Building capacity Pathways to Energy Efficiency in SE Asia and the Indo-Pacific

Introduction

Most of us should be very familiar with Jeremy Rifkin and the idea of Net Zero Marginal cost. European Bankers and Financiers have mastered how to structure energy projects with Proxy Rebates and Credits utilizing direct PPA finance instruments. This is irrespective of whether these projects are grid connected or off grid. It doesn’t even matter whether the project scope is at community, regional and national level. As a consequence the idea of Net Zero Carbon communities that are self-managed, sustainable and resilient is no longer a mystery. The question is why do so many nations in Africa, SE Asia and the Indo-Pacific region struggle to incorporate the principles of Net Zero Marginal Cost with Net Zero Emissions into their anti-poverty, food security and Climate Change resilience national development policy agenda?

The pathway to energy efficiency is neither a political, nor an economic policy priority for all nation states. In SE Asia and the Indo-Pacific as well as in Africa and Latin America, energy policy is tied to geopolitical, trade , security and soft-diplomacy initiatives. Integrated sustainable development for building resilient communities is often cited as the reasons for development aid.  What integrated solutions look like often escapes the eye of the policy maker. We know that appropriate planning pathways for energy, water, sanitation, health, education, transport and communications infrastructure is best integrated in a holistic anti-poverty and regional growth context. There is little evidence that neither the funding nor the project management expertise follows the expressed development objectives. We see unilateral, bilateral, trilateral and multilateral agreements that are frequently self-serving, poorly co-ordinated and inappropriately structured, planned and executed. We also see international and regional financial institutions; NGO’s and private for profit businesses ignore the very ideals that underpin sustainable development aid finance. These capacity building deficiencies are not confined to the manner in which finance is structured but are found in the very nature of traditional project management principles that underpin the development aid process in a soft-diplomacy context.

Energy efficiency should be a central political economy policy platform instead of being treated as a separate issue from energy generation, transmission and distribution in all developed and developing nations. It should in fact be an integral part for identifying energy priorities in a national and transnational holistic value chain GHG development funding framework. The reality is that it is not. The recent announcement of a tri-lateral energy infrastructure agreement between the Australian, Japanese and US government for the Indo-Pacific demonstrates this. The question is why is there such poorly co-ordinated capacity planning in regions most vulnerable to Climate Change? What indeed are the priorities and why have the assumptions that underpin them so far failed to deliver lower debt and greater local community resilience in a full circle value chain self-managed sustainable development framework. Is it truly a question of how much we spend and what we spend it on, or should it be a question of how we spend what spend in order to achieve economic sustainability and community resilience at the lowest debt to equity ratios. In Australia’s case we find that outsourcing this responsibility to four preferred private contractors neither delivers Australian taxpayer nor long term DFAT value for money.

Identifying the barriers

We understand and recognize that traditional pathways to energy security, access and affordability remain barriers to entry for intelligent and innovative decentralized off-grid Mini-grids and grid connected closed Smart-grids in developing countries. We also recognize that integrated E-WASH-E-T-C (Energy, Water, Sanitation, Health, Education, Transport & Communications) solutions are not independent of each other in a 21^st knowledge and skill based economy. Applying contextually appropriate infrastructure solutions in societies with a relatively low level of knowledge and skill social capital remains a key capacity building requirement for these societies. Inheriting institutional infrastructure and value sets that govern them can often lead to perverse outcomes. The PNG education system is a case in point. Built in a mirror image of the Australian education system it copies all the problems and issues Australia struggles with when it comes to education standards, compliance and enforcement. It is not surprising that these issues are multiplied many times in a developing country such as PNG.

The 2014 Country Report into financing the PNG TVET sector illustrates several points in this regard. We don’t have to go past page 10 of the report to find out why overlaying an Australian education structure onto PNG and other Pacific economies poses recurrent structural issues at governance, institutional and national economic development level. The red circle ( see Image below) demonstrates the structural and functional problems at the national, provincial, district and local government level all the way down to the school management level in PNG.

Just as there is a fundamental disconnect between the department of Labour, Industry Relations and Industry Training with the department of Education in the Australian Federal system we find the same in PNG. The inheritance of the Australian Education and Industry / Industrial Relations governance structure and bureaucratic value system by SE Asia and Indo-Pacific nations display remarkably similar problems. These problems manifest at the functional and structural governance level in the form of similar methods of corruption and bureaucratic mismanagement. This manifests itself at the political level as fundamental policy disconnectedness to the knowledge, research, skill and training needs of industry and the country as a whole. Whether or not these dysfunctional departmental and inter-departmental relations are exploited at some political ideological level is not at issue here. What is pertinent is the manner in which senior public servants exacerbate these dysfunctional relations throughout the various bureaucratic layers down to the individual local institutions.

