Infrastructure projects need to demonstrate a return on investment

Fabio Pulizzi 00:10

Hello, this is How to Save Humanity in 17 Goals, a podcast brought to you by Nature Careers in partnership with Nature Water. I’m Fabio Pulizzi, chief editor of Nature Water.

Welcome again to the series where we meet the scientists working towards the Sustainable Development Goals, agreed by the United Nations and world leaders in 2015.

For almost a decade, in a huge global effort, thousands of researchers have been using those targets to tackle the biggest problems that the planet faces today.

In episode 9, we look at Sustainable Development Goal number 9: infrastructure, industrialization and innovation.

And we meet an electrical engineer who sees efficient energy provision as central to a country meeting these aims.

Sinan Küfeoğlu: 01:02

I am Sinan Küfeoğlu. I am working as a senior policy manager at the UK Office of Gas and Electricity Markets, OFGEM.

Previously I worked at Oxford, Cambridge, University College London, Alto University in Finland, on various energy, economics and policy-related subjects.

I'd like to clarify that the perspectives I express are my own as a researcher, and do not necessarily represent or reflect the official or unofficial stances or views of OFGEM, or the UK civil service.

Goal number 9 is about building a resilient infrastructure and promoting sustainable industrialization and fostering innovation.

So it has kind of three pillars: ifrastructure, industrialization and innovation.

For the infrastructure in SDG number nine, the three main themes are to provide transportation, information and communication infrastructures.

So these are the enablers for a sustainable development in industrialization and innovation.

You know, without transport, without information, and without communication, we can't enable economic activity, industry and innovation.

So these are the main pillars picked up by the SDG number 9.

I’m originally from Turkey. When I was a little child, Isaac Newton was my hero. That is why I was quite interested in physics. That was my favourite topic in the school.

And when I started university in Ankara, in the Middle East Technical University, I wanted to study electrical engineering, just to continue all this. Faraday’s works, Maxwell’s work, you know, I started being more and more interested in this electricity and energy fields.

At the age of 14, I gave a seminar on the the importance and future of nuclear energy to the city representatives in my city in Turkey.

So I was quite interested in energy related subjects. That's why I studied electrical engineering in Turkey.

Then, I wanted to do research and get into academia. That is why I moved to Finland to do my Masters and PhD, again in electrical engineering.

But when I finished my PhD, I said: “Okay, this is a time for a bigger challenge to see, you know, to be exposed to the outer world.”

Because Finland is more of a reserved place. You know, well, it’s a happy country. Yeah, everyone, let's say in my university, Aalto University, we were all electrical engineers.

Imagine a corridor. Forty people, they're all electrical engineers, and they look at the world from the same perspective, from the same window.

So I wanted to change that, to expose myself for differences and different, you know, problems, peoples, backgrounds.

That’s why I moved to UK. And in Cambridge, I found exactly that sort of environment. I, for example, from this school of electrical engineering, I moved to business school, in Cambridge.

So in there I worked with business people, finance people, people from sciences, humanities, backgrounds, any backgrounds.

And I started working with companies, industry, the public authorities, the companies from all around the world, and getting questions from them. You know, a company approaches you and says: “Okay, we have this problem. Can you do research for us?”

I say, “Okay, yeah, we can do this. And we need these skills and experiences.”

They fund us. They go around our network, find the necessary skills. Altogether truly interdisciplinary research. We come up with answers. And we publish our answers. In a short time period, we can see the real impact in the world. And that is what motivates me the most, to see the impact what I do, what I publish in the end.

After that, I experienced the same thing in Oxford, now with the World Bank, EBRD, OFGEM, the civil service, we do regulations of policymaking, and everything we do, whatever we change, immediately, the next day, there’s enough impact in the orders of hundreds of millions, even billions of pounds.

So this is quite, you know, tempting and motivating. And energy is the enabler of everything.

Sinan Küfeoğlu 05:54

The biggest infrastructure challenge, I think, as a power engineer, I can say the access to electricity, the power network.

Because power network, in my opinion, is the biggest engineering achievement of humankind to this date, because it enables other sectors and other economies to continue.

And five, seven years ago, in Cambridge, we published a paper on the future of power distribution in the world, and investigated what parts of the world has access to continuous power, what kind of netoworks they have.

So around 1 billion people in the world right now lack continuous power access.

And the concentration of these people are mainly in the Global South. So there is an equality problem as well, as well as technical problems of accessing electricity.

