REINVENTING THE CITY

REINVENTING THE CITY

THREE PREREQUISITES FOR GREENING URBAN INFRASTRUCTURES

The Urban Challenge

The Urban ChallengeOur cities play a vital role in the quest to achieve global ecological sustainability. They are the largest contribu-tors to greenhouse gases and climate change. Howev-er, if we can achieve sustainable construction and use of urban infrastructure, our cities could become a criti-cal leverage point in global efforts to drastically reduce emissions and avoid the social and economic costs associated with climate change, as well as enhance energy security and resilience in the face of high fossil energy prices.The world’s urban centres already account for more than 70 per cent of CO2 emissions.1 In the next three decades, the global population will continue to grow and become ever more urban. Booz & Company analysis conducted for this report shows that under business-as-usual (BAU) assumptions, $350 trillion will be spent on urban infrastructure and usage during this period. This huge expenditure either can cause the ecological impact of our cities to become even more.

pronounced or can be a tremendous opportunity to reduce that impact. To meet the urban challenge, cities around the world—in developed and developing nations—need to tackle climate change directly. Cities in developed nations can apply new technologies to mitigate greenhouse gas emissions stemming from the usage of their exist-ing infrastructure. They can invest in mobility manage-ment and incentivize sustainable lifestyle choices. Every city is part of the solu-tion—now is the time to act!

Business as Usual Is a Prescription for Failure

Business as Usual Is a Prescription for FailureIf our cities don’t act, it is likely that the opportunity to control global warming will be lost and costs will continue to spiral out of control. There is a growing consensus that the average global temperature 2must not rise more than 2 degrees Celsius over pre-industrial levels if we are to avoid dangerous climate change. However, in a BAU scenario, the growth of our cities—in particular, the construction and usage of urban infrastructure for dwelling and transportation—will generate global carbon emissions of more than 460 GtCO2 in the next three decades alone (see Exhibit 1).

The economic cost of climate control also represents a major challenge. Estimates by economists such as Nicholas Stern suggest that it will cost an additional 1 to 2 per cent of GDP—$28.4 trillion to $56.8 trillion over the next 30 years, using purchasing power parity (PPP) GDP estimates—to combat climate change. But even though this level of investment is small compared to projected urban infrastructure expenditures, the source of this funding remains uncertain, particularly in developing nations. The Copenhagen Accord sought to address this issue by establishing the Copenhagen Green Climate Fund, which will provide $100 billion annually to help devel-oping countries mitigate carbon emissions by 2020. But it may be too little and too late. First, the targeted funding level is well below the estimated requirements to combat global warming and adapt to climate change in developing nations. Second, the timing of the funding is problematic.

Further, the economic challenge of climate control pales before the gargantuan needs of cities over the next 30 years. Our analysis shows that global urban infrastructure and usage expenditures in dwelling and transportation for the next three decades will exceed $350 trillion (under BAU assumptions and in constant U.S. dollars set at year 2000), or five times the current global GDP (see Exhibit 2).

In order to control emissions and meet the economic and public health challenges of urban growth, cities will need to shift their spending from high-carbon infrastructure to green infrastructure that features zero or very low emissions. This will require long-term and strategic action plans to guide capital investments towards infrastructure solutions that offer attractive returns in the form of reduced running costs, zero or low carbon, and lower air and water pollution levels.

Urbanization Trends

The ecological footprint created by these two trends is currently distributed unevenly among regions. For example, the ecological footprint of the average Tanzanian or Indian is approximately a quarter of the ecological footprint of a European and a ninth of that of an American. Cities are already the source of more than 70 per cent of global CO2 emissions, and they will account for an ever-higher percentage in the coming years, as more and more people reside in and move to cities in search of more prosperous lifestyles.

 Focusing on Small Cities

The bulk of urban population growth will not occur in well-known and mature megacities like Beijing, London, Los Angeles, Mexico City, and Mumbai. By 2020, its population is expected to exceed 500,000.

