Infrastructure, energy and construction forum - Report part three

Above: Declan O'Brien of UBS Asset Management (on right of picture) speaking at Future Cities Forum's 'Infrastructure 2025' forum at DLA Piper LLP

Future Cities Forum's 'Infrastructure, energy and construction 2025' report part three examined the challenges around decarbonising transport in the UK, the investment opportunities in the freight sector, the need for government to connect with the journey to a Net Zero Building Standard, and the role for the 'resilient edge' coastal cities to become new industrial powerhouses.

The discussion included contributions from Quinbrook Infrastructure Partners, UBS Asset Management, Grimshaw, HOK and DLA Piper LLP.

During the debate, Declan O'Brien of UBS was asked to comment on progress around the decarbonisation of transport and the balance between public and private investment.

Declan is Head of Infrastructure Research and Strategy of the Real Estate & Private Markets business of UBS Asset Management. In this role, he is a voting member on all of UBS's direct infrastructure committees. He is primarily responsible for providing quantitative and qualitative cross-regional analysis of infrastructure investment markets to assist with portfolio allocation, and to find attractive new markets and sectors for investment by UBS's funds.

'We manage insurance and pension funds. We invest in data centres, energy storage and I focus on the decarbonisation of transport. Seventy per cent of co2 emissions globally comes from surface transport and a lot of that is freight. We focus on the parts that do not have public subsidies. Many parts of transport today without subsidies are very economic and can be delivered quickly. There is a lot of this that is very economic. It really is a missed opportunity. Quite rightly there is a huge focus on passenger vehicles and EV charging, however there is not enough focus on commercial fleet segment. If you are a logistics or postal company it's not just the upfront costs (of decarbonisation), it's the inconvenience of moving from fuelling where and how you want. How do I get my employees to work?

'Globally on passenger vehicles, we are doing quite well. One in five vehicles are low carbon, and China is a big part of that. Only three percent of commercial vehicles are low carbon. Sixty five per cent of all vehicle trips globally are less than 400 kilometres and the technology today is around 500 kilometres so there is no reason why we should not be moving that last mile and mid journey plan for electric commercial vehicles but it seems like governments do not focus on this. It's very good news to hear about the strategic spatial plan for energy infrastructure to be put in the right places (from NESO) but there are a lot of sites where there is not enough power for logistics or postal companies to decarbonise.'

Above: CGI from Aegis of freight transport charging station (courtesy Aegis)

One investor that is tackling the commercial freight opportunity is Quinbrook Infrastructure Partners. The firm's Global Head of Sustainability and Impact, Hilkka Komulainen, commented at the forum on the government's plans to unlock UK pension fund investment to help finance infrastructure projects.

'We are an energy transition investor and we build private businesses for renewable energy generation Renewables are very much our history and we look at projects involving grid support, grid stability and now the decarbonisation of transport in the UK, and we are invested globally. We have a UK fund, which is focused exclusively on UK investors, which includes pension funds and this shows there is a lot of appetite for channelling capital locally. The story I love is being able to say that my pension has helped cut energy bills or emissions locally.

'We have just bought a UK business called Aegis Energy, which creates charging infrastructure for commercial freight vehicles. However there is always competition as to whether we invest in the USA or in Australia for instance. When we compare the the three at the moment the UK is trailing.

'Looking at where we want to invest, hearing what Alice Etheridge at NESO had to say about a spatial strategic plan for energy, and the grid and avoiding delays (in connections) in the UK is music to our ears. Probably the biggest determinant of where we invest is knowing the location of where you can easily link into a grid connection. Access is vital.

'We are looking to deploy over £1 billion but if the grid connection is more than three to five years out then that affects whether we invest. Anything that NESO can do about that is hugely helpful. We have tried to utilise existing grid connections where possible, for instance via an old coal fired power station in Wales. On other areas like solar, which we invest in, as we get more of this nationally we are seeing more 'Nimbyism' - and I understand that position if you have been used to a view over marshland or countryside and now there are fields of solar panels - so it would be better to have more communication on what the benefits are for local communities.

'We have just made an investment in a company which is building charging stations for freight. HGC and LGV. This will be a fleet based subscription model - allowing you to book your charging spaces - and it will be multi technology. This might include biogas and other options so you don't have to commit wholly to EV.'

Image above courtesy of Aegis

Aegis has stated:

'This investment from Quinbrook Infrastructure Partners kicks off the construction of the UK’s first clean, multi-energy recharging and refuelling facilities for commercial vehicles. The network of hubs will meet the needs of all truck and van operators transitioning to cleaner fuels, including electric, HVO, hydrogen and bio-CNG.

'Transport is the highest emitting sector in the UK, accounting for 29% of greenhouse gas emissions, while commercial vehicles contribute 10% of the UK’s total emissions. There is growing regulatory pressure to decarbonise – with sales bans on non-zero emission vans and trucks from 2035-40 – while consumers are demanding more sustainable products and services, making the transition a key strategic priority for logistics operators.