So in my opinion, this is the biggest challenge to provide electricity to everyone, so that they will have an economy, they can create jobs and businesses and they can sustain their more than social lives.

In addition to electric power, I can say, access to clean water and sanitation is another infrastructure problem.

Because it is necessary to, as I said, sustain daily lives of, you know, dignified human beings. And again, this concentration of lacking access to clean water and sanitation is almost geographically the same with the lack of access to power.

So these two are going you know, side by side, I think, in terms of challenges.

So solving one will naturally solve the other I guess, if the necessary actions are taken. As SDG number 9 reminds me of transportation, it says information and telecommunications.

But transportation wise, I think the world is at okayish levels. So we can connect and travel to all, to even the remotest areas in the world.

It is fine, I think. Information, well it comes to telecommunications and internet. Yes, we should just distribute the Internet to all regions in the world.

Some companies, you know, are doing this, some widespread big projects that are promising that anyone on Earth can access to internet. I hope that will work out.

In terms of telecommunications, 2G network is almost everywhere on Earth. But the adoption of 4G is slower and 5G is much lower. I’m sure those will increase in time as well, as we achieve 2G.

So, you know, information and telecommunications are okayish in terms of when you compare with other problems in the infrastructure.

Sinan Küfeoğlu 09:03

When we talk about infrastructure, everyone thinks of investments. What would happen in the future? What we should do more to add on top of the existing one. But people tend to miss the thing that the existing infrastructure is aging as well.

For example, in the energy network, the usual lifetime of you know, equipment is around like 50-60 years, if you're lucky, 70 depending on the quality of the manufacturing.

So replacing the existing infrastructure, the aging infrastructure, is another big challenge. I remember back in the day, we went to a factory in Turkey. I was in the university there.

And they wanted to change the electricity infrastructure to a new one, to a smarter one, you know, Smart Grid, Smart Energy Systems.

Yep. Popular ones, Let’s do that. So that was the year 2010. We went to that factory. And I saw that the equipment for installed back in 1920s.

They were German-made, still working after 90 years, you see. But they had to be replaced maybe after 60 years. So they made it to 90 years. So these are huge costs, you see.

Sinan Küfeoğlu 10:22

In the developed world, while the infrastructure is ageing, and it needs to be replaced, this is the biggest challenge.

And the industry, it’s transforming into, you know, more digitalized, more green industries, more sustainable.

Whereas in the developing countries, they still lack businesses infrastructure. So basic infrastructure should go there first.

I remember back in the day, we had a chat with the retired senior officer of one of the biggest oil companies in the world.

I asked him a question said that, you know, he gave a speech about sustainability. Imagine an oil company former CEO talking about sustainability. That’s a bit ironic. I said, “Okay, you say were going to create a sustainable world in the in the future.” And I said, “In that sustainable world, there is no place for you, you know, oil companies. What are you going to do in terms of business.”

And he laughed at that bit and said, “I understand your enthusiasm, young man, but about a billion people lack energy right now in the world. And we are the first ones, the oil and gas companies, to reach these people before the electricity goes to them.”

So you know, the industrialization, the needs, they change rapid, vary widely between geographies. I think when we talk about the challenges the solutions, we should we should address what we’re talking about and where we’re talking about.

Sinan Küfeoğlu 12:00

So, the solution for this industrialization challenge, the practical and sensible solution, would be to provide decentralized and smart systems to the developing countries, and less developed countries.

For example, these solar systems, you know, solar PV systems, together with energy storage assets, and clean water and sanitation assets, they could be deployed, so that these regions will have the sufficient amount of basic infrastructure to run their daily errands.

And these self-sufficient mini and micro infrastructure could be a solution in these underdeveloped regions.

As long as financing mechanisms exist and provided to these regions, that's another problem. We know financing mechanisms. For the developed world the challenge is digitalization and ageing infrastructure.

So in one hand, we are going to incorporate more digital solutions. In the other we are going to green it by decarbonizing it. In the meantime, of course, we will replace the ageing infrastructure with the new ones.

Sinan Küfeoğlu 13:24

We had this kind of a trend, maybe 20 years ago, saying that, “Okay, let's decentralize everything, our energy systems. Why not go for micro grids, mini grids, self sustaining cities, self sustaining university campuses? Everything should be self sufficient.”

You have self-sufficient homes. These ideas emerged everywhere in the world. So we wanted to decentralize these power systems, for example. But after 20 years, two decades, when we see now that we are creating more bigger, gigantic centralized entities, rather than decentralization.

