The Covid-19 pandemic has served to exacerbate existing trends across infrastructure and power, accelerating project developments conducive to the low-carbon energy transition and stalling the progression of carbon-intensive projects globally, says Fitch Solutions.
The initial Covid-19 shock disrupted global construction activity in the short term. “Medium-term factors, however; namely the greater consideration of sustainability in investment mandates and the proliferation of legally-binding emissions targets globally, have begun to materially impact the project financing flows and reshape the composition of the global project pipeline,” Fitch Solutions says in a recently-published report seen by Kallanish.
Between March 2020 and March 2022, the global project pipeline saw 9,507 new project additions, bringing the overall number of projects to 40,331 from the previous 30,824, the research firm calculates. Asia accounted for the largest proportion of project additions, followed closely by North America and Western Europe.
In China, efforts to develop strategic “new infrastructure” sectors and projects in its 14th Five Year Plan (14FYP) continue to support the transport infrastructure project pipeline. Similarly, Vietnam’s 2021-2025 five-year plan (FYP) has sought to increase infrastructure project activity since the plan’s approval in February 2021, alongside new legislation on public-private partnerships (PPP) to ease legal bottlenecks and attract investment, the firm observes.
Energy and utilities projects accounted for around 34% of new global project additions, closely followed by transport infrastructure and construction projects with 33% and 27% respectively.
Among projects at pre-construction, the hydrogen project pipeline saw a 2,622% increase over the period, alongside substantial increases in solar and offshore wind project volumes. Coal and oil infrastructure projects meanwhile saw a relative decrease in their respective project pipelines.
New airports, airport expansions, and commuter rail projects saw the steepest decreases, highlighting the Covid-19 pandemic’s severe impact on global aviation. “We continue to highlight the long-term headwinds for investment in airport developments in light of increasingly stringent environmental targets, both for public and private investment, owing to the increase in emissions that such developments would facilitate,” Fitch Solutions concludes.
Adam Smith Germany