Most of the world’s population has started moving towards cities because of the greater availability of all the necessary resources and better employment opportunities. Due to this, many cities are getting overcrowded leading to the huge amount of waste, greenhouse gas emission. UN DESA notes that by 2050 around 68% of the global population will reside in urban areas, leading to growing concerns around developing smart and sustainable cities.
Smart cities have the potential to generate economic benefit worth $20 trillion by 2026, leading to 3 priority areas arising to transform urban infrastructure
Enabling technology in building and construction
Decarbonising the building and construction sector is crucial to achieving sustainable cities. Commercial buildings account for 20% of energy usage (30% of which is wasted). Smart technologies like digital twins, matching energy occupancy with usage, dynamic power consumption and seasonal thermal energy storage could be potential solutions to achieving net zero. About $20 billion of opportunities can be deployed by 2023, which significant upside in the future. These technologies have immense potential in reduction of power wastage and self-monitoring. Government investment coupled with financial incentives from the private sector can drive this investment, making the system more sustainable in long run
Improved energy sourcing
With cities currently consuming two-thirds of energy, there has been immense pressure to transition to low carbon energy systems. Investment in smart grids, next generation energy transmission and smart meters that can self-monitor energy flow and microgrids for local energy source could be potential solutions
Water and waste management
Access to clean water is a growing concern. Over 2.1 billion people around the world lack safe drinking water, with water losses and flooding reoccurring as frequent problems. Smart solutions to control leakages, pollution detection and predictive maintenance planning, just-in-time waste collection using sensors, circular waste management through the use of improved packaging, and strategic waste collection serve as viable solutions
One such city that is leading the charge is Copenhagen, which plans to achieve net zero by 2025. Since 2010, Copenhagen’s population has grown by 20% and has been able to cut down GHG emission by 42%
Copenhagen’s 3 focus areas are:
- Mobility: Copenhagen has invested $300 million to improve infrastructure suitable to people with bikes, leading to growing dependence on bikes as the preferable mode of transport, thereby cutting down vehicular pollution
- Pollution: Over past 2 decades investment in treatment plants have helped to reduce harbors waste, and put in place several sensors across the city to detect pollutants
- Energy: Copenhagen uses efficient district heat system where the leftover heat from electric production is distributed to the city
Much of this work has been driven by the Copenhagen Solution Lab, an incubator lab which works to provide innovative, smart city solutions.
Apart from Copenhagen, a number of initiatives have been launched to accelerate smart cities. For example, the United Overseas Bank (UOB) has launched the UOB Smart Cities Sustainable Finance Framework to avail sustainable financing to companies working in these areas.
This is the first dedicated sustainable financing framework by an Asian bank, which aims to increase the accessibility of sustainable finance to companies working towards the establishment of smart cities. This framework particularly considers climate adaptation, energy efficiency, green transport, waste management and more.
Current sustainable finance and ESG discourse, coupled with the challenges and complications arising out of the COVID-19 pandemic has highlighted the world’s dire need for smart and sustainable solutions to complex global challenges. New business models, investor demand and the changing attitudes towards sustainability have encouraged a number of stakeholders to taken on net zero commitments. Sustainable issuances have skyrocketed, crossing new milestones and surpassing performance expectations, these are not enough to bridge the substantial $2.5 trillion global annual financing gap to meet the SDGs. Shifting towards smart technology, will not only make our cities sustainable and resilient, but will provide immense opportunities for investment in the long run.