For example, it happened in the UK 20 years ago, when we’re talking about mini grids, micro grids right now, we are creating this future energy system, future system operator.

So it's going to be bigger, heavier in terms of physics, and more, you know, authorities and technical capabilities will be concentrated on the centralized entity.

So everything is going for centralized entities. So that’s, that’s a kind of a big irony in the developed world. I think. that should be mentioned here.

Sinan Küfeoğlu 14:39

There are various innovation challenges. First, we can mention of this research and development expenditure.

Again, there's this inequality in the developed world. The, you know, a higher percentage of GDP is being spent for research and development.

Whereas in developing countries it is almost half of that, or maybe lower than half of that.

Similarly, the number of researchers and academic activities in the developed world is much, much, much higher than the developing countries.

So that means that the gap in between is going to get larger, bigger, when time passes. So, when we, you know announced these SDGs, back in 2015, the main idea was to support, you know, these developing countries so that there’ll be more research and development innovation activities, so that the gap would be smaller.

But the numbers tell us exactly a different opposite way. So, more research and development activities are concentrated in the developed world, less in the developing world.

The other thing, in innovation, I think we should mention something really, really important here is the viability of innovation. Because the countries are, you know, funding the research work. Projects are the projects, and everything.

What I’ve witnessed in my professional career, I’ve been quite active in Brussels back in the day, attending, you know, European Commission meetings about funding announcements, all these you know, Horizon projects etc.

In many chats, I realized that they don't run proper return-on-investment analysis, cost-benefit analysis. So in the developed world, I can say that the biggest challenge with innovation is that people tend to use these buzzwords.

What are these buzzwords? Green, stainable, holistic approach, inclusive, circular economy. So as long as you bombard your research proposal, or, you know, innovation proposal with these words, you can easily sell it to people, to the funding authorities.

And those authorities don’t measure the impact after that. Imagine, you propose a research project of five years, and you’re funded less than 100 million euros.

And after five years, no one is asking how much of value you created. So how much of this money returned back to the society, returned back to the economies?

And I can give you two solid examples about this innovation challenge. The first one could be blockchain.

Five years ago, it was the biggest hype in the world, especially in the energy world. Everyone said, “Oh, it’s gonna decarbonize the whole world.”

We will say it. Blockchain is the hero. And many countries, primarily Germany, invested a huge amount of money in this in the sphere, funded projects, companies, startups.

But after five years, now we can see that most of those companies failed. They perished from the business world.

They couldn’t create any real value. They couldn’t create revenue streams. And what happened to those fundings? They are just gone, you see. Right now the similar thing is happening with hydrogen, similar big hype, it’s going to decarbonize everything.

You’re going to achieve net zero through hydrogen, and billions of euros are being spent everywhere, in North America, in Europe, even in Britain. But no one is actually, you know, asking the question: “How much of this money is going to return back to the economies also societies as real real value?“

So I think in terms of innovation, when we talk about innovation, we should really highlight and underscore the term viability.

The SDGs are not solid or binding targets. Rather, these are accumulation of numerous recommendations and roadmaps. And so we don’t have to achieve any solid targets by 2030.

They’re not binding, or legally binding. So these are recommendations. But when we asked the questions, “Will we achieve SDG number nine by 2030? The answer is yes and no. Both.”

Because some parts of the world you know, we already talked about the inequalities, you know the geographical differences, they’re going to achieve it maybe some pas have already achieved this, you know, SDG number nine target sub targets, there are various sub targets in there, but some other parts of the world may be they will never achieve it.

What I can say from my kind of professional experience, the ship has already set sail. These SDG ships in particular as SDG number nine, yep, it’s traveling now.

And it has a direction and ultimate kind of target It’s going there. But the main question is who is traveling in the first class, and who is traveling below the deck below the engines, below the sea level.

So some peoples are traveling first class, some people just below the engine rooms. So that is the problem because after all, I’m an engineer, and I believe in science and engineering and I really, really believe in the potential in mankind.

I definitely think that that we are going to achieve these climate goals, the sustainable development goals one way or another, maybe in 2030, maybe in 2050.

But eventually, we will achieve these, but it’s not going to be an equal journey for everybody.

Fabil Pulizzi 21:06

Thanks for listening to this series: How to Save Humanity in 17 Goals.

Join us again next time when we look at Sustainable Development Goal number 10: to reduce inequality in and among countries. See you then