Australia’s water sector - enabling education and innovation

Australia’s water sector is recognised globally as one of the first required to adapt to dramatic changes in water availability due to climate change. Through traditional technology solutions (desalination and treatment for re-use) and more radical options (strong demand management and recycling networks), progress has been made but at a considerable cost in energy, carbon emissions and dollars.

Questions remain around how Australia will develop sustainable water solutions and, at this point, I suggest that an attitude shift may be warranted. Rather than employ ‘reactive compliance’, the water community needs to adopt ‘step-change, strategic innovation’ to deliver cheaper, lower carbon solutions for a sustainable future.

The sustainability challenge

A widely held sustainability definition shows the economy, society and environment are equal and must be balanced. However, this is an unrealistic view: ultimately, all is dependent on the environment, given that we must live within, and depend on, the natural capital of our single planet. The laws of nature are unchangeable, while society’s behaviour can be changed (with some difficulty) and economic rules can, with political will, be reinvented to better fit our objectives (as the GFC reminded us).

Water infrastructure is part of the critical interface between society and the environment. It works both ways, protecting humans from environmental risks and providing a water resource, while also protecting the environment from our wastes. So, we have to work to ensure that each and every new project moves towards sustainability.

Australia, as yet, has not declared a national carbon emissions target, following the Copenhagen climate talks last year, and it is a pity further commitments to innovation in reducing emissions from water infrastructure have not been made. That said, several Australian water companies have set themselves targets for ‘carbon neutrality’, including Sydney Water (2020) and Melbourne Water (2018).

A University of Queensland (UQ) paper suggests that the increasing treatment requirements for water adaptation will multiply water company energy use by three times or more by 2030. This highlights the particular challenge for the water sector - the projects that they require generally increase energy use and CO₂e emissions, while the CO₂e mitigation challenge requires us to reduce these significantly. How can this be resolved?

We need win-win solutions for an asset base transformation

The UK Carbon Impacts Programme (UKCIP) suggests that, for any large infrastructure investment, we should aim for an adaptation-mitigation ‘win-win’ solution. To date, most environmental or adaptation responses have been ‘win-lose’.

The UQ research paper highlights the particular challenge in Australia:

“Utility energy use is set to grow 300-500% by 2030. If we aim to reduce greenhouse gas emissions 80% by 2050, a 25-fold gap exists between desired and actual [business as usual] pathways.”

We need water assets transformation over the next 40 years, starting now.

The ‘sustainability funnel’ - investment strategy choices

The Australian water sector is responding reactively to the problem of water shortages and fire risk, while also facing pressure from political, commercial and customer demands for the mitigation of CO₂e emissions. As this ‘funnel diagram’ below shows, there are two potential paths to be travelled:

Reactive compliance assumes that finding more sustainable solutions is difficult, and that costs cannot be reduced. It acts only when essential and waits to be pushed before taking action on mitigation.

On the other hand, strategic innovation avoids shocks and reactive responses by researching and identifying conditions and characteristics of the 2050 target, including CO₂e measurement and pricing, and incorporating these into objectives and decision-making. It has recently become easier to take this approach, as:

• Continuously improving science on climate change impacts allows us to make better predictions and determine our direction.
• New methodologies allow smarter problem definition and better informed decision-making.
• Increasing evidence confirms that an innovation mindset applied to the water sector can deliver lower cost, as well as lower carbon, solutions.

Innovation strategy

To effectively implement an innovation strategy to create change, we must:

• Do an outline 2050 Master Plan - make the future ‘real’ and assess whether we’re heading in the right direction.
• Get the timing right - ask the right questions at the right time; the earlier in the project process you intervene, the bigger the opportunity.
• Collaborate with regulators and stakeholders for integrated catchment management - collaboration allows us to define problems and identify sustainable solutions.
• Always test a hierarchy of likely sustainable solutions - optimum solutions depend on local context and conditions and we should test a variety, including:

- using less water and at appropriate quality

- using less energy/chemicals/CO₂e/cost per litre of water

- keeping toxins/hard-to-treats out of sewage - ‘the polluter pays’

- maximising energy generation and resource recovery from wastewater, and optimising the sequestration of CO₂e in wastes.

How do we innovate faster?

There has been substantial innovation in the water sector in the past 20 years. It has been mainly aimed at cost reduction or containment, in light of increasing service demands, and has been enabled by a shift in the culture and commercial behaviour of water company clients and their supply chains. Notably, Australia has been a leader in adopting many supply chain procurement innovations, including ‘alliancing’ and target cost contracts. Three particular systemic changes, enabled by these new procurement methods, have helped foster the innovation that has delivered cost reductions:

• Mindset - the joint teamwork in ‘alliancing’ forced the removal of barriers to collaboration and fostered further innovation.
• Creative space and methodology - the supply chain creativity, thus created, was allowed to be applied in the feasibility (‘optioneering’) stage, not just the later ‘design and construct’ stage.
• ‘Follow the money’ validation - the ‘stick’ of transferring more risk to supply chains was accompanied by the ‘carrot’ of opportunity to help save costs and gain extra profit from ‘gain share’ against target costs.

Several Australian water companies are changing the regulated business model, including demand management and addressing the CO₂e used for heating water, but more can be done to shift attitudes from a product (short-term) view to one of service (long-term).

The new challenge is not just to reduce capital costs, but to minimise energy, chemical and transport costs, and CO₂e emissions, through an asset’s operating life. This requires us to construct new target cost models that include those operating costs, with the ability to include environmental pricing.

Some innovative alliances have already incorporated this: the Sydney North Storage Tunnel Alliance priced social and some environmental impacts into target costs and gain/pain shares to good effect, and the Maroochydore Sewage Treatment Plant alliance on the Sunshine Coast included key operational costs in the contract targets.

However, to bring about the scale of change needed, Australia’s water sector needs to take innovation up a gear and make it strategic.

Innovative, collaborative approaches need to be adopted by economic, environmental, and social regulators, working with water companies and their supply chains. Business objectives, performance measurement and commercial incentives must focus strongly on reducing energy use and CO₂e emissions while achieving a lower whole-life cost, dealing with climate change mitigation at the same time as adaptation.

There are many untested ideas out there but I see a ‘risk/credibility gap’ forming (the lack of an answer to the killer question - ‘will it work?’), which greatly delays adoption. I suggest that there are two key steps we can take to bridge that gap, effectively progress sustainable innovation and build the first ‘real’ full-scale project - the ‘demonstration project’:

• Do a ‘what-if’ desk study (before any commitment) to better test and develop the business case justification.
• Do a small-scale pilot project, acknowledged as ‘experiment’.

Both of these need to be done in an ‘experimental’ mindset, as in R&D.

Because water organisations are often risk averse in nature, regulators may be the best people to sponsor and facilitate this. In the UK, the Scottish water regulator has recently added funding into Scottish Water’s next five-year program, specifically to enable innovative studies and new solutions, helping them meet CO₂e emissions reduction challenges.

The technologies and methods we need are available; it is up to us - all water sector players acting together - to take responsibility to act innovatively and collaboratively for an effective response to climate change and a sustainable water sector.

* By Charles Ainger, Cambridge University visiting professor and UK-based Sustainable Development Consultant for MWH, a global engineering consultancy with operations in Australia.

This is an adapted extract from a background paper: Ainger, C (2010): “Inventing the future - a sustainability strategy for water?”, published by and copyright of the AWA for its Ozwater ’10 conference, Brisbane, 8-10 March 2010.