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 / Summer 2008 / Issue 51(originally published by Booz & Company)


Building the Sustainable City

How governments and private business can foster environmentally sensitive urban planning.

In July 2006, London Mayor Ken Livingstone did something that few other public officials have had the foresight to do. Hoping to transform the city from one of Europe’s most polluted capitals to an environmentally conscious metropolitan area, Livingstone an­nounced that the London Development Agency would develop a zero-carbon residential community on a three-acre site in the Thames Gateway. The facility would incorporate renewable energy technologies, energy-efficient architecture — for example, a building orientation that maximized solar gain, and enhanced insulation materials — as well as integrated waste management, on-site growing of food, and green transport systems. Construction is expected to begin this year.

European nations are leading the world in so-called sustainable urban planning, but Livingston’s radical project is among the most far-reaching efforts to date. The idea grew out of a simple fact of which few people are aware: Buildings account for about 40 percent of the world’s total energy consumption and 65 percent of electricity usage in the U.S. As noted by former Vice President Al Gore, improving ­en­ergy efficiency in buildings represents “low-hanging fruit.” 

For a number of reasons, however, the building sector has been slow to pick this fruit. Constructing a building is typically a complex, multiyear effort involving multiple organizations and individuals, in­cluding government authorities, landowners, developers, architects, engineers, and financial institutions in the early planning phase. And once a project is under way, construction companies join the effort, often managing an armada of suppliers and contractors. What virtually all of these interested parties have in common is a focus on short-term costs and profits. Consequently, in most planning and feasibility cal­culations, minimizing up-front expenses is paramount — yet these outlays will account for as little as 10 percent of the total cost of a building over its useful life, which is 50 to 100 years in developed nations. It is the operating expenses that constitute as much as 85 percent of life-cycle costs, with space heating and cooling, lighting, water heating, equipment, and appliances typically accounting for more than 60 percent of those outlays.

One true “sustainable urban community” is currently under development in the United Arab Emirates (UAE); made up of two towers projected to combine residential, commercial, and retail space, it is expected to break ground this year. Its sustainability “pre­mium” on up-front construction costs — that is, the extra expense of including environmentally friendly features — is about 15 percent. However, the project’s Swiss and British planners and en­gineers estimate that the project will reap as much as 80 percent energy savings over its lifetime, thanks to an optimized mix of facilities; improved insulation approaches; radiant cooling, which uses chilled water as opposed to forced air for air conditioning; and photovoltaic as well as other solar power systems. Overall, this combination of approaches translates into an attractive internal rate of return of about 20 percent. 

Nowhere is the opportunity for sustainable urban planning and development more pronounced than in the developing world, especially in Asia. The Asia-Pacific region is home to 55 percent of the world’s population and has more than doubled its consumption of ecological resources since 1961, according to the World Wildlife Fund (WWF) and environmental watchdog Global Footprint Network. The World Bank estimates that by 2015, more than half of China’s urban residential and commercial building stock will have been erected during the previous 15 years. And in India, the largest developer plans to build 750 million square feet of retail, commercial, and office space in the near future, three times the amount it con­structed in the previous six decades. But in the midst of this building boom, Asia has the chance to improve its heretofore less-than-exemplary environmental record. In their report titled Asia-Pacific 2005: The Ecological Footprint and Natural Wealth, the WWF and Global Footprint asserted that these building trends present an opportunity for the region to “shape the world’s path towards sustainable development in the coming decades.” 

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