Australia did not achieve its status as the 13^th most corrupt nation of all OECD member countries for no reason at all. For an anti-institutional corruption campaigner like me, this revelation is not news. What is important to understand in the context of PNG development is that its education infrastructure is not fit for purpose to support the development needs of the nation as a whole. The primary reason for this is that the PNG department of Labour and Industrial Relations and Industry Training cannot deliver any creditable workforce analysis without a national industry policy. It therefore cannot enable a creditable national workforce education and training policy let alone engage in specific industry sector analytics. As a consequence, specific industry staffing requirements are ignored and industry organizes its own training programs independent of the formal education and training sector. This affects not only staff skill levels but it makes any pathways and credit point recognition and transfer program impossible to assess, measure and compare to any meaningful base line data set. What is perhaps more perverse is that DFAT has not recognized this fundamental problem. DFAT continues to fund its four preferred development aid contractors to deliver Australian education capacity building support without comprehending that its entire Indo-Pacific education aid program will not achieve self-management let alone self-funding status under current spending priority conditions for many years to come.

Breaking the strategic policy disconnect

The Indo-Pacific, SE Asia and many parts of Africa are exceptionally well suited to decentralized energy, water and sanitation models that minimize the cost of building expensive new infrastructure. Little strategic policy planning that integrates these essential infrastructure requirements with higher order knowledge and skill transfer programs, let alone viable and workable knowledge and skill capital retention practices are evident across all aid recipients under nearly all development aid programs in the region. Continued spending on poorly articulated education capacity building projects remain priorities for all development agencies, NGO’s, the UN and regional development banks even though Net Zero Marginal cost economies that can take full advantage of the Net Zero Emission technologies require targeted education, research and TVET skills at the local level.

There are of course a plethora of specific purpose development aid programs receiving funding. Many have been funded for years without any visible signs that any of these programs are nearing completion or are becoming self-funding and economically sustainable for the host nation. Naturally we hear that by necessity all development aid is long term. Any solutions to complex cultural, social and institutional governance issues have no quick fixes. We call this argument the development readiness paradox. Others simply call it the parachute paradigm. You simply take what works and superimpose the solution on the host nation irrespective of development readiness, context or value sets.

This condescending assumption by donor nations, NGO’s and institutions are the reason many small nations in the Indo-Pacific have appalling debt to GDP ratios. Even China’s argument that it does not interfere in the governance and institutional arrangements of Indo-Pacific and SE Asian countries has a hollow ring. China’s development loan structures are geared towards loan default for a direct strategic foothold in the region. The Belt and Road initiative (BRI) of the Chinese government leaves little doubt. It is just as short sighted as the capacity funding by the EU, Australia, US and Japan! At the heart of the problem is that all donor nations struggle to comprehend that capacity building is not about influence but a matter of trust. Without a properly trained and skilled local workforce debt dependence in the Indo-Pacific, SE Asia and Africa will continue to rise. At the social level the impact of Chinese workers and their influence on traditional community values continues to cause tensions in many African, SE Asian and Indo-Pacific societies as local job opportunities go unrealized.

The Knowledge Economy is part of the Full circle Value Chain

Without the knowledge, skills and expertise to understand the opportunities full circle value chain deployment of low GHG emissions alternatives in terms of self-funding sustainable development solutions SE Asia / Pacific nations struggle with all aspects of governance, standards, compliance and enforcement. Once again we notice the contradiction! Do these countries struggle because they don’t have the necessary levels of institutional knowledge, skill and expertise to maintain acceptable standards of governance, compliance and enforcement? Is the consequence weak and poorly informed decision making practices, gullibility and corruption?  Perhaps the issue isn’t any of it but a cause of development aid. Perhaps it is a simple matter of getting the advice assigned by the donor nation / institution at a cost the recipient country agrees to repay.

At the heart of these problems is the structural dysfunction of governance and institutional inter- relationships across the board. Levels of development entry, that include knowledge and skill base lines as well as legislative, regulatory and bureaucratic obstacles continue to slow progress. They do so because there is little work being done in the area of ‘appropriate’ development and how this relates to development ‘readiness’. Whether the preconditions for orderly development progress are either ignored or purposefully manipulated to service an ideological transition that serve established interests and social elites, remains part of the institutional and legal framework each country adopts into its governance structure. This can result in aid requests for building capacity in areas secondary to a national industry development priority, or contrary to it.

