Harnessing Innovation to Power the Future

Introduction

This article is part of an Asia Clean Energy Development (ACEF) 2018 discussion forum hosted by the Asia Development Bank (ADB).  Its primary focus is the identification of commonly used terminology in international and national public policy debate for the promotion of positive Climate solutions. As such, I will not discuss the overused and imprecise term Climate Change. I prefer to use the term ‘man made pollution’. I make no apologies for my use of non-gender inclusive language where it occurs throughout this article. Instead I acknowledge that all humans are ultimately responsible for the environmental and social mess they continue to create for themselves and each other.  I prefer not to use terms such as ‘sustainability or resilience’ because these terms have political connotations as well as contextually specific value and inferred meaning in business and finance circles. A community in Brazil might argue that school lunches are a sign of sustainable and resilient government. This sustainability indicator is often used as a measure of government corruption and political inclusiveness in Brazil. The same term can mean something different on Pacific Islands concerned with sea water level rises and the loss of community food gardens. We might talk about ‘liveable cities’ or the importance of sustainable agriculture and aquaculture in remote and rural communities as a necessary means to achieve Climate Change resilience. What we need to understand is that these words have context specific meanings and emotional subtexts for different audiences.

Innovative public policy solutions that are fully integrated with both private business and community expectations must achieve responsible and equitable economic and social outcomes. All E-WASH ( Energy, Water, Sanitation, Health and Education ) infrastructure development imperatives must be viewed in the context of governance, standards, regulatory compliance and uniform enforcement measures if they are to maximize community income, water and food security objectives in a sustainable national debt environment. Smart public policy and innovative solutions are part and parcel of a multi-disciplinary problem solving approach. They require carefully articulated strategic policy priorities at the international, national and local government level. This demands a consistent policy approach at all levels of government to reduce red tape, corruption, bureaucratic delays and inefficiencies as well as confusion, deliberate postponements and nepotism. The implication for this not so radical rethink is not even a radical question. How relevant is classical and neo liberal economic theory in a world where community self-sufficiency and self-reliance demands an equal voice with big government and big business? If we take the meanings of ‘sustainability and resilience’ to their logical conclusions, we must consider mutually co-operative systems of government that are organized in a holistic and fully integrated manner. These systems must offer fair and equitable economic returns to communities. Modern technology allows for each individual to exist in a symbiotic relationship with all sectors of the economy. Issues of equity, equal participation and transparency are therefore at the heart of this debate in all modern democracies. This is true irrespective of a nation’s development status in the Asia Pacific or beyond. Nothing demonstrates this more comprehensively then the E-WASH infrastructure needs and the way we measure the economic cost and benefit repercussions on social and natural capital.

The role of the Universal Development Matrix

All countries in the Asia Pacific, Africa and beyond face significant future infrastructure development issues. These issues strike at the core of UN concerns for the building of sustainable and resilient rural communities and liveable cities. This is true regardless of a country’s wealth or development status. UN guidelines for poverty reduction, gender equality, food and water security are often cited as key goals. They are rarely financed in a manner that reflects a comprehensive multi-disciplinary design approach aimed at maximizing community benefits at the lowest risk to national debt. In the same context we can cite issues such as access to affordable social housing, transportation, pollution and waste management. Many of the current responses are haphazard and short sighted. They remain empty pleas in a world where policy disharmony and confusion between local, regional and national authorities are underpinned by self-interest and political and bureaucratic incompetence. The challenges for Climate smart solutions and their implementation are often insurmountable in the face of dysfunctional government and inarticulate institutional responses. Development bankers and major international sponsors are not immune from this criticism. They are often part of the problem as soft diplomacy priorities clash with local governance standards in poor compliance and enforcement regulatory environments. At the heart of this problem we often find powerful interest groups exploiting internal institutional dysfunction, poor staff training and knowledge standards and competitive management priorities. In countries where income distribution, cultural, ethnic, religious and racial differences form part of the social and economic disruption mix, progress remains even more frustrating.

Despite increasing competition for scarce natural resources the key drivers of public policy in the 21^st century will be access to cheap and reliable clean energy, food and water. Community expectations for education, housing and health services must be balanced with a demand for healthy environments and effective pollution control measures at the lowest cost to government and business. It might appear these competing demands are at odds with one another in a global environment pushing for lower corporate taxes, multi-lateral trade agreements and the imperatives for global economic growth. This type of economic nonsense is precisely what is wrong with the current debate. The ability to shift profits from one side of the world to another or make money in the foreign exchange markets often ignores the ordinary worker. The imperatives that underpin sustainable and resilient communities have little do with the quantity of appropriate economic growth but the quality of it and the fair and equitable distribution of its benefits. In a world where 70 trillion dollars must be spent to address the impact of pollution on public health by the end of the century, everyone expects that the full costs are leveraged against those directly responsible for creating this mess in the first place. This risk does not include the risk of ‘man made’ Climate Change, the impact of deliberate political disruption, wars and self-imposed conflicts. There is a dollar to made in everything. Trading in death is no different.

Conflicts that are created to serve the egotistical needs of irresponsible leaders in the name of faith, nationalistic sentiment or some confused ideology demands that we seriously question the very sanity of the sick people who govern us. There is much truth in the statement that we should not be talking about the present or the future but the continuous repetition of the past. What have we learnt about us in the last eighty thousand years? We have failed to learn, let alone achieve enlightenment in how to assure the survival of our own specifies. Don’t get me wrong! We all know where we have screwed up. Science even tells us how we should fix the mess we created. Getting to the point of actually doing something about it is where the problem with inherently lazy humanity starts. Perhaps there is some truth in the war and global population game simulations that maintain that our planet achieved its optimum population density when it reached 6 billion inhabitants. What we do know is that we place a great deal of faith in our ability to apply technological solutions and scientific method to redress a fundamental flaw in our own character without any real evidence of positive results. Let’s all go into analysis! Maybe that will help. I know, let’s blame a politician! That will surely make us all feel better about ourselves.

