How can smart cities help us

How can smart cities help us

to cut down our energy consumption and make our future greener?

03/2019  | Reading time: 7 minutes

Despite the frequency of city “smartness” labelling — as mentioned in many other articles of our latest In Focus magazine — there is no accepted definition for the smart city concept. However, in general terms, all definitions of smart city have a common element: the use of state-of-the-art technology to improve the sustainability and energy efficiency of public services.

“The story of electric power is the beginning of the story of modern urbanisation.” In Edisons world of electricity, we can find a power station fired by coal every couple of kilometres. With direct current, it became possible to operate motors, enabling businesses to be more productive and to grow. Alternating current, on the other hand, made it possible to send electric power across long distances, so alternating current-generating plants allowed us to electrify complete parts of a town and to expand them. Parallelly much more efficient forms of mass transit arose: electricity-powered trolleys and subways opened the era of public transportation. The life of people moving to the city became powered by electricity, and these urban areas became the engines of growth. At the same time, this rapid increase brought about health and safety issues, and expanding industrial cities became the centre of contaminated water and air, and communicable diseases. Similarly, the fast-paced population growth and uncontrolled urbanisation today raise the need for harnessing the fourth industrial revolution for sustainable cities. The crucial importance of energy efficiency is (among others) indicated by the fact that 55% of the world’s population lives in urban areas. Smart city solutions are indispensable when over 4 billion people eat, shop, work, study, and travel in cities. Additionally, as many more are aspiring to the city lifestyle, global urban population is expected to increase to 68% by 2050.

Today, cities — requiring an uninterrupted supply of energy — are responsible for 75% of the world’s energy consumption, and they emit between 50% and 60% of the world’s total greenhouse gases, but only occupy 5% of the earth’s landmass. Thus, cities are among the biggest opportunities to mitigate climate change. But, seemingly, the world is not able to bridge sustainably the gap between energy demand and supply. However, technological inventions and smart city applications could offer a blueprint for more efficient use of energy resources and for better living conditions as well.

Smart city initiatives have been attracting technology investments worldwide; according to a research by Zion Market Research, the global smart city market accounted for more than USD 955 billion in 2017, and according to forecasts, it might reach more than USD 2,700 billion globally by 2024. On a geographic division, the Asia-Pacific will account for more than 40% of global investments this year, followed by the Americas (33%) and Europe, and Middle East and Africa (25%). China is the largest country market for smart city solutions. Another potentially big market is India, where the government’s Smart Cities Mission — including 100 cities of the country — allocate USD 29.9 billion for smart technology solutions.

Smart solutions might keep the pace with the deeper integration of intermittent renewables, such as wind and solar. The drop in the prices of renewables made them cost-competitive with fossil fuels, leading to new power deals across the world; solar’s price fell especially steepy after the Chinese manufacturing boom. However, if renewable energy is so beneficial, why have we not stopped fossil fuel consumption yet? Well, it is in progress… Variability of supply is the biggest issue, and, in practice, the storage of renewable energy runs into several problems as well.



Global new investment in renewable energy: developed and developing countries, 2004–2017, billion USD
Source: Bloomberg New Energy Finance: Global Trends in Renewable Energy Investment 2018. Frankfurt School of Finance & Management gGmbH, 2018. 15 (Figure 4)


However, according to the research of Wood Mackenzie, more than a fifth of the investment by the largest oil and gas companies could be in wind and solar power in just over a decade. Countries dominating the production of fossil fuels, such as the oil-rich countries of the Arabian Gulf, take a keen interest in renewables. However, the last half century has been a rather bad time for establishing liveable cities in the region. Cities are rising out of the desert on the Arabic Peninsula, and where many have tried to design cities whose inhabitants can live in harmony with nature, automobile-based, energy-hugging urban areas were formed. From the point of view of sustainability, they provoke some questions, and there are some “solutions” which occur when cheap energy meets environmental indifference.


