With half of the infrastructure for 2050 already built, under construction or being planned, the pressure is on governments all over the world to ensure the balance of spend delivers on goals towards net zero. However, as New York Times columnist Ezra Klein recently commented in reference to the US Inflation Reduction Act, the complexity of coordination required across a vast array of stakeholders, including multiple levels of government, is often under recognised.
The Act's funding provisions are broad, offering tax credits for renewable energy investment (USD64.8 billion), renewable energy production (USD62.3 billion), clean hydrogen (USD13.2 billion), and support for the uptake of electric vehicles (EVs) (USD22.9 billion). However, as Klein notes, they are married with coordination and planning provisions that are “spotty, and in key cases, non-existent”.
The Biden administration recently released a timely action plan to address some of these concerns. The proposals in the action plan include expanding the use of best practice, providing direct support to delivery agencies, and focusing resources on delivery. This is a welcome initiative. If successful, it may provide a blueprint for addressing coordination and delivery issues for other jurisdictions.
This issue resonates beyond the United States. Multi-tiered government is a common structure around the world. Although a great deal of commentary is given to international cooperation and transition pathways for countries in different stages of economic development, coordination risks posed by domestic government structures are far less prominent.
Multiple layers of government demand we address coordination risk
Multilayered systems undoubtedly have benefits; however they also operate with a significant level of coordination risk. Overall, federal systems represent 40 percent of the world’s population, and at least 70 countries worldwide have more than one level of government. These subnational layers of government often play a significant role in the actual programming and delivery of infrastructure projects.
Federal governments and their agencies are often not the organisations delivering infrastructure – rather it is organisations at other levels of government that are called on to deliver, despite often not having the 'administrative capacity' (or desire, or funding) to act at sufficient speed and scale (see figure 1). This is particularly the case in jurisdictions where national governments set high-level climate and infrastructure policies, but provincial and local governments are responsible for delivery. Polarised politics can further complicate matters. Essentially, national governments do not always fully control the delivery of their stated policy goals.
Figure 1: Subnational government (SNG) expenditure as a % of GDP and public expenditure (2013). Source: OECD, Subnational governments around the world, 2016.
As can be seen in Table 1 below, subnational governments are heavily reliant on national government grants.
Table 1: Breakdown of SNG revenue by category and income level (2013, % of SNG revenue). Source: OECD, Subnational governments around the world, 2016.
The World Bank has noted several issues that may arise from this ‘administrative decentralisation’: sometimes inexperienced actors must take on new responsibilities, tension can develop between local autonomy and national standards, and administrative costs can escalate.
The challenges being faced to deliver large scale net zero infrastructure initiatives are substantial. For example, green powered EVs and clean energy generation will require large tracts of land for solar and wind farms. These farms will necessitate constructing and maintaining thousands of kilometres of new high-voltage transmission lines. The large-scale adoption of EVs will require an enormous network of charging stations. The responsibilities for such projects are rarely the responsibility of one level of government. Coordination is key.
Managing the risks of intergovernmental coordination
How can we foster cooperation at all levels of government so that policy intentions are not compromised before they can be acted on? Firstly, national governments need to acknowledge the importance of subnational governments in this endeavour. This can help to focus attention on practical strategies that foster collaboration.
The strategies might include:
- Co-design between national governments and other domestic governments to facilitate buy in and joint commitment to delivery of policy and legislation
- Explicitly recognising and planning for program delivery, as with the Biden-Harris Action Plan for Accelerating infrastructure
- Specific-purpose agencies with convening power to bring together arms of governments at multiple levels can work to formalise cooperation. Specialist infrastructure bodies with a supportive legislative and policy framework can help deliver this
- Funding and resources for subnational governments to enable them to deliver on national policy commitments – particularly in emerging and developing economies where capital budgets are most acutely constrained.
Without cooperation at all levels of government, the best of policy intentions may be compromised before they can be acted on. As has ever been the case, law and policy can only take us so far – humility and good faith communication between all levels of government will be required to complete the journey.
Transformative Outcomes Through Infrastructure