In all cases the core problems can be directly traced back to governance, standards, compliance and the enforcement of applied legislative norms. Even wealthy countries such as Australia face these problems. What we all agree on is that the solutions are context specific and cannot be ignored in the face of ‘man made Climate Change’. Government complacency, negligence and corruption often drown in a morass of entitlement and privilege. Regulatory compliance and transparency standards may vary from country to country as civil unrest and citizen disillusionment grows ever more poignant in the face of governments unwilling to deal with the growing income divide. Standards and government transparency are at the heart of the problems all countries face when it comes to future proofing their energy, water, sanitation, health and education infrastructure. Invariably the problems can be traced to the failure to apply one basic principle. This basic principle is that standards must always inform government policy. Instead we witness international standards ignored, or at best, paid a cursory lip service to. As a consequence we observe short term political policy made on the run without consideration for a rational and cost effective and consistent long term national strategic public policy direction.  The situation is so tragic that Australia’sChief Scientist recently declared that Australia is facing an energy crisis not because of the incompetence of the taxpayer funded  and cartel controlled energy bureaucracy, but because these public servants have struggled for years without clear direction or the power to do anything. Now we have the same public servants steering a transition towards a renewable energy future for the same energy companies that have manipulated government policy for years. The absurdity is mind boggling!

Without adequate consideration for the application of proper processes and the development of uniform national standards, regulatory compliance and enforcement frameworks are impossible to formulate. I fully agree with the Chief Scientist on that. I am sceptical of the proposition that a consistent national strategic policy direction that all stakeholders can agree on must necessarily exclude national competition reform, sector wide re-regulation and positive pricing control measures. Especially when standards remain undefined and understood by the bureaucratic institution responsible for imposing them. You just don't get good governance through compliance and regulatory measures without defining the standards first. You can't achieve a logical and consistent governance framework without first defining the standards the regulatory and enforcement processes must adhere to. In all cases the blame falls equally on incompetent or corrupt public servants ensnared in partisan political processes and subject to internal department priorities influenced by powerful interest groups. It is easy to blame the electoral cycle or the ham fisted political cash splash during election years. Even our most endearing symbols of democracy have lowered public debating standards.  This poor excuse for a broken and non-transparent political system remains a convenient defence for the media and by the media for a failure to promote an inclusive conversation. Australia’s ongoing national energy policy hiatus stands as a clear example for this comprehensive failure in governance at all levels of government.

What Australia shows conclusively is that dysfunctional government, red tape, government waste and corruption is not merely a historic constitutional problem but a fundamental lack of co-ordination between all three levels of government. Whether we are discussing Australia’s federal system or any other form of government that divides functions between regional and national authorities in the Asia Pacific is irrelevant. The same issues of inadequate co-operation between government and institutional bodies inform public policy debate in one form or other everywhere we look. What is clear is that the greater integration and co-operation between national and regional institutions is highly desirable. Streamlining processes by making national institutions responsible for national standards as well as uniform regulatory compliance and enforcement measures is imperative when regional state authorities are accountable for the implementation of national development priorities. We recognize that strong transparency requirements and clearly articulated oversight processes at all level of government and all key institutions remains challenging. Abrogating policy decision making processes to a bunch of public servants and waiting for regional government to lead the discussion on the renewable energy transformation of Australia's energy sector is quite frankly a  gutless national government response.

There is however an E-WASH model that is fully compliant with UN rules and guidelines and uniquely adaptable to all urban and rural environments. This model addresses core issues of poverty reduction, community self-sufficiency and resilience whilst promoting better and more transparent government. The model addresses key energy, water, sanitation, health and education co-ordination requirements whilst articulating national infrastructure goals under ‘man made’ Climate Change risk conditions. The model is uniquely adaptable to context specific solutions and can be applied in an integrated multi- outcome solutions focused public policy setting that includes transport, pollution, waste management as well as water and food security at the lowest cost to host countries. The model is fully compliant with UN and International Monetary Fund risk assessment practices and carbon management standards. It provides both a return to investors and the community without forcing host countries into an unsustainable debt spiral. The model is designed to specifically address governance, standards, compliance and enforcement rules from the project design phase through the finance stages whilst promoting local institutional and international partner transparency at all levels. This model is called the Universal Development Matrix. (See Figure 1)

The Universal Development Matrix  is built on the philosophic principle of inter-connectedness. Everything we do in this world has both a risk management and a cost consequence associated with it. Minimizing future risk within an integrated project design plan that incorporates a multi-disciplinary co-operative management implementation strategy is clearly desirable. Focusing on ‘Avoided Cost’ and multiple project benefits that enable multiple project income streams and community benefits on a long term basis is one of the key strengths the Universal Development Matrix delivers to advanced and developing nations.

Figure 1

The principles of the Universal Development Matrix

It is irrelevant whether we are talking about liveable cities or aspects of resilience and sustainability. At the core of all modern societies is the supply of affordable and reliable energy, water, sanitation, health, education, housing and food. Secondary issues such as efficient transportation, logistics and communication are inexorably bound to these basic necessities. Consequential aspects such as waste management, pollution control as well as maintaining healthy ecosystems for flora and fauna imply that we must learn to exist in a symbiotic relationship with planet earth. We don’t adhere to these basic contentions as a species, preferring to ignore and undervalue social and natural capital in favour of immediate gratification and exploitation objectives. Counting the human and financial costs of this deliberate neglect is a relatively recent phenomenon. This issue alone poses a serious concern for all international development agencies and UN institutions grappling with regimes that show variant regard for their own people. Advanced nations are no less to blame. Armed with the mantra for trickledown economics and little regard for bridging gender income disparity the nonsense economics that justify the deliberately politically engineered chasm been rich and poor drones throughout the western media. Addressing the problems with targeted solutions is an even more recent phenomenon. It is here that government, industry and financial institutions stall debate or deliberately undermine clever design solutions. Integrated solutions that address more than one problem at once with a multi-disciplinary project management approach are particularly challenging for governments, bureaucrats, investors and financial institutions to understand. A preference for simple project finance and single purpose infrastructure development proposals remain preferred practice. 

