Cities of the future – to be compact, connected, co-ordinated

Urban sprawl chokes cities. That was a key takeaway for me from a responsible investment conference I attended  earlier this year. If we want to help reduce carbon emissions we need the cities we build today to be compact, connected and co-ordinated. The greater the area of a city the higher the costs, not just in terms of monetary value, but also in carbon emissions. For example, as the following chart shows, Atlanta in the US and Barcelona in Spain have similar populations and wealth, but with the area of Atlanta over five times that of Barcelona, their carbon productivities are very different. Barcelona has employed smart infrastructure and smart utilities, the city’s grid system has optimised transportation routing and scheduling, while other initiatives have reduced energy usage.

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I believe this is a huge opportunity for infrastructure spending in emerging markets, which is expected to account for two-thirds of total infrastructure spending over the next 20 years. More infrastructure is expected to be built in the next 20 years than the existing stock, which has been built over the last century. With 60% of carbon emissions coming from vehicle use, creating more concentrated cities combined with alternative energy sources and new technologies (electric cars, energy storage etc), is surely the way ahead. Cities could be planned to take account of higher population densities and to reduce emissions levels. The era in which cities are built often dictates their design and structure. For example, European cities that developed mass rail transit systems at the turn of the last century look very different from the automotive cities and suburban sprawls in Australia and the US that were built in the post-WW2 era.

Well-planned future cities in highly populated emerging economies should also prioritise more efficient use of space and energy via better linked infrastructure and communication technology. There is a great opportunity to design a flexible, efficient structure into which technological developments can easily be incorporated. This is particularly true when it comes to energy, where the costs of solar and wind energy have plummeted to the point where they are dropping below the equivalent gas or coal production costs.

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One major challenge in renewables to date has been the lack of development within energy storage, being able to manage the peaks and troughs of demand without having electricity ‘on tap’. However, the technology is catching up. Solar technology allows for localised power generation near to or at the site where it is being consumed. Costs of storage technologies, particularly lithium-ion batteries, are continuing to fall steadily, while their storage capacity and flexibility to use the stored power as and when needed, is increasing. This brings storage solutions within reach of end consumers.

Entire power systems can be built differently. We have traditionally built the electricity grid around the premise that power generation will be generated on a national level and can be located far away from population centres. But the alternative of having some distributed resources generating power near population centres, together with centralised resources, should reduce the overall need for transmission and distribution infrastructure. New cities using distributed energy will need far fewer wires and a lot less capital investment for that part of the grid, as an increasing amount of power generation will be sourced at the point of consumption.

Managing growing cities and their supply of resources is a formidable task that places heavy demands on infrastructure and the environment. However, with the technologies available today there is a huge opportunity to achieve more efficient outcomes for less capital expenditure, creating smarter cities for the future.


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