A pivot for the infrastructure supply chain

Meeting net-zero and resilience objectives will require supply chain organisations of all levels to align and collaborate, writes Steve Tetlow.

The infrastructure industry and its supply chain are making a historic pivot in response to climate change. For a long time, the commonly-held view has been that the whole reason the supply chain exists is to build new things. This has certainly been the case for the UK water sector, where in the 30 years since privatisation, new assets have been central to the industry meeting its challenges of improving environmental water quality (driven by European legislation) and providing wholesome clean water to a growing society.

The twin aims of achieving net-zero and improving climate resilience are now changing everybody’s priorities. To manage out carbon, owners and operators will need to follow the hierarchy set out in the PAS2080 standard: seeking first to optimise, repair, repurpose, reuse or modify the assets they already have, and only resorting to building new assets once these other potential solutions have proved insufficient. Where new infrastructure is required, it will need to be built in a way that minimises carbon in both construction and in operation.

This shift presents a huge challenge to those in the supply chain, who primarily want to grow their own financial performance, now and in the future. If suppliers are willing to re-orientate their business activities to align with these priorities, then sustainable growth is still possible. But they need to be able to offer solutions that help reduce whole-life carbon; and this may imply commercial arrangements which reward them according to the value they bring, beyond the one-off construction of an asset.

For some suppliers (e.g. manufacturers of pumps for the water industry) the ability to reduce operational carbon will clearly be the most significant. But let’s put that aside for a moment and consider traditional construction activities where the focus is on how to reduce capital carbon.

Over the years, supply chains have become very good at value engineering and optimising for cost. They now need to become equally good at doing the same for carbon.

Steve Tetlow

Director, JN Bentley

The central problem in decarbonising the construction of infrastructure is that we use a lot of materials, such as concrete and steel, that are energy intensive; and the generation of that energy is carbon intensive. In stating the problem, you can see the answer is going to be in three parts:

1. Use less of these energy-intensive materials. We need to be designing more efficiently, using nature-based solutions and low carbon alternatives such as sustainable timber to reduce the use of concrete and steel. Specifications and standards will need to change, and regulators and clients will need to lead.
2. Use less energy in material production. Amongst materials suppliers, there has been a lot of focus and hard work on how to minimise energy and resource use. The recently published Low Carbon Concrete Routemap is one high profile example; another is the proposal to replace traditional blast furnaces producing steel in Port Talbot with electric arc versions. Technical solutions to lower carbon materials do exist, they need to be invested in and scaled up if we’re serious about delivering on low carbon construction materials. This might require government support and incentives for industries to invest in decarbonising products much sooner than their current capex plans show.
3. Decarbonise the generation of energy. By 2030, the electricity grid in the UK is going to be largely powered by nuclear, wind, solar and other renewables. However, supply chains are international, and many construction materials are made in places that are less able to transition to a green economy. Manufacturers with access to renewable energy generation may in future enjoy a competitive advantage.

Acting individually, organisations will only be able to make limited progress on these aims, so collaboration is crucial. Clients and tier one contractors need to provide leadership: the more they can show that they are serious about eliminating carbon, for example by becoming accredited to PAS2080, then the more this signal will filter down to those lower in the value chain, who are currently much less likely to be engaged. Contractors can play a key role in linking those with product knowledge with those in the solution development space, especially where more innovative products and materials are concerned.

Over the years supply chains have become very good at value engineering and optimising for cost. They now need to become equally good at doing the same for carbon. In the project space, there is a high correlation between the two, so that if you concentrate on reducing carbon you will also reduce cost. Is the same true for the production of materials in the supply chain? In the long term, yes; but it’s going to require investment in new equipment, in decarbonising processes and in power grids. That is what suppliers around the world are going to need to do if they are going to compete in the new world that we face.