Let me give you an example

The Australian Prime Minister Mr. Turnbull recently announced a ‘game changing’ solution to Australia’s energy crisis. The Snowy Hydro 2.0 project is designed to boost energy storage and shore up the reliability of Australia’s national grid. The government advertised this scheme as a game changer for a national grid suffering from a variety of problems. Among these are an aging fleet of coal power plants, transmission and distribution grid reliability and sky rocketing electricity prices for consumers. On the surface the project seems to make sense.  Even the relationship between unsustainable electricity prices, flagging national productivity and consumer pain seem plausible. That is until you add the cost of taxpayer subsidies to the amount of money energy cartels are siphoning out of the country tax free. What precisely is the base electricity price negotiated between state governments and electricity Utilities in Australia?

The financial risks and undisclosed costs to taxpayers make the multi-billion dollar Snowy 2.0 a nostalgic anomaly of highly questionable value. For a start, the assumed eight billion dollar cost is unlikely to be realized. Conservative estimates put the project at somewhere closer to ten or twelve billion dollars. The reason for this is that new transmission line infrastructure and engineering cost overruns have not been quantified. The Australian competition and regulatory framework provide ample opportunities for protected electricity cartels to routinely siphon 28 billion from the Australian economy into overseas tax heavens. More than 3.4 billion of this blight on national productivity is the cost of hidden fees and daily grid connection charges to consumers. These daily charges equate to 10 Kwh of daily solar rooftop production for rooftop solar owners before they can think about turning on the light switch. With 1 in 5 Australian homes endowed with rooftop solar and predictions for battery storage adoption doubling every year for the next 10 years, serious questions have to be asked. 

1.)    What happened to the millions of taxpayer dollars supposedly invested in transmission and distribution grid infrastructure?

2.)    Why did taxpayers fund the implementation of smart meters when block chain technology makes them irrelevant at individual connection level?

3.)    Why have consumers no right to own their own electricity data despite assurances by the Australian ConsumerCommission regulator who claims that a new era of data sharing is not only on the horizon but inevitable?

4.)    What role do large centralized power generation and energy storage infrastructure projects play in a commercial environment that favours small scale distributed and locally managed community owned renewable energy networks connected to the national transmission grid clustered into 40 MWH renewable hubs and connected to the national  grid by a single Utility owned smart meter?

5.)    How do we transition the electricity companies / Utilities from an inefficient centralized power generation sector to a highly responsive service industry responsible for the management of distributed energy resources ( DER)  between multiple 40 MVH renewable energy Hubs / Zones?

In the case of the Snowy Hydro 2.0 project announced by the Turnbull government these questions remain unanswered. There are other financial and taxpayers risks this project poses. If the states of Victoria and New South Wales develop solar powered regional ‘Blockchain VPN managed embedded Smartgrid’ towns along their respective state borders, Snowy 2.0 will become an expensive white elephant. This is particularly true if these regional solar towns contain embedded battery storage and are connected to a series of proposed distributed waste to energy plants. Even without the construction of waste to energy plants; direct PPA agreements between solar towns and large scale wind and solar farms in the region, will mean that Snowy 2.0 is unlikely to turn a profit until 2040 or beyond.  The only sensible project rationale is a political imperative and the not so hidden agenda that tells us, that the real purpose of Snowy 2.0 as to guarantee the long term electricity supply for the city of Canberra only. After all, additional income streams from R-FACAS services are unlikely, given ramp up delays and embedded battery technology roll outs. This leaves the Snowy 2.0 project with the option of generating income from  continuous R-FACAs idle services that provide gird frequency stability and storage services for the large solar and wind farms in the region.  However with the introduction of 40 MV regional self-managed renewable energy hubs and embedded battery storage at both transmission and local wind and solar farm level, this income option is likely to leave Snowy 2.0 stranded in debt.

What you can see from this is that the project is an entirely ridiculous over kill from a financial perspective. This is particularly true for a national electricity transmission grid supposedly in compliance with international grid standards codes. Since the transmission line infrastructure connecting the Snowy 2.0 project has not been designed, costed nor built, the issue of national grid standards compliance remains. Building massive infrastructure projects on a political whim poses the same problem as development banks funding gas power plants on remote Pacific Islands and roads to nowhere in Papua New Guinea. It is the same problem as funding hospitals without doctors and schools without teachers. At the international development institutional level these problems can be directly traced back to institutional staff competence, soft diplomacy objectives, and entrenched preferred consultant interests. Discretionary interactions between donor and host countries through a preferred consultancy network invariably ends up in a very poor value for money return for never ending projects that have been purposefully designed to never fully meet host country expectations. 

Let me give you an example

I recently attended a PHD research proposal by an ADB staff member at the University of Melbourne. The Thailand based ADB energy professional cited his PHD research topic as the ‘Impact of Demand Management Policy on Transmission grid reliability’. No one informed this PHD candidate that data transparency and data sharing between Australian Transmission Grid  owners and government agencies, let alone third parties, was not even legislated under the Australian National Energy Market and Competition rules. So the entire PHD was based on assumptions and AEMO ( Australian Energy Market Operator ) data when AEMO itself complains of insufficient data access for reliable modelling and grid forecasting. No one informed the PHD candidate that ‘Demand Management’ policy is a reverse subsidy scheme that rewards customers for not using energy during periods of high demand. No one informed this PHD candidate that his specific interest in the Aluminium industry and the application of ‘Demand Management’ policy to Malaysia and Thailand would produce a very expensive policy nonsense for these countries. Why is that? The Aluminium sector in Australia receives a raft of subsidies starting with generous tax allowances and ending with electricity price and supply guarantees. As a consequence any ‘Demand Management’ subsidy subsidizes at least two existing subsidies through discrete and undisclosed usage arrangements  between state authorities, the regulator and the Australian electricity authorities. Translating this policy nonsense into the Asia Pacific would place considerable strain on government finances for developing nations. At an ADB staff culture level this example poses both a serious internal credibility as well as a long term host country debt problem.  Why is that? If the purpose of development finance is to create sustainable and resilient communities, a project that increases national debt for developing countries must be excluded from bank consideration and automatically trigger a project risk warning. The very idea that development bank institutions consider unsustainable subsidy programs as part of a standard project finance arrangement when better solutions are available simply defies logic.