'However, the energy transition demands considerable growth in infrastructure provision. Installing depot infrastructure is often impractical or unscalable, particularly where logistics operators lease their premises or there’s a grid constraint. Meanwhile over half of van drivers(52%) have no access to at-home charging.

'By building first-of-its-kind public infrastructure, Aegis Energy will deliver an essential missing piece that will enable the next wave of low and zero-emission truck infrastructure.'

Above: Eden North project at Morecambe, Lancashire (courtesy Grimshaw) - cultural and educational infrastructure boosting the economy of a coastal town

Keith Brewis, Partner at Grimshaw, proposed that the UK needs to re-think industrial and housing development to fit with where renewable energy sources are located - and make much more out of the UK's richness in nature resources and join this up for social equity.

'As an architecture firm we have been obsessed with engineering and technology and this has moved us into the infrastructure sector and also the national policy space. A lot of that infrastructure design has been in the service of government. We have talked about how Heathrow expansion is now back on, but the five year electoral cycle means that infrastructure projects go on and off - like HS2 as well. I think this points to a need for a long term infrastructure plan that recognises the preciousness of land in the UK and the relation to the sea. It's incredible but also heart-warming to hear from Alice Etheridge that it is the first time we have developed a national spatial strategy for the energy grid. However, how does a government working under a 5 year mandate plan for something that the nation needs over a 50 year period?

'Reflecting on how the great late eighteenth and nineteenth century industrial cities - like Manchester and Sheffield - were built around sources of energy, They exist because of energy - the coal and water - and the industry that came with it. I believe we often pursue historic notions of the reasons for urbanism and then we are growing housing to meet metrics. Therefore we have lost sight of the long term purpose of that housing for the future economy.

'We have over 22,000 miles of coastline and a love of trade and the ocean. We are an island geography. It strikes us that we have an abundance of offshore energy untapped, the second biggest tidal range, and the biggest single offshore wind farm in the world. If the future economy is based around industry that needs the assuredness of sustainable energy we need to reflect that we are growing urbanism in the wrong places. We need to think about the resilient edge, where we can build settlements, industry and agriculture that can plug directly into the sources of renewable energy, on the edge and coasts of the country. This would take some of the stress off the interior cities, which would be for service economies, and in effect take Britain's industrial heartlands to the edges of the country.'

Whether cities and towns are coastal or located in the middle of the country, they will still have to address the challenge of a net zero building standard for a range of building typologies, from residential through offices and education to science and technology and industrial. Rob McGill, Sustainability Lead at HOK was asked to add his perspectives:

'The transport industry is contributing 23 per cent to carbon emissions globally but the construction industry's building operations stands at 28% with an additional 10% for construction. I would say that first challenge is about speed and the timescale. The Net Zero Building Standard has been in development for some time now, and the pilot has been launched. The ultimate ambition is to try and harvest as much information as possible on the energy our buildings use and how we can use the information to help adapt and transition to net zero..

'There is worry. that we understand some sectors in terms of energy use well such as residential, commercial and education but it gets more difficult when you include science and technology.

'It's a bottom-up movement trying to shift the whole industry, with many of the best minds from practitioner groups involved. Despite the high level of expertise this is the Achilles heel. There is also a funding issue in how we get this data. At the moment the burden is put on clients of building projects to fund the data collection. There is a collective understanding in the industry that we are aiming for both 2030 and 2050. We won't be delivering net zero buildings by 2030, judged on our current progress. But don't put the data burden on clients, who are already being asked to pay for many sustainability modifications and upgrades on the design side. It's extremely challenging, we are still struggling to work out what good looks like in terms of carbon reduction. I would like the government to be more involved. It is noticeable that the construction sector is very under-represented at COPs. I can't speak for infrastructure though.'

Above: HOK designed a deep retrofit of London’s 10 New Bridge Street for European real estate company Atenor, which had acquired the 1960s office block and has a history of creating sustainable urban developments.  

Howard Bassford, Partner and head of the infrastructure and transport sector at DLA Piper LLP spoke on the importance of timing and how the electoral cycle influences the start dates of infrastructure projects:

'We are supposed to have a decarbonised grid by 2030. However the critical date for infrastructure projects is not 2030 but May or June 2028. That is when the Starmer government has to decide when to go to the country, about a year out from the election. They will be thinking about the pounds in the pockets of the electorate. The growth we are promised - and this is 'Boosterism' with a technocratic face - needs to aim at that date.

'The year 2028 is when the money will come via the funding via contractors on infrastructure projects into the pockets of the people. If you roll back from 2028 unless you start the planning application around now, all the growth projects will need be considered in the next six months. It is very difficult to reduce the length of time needed for the planning process to below twenty-seven months. That's about the fastest. Calculate back from then and you need to start the planning now.'

Future Cities Forum will continue this important discussion at its April event hosted by Manchester City Council at the Town Hall.