Indoor skiing in Dubai
Source: Shutterstock


Considering these huge cities, the natural tendency to accommodate automobiles has been one of the main aspects of construction. Walking around in Abu Dhabi, in Masdar City, or in Dubai is quite the same: they are surely not listed among the most pedestrian-friendly places in the world. The United Arab Emirates is sitting on the 10% of the world’s oil reserves, which does not mean that people behind these cities would not be determined to find alternative answers, such as carbon-neutral, pedestrian-friendly solutions empowered by renewable energy. (Most probably cheap energy will not last forever.)

Another big player is China, where the first smart city development-related projects appeared in the 2010s, and now the country has about 500 smart city pilot projects, the highest in the world, according to a leading auditing and consulting firm Deloitte. As per the Chinese government’s plan, about 60% of the total population should live in cities by 2020, and this accelerated urbanisation has entailed a series of environmental and energy resources-related concerns.

study conducted by scientists in Germany and the United States examined the typology of global urban energy use. The energy use of 274 cities across the world were evaluated, looking at various city sizes and regions. According to the research, without any mitigation actions, if the current trends in urban expansion continue, urban energy use will increase more than threefold from 240 EJ in 2005 to 730 EJ in 2050. However, it also predicts that, with well-established urban planning and transport policies, it might be possible to limit future increase in urban energy use to 540 EJ by the same date.

No doubt that a shift to a sustainable, efficient energy generation and transport is necessary, but this shift also means that a new set of elements will become key in order to fulfil the needs of global urban energy use: not only in technology but in policy as well. The findings of a sustainability index developed by Columbia University, Tsinghua University, and McKinsey in 2010 show that the fastest-growing cities in China are also the ones with the best environmental performance, achieved with the help of new policies, i.e. through better planning of transportation services, clear targets for industry plus clear monitoring standards, and investments into resource efficiency. Efforts to take control over energy-hugging, fast-urbanising cities, for example in Asia, might potentially help to reduce total energy use in cities by more than 25% according to the research.

Globally, industry is responsible for around 38% of final energy consumption and almost one-quarter of total CO₂ emissions. Global energy demand in transport currently accounts for about 28% of overall energy consumption and for 23% of energy-related greenhouse gas emissions. Oil products account for around 93% of final energy consumption in transport, according to IEABuildings constitute nearly one-third of global final energy consumption and 55% of global electricity demand. In rapidly growing economies, including China and India, electricity demand in buildings grew by more than 8% per year on average over the last decade. Much of these regions have a relatively warm climate, which means that the demand for space heating is small. Conversely, the majority of demand is driven by the need for air conditioning, together with lighting and electrical devices. Many say a city cannot be truly smart without smart water management and infrastructure: it is not just the latest marketing hype, but a real issue when it comes to the fact that water utilities have to manage aging networks with limited resources.

Efforts are taken in all these sectors, as applied smart technologies have been most evident in the industry, transport, buildings, and water management. The following chart shows the magnitude of the potential change in energy demand that different tech solutions can provide. These technologies can contribute to the reduction of the energy intensity of services, while some could also induce rebound effects that increase overall energy use.



Digitalisation’s impact on industry, transport, buildings
Source: © International Energy Agency Digitalization and Energy 2017, licence:


In the Arabic Peninsula, cutting-edge smart technologies in the industrial, transport, and building sectors are maturing. Dubai-like cities have one of the largest ecological footprints of any city in the world; by 2050, Dubai plans to have the smallest. The turning point in the Arabian metropolis came when Sheikh Mohammed bin Rashid Al Maktoum, taking over in 2006 as the Ruler of Dubai, announced that the city will get 75% of its energy from clean sources by the middle of the century. Another huge project launched in the neighbouring Abu Dhabi in 2006 was the construction of Masdar City, where the aim of the USD 22 billion project was to create the world’s first zero-carbon, zero-waste city. The concept looks simple, but let us focus on the energy of the future. Undoubtedly, growing energy efficiency would also provide more fossil fuels for export, but disregarding the motivation, Arabia is confirming its place on the renewable energy map. (It is also worthwhile to note that such prompt increase is also due to the lack of political or public opposition, so projects advocated by the Ruler are very unlikely to be brushed aside.)