Let me cite two simple examples

11.)    Let’s consider a tax credit policy that lowers corporate tax for industry investment into renewable energy projects such as direct PPA agreements, onsite self-generation and energy efficiency measures. Let’s consider a 15% corporate tax for any project that reduces grid reliance by 20% for a fixed investment and tax minimization period of 5 years. Let’s consider a Green Bond funding mechanism for this 20% industry renewable energy project. Naturally the policy can be incorporated into a 100% self-generation and energy self-reliance policy framework over a 25 year project maturation lifespan.

22.)    Let’s consider legislation for a national white good appliance energy efficiency plan. This plan would phase out 240 volt domestic appliances over a 20 / 25 year period. In the Asia Pacific the energy requirements for domestic refrigeration, cooling and washing machines will place considerable strain on existing and future electricity infrastructure. A simple phase out program that mandates 12 volt appliances can save billions in infrastructure expenditure and avoid a ‘Demand Management’ scheme completely. A uniform policy between Asia Pacific trading partners can put extensive pressure on white goods manufacturers to design better products under a mandated minimum 12 volt energy efficiency compliance ratings scheme.

In both cases the two policy examples have multiple cost, efficiency, grid resilience and health impacts. In the case of the Australian Snowy 2.0 project the effort remains to find multiple income streams in order to demonstrate project viability. In the case of the institutional staffing competence example we are looking at failure of banking practices at the most rudimentary level. We can trace these failures back down to the traditional way we apply classical economic doctrine to inform our decision making practices as the means to rationalize project design standards for the justification of political imperatives. Couching these familiar themes in media hype that crows about the national significance of a project’s value to taxpayers is a well trotted path. Ignoring ‘Avoided Costs’ and community benefits that do not comply with stakeholder interests remain equally undervalued in this perverted game of sustainability and resilience that rationalizes exploitation by stealth.

An integrated project design approach based on uniform national and international policies can turn a white elephant into a profitable business whilst addressing national debt.  At issue are the often ignored economic concepts of ‘Avoided Cost’ and ancillary income streams. Instead of thinking of large infrastructure projects as single use and single purpose projects we must embrace the idea of multi-use and multi-benefit projects. These principles can be applied to a single building, a road or any large scale city and rural development scheme.

For example

Pumped Hydro Energy storage projects should include the ‘Avoided Cost’ and ‘Ancillary Income’ provided by:

1.)     Water Security and environmental and irrigation flow

2.)    Land based aquaculture and other high return agricultural business development in regional / rural towns.

3.)    Boating and fishing / nature tourism

4.)    Distributed drinking water storage for Asia’s mega cities

5.)    Environmental impacts

6.)    Downstream impacts for communities dependent on adequate water flow.

7.)    Pollution and silt management

8.)    Drought and soil quality impact for managed environments such as farmlands and wetlands.

Even if there are no obvious negative consequences the project should at least quantify the positive benefits for all identified project consequences other than reliance on narrow economic assumptions for economic returns to some stakeholders.

Applying the Universal Development Matrix to Liveable Cities

Eight years ago I was asked to participate in a national building and planning code review aimed at developing a sustainable housing energy efficiency rating systems.  I declined the invitation from the Australian federal government agency not because the terms of reference where outdated but because the standards upon which they were based where fundamentally inadequate. Not only was the proposal unlikely to achieve a coherent national standard uniformly enforceable at all state and local government level, it would pose significant compliance issues at the building materials and inspection level. Once again we were looking at a stop gap measure that would never be enforceable at local urban and rural planning level for built environments. Instead I proposed a much simpler national energy efficiency guide for domestic and commercial buildings. This guide was based on the following standards specifications.

1.)    A building receives a 1 star energy rating if it self-generates or purchases all of its renewable energy requirements.

2.)    The building would receive a 2 star rating if it stored at least one 24 day of its own maximum consumption or could demonstrate a reliable local clean energy supply requiring no transmission grid supplement for a maximum daily period of at least 8 hours.

3.)    A building would receive a 3 star rating if it could solely function in a distributed Blockchain managed under a localized community VPN  and under transmission grid disconnection or Utility routing / maintenance incidents caused by high demand or unusual environmental conditions such as storms and bush fires.

4.)    A building would receive a  4 star rating if it generated more than its own energy requirements and fed all excess energy to either a community owned centralized battery storage facility ( in addition to its own local battery storage ) or sold the additional energy to local industry and electrified transport networks.

5.)    A building would receive a 5 star rating if in addition to points 1-4 it collected at least 25 litres per day of rain water for each occupant’s drinking purposes.

6.)    A building would receive a 6 star rating if it stored and recycled all grey water for use in toilets in addition to points 1-5.

7.)    A building would receive a 7 star rating if it collected and partially treated its own black water (sewage) in addition to points 1-6.

8.)    A building would receive an 8 star rating if it fully recycled its grey and black water in addition to points 1-7.

9.)    A building would receive a 9 star rating if it fully recycled it’s grey and black water and green waste in an onsite waste to energy conversion facility in addition to points 1-9

10.) A building would receive a 10 star rating if in addition to points 1-9 it maintains an average energy consumption not exceeding 1.2 Kwh per day per occupant.

This 10 star ratings system is at the heart of all liveable cities and sustainable rural communities in both the developing and developed world. Why is this so? If you look at figure 2 you will notice that the renewable energy zones / hubs propose a net zero emissions profile. You will also notice that the distributed energy and energy storage profile are mutually self-reinforcing. Promoting lower overall national government transmission infrastructure costs, higher distribution grid reliability and higher community income returns at lower national government debt should be at the core of sustainable energy infrastructure design. If you add into the system distributed waste to energy including sewage to energy conversion technology you increase the resilience of the local distribution grid. You also minimize land fill, waste cartage, sewage pipelines, pumping stations, filtration, ocean outfall as well as local waterway and wetland degradation. Additional income streams from waste to hydrogen technology can benefit from a national hydrogen / hybrid public transport policy. In conjunction with a inner city diesel exclusion policy, it is possible to reduce air born particles, traffic congestion,  noise and improve public health outcomes.

