Navigant Research Blog

Buildings and Climate Change

— November 6, 2015

Telescopers_webAccording to the United Nations (UN) Environment Programme, the buildings sector is estimated to be worth 10% of global gross domestic product (GDP), or roughly $7.5 trillion. Currently, buildings consume about 40% of global energy, 25% of global water, and 60% of global electricity. Buildings also emit more than 30% of global greenhouse gas (GHG) emissions. Under the business-as-usual projection accompanied by rapid urbanization, emissions caused by the buildings sector may more than double by 2050.

However, the buildings sector has among some of the most cost-effective and proven solutions for reducing energy consumption and GHG emissions. There are commercially available technologies that can reduce energy demand in buildings by 30% to 80%. Investment in building energy efficiency will lead to significant savings that will help offset incremental costs, providing a quick return on investment. Also, because existing buildings perform far below efficiency potentials in general, there are enormous opportunities for reducing energy consumption. Meanwhile, due to population growth and increasing urbanization, a new construction market is growing in developing countries, where construction activities account for up to 40% of GDP and provide opportunities for adopting energy efficient technologies.

UN Buildings Day

The buildings sector can play a critical role in mitigating climate change by reducing energy consumption and GHG emissions. Consequently, for the first time in the history of climate negotiations, a Buildings Day will be held on December 3, 2015 at the COP21 UN conference on climate change in Paris. This meeting is a mandate from the Lima-Paris Action Agenda of 2014, and it aims to discuss ways to limit global warming to a maximum of 1.5°C to 2°C. The Buildings Day at COP21 will showcase actions already taken by the buildings industry and will serve as an opportunity to encourage communications, collaboration, and implementation among various stakeholders.

In addition, a Global Alliance for Buildings and Construction consisting of governments, companies, financial institutions, organizations, academia, associations, professionals, and user networks will officially launch on that day. By putting the buildings and construction sector on the below 2°C path, the alliance commits to helping countries realize their Intended Nationally Determined Contributions, which are essential drivers for achieving the ambitious global climate goal.


Australia Picks Up the Smart City Challenge

— October 26, 2015

Recent U.S. government support for smart cities research and the announcement of the selected cities for the Indian smart city program are just two signs of the continuing momentum behind urban innovation across the globe. Such developments only increase the pressure on other national governments and city leaders to clarify their own programs and ambitions around urban development. Australia is a good example of how that pressure is hard to avoid.

Despite being one of the most urbanized countries in the world, with around 90% of the population living in urban areas, Australian cities have played a relatively subdued role in the development of smart city ideas. However, there have been a few high spots. The Smart Grid, Smart City project in Newcastle is one notable smart grid pilot attracting global attention, but despite positive results, the follow-up has been limited. Sydney and Melbourne have also been leaders in promoting building energy reporting and energy efficiency, and a number of cities also have sustainability goals, such as the Sustainable Sydney 2030 program. However, there has been little in the way of a significant focus on the issues of urban innovation and sustainability. A recent report from the Australian Council of Learned Academies, for example, highlights the need for Australian cities to put much greater emphasis on clean and efficient mobility solutions if they are to sustain their growth and citizen expectations.

Waking Up to the Challenges

That report is among a number of signs that Australian cities and the Australian federal government are waking up to the challenges presented by globalization and climate change, as well as the opportunities offered by new forms of urban innovation. Adelaide, for example, has launched a number of initiatives including the creation of an Internet of Things (IoT) hub in association with Cisco. Melbourne has recently created a new post of Chief Digital Officer to lead its Smart City Office and has also presented its plans to become a smart city to a committee of the Australian parliament. The federal government is also taking cities more seriously. The new prime minister appointed the first Minister for Cities and the Built Environment in September, reversing the lack of focus on urban development issues shown by the current government so far.

Despite the environmental goals set by some Australian cities, the country’s record on emissions reductions remains poor compared to other developed economies.  Australia has one of the worst records for per capita climate emissions, on a par with the United States. However, whereas the United States has been making reductions in recent years, Australia has done little to mitigate its emissions. The rejection of a number of clean and efficient energy programs by the previous prime minister has not improved the situation. Australian cities have the opportunity to pick up the baton and show there is a better way forward.


VW Diesel Cheating Threatens Consumer Trust of Automotive Software

— October 19, 2015

In late 2007, U.S. gasoline prices were headed toward an all-time high of $4 per gallon and the financial collapse was still a year away. With more restrictive emissions standards being phased in and Congress moving to impose dramatically increased fuel economy standards, automakers and suppliers were scrambling to figure out how to comply without making vehicles so expensive that mainstream consumers could no longer afford them. Tesla was already on its third complete redesign of the Roadster transmission and was months from starting customer deliveries of its then unproven battery technology. Thus, many automakers were looking to the European market, where diesel technology was already so popular.