Financial institutions and structured project finance practices are part of the growing debt levels in the developing world

Whereas much of this defies traditional development banking higher order thinking (HOT) in a global and regional development context, we find that financial institutions labour to minimize their exposure to future debt and stranded assets risk whilst balancing the influence of their primary partners. This includes their long term energy sector investments. A narrow development finance focus is often the root cause of unequal regional development. Institutional capacity building options favour soft diplomacy priorities of the lead donor nation. This can lead to greater aid dependence, high debt to GDP ratios and stagnating economic productivity in the SE Asia Indo-Pacific region. Recipient nations are often unaware that institutional and governance structures recommended by external consultants and specialist aid development companies / NGO’s rarely have the multi-disciplinary skill and knowledge to offer full circle sustainable value chain solutions that are long term debt neutral, culturally appropriate and socially responsible. In many SE Asia Indo-Pacific countries unequal regional development remains fundamental to issues of inequality, income distribution and poverty despite phenomenal GDP figures. Australia is not immune from these concerns.

There are two inherent problems. The first is that clean energy project planning assumes a distributive decentralized solution that is framed in a fully integrated E-WASH-E anti-poverty and climate solutions policy agenda. Much has been said about sustainable cities and resilient communities! Little has been said about how to deliver an integrated masterplan that delivers E-WASH-E-T & C solutions that meet national and local community needs at the lowest infrastructure and long term debt recovery cost for local communities. Defining such a comprehensive political and economic agenda at a national and sub-national level continues to drag industry, social and economic agendas for many SE Asia Indo-Pacific nations including Australia. Even though such a policy is often vocalized as the most urgent international problem, this urgency is not reflected in the political and economic agendas of the ruling political elite and key industry sectors of many countries. This disconnect between what is said and what is done on the ground is often so great that many communities feel marginalized from the economic benefits of growth and excluded from the political decision making process.

The same rhetoric is reflected in the international finance community who express their desirable aims and objectives in convoluted terms. At the heart of the problem is that the actual distributed decentralized funding models compare equally unfavourably to ‘managed’ integrated funding approaches. The problem is often a subtle distinction of diplomatic language and interpreted meaning within a specific sector framework.  In soft diplomacy terms the dichotomy between the various approaches is best described as the difference between unilateral, bilateral and multilateral agreements between host and recipient nations. What is clearly at odds here is the meaning and understanding of the words, ‘distributed decentralized funding’ and ‘managed integrated funding’ and how these words apply to all aspects of soft-diplomacy in an international development aid context.

Both approaches to development funding often ignore the developing nations entry level needs in favour of predetermined capacity building approaches that bind the host nation to an identified framework of soft-diplomacy influence at the institutional, social, cultural and industrial level. The idea of building a developing/ emerging nation in one’s own image has a long standing history going back to pre-colonial days. The inheritance of the structural and functional problems of the donor nation at the governance and institutional level is therefore a calculated trade-off for the recipient nation. The underlying aid argument boils down to two things.

1.)   If you are going to accept my money then you buy the conditions of sale plus interest.

2.)   If you accept the conditions of sale plus interest then it is incumbent to spend that money in the spirit of a negotiated long standing commitment of friendship and reciprocity to which the binding agreement commits you.

What is clear is that the inheritance of structural and functional problems from the donor nation poses a set of contextual problems for donor countries and their finance partners that can aggravate existing development problems. These can slow development progress and cause both debt dependence and loan default issues. The second issue is the effect this has on local institutions, through unwanted dysfunctional influences and dependencies. These issues often stifle innovation, resilience and sustainability goals long term. Whether this is through the unintentional stagnation of local investment and secondary value chains in Clean Energy, Water, Sanitation, Health, Education and other knowledge based workforce skilling opportunities, or the loss of locally owned business prospects; remains a matter for concern to both donor and recipient alike. Ignoring this unwanted influence donor countries have on institutional and governance capacity building remains at the core of bureaucratic corruption and other unwanted side effects irrespective of whether the donor nation is China, the US or Australia. Invariably this leads to further specific aid funding to address unequal capacity issues that are either newly created due to unforeseen consequences or due to specific purpose aid funding narrowly applied. Thus, requiring more aid money to address the unbalance created by the aid money previously received! This is what we call aid dependency even though the goal may have been for lower long term debt and managed sustainable development.