The true challenge for everyone looking to implement an integrated E-WASH Universal Development Matrix for existing cities and remote rural communities is twofold.

1.)    How do you redesign existing infrastructure around the current built environment at lowest cost?

2.)    How do you connect remote communities into the national network so they can benefit from development cost savings and increased income streams?

In highly populated countries such as India this problem is both a curse as well as a blessing. In countries characterized by low population and large distances the same is true. Small Pacific Island communities on the other hand pose different problems of scale. What we have discovered is that the net zero built environmental model works in all cases at the lowest marginal cost whilst enabling the highest community return per capita. Once again it all depends on the application of intelligent and nationally consistent standards, compliance and regulatory frameworks and policies in a context of co-operative and transparent governance. Let’s assume a high fossil fuel import Asia Pacific nation or a western nation trying to balance its education budget. The following example works for both.

Example

We know that 400 solar panels on a school roof can supply 1 gigawatt of electricity per annum. Assuming a 15 cent per Kwh feed in tariff on a 4 year ROI will generate an income of $75,000 per school per annum. This equates to 1 fully funded teacher per school in Australia. In the Asia Pacific it equates to approximately 12 fully funded teachers per school. If we then consider the avoided cost of diesel and gas imports and any related fuel subsidies and add to that the carbon emissions, credits and air pollution savings we have to wonder why governments in the Asia Pacific don’t have this policy.

Example:

Let’s consider the application of the Development Matrix to the issue of water security. With cities such as Cape Town in the grip of a water crisis and Jakarta unable to meet its own drinking water needs both cities are discussing water desalination systems among other things. The vast majority of Asia’s mega-cities currently cannot provide clean and reliable tap water to its residents. High rise housing developments do not incorporate energy storage walls nor do they mandate hydro-walls for rain water collection and grey water storage. They don’t incorporate these things because at the local municipal planning and building code level these things are foreign concepts. At the national ministerial level these integrated distributed resource concepts are equally unknown. As a consequence everyone scrambles madly to get funding for huge centralized energy and water projects without thinking about the downstream cash needed for the kilometres of pipes, cables and other infrastructure. If however you look at every social housing project in Asia, you will notice that developers maintain a long term interest in the provision of energy, water, sewage and communications services infrastructure as an additional income stream. This is particularly true in the Philippines and India where special subsidies and social housing exemptions for government staff, the military and police is common. The same exists for public housing and welfare recipients in Australia. With ever increasing frequency of freak natural events and rising infrastructure maintenance and upgrade cost pressures on national budgets to reduce welfare, education and health spending is a popular political theme. Implementing a rational national 10 point building energy efficiency plan seems to be in the too hard basket. This is despite the savings in water and sewage infrastructure cost and the benefits to environmental run of and pollution. These problems are particularly evident during periods of unusually high rainfall, drought or during the tropical monsoon season. It doesn’t matter whether you are in Delhi, Jakarta or the north of Queensland! There is at least 1 time during the year that your sandaled feet will trudge through raw sewage spilling out of the storm water drains into streets and into shopping malls. Mandated hydro-walls for high rise apartments, factories and low rise domestic dwellings can reduce the overall volume of seasonal rain water, lower the cost of purchasing bottled water and reduce city infrastructure costs.

The same principles can be applied to road construction. Distributed underground storm water collection tanks and small lakes in planned green spaces can reduce water flow and environmental run of. It also provides a valuable water reserve for city park irrigation that can be developed into a local aquaculture project. In Melbourne Australia several urban lakes are used for recreational fishing and commercial eel harvesting. Once again, the issue is not that smart design breed’s innovation, but that innovative policies applied consistently at a national level and in compliance with international standards enables informed governance and the enforcement of transparent regulatory mechanisms at local level. A more integrated, better trained multi-disciplinary bureaucracy can be a nice added benefit.

Short Author Biography

Mr. Angerer has more than 30 years’ experience as a government adviser and senior consultant covering all aspects of Climate policy and context specific solutions for urban and rural development. Mr. Angerer has a multi-disciplinary background in Architecture, Engineering, ICT, GIS & Mapping, Urban and Rural Development, International Development Law, Transport Systems, Environmental Management, Business and Project Management, Risk Analysis, Change Management as well as E-Learning, Education Management and Training. Mr. Angerer has developed the UN compliant E-WASH system with a focus on poverty reduction, food and income security, whilst enabling positive investor returns at the lowest risk for developing nations. Mr. Angerer’s expertise is in strategic government and business policy and business development for all aspects of renewable energy and Blockchain peer to peer VPN managed community owned smart grids for integrated E-WASH grid connected and off grid system. Mr Angerer also has an extensive background in employment and training policies and curriculum design standards at national and international level.

We must change the banking mind set on development finance and soft diplomacy

The UN estimates the infrastructure development costs in the Asian Pacific to be in excess of $1.7 trillion USD over the next 30 years. This estimate raises a raft of questions not only about how this figure was arrived at but where, how and in what context this money is to be spent. Throughout the Asia Pacific are clear concerns over sovereign debt levels and the impact of foreign asset ownership. With debt to loan repayment levels standing at a ratio of 1.2 : 1 the impact on the lives of the urban and rural poor are often ignored by wealthy nations seeking to promote their soft diplomacy and Climate Change agendas. Development agendas are always argued to reflect the host nation’s development objectives. What is entirely unclear however is whether these development agendas reflect the objectives of the national government or the state and regional authorities? In a large number of cases regional development agendas receive international donor funding approval via special interest groups lobbying for these funds. Often these groups are aligned with key individuals in government and business who will directly benefit. As a consequence we are witnessing an arrogant abuse of authority ensuring the repeat of the same development mistakes many accuse previous government officials of. Even though a raft of checks and balances exist in the development finance sector, we continue to see the approval of projects that are handpicked by donor countries and industry insiders with little regard for their broader social and economic impact. Project design and all aspects of project management are calculated to ignore future debt obligations that might lower the gulf between rich and poor. Development banking institution from the World Bank through to regional banking and NGO finance institutions are simply incapable of designing appropriate loan mechanisms for integrated projects, enabling the broadest social and economic benefit at the lowest debt to equity ratio even when they acknowledge the problems with current approaches.