They generally follow predictable patterns in the mix of expenditures and emissions related to infrastructure development and usage. During the early stages of city development, the bulk of expenditures and emissions stems from construction of buildings, public transportation, and utility infrastructure, such as energy and water. As the maturation process continues, ongoing energy usage increases as the city grows in extent (and, not entirely coincidentally, in wealth) until the bulk of expenditures and emissions comes from the use of existing infrastructure. The fact that growth is occurring fastest in small cities that are still in the process of developing their infrastructure creates a valuable opportunity to decouple the global urban future from expensive, high-carbon lifestyles.

Focusing on Developing Nations

Energy usage in residential and commercial buildings in some industrial regions, in developing economies will be high overall compared to usage. This suggests that there is a window of opportunity to drive down emissions. Given the rate of urban growth in developing nations and the early stage of their infrastructure development efforts, it is clear that they can offer the highest returns in the quest for urban sustainability, even if they are currently less equipped to deal with the challenge. And given the outsized energy usage of cities in developed nations, it is also clear that developing nations should not adopt their inadequate transportation systems and energy-wasting house and building stock as a norm. Developing nations must be supported in a drive to minimize energy use and undertake a shift to renewable energy sources that will enable low carbon lifestyles for city dwellers. The first step in such an effort should be long term, strategic level, low carbon action plans, supported by a holistic national urban planning approach that enables the integration of large mainstream investment flows rather than a project by project approach on the sidelines of core development strategies and decisions.

The Planning Prerequisite

This decrease occurs due to a shift in the mix of industries from energy intensive manufacturing to the lower energy requirements of service industries. It can also occur because of the natural responses to high population density. The most obvious example of the positive role of urban density is transportation, one of the major components of energy and emissions intensity. Population density also has a significant impact on emissions associated with habitation. Denser land use is highly correlated with denser individual housing units, which in turn lead to lower demands for heating, cooling, and lighting, the principal uses of residential energy in the industrialized world. The net result is that increasing urbanization, industrialization, and wealth not only are inevitable but will generally have a negative ecological impact. Higher population densities may have lower emissions per capita, but their total energy usage is higher. The solution is better planning, with high density as one of the central aspects of that planning. With an integrated approach to urban planning that utilizes modern technology, it is possible to achieve lower carbon emissions from transport and buildings in any city.

The Investment Prerequisite

Nations that are in the later stages of the urban infrastructure life cycle with high carbon infrastructures should give high priority to large scale programs designed to reduce the emissions that have been built into the infrastructures of their cities. They should apply the latest technologies to mitigate carbon emissions from their old stock and also set ambitious and challenging standards for guiding their future investments. Decision makers, especially mayors, in developing countries must also seize the opportunity to allocate their financial resources in a strategic way that frees urbanites from high-cost, high-emission infrastructures.

The Technology Prerequisite

Incremental technological improvements cannot provide the absolute emission reductions needed given the rates at which our cities and consumption levels are growing. The technological solutions that we seek must offer transformational levels of improvement. We need to plan infrastructures and use financial leverage from the enormous investments to create zero carbon infrastructures that feature the intelligent use of renewable energy sources. These will likely include solutions integrating renewables like the electrification of private vehicles, public transportation run on electricity and biogas, and the use of district cooling and heating, LED, and natural lighting in buildings.

The Low-Carbon City Is Already Emerging

As in many cities in developing nations, emissions levels are rising in the Chinese city of Baoding, but unlike with other cities, a share of Baoding’s emissions growth is caused by fuelling its workforce and the machinery it is developing to provide lowcarbon solutions to the rest of the world. Solar photovoltaics, wind power, and energy efficiency industries have been a major source of Bao-ding’s green growth engine for the past five years, and the city is determined to expand further. Nationally recognised as the “Green Electric Valley of China,” Baoding has seen the number of its green energy companies expand from 64 in 2005 to 200 in 2008, and its green revenues have more than quadrupled in the same period, from $700 million to $3.5 billion.