The type of solutions that change the life of a resident in the United Arab Emirates or China is much different from what a correct solution in an African urban area means. In addition, smart city projects are quite different in terms of capital, paying parties, and beneficiaries; there is a huge difference between decisions such as establishing a free Wi-Fi system or installing a cutting-edge stormwater management system. They should not be considered in the same pool of “tech dreams.”

Energy security issues and global warming, due to the impact of increased energy usage, are some of the key issues the city managers are looking to solve; however, the (smart) energy situation of a country or region — besides technological development — relies to a great extent on urban form and economic, and geographical characteristics. The above-cited research conducted by PNAS in order to bridge the gap in comparative analysis about which conditions drive urban energy usage the most claims that, to analyse urban attributes related to energy consumption, it is necessary to take into consideration multidimensional features: urban form (structural characteristics, population density), economic (economic activity, gasoline prices), and geographical characteristics (heating degree days, but not cooling degree days, and coastal city location). These variables can explain an important fraction of the energy use variedness of cities. The dataset of the previously-mentioned research evaluated 274 cities of various sizes from 60 countries with a combined population of 775 million, i.e. 21% of the global urban population.

The analysis finds that final energy consumption is mostly influenced by the effect of economic activity — economic factors are more closely correlated with energy use than, for example, with population density — and is followed in importance by climatic variables (heating degree days), household size, and urbanisation rate. (This corresponds with other studies, which assess the ecological footprint of cities and countries, and find that the factor which determines the magnitude of the ecological footprint the most is aligned with the level of economic activity.) Final transport energy use, which was examined separately, is mostly affected by fuel price and population density. The study also finds that the greatest potential for reducing energy use is in the rapidly-urbanizing AsiaAfrica, and the Middle East, mainly because OECD cities are more mature, built-up environments with established infrastructure, which is accompanied by locked-in behaviour and energy consumption patterns.

In the African building sector, at the moment, smart solution might mean something different than the high-performance glass buildings in Asia, for example. In Cape Town, sandbag homes are built, replacing brick-and-mortar, as a safe and cheap way for affordable housing. In Lagos, floating schools are constructed which are suitable to accommodate more than hundred students. In this case, everything is nature-based, no high-tech instruments are included in the system.

In contrast, cutting energy use in Europe’s old building stock requires a different approach, which is one of the biggest possibilities to make Europe’s future greener: buildings account for over 40% of the EU’s final energy demand.

We all can easily visualise the developing and emerging cities of Asia, which became the worst cities for traffic: old infrastructures cannot accommodate the ever-growing number of vehicles. The trail system of Japan and the bike- and car-sharing system of Seoul are some outstanding examples. However, in less developed economies in the region, the construction of road infrastructures, the installation and maintenance of traffic control systems, and the education of commuting people take some time and money. Other commuting methods, such as inland waterway transport — considered as the “poor man’s transport” — is still the most climate-friendly solution in the applicable areas.

It is unclear how urban energy use changes with economic growth, fuel prices, and shifts in population density, but, where infrastructure is still nascent, there might be the greatest prevention potential.

Nonetheless, there is an ever-growing demand in these regions for water, food, building material as well as for pollution control measures and waste management. Urban infrastructures modulate energy flows in economic activities, buildings, and transport, and these built environments might shape energy consumption patterns for decades; meanwhile, smart applications appear daily on the market. However, in order to breathe new life into centuries-old infrastructure, sometimes technology needs to be retrofitted, while in a new infrastructure, built from the ground up, it is easier to test new projects.

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