Let’s put this into some perspective! Infrastructure aid and development needs in the Asia Pacific have been estimated at 1.7 trillion USD without accounting for specific Climate Change adaptation needs. If the developed world would make all these funds available tomorrow, the combined Asia Pacific debt; including all outstanding loans and excluding loan default or other contingency banking arrangements; would exceed 31 trillion USD by 2050. There is little doubt that vast sways of community leaders and activists have a point when they argue that development finance mechanisms deployed by the wealthy nations through powerful global bureaucracies such as the UN are little more than the vanguard of a new type of economic imperialism designed to maintain the existing international order. A large part of the problem rests with the type of development finance and social impact finance methodology deployed. Irrespective of whether a top down or bottom up development strategy is recommended, the macro economic analysis contextualizes the nature of the specific problem within a national straight jacket of assumptions that are presented as desirable outcomes. Invariably people are asking whether these assumptions realistically meet the desired objectives of the communities whose lives the development projects target. Questions are increasingly being raised about the ethical, cultural and social principles these aims are meant to improve for who, what, where and when and at who’s cost. Many of the reports highlight GDP agendas in the context of governance, income tax reform and local institutional reforms without questioning whether the idea of increasing indirect taxes and government charges coupled with privatizing transport, water, electricity, health and education services is in the long term development interest of the most marginal nations in the Asia Pacific. Despite ample evidence in both the developed and the emerging world that this approach increases private household debt, this traditional macro-economic methodology to development financing continues to persist.

It is clear that the traditional narrow formal training economists receive is part and parcel of the problem. Unable to think outside the box these people write the same old rubbish reports and slavishly cite statistics to support their own preconceived ideas of what developing nations need and want. Perhaps more intriguingly is that the assumptions that underpin the methodology of these reports highlight a single unified pathway to development that mirrors western thinking without recognizing that 21^st century technology offers a vastly different way of inclusive development then was previously thought possible. This is precisely where the new battlegrounds are.  We should not be under the illusion that the emerging economies of the Asia Pacific have to follow the same 18^th and 19^th century economic development model of the west.  Modern technology allows us to leapfrog much of these outdated ideas with innovative and culturally appropriate development methods without destroying the very community fabric that makes these nations the vibrant historic and culturally unique societies they are.

In the Asia Pacific local community leaders are anxious over a new type of economic colonialism as rural landownership, affordable housing, social welfare, jobs, education and health become battlefields in the growing divide between rich and poor. Invariably the reports blame the economic development problems in transport, housing, energy, water, sanitation and health infrastructure on the readiness of the institutions to design, plan and manage the western funded projects to a standard acceptable to the western donors. Blaming poor levels of governance and low levels of accountability on national and regional institutions in the Asia Pacific whilst approving loans to the very people international financiers are critical of seems an entirely pointless prattle. Influential businessmen and politicians are forever building monuments to themselves in an effort to enrich themselves and grow their spheres of influence. Mugabe is exempt from prosecution for years of incompetence and theft.  There is no doubt that the embedded commercial interests underpinning the aims of soft diplomacy in the international aid and development finance sectors drive the interests of the developed world at the expense of ordinary people in the emerging nations of Africa, Latin America and the Asia Pacific. Recent trade disputes between the US and China merely reflect the tip of the underlying socio-economic problems with international agreements. Ignoring local customs and values in favour of trade agreements that will inevitably depend on the subsidy arrangements of the host country is something no government should willingly agree to. Poor nations are aware that their relative advantages in labour and other resource costs must be balanced against disparities in education, environmental degradation, land ownership, population displacement as well as the costs to health and the loss of social and community identity.

The future urban ghetto’s in Kolkata comprise of high rise developments constructed on farm land, wetlands and swamps that used to drain the Ganges into the Bay of Bengal. Roads and building foundations are not designed to cope with heavy monsoons or Climate Change. Daytime summer temperatures frequently exceed 45 degrees Celsius.

Displaced rural workers migrate into the city for low paid construction jobs. They often live in the unfinished buildings without basic sanitation or clean drinking water.

Transport outside one of Delhi’s railway stations on a relatively smog free day

Children washing themselves in the back streets of Balia

At the heart of these problems are perceptions of empowerment and alienation. Invariably these matters coalesce with local traditions, culture, religion and ethnic mores that find expression in unique and sometimes violent nationalistic sentiments. Creating sustainable urban and rural environments that nourish and support local communities whilst providing access to economic participation often involve political choices that are difficult to reconcile. Conventional liberalist thinking pushes a raft of agendas that have evolved little from the master and servant arrangements of the Middle Ages. Some would go as far as to say that modern day slavery is merely hidden behind a veiled façade of privilege, inherited wealth and institutionalised corruption. Others point out that each age in human evolution has given rise to new heroes who against overwhelming odds battled the establishment in order to carve out a new future for themselves and their followers. Today we worship Bill Gates and Elon Musk. It was not so long ago people talked of Alexander the Great, Genghis Khan, Napoleon and the great Chinese dynasties. Just as we have commodified the great leaders of the past we institutionalize the leaders of tomorrow. The disgusting immorality of this trend is that we have outsourced personal responsibility and accountability to a self-serving behemoth known only as the bureaucratic machine and its political masters.

Electricity and communications infrastructure in rural India

Wiring standards, safety and compliance are not on the agenda here.

