Energy & Climate Change

The CMS In­fra­struc­ture In­dex ana­lyses data across 50 jur­is­dic­tions against six cri­ter­ia to cre­ate a guide to the most at­tract­ive des­tin­a­tions for in­fra­struc­ture in­vest­ment.In Bridging Con­tin­ents, the 2019 CMS In­fra­struc­ture In­dex, we see that in­fra­struc­ture is con­nect­ing people world­wide at an un­pre­ced­en­ted pace. De­vel­op­ing eco­nom­ies are in­vest­ing heav­ily in roads, rail and air­ports to drive eco­nom­ic growth and bring them closer to in­ter­na­tion­al trad­ing part­ners and the rol­lout of 5G and build­ing of smart cit­ies are cre­at­ing new di­git­al high­ways. Ger­many has taken top spot.  Ger­many’s fo­cus on sus­tain­ab­il­ity and in­nov­a­tion is the driv­ing force be­hind its po­s­i­tion. The coun­try is aim­ing to make cli­mate ac­tion part of the Ger­man na­tion­al iden­tity and sup­port­ing this through a num­ber of off­shore wind pro­jects, con­struc­tion of a fourth elec­tri­city high­way and an ex­tens­ive EV char­ging pro­gramme. The UK’s story is not so pos­it­ive.  We see the UK fall from fourth in 2017 to ninth in 2019.  The Brexit-ef­fect.  There is a steady pipeline in some in­fra­struc­ture sec­tors, for ex­ample rolling stock re­new­als in Eng­land and trans­port in Scot­land.  There is also a shift from primary to sec­ond­ary in­vest­ments. However, un­sur­pris­ingly the polit­ic­al un­cer­tainty has led to delays on flag­ship pro­jects (e.g. HS2 and Heath­row air­port) and a de­crease in lend­ing to UK pro­jects. An­oth­er coun­try to note is China, which has ris­en by 10 points since the 2017 in­dex and is now in 18th po­s­i­tion.  5G is in­stru­ment­al in China’s in­creased rank­ing, due in part to ma­jor cor­por­a­tions such as Hua­wei and ZTE ; over 10 mil­lion ad­vance or­ders for 5G data plans were sub­mit­ted to China’s three mo­bile op­er­at­ors, and they will de­ploy a total of 130,000 stan­dalone 5G base sta­tions across the coun­try by the end of 2019. As the world fo­cuses on cli­mate change and sus­tain­ab­il­ity, we see this trans­fer­ring to the in­fra­struc­ture sec­tor too.  In­fra­struc­ture as­sets have a vi­tal role in cli­mate change mit­ig­a­tion and eco­nom­ic, so­cial and gov­ernance (ESG) cri­ter­ia are an in­creas­ingly pop­u­lar way for in­vestors to eval­u­ate com­pan­ies in which they might want to in­vest.  However, the sec­tor is fa­cing a num­ber of chal­lenges, in­clud­ing lack of gov­ernance, an ab­sence of ob­ject­ive stand­ards and as a res­ult, no reg­u­la­tions on how to re­port and meas­ure per­form­ance.  Reg­u­lat­ors glob­ally are work­ing to cre­ate their own reg­u­la­tions in this area but with each coun­try cre­at­ing its own stand­ards, in­ter­na­tion­al op­er­at­ors will face a com­plex mat­rix of re­quire­ments for dif­fer­ent pro­jects around the world. In this year’s re­port, we see some very strong rep­res­ent­a­tion from the Amer­icas. Lat­in Amer­ica has some mega in­ter­con­nectiv­ity pro­jects, present­ing some ex­cit­ing de­vel­op­ments.  Ex­amples in­clude a 3,500km-long sub­mar­ine fibre op­tic net­work from the north to the south of Chile and the re­cently com­pleted 10,000km sub­sea cable con­nect­ing Cali­for­nia to Chile.  On the oth­er side of the con­tin­ent, Brazil is work­ing on the in­nov­at­ive 9,300km El­laLink sub­sea cable sys­tem bridging between the Amer­ic­an (Brazil) and European con­tin­ents (Por­tugal and Spain).Over­all, the in­fra­struc­ture sec­tor presents a pos­it­ive pic­ture in an un­cer­tain world.  Gov­ern­ments glob­ally are in­vest­ing heav­ily in in­fra­struc­ture as­sets to stim­u­late their eco­nom­ies.  On the flip side, there is sup­ply of cap­it­al as in­vestors look for long-term in­vest­ments.