For the past two decades, global efforts to address climate change have been centred around broad, economy-wide initiatives to reduce emissions, and somehow gain the unanimous support of all sovereign countries to join that effort. So far, it has come up well short of needs and expectations.
But while policy deadlocks bedevil concrete action at a national level, the world’s largest cities are looking to position themselves as centres of innovative technologies and business models, and the smart money is starting to flow.
There are several reasons why this should be the case, according to Dr Roland Busch, the head of Siemens’ newly created cities and infrastructure division. Although cities occupy just 2 per cent of the world’s land mass, they contain half the population, account for two-thirds of its energy use, and generate more than 70 per cent of its carbon emissions.
But as we have seen with the City of Sydney’s ambitious plan to reduce emissions by 70 per cent by 2030, the creation of the C40 initiative, which has brought together 40 of the world’s largest cities to devise ways of cutting emissions (Sydney and Melbourne are part of that initiative), and the focus in China, Korea and Japan on city-wide emissions abatement projects, city officials have been more significantly pro-active than their federal counterparts.
Mostly, it is out of self-interest. Just as people and statistics crowd into city centres, so do most of the problems and the challenges, and in coming decades these are likely to be momentous – whether in public transport, personal mobility, pollution, and/or security.
But, says Busch, this is also creating great opportunity. He values the global city infrastructure market at around $370 billion – including building retrofits, lighting, low-carbon transportation, and waste management. And in light of the global megatrends (population growth, climate change, energy security) that will be driving decisions on how to spend this money in coming years, Siemens sees this as a significant growth market.
So much so, that it brought together several business divisions – such as smart grid technologies, renewable energy and EVs – and formed a new division last year. Siemens already sources one third of its around $100 billion in annual revenues from green technology, and expects this to grow rapidly, hence the decision to invest more than half of its $6 billion R&D spend in the sector.
Australia, Busch says, can play a key role in this, because it has several unique characteristics – it is the most urbanised country in the world (89 per cent of the population live in cities), has the highest per capita emissions, and has ageing infrastructure. A perfect opportunity, you might say, to change direction; and, he says, for Australia to export knowledge and expertise, particularly to the Asia-Pacific region.
Busch, who is currently in Australia to assess these opportunities and to launch a new project – a green city index that will rank five Australian and two New Zealand cities on their green credentials – says cities are also the powerhouses of the world economy, growing at 0.5 to 1.0 per cent above the global average.
Busch says the biggest issues for cities will be around managing mobility and congestion, as well as developing efficient and decentralised energy infrastructure to manage the security of energy supply.
Mobility issues, he says, will be addressed with high-speed connections between and within cities, freight corridors, and the boosting of public transport. “You cannot force people to step out of car, but if the public transport offering is good, people will take it.” He sees more electric vehicles and car sharing – “young people today want to share rather than own a car.”
A second significant element will be about energy supply. He anticipates an increase in decentralised power generation – rooftop solar, energy efficiency and cogeneration. It’s a similar view to the City of Sydney, which has unveiled a bold plan to service its own energy needs.
“That causes a different kind of problem for grids,” Busch says. “In a way you want to have the grid rebirthed, so it can pool power, deal with fluctuating energy sources, and do peak shaving. The demand has to follow the offerings rather than vice versa, as you have today. And that requires storage – it could be electricity or heat – and it requires a smart grid, and smart consumption.”
This leads to the role of buildings which consume 40 per cent of energy. Busch says they will be the driver that pushes networks towards smart grids.
But here’s the thing for Australia; the country has embarked on a massive $45 billion transmission upgrade program over five years that, without change, will probably be replicated in the following five years. It is accounting for the majority of consumer energy price increases, but little is being done to consider whether this spending is needed, or very smart, despite the conclusions of studies such as those of the University of Queensland and Sunwiz and the University of Technology’s Institute of Sustainable Futures.
“Most grid infrastructure is outdated,” Busch says. “If you have to replace it and decide to build it to match peak consumption (as Australia seems to be doing) that will cost a lot of money. If you have smart grid, you can find means to reduce that demand and the cost.” The key to that, he says, is knowledge – having smart meters to monitor production and demand, send a price signal to consumers, and to provide sensors along the network.
So how do Australian cities rate among their global rivals? Busch is not saying just yet, because Siemens is about to launch a green city index in Australia that will deliver its first ranking – among seven cities in Australia and New Zealand – by the end of the year.
But he does make some observations about the place of Australia in the world. The first is that the country, for good reason, is well ahead of most on the issue of water management. In the area of energy efficiency, it is well behind European and other countries. In terms of grid management, it’s in the middle of the pack. In transportation, Busch says, there is some work to do. “You have such a big country, you could operate a freight corridor and make logistics so much more efficient,” he says. “In one of your largest cities, there is not even a rail line to the airport. For a European, this is difficult to comprehend.”