There is of course logic behind the denationalization of control. Hiding decision making processes behind a wall of labyrinthine procedure and unfathomable processes is all about maintaining standards of equity and fairness whilst enabling compliance through rule based enforcement. This arrangement has, we are told, always been considered as the most rational organizational principle for all complex human organizations. A homogenized and pasteurized sausage factory for the masses to chew on and stew over provides ample fodder for disagreement and hopefully little chance for collective action. Unlike Pacific Island communities who can often wait for years until a true village leader emerges, we prefer to elect or nominate our representatives from those willing to apply for the job. As a consequence, modern societies are riddled with people who are prepared to put their own interests before those of the community they are employed to serve. Self-interest is perhaps the most powerful instinct of any living organism. Other components to this subset are survival and procreation.  All living organisms deploy strategies for space, mating rights and all other resources needed for individual survival. These strategies can include any type of co-operative arrangement as well as competition in every form.

Social housing in Cebu Philippines is often constructed with poorly planned road access on land little more than 1 meter above sea level. Housing construction methods as well as building and planning codes are ignored or subject to bribery from government contracted developers. During heavy rains the sewage mixes with road drainage flowing out of the manhole covers into the streets.

All our great cities exist because of the collective needs of the people that chose to live there. The need for shelter, security and commerce remains an evolutionary imprint we do not seem to be able to escape from. No matter how hard we try to remove ourselves from the immediate nastiness of what this may entail, we are increasingly confronted by the compromises we need to make. This is true whether we look at problems of housing affordability, cost of living, or the health and welfare for ourselves and our families. By 2050 our small planet will host more than 41 mega cities with inhabitants of 10 million people or more. Most of us are acutely aware that greater urban densities, rural migration, homelessness, urban congestion, crime and Climate Change will make these places a nightmare on earth. The motivations that caused humans to congregate in collective communities for security in the past are no longer a valid reason for living in large urban centres. Karachi has more than six hundred assassin for hire. 80% of their business derives from political assassinations with the rest attributed to the Karachi mafia. Entire neighbourhoods in the US are gang controlled and theft, graft, rape and many other crimes riddle major cities in the developing as well as the developed world. This does not have to be the legacy we bestow to our children and grandchildren.

Communities are living organisms. Like all living organisms they must have the freedom and the rights to manage and control their own collective needs. This is true irrespective of whether we are talking about a remote island or a neighbourhood in one of our great cities. Every successful urban renewal or rural development project respects these fundamental aspects of shared responsibility implied by this statement. Modern technology combined with strong local community representation supported by proper planning, zoning and building codes can transform the urban ghettos of today into the liveable cities of tomorrow. It can transform rural poverty into vibrant self-sustaining communities halting the breakdown of families and the relentless migration in search for jobs and greater economic security. The key to achieving this is to move away from large scale infrastructure planning and embrace the concepts of small scale, distributed development solutions that are customized and integrated to specific community needs.

In the absence of modern medicine local herbal remedies are prepared under the instruction of a visiting doctor. All of these remedies contain water from the local well contaminated with cyanide, E.coli and other bacteria. The water is neither boiled nor filtered.

Enormous sums are spent on E-WASH-E ( energy, water, sanitation, health and education) initiatives every year. Add to that the disaster and emergency relief funds collected by the many NGO’s and it becomes increasingly plain that the accountability and effectiveness for the expenditure of these vast sums are increasingly questioned. The question is not how do we spend money on soft diplomacy more effectively but how do we spend money more appropriately? How do we ensure economic development impacts evenly on all levels of the community without cultural and social dislocation and without increasing the divide between rich and poor? In a world where trickledown economics seems to dominate rationalist economic thought these notions are perhaps unfathomable left wing utopian ideals best enshrined as principles we should aspire to rather than act upon. This is precisely the problem! Instead of spending a $1 to fix the problem our institutional banking guru’s prefer to spend $1 without comprehending the entirely avoidable consequences the expenditure of this $1 creates. Let us look at a specific example!

The Republic of the Marshall Islands is designated as one of the 50 at risk and 23 at critical 'Need nations' by the UN. The atolls that comprise this Pacific nation are typical of the many island nations to the north of Australia with perhaps several key distinctions. Firstly, the country is the site of US nuclear experimentation. As a result, the island’s government and people are still fighting for full compensation from the US government. Secondly, the coral atolls are little more than 1 meter above sea level. This will make the entire population of the Marshall Islands the first man made Climate Change refugees unless the rest of the world will make Climate Action a reality now. Thirdly, without any land for agricultural production, the economy of the Marshall’s is entirely import dependent for its food, energy and all other materials. Despite a small banking services industry the country is dependent on selling its fishing rights to Taiwan, Japan, Russia and other nations. A small merchant maritime service sector provides the only other industry that provides income to a population living with chronic diabetes, high unemployment and a raft of avoidable health problems.

Despite years of development aid the lives of the people have not improved. Net migration to the US mainland is increasing every year.  A close look at the expenditure of ADB and US aid funds reveals that E-WASH-E infrastructure expenditure is poorly coordinated and largely wasted in expensive and ineffective consultancy fees or inappropriately planned and atrociously mismanaged projects. Not one aspect of this money is integrated with a properly integrated E-WASH-E Climate Action agenda even though all of the funding; other than the current work in training the department of finance in basic economics; is paid by the ADB under a Climate Action development pretense. 

As a consequence there is no properly planned WASH infrastructure. What exists has been constructed and is maintained by foreign companies who for some reason have managed to procure contracts in line with their donor country’s foreign aid policy. You will find that Majuro’s main water supply is the airport runway. There is no municipal planning or building code that requires rainwater storage to be mandated for each building on the island as part of a standard building approval process.

Instead of building a faecal and bio-waste to energy plant the only sewage treatment facility on Majuro operates on diesel pumps without any bio-digestion capacity. Sewage sludge is piled behind a series of storage vats near the main part of town. During high tides, or when the diesel powered electricity grid fails, raw sewage is released into the lagoon used by the local children ( see picture above). The subsequent health issues are something every visitor to the island is warned of in a casual conversation over turkey tail soup. Instead of recycling grey water and reprocessing sewage sludge into fertilizer, the increasing frequency of dry weather spells leaves the few raised garden beds filled with imported potting mix around town struggling in the salt laden coral rubble that forms the top soil on Majuro.