If we regard this dichotomy as a temporary anomaly in a country’s development progress, the current energy infrastructure, knowledge and skill status remain important considerations when charting a path for energy efficiency, security, access and affordability. This is true for all integrated E-WASH-E-T &C Climate Solutions scenarios whether these are applied to a developed or a developing nation. In all cases the evaluation of where a country is; with respect to its energy infrastructure and how it intends to develop it in relation to its socio-economic agenda, demands a coherent national policy framework. This framework must necessarily address all aspects of poverty, equity, access and opportunity. The alternative is continued dependence on overseas aid and rising debt to GDP ratios. Future stagnation in local business innovation shackling the knowledge capital demands of the 21^st century is clearly no longer an option for international aid and development financing. It is not an option for maintaining productivity and global competitiveness for any developed or developing nation going forward.

The theoretical hurdle of government policy versus the econo-babble of self interest

The problem with much of the energy debate is that we think about energy in terms of a specific purpose commodity. We fail to understand the ubiquitous nature of what energy is in the context of everything we know about it. We even project this level of narrow minded understanding into the phrase ‘Energy Efficiency’. Implied are such things as conservation, anticipatory capacity, reduction, adaptive systems capacity, absorptive systems adaptability and the reliability of transformative technology and its alternative use.

The scientific and very human reality is that the human race has always been transforming energy from one form to another. We need to power ourselves and the myriad of labour saving and convenience devices we consider of value in our quest for civilization. Knowledge in the pursuit of profit though methods of conflict and co-operative trade have been at the heart of every civilization from the Indus valley, China, Egypt, Persia and Rome for thousands of years. We wouldn’t even have the Climate Solutions and Energy Transitions debate if we had our own micro-wave oven size fusion reactor installed in our home. As a consequence we labour over the disconnected and narrow minded thinking that ignores the energy value chain solutions created throughout a national economy by not addressing the issues directly at local and regional community level. We ignore that fact that the fossil fuel economy has never achieved more than a 20% national productivity level for any nation since the day the car was invented. Despite this we struggle to transform our stagnating economies into Net Zero Emission economies using Net Zero Marginal Cost principles for social goods such as housing, energy, water, sanitation, transport, health, communications and education. These social goods are ideally suited for the 21^st century Net Marginal Cost economics of the sharing economy.

Allowing a small minority to control access and supply to a social commodity is only one of the many issues in this debate. We ignore avoidable consequences in both the short to medium term by concentrating distributive finance mechanism in the unequal and unfair distribution of capital. As human beings we are ill prepared, from an evolutionary stand point, of thinking about anything that extends beyond our own immediate needs. Every major institution and government in any country on spaceship earth reflects this conundrum. Despite this we find that the Indus valley civilization was apparently founded on a distributed collaborative model without centralized control and ownership of services. It was based instead on an agreed collective master planning model for the cooperative ownership of water, sewage and other social infrastructure that supported cities and regional village live 4000 years ago without the need for a centralized government. Jeremy Rifkin may indeed blame the concentrated financial power of the fossil fuel barons and herald the emergence of the internet tycoons who brought about the sharing economy as the basis for the Third Industrial age. I do not believe that technology and the concentration of macro data sets in the hands of a few global companies is the answer.

I agree that there is a monumental change a foot! Convincing institutional bankers and politicians to think about finance as a total value chain solution remains a problem when national governments are not prepared to define their energy infrastructure in a national development context. Financial institutions are prepared to exploit this situation by funding projects that offer a secure return of investment. The fact that the owners of energy capital seek to concentrate their control and ownership of any national energy market will remain a fact of life. What is at issue is how, where and to what extent a government ignores the necessary regulatory and legislative market governance standards, compliance and enforcement mechanism. This is especially true when current (HOT) finance thinking favours ‘Proxy rebate plus credit finance options within the context of a specific regional PPA supply agreement. The same type of financing options are available for Water, sewage, transport, communications, social housing and any other local infrastructure and food security issue facing SE Asian and Indo-Pacific nations. Applying these finance options in an international and a regional banking finance package remains the challenge.

What we know is that the Net Zero Build Environment Emission model  ( Fig 2.) is fully compliant with Jeremy Rifkin’s Net Zero Marginal cost model. This is especially true if we consider a Proxy Rebate and Credit PPA finance mechanism as the means to lower debt levels in SE Asia and the Indo-Pacific that will promote sustainable and resilient communities at both local and national level. Despite this we witness the AsiaDevelopment Bank and the African Development Bank Climate Change and Finance department struggling to comprehend the basic concepts upon which these solutions rest. Recent IMF funding of precisely such an energy model for the Marshall Islands provides us with a glimmer of hope and a new pathway to building Energy Efficiency capacity in the SE Asia and Indo-Pacific region. Whether it translates into the rest of the Indo-Pacific in the wake of President Trump’s recent trilateral energy funding announcement remains to be seen.

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.

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.