At the 2008 Detroit Auto Show, we saw an array of diesel-powered production and concept vehicles from Audi, BMW, Mercedes-Benz, Cadillac, Saturn, Jeep, Hyundai, Mitsubishi, Acura, and Land Rover. Several of these automakers, along with suppliers such as Bosch and Honeywell, openly talked about diesel capturing 10% to 15% of the American market by 2015, while J.D. Power and Associates projected that 17% of American cars would be diesel-powered. Prior to the current Volkswagen scandal, diesel cars accounted for just under 2% of sales in 2015.

Diesel has been an appealing solution for American drivers who do a lot of intercity highway driving, where the regenerative braking benefits of hybrid technology are less of a factor, as well as in larger vehicle segments where greater hauling capacity is required. The inherent efficiency of the diesel engine meant that CO2 emissions could be slashed by 25% or more, and technologies—including common rail fuel injection, particulate filters and selective catalytic reduction—would address the traditional noise and emissions issues associated with compression ignition. At least, that was the theory up until the last few weeks.

Special Code

Volkswagen (VW) and its premium brand Audi have acknowledged using special code in the powertrain control software that specifically looks for the conditions associated with running an emissions test in the lab to trigger a fuel delivery strategy that enables cleaner emissions. On the open road, the engine management strategy switches to one that delivers better fuel efficiency and performance but also increases NOx emissions, which contribute to smog.

Several factors contributed to VW’s ability to do this, including the use of standardized lab tests for fuel economy and emissions certification. When the test conditions are well-known and limited, it is quite straightforward to develop control software that meets the letter of the law in the lab while violating it in real-world conditions. Since the source code is closely held by the manufacturers, it’s difficult to verify cheating, logical flaws, or security vulnerabilities.

A Matter of Trust

Since gaming emissions requirements is comparatively easy and not unprecedented, as others (including Ford and Honda) have paid fines for installing defeat devices, the current scandal has the potential for a much more wide-ranging impact on the transportation industry. In addition to electrification, manufacturers are relying on connectivity and automation to enable both efficiency and safety improvements in the coming years. Navigant Research’s Autonomous Vehicles report projects that by 2035, more than 80 million vehicles will be sold annually with some degree of autonomous capability. However, if consumers don’t feel that they can trust manufacturers such as VW, they are far less likely to be willing to pay for the premium features.

When automakers break consumers’ trust, they jeopardize the potential benefits to society and the environment from these technologies. Regulators and manufacturers will need to act decisively, such as the Environmental Protection Agency’s decision to road test all diesels, to ensure consumer trust can be restored.


China and America: Hope for the Climate Change Cause?

— October 14, 2015

During Chinese President Xi Jinping’s visit to the United States in September 2015, the agenda included serious discussions involving cybertheft, territorial disputes over islands in the South China Sea, and human rights in Tibet. Though President Xi and President Obama reached a “common understanding” on these issues (however warily), the two presidents came to a stronger agreement on climate change action.

In November 2014, the two presidents committed to targets reducing their respective nations’ carbon emissions. President Xi announced a plan stating that China’s carbon dioxide emissions would hit their peak around 2030, and President Obama pledged that the United States would cut emissions 26% by 2025 from 2005 levels, which is in line with a pledge he made regarding U.S. carbon emissions in 2009 with the United Nations (UN). The figure below displays the two presidents’ goals alongside historical carbon emissions levels.


United States and Chinese November 2014 Emission Goals

Paige Blog Chart(Sources: The New York Times, U.S. Energy Information Administration)

These goals provide some confidence for reaching a new international climate treaty at the UN climate summit in Paris this December, where American and Chinese emissions reduction commitments are anticipated to be a major part of the deal.

The September discussion on climate change between the two presidents resulted in steps for moving forward with these emissions goals, boosting optimism surrounding the climate summit. Both Obama and Xi have signed a joint vision ahead of the meeting, and Xi announced that China would launch a national carbon cap and trade system in 2017, which will build on seven regional pilot markets already in operation. China will also be adopting a green dispatch approach to its electricity supply, which will enable the country’s electricity generation to reach a 20% share of renewables by 2030. Additionally, China will set aside $3.1 billion in a fund to help developing countries fight climate change. As part of the deal, the United States plans to reduce carbon emissions from electric power plants by 32% from 2005 levels by 2030, which is in line with both President Obama’s pledge in late 2014 and his previous pledge in 2009. However, Obama’s goal will be tested when a new president takes office following the November 2016 election cycle.

Currently, China holds the record as the largest emitter of carbon emissions, producing 29% of the world’s total in 2013. China is followed by the United States with 15%. Scientists now say that the current emissions reduction goals of these two countries will not be enough to prevent an increase in global temperature of 3.6 °F (or 2 °C). Perhaps if the UN’s climate summit can reign in the world’s two largest emitters and push them toward more ambitious goals, there may be more hope for the cause. Better late than never.



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