There are a few remaining breadfruit and coconut palms not covered with concrete and asphalt. They barely survive the harsh conditions. Despite the government’s food security agenda few coordinated solutions exist. Tourism is the only other option that seems to be on the agenda for a government looking for answers to a growing debt to GDP ratio. However, when a country can’t even process its own sewage into fertilizer and redirect its grey water into raised garden beds, the idea of growing something as simple as a few herbs is unlikely to attract foreign visitors other than the most committed diving enthusiasts.

There are clear and simple answers that can be implemented with a little planning and foresight. The problem is as always that development money for integrated project solutions and the training of local staff disappears with the next consultant and foreign adviser appointment. Somehow these people are forever pushing the agenda of a company interested in a plush contract sponsored by the donor country. Urgent funding in appropriate planning and construction standards and infrastructure compliance governance remain ignored. The idea of implementing project management standards and compliance codes run contrary to the agendas of the donor agencies and the companies interested in securing the contract. Even the idea of integrated solar and small scale wind generators to reduce the country’s diesel import bill is largely left to donor nations who take advantage of cultural traditions by gifting a few solar panels in return for prominent signage, the extension of commercial fishing rights and a generous tax deal.

It is true that much of the governance issues in the Pacific rest with the traditional authority structures. Government has always been run and management by a few prominent families. The Marshall Islands are no different in this respect. This does not mean that foreign companies who have installed themselves as preferred suppliers of services with their donor nations must exploit their preferred status by constructing substandard infrastructure and devising idiotic solutions to relatively simple engineering problems. In Australia's case the systematic outsourcing of DFAT ( Department of Foreign Affairs and Trade ) functions to four external consulting firms poses a serious accountability and value for money contradiction.

Where are the Australian and US Universities who could be engaged in substantial Climate Change, oceanographic, agricultural and environmental research, local training and knowledge exchange programs? Where are the diploma and undergraduate exchange programs in urban and rural planning, transport, civil engineering, building and construction? What we have instead are basic education and training solutions Australian companies organize with DFAT under contract. No one seems to have informed DFAT that the inappropriate primary and secondary school support, including the standard automotive and other basic TAFE training programs have not cut the mustard for 20 years. It took me 2 hours to discover that the Australian company offering education and training consultancy services is so incompetent in structuring any education and training consultancy / advisory service contract in the Pacific, that it can’t write an international consultancy proposal correctly. Even the idea of teaching basic construction techniques are a bit droll for an Island nation likely to suffer from cyclones and tsunamis. Instead of building cinder block structures on tiny coral islands, flood proof social housing should be constructed on pontoons and pylons in Majuro’s lagoon. This would leave the available land clear for raised garden beds filled with fruit trees and vegetables. Not that this idea is ever going to receive any serious financing before sea level rises claim the Marshall Islands for good.

The scarcity of arable land in the Marshall Islands requires innovative solutions. These solutions must by necessity not include covering the few acres of coral atoll with concrete slabs for housing only to see the housing washed away in the next king tide. Someone might even think of importing a few bee hives to help the only guy trying to grow a few tomatoes in his green house. The fact that DFAT employs a company to design education and training support packages for the Pacific without bothering to check whether this company is actually qualified to offer qualified advice to the government of Pacific Nations continues to amaze and disgust me. But then again DFAT employs a senior diplomat who used to lobby for the coal industry in Delhi and who is now pushing a gas power agenda in the Pacific.

Many of the most basic education and training pathways programs for local youth are simply ignored. Adult education is simply not even mentioned. As a consequence the chain of respect and leadership passed down from grandparents and parents breaks down in these traditional societies. This causes social dislocation, community disharmony and eventually families will fragment and migrate to the US or elsewhere. The old people know that the life style of the young is killing them. The women know improvements in local fresh produce production will assist in the reduction of diabetes and related health issues. Instead of being a nation known for having the worst diet on the planet, a simple process of improving local fresh food production will benefit the promotion of tourism. This in turn will promote improvements in hospitality education and service standards. Perhaps someone might even learn how to set a hotel dining room table properly. 

What the majority of ADB economists and advisers simply don’t get is that funding for infrastructure projects begins and ends with a properly articulated development plan that includes and requires ownership of this plan by the local community. Spending a few million dollars on a sewage plant built by a foreign company to outdated specifications that will fail when the generators are off line is simply a waste of ADB ( Asian Development Bank) money. Improving the electricity infrastructure by changing a diesel generating infrastructure to gas is a pointless exercise no matter which DFAT and ADB consultant promotes it. What the boffins at the ADB and other development banking institutions don’t seem to comprehend is that no one in the Pacific cares about Australia’s addiction to gas. No one wants to be dependent on Australia’s gas exports. So devising an ADB energy development policy that ignores the Paris Climate Convention defies standard banking risk analysis protocols.

For those of you not familiar with the Paris Agreement let me put it in black and white for you. The Paris agreement states that no knew coal fired power stations are to be approved beyond 2017. No new gas fired power stations can be built beyond 2030 if we are to remain within the agreed global temperature range. The integrated E-WASH-E infrastructure focus for all Asia Pacific, Caribbean, Latin American and African nations is an integrated solar/ wind / tidal and wave generation profile optioned on a base load sewage sludge / bio-mass / bio-gas digester backbone with suitable energy storage configuration in a standalone smart grid. The fact that ADB internal as well as external senior consultancy thinking is not even on the same page puts ADB loan management for any Pacific Island nation into serious risk management territory. Why would any economist worth his salt even suggest such a silly diesel for gas substitution idea when in 10 years the entire gas energy project will have to be torn down anyway? That is unless the host country has not gone broke paying for the gas imports from Australia before that happens! Alas, that is the nature of development politics. Waste and incompetence are dictated by the foreign policy agendas of the donor nations.