. This growth is rising fastest in emerging markets and developing economies like India, China and Nigeria.
Using a robust value framework and advanced technology tools, we support organisations in the evaluation and planning of delivery portfolios that maximise return on investment and meet strategic objectives.
Global Capital Projects and Infrastructure Leader, PwC United Kingdom
Tel: +44 7764 235 239
