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 / Autumn 2010 / Issue 60(originally published by Booz & Company)


Reinventing the City to Combat Climate Change­

As an essential enabler of smart grids, information and communications technology (ICT) will be a significant part of the drive to achieve urban sustainability. ICT can play an important enabling role by supporting energy-efficient construction with sensors and controls that tailor energy use to demand. ICT also provides tools for effective urban planning — a fundamental component of a city’s sustainability efforts. In addition, as a dynamic and powerful new sector, ICT has a key position as a “big brother” of the clean tech boom. And with companies such as Intel and Google racing to invest in clean tech, there is a strong likelihood that ICT will be a critical catalyst for change.

Green Incentives and Investments

Investing in green technology today can provide powerful economic and environmental benefits for cities. As noted, we estimate that the world’s cities will spend $350 trillion over the next 30 years on building, operating, and maintaining urban infrastructure. Our analysis also shows, however, that increasing up-front investment in green urban transportation and residential technology by $22 trillion would reduce future infrastructure spending by a cumulative $55 trillion by lowering future lifetime operating costs — for a net savings of $33 trillion over the lifetime of the infrastructure. At the same time, this investment would lower lifetime carbon emissions from infrastructure operation by 50 percent. The equation is simple: A relatively small investment will yield an enormous environmental and economic payoff. Even with such promising expected returns on investment, however, gaining political support for major capital investments remains challenging.

Although new public and private energy financing opportunities are emerging as climate change rises to the top of the global agenda, scarce resources and competing agendas pose continued challenges. That being the case, innovative financing strategies are needed to provide funding for up-front capital costs.

Consumers must have incentives in order to choose energy efficiency over energy guzzlers. “We’ve found very clearly that if people ever get $10,000 to improve their home, they fix up their kitchen,” explains Susan Anderson, director of Portland’s Bureau of Planning and Sustainability. “They don’t insulate their homes or [replace] their furnace.”

As a result, programs such as Portland’s Clean Energy Works give property owners an opportunity to borrow money to install energy-efficient upgrades, paying off the loans over time through their energy bill. Similarly, the Property Assessed Clean Energy program in Berkeley, Calif., offers loans to install sustainable technology solutions such as solar panels. In Berkeley’s case, consumers repay the loan through a special fee on their property tax bills.

Creative solutions are also being offered in the developing world. In Eritrea, a country in the Horn of Africa, indoor cooking on woodstoves is common, but it emits unhealthy fumes. So the government has partnered with nongovernmental and business organizations to produce new fuel-efficient stoves, which are then carbon certified. The certified carbon credits are sold on the voluntary emissions reduction market, and the funds raised are used to import and install solar-powered electrical systems in homes and other buildings. By reducing CO2 emissions as well as harmful fumes, the plan confronts an essential quality-of-life challenge even as it helps the environment.

Every city has its own set of opportunities and challenges, but information sharing and cross-sector collaboration can help pinpoint best practices and appropriate solutions. Pilot initiatives should be evaluated for effectiveness, and successful programs should be brought to scale — with the understanding that progress will not happen overnight.

A Prescription for Healthy Growth

By directing the enormous expenditures earmarked for urban infrastructure and usage toward energy-efficient technology, policymakers will be able to accomplish several important goals: First, they can make progress in limiting climate change. Second, they can enhance the livability of urban areas. Finally, they can ensure their city will serve as an innovation platform and hub of green entrepreneurship, building the economic base and creating jobs by attracting green industry.

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  1. Stewart Brand, “City Planet,” s+b, Spring 2006: How the profound consequences of increasing urbanization are changing the way we think about demographics, cultural vital­ity, and economic development.
  2. Viren Doshi, Gary Schulman, and Daniel Gabaldon, “Lights! Water! Motion!s+b, Spring 2007: Rebuilding the world’s urban infrastructure can be done only by integrating energy, transportation, and water.
  3. Peter Senge, Bryan Smith, and Nina Kruschwitz, “The Next Industrial Imperative,” s+b, Summer 2008: Why facing up to climate change requires a revolution in business thinking.
  4. World Wide Fund for Nature and Booz & Company, “Reinventing the City: Three Prerequisites for Greening Urban Infrastructure,” (PDF) March 2010: More analysis and ideas on why we need to aggressively pursue urban sustainability.
  5. For more thought leadership on this topic, see the s+b website at:
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