Navigant Research Blog

Cities: The Focal Point of Climate Action

— November 17, 2017

This blog post was written by Richard Boehnke.

Cities are a focal point of climate action, both individually and as signatories to large networks dedicated to climate mitigation (e.g., Covenant of Mayors and C40). However, efforts to pledge support, sign an agreement, and publish a local climate strategy with an emissions target do not equate to implementing meaningful climate action. Little data is available to support whether cities are on track to achieving targets or if their targets can be met. For example, with the Netherlands reporting only a 3.8% emissions reduction between 2010 and 2015, municipal governments will be required to take the lead in climate action. Yet, with limited budget and staff working on mitigation, most municipalities are also falling behind on individual climate targets. Ecofys, a Navigant company, investigated which existing best practices could be used by local governments to work towards achieving climate goals.

Opportunities for Local Governments: Best Practices in Climate Action

The study examined 26 best practices from 13 Dutch municipalities. These ranged from community energy ambassadors in Almere, to an energy coalition in Den Bosch, to the investment scheme that led to the construction of large wind turbines in Nijmegen. Civil servants stated the goal of these practices was to act as facilitator, engaging the public and businesses to mediate regulatory and institutional processes. However, more needs to be done to meet ambitious targets.

The First Missing Piece: Collaboration

Listening to other departments’ targets and collaborating on projects is crucial to developing citywide climate solutions. Climate projects typically involve several aspects of city development and are frequently cut due to varying priorities when considering the expense of a specific climate measure. It is possible to use mitigation actions to achieve municipal targets because of the broad impact these actions can have beyond reducing CO2 emissions, like air quality improvement or job creation. Achieving climate targets can be considered a co-benefit when conducting successful and profitable municipal projects.

The Second Missing Piece: Monitoring

Databases like the Klimaatmonitor—which contains key energy and climate statistics for Dutch municipalities—are extremely useful for overviews of municipal progress and national trends. However, there are no clear data or monitoring schemes of local climate projects. This gap limits decision makers because the effects of any given project are not known. Without this data, pilots are less likely to be scaled, best practices are difficult to develop and replicate, and real-time progress cannot be assessed.

A Way Forward

Clear, actionable climate plans are necessary to realize the potential of local climate action. Local governments lack public short- and long-term plans in areas where emissions will be locked in (e.g., district vs. electric heating, hydrogen vs. e-transport, in-depth vs. cursory building renovations). There are several tradeoffs when considering each of these paths, but inaction will only delay the inevitable choice and reduce related short- and mid-term benefits. Robust climate plans require:

  • Emissions targets
  • Emissions baseline
  • Budget
  • Stakeholders
  • Clear measures
  • An implementation plan and timeline
  • A monitoring scheme

If full-bodied plans are implemented, municipalities can share each step of their projects and monitor progress towards achieving local climate goals. With public long-term planning, citizens, cooperatives, and businesses can participate, invest in, and adapt to the municipal energy transition. Municipalities will have to invest a lot more than the currently allocated budgets and manpower to become climate neutral in 20-30 years.

Research conducted for the municipality of Utrecht (350,000 inhabitants) shows that if all measures were realized within the city limits, becoming climate neutral would require investments of about €9.5 billion. However, if the municipality agreed to take part of its investments outside of Utrecht (e.g., funding offshore wind in the North Sea), total investments could be reduced to roughly €4 billion. Ecofys, a Navigant company, proposes that national and municipal governments should agree on a fair effort sharing to reduce overall societal costs.

For more information, please get in touch with our team.

 

Cities and Businesses Care about Smart Buildings: Part 2

— November 14, 2017

With 238 proposals in hand from cities and regions across North America vying to host its second headquarters, Amazon plans to make a decision next year. Cities trying to lure Amazon should turn this occasion into an opportunity to strengthen their business environments to both complement and drive investment in smart buildings.

Regulatory Certainty and Standardization of Business

In order to attract investment in smart buildings, governments should work toward offering certainty and standardization for investors. Certainty refers to predictable outcomes or guaranteed returns. Governments can establish policies that set expectations for the building sector. Cities that adopt and enforce building energy codes, for example, can quickly increase local demand for energy efficiency technology. Stable demand means a stable market for finance.

In addition, having common standards for assessing risks will be helpful. For example, many stakeholders are already familiar with existing green building standards like Leadership in Energy and Environmental Design (LEED). If governments use policies such as financial incentives to encourage broader adoption of such standards, that will make it easier for investors to assess a project and ultimately increase the likelihood of investment.

Leading by Example

As a start, enforcing policies like building efficiency codes and fostering voluntary programs to pursue LEED certification can offer certainty and standardization. Cities can lead by example, ensuring that their own buildings adhere to the policy goals, unleashing the power of information and communication technology in public buildings. In its recent report, Smart Buildings and Smart Cities, Navigant Research expects the global smart public buildings market revenue to grow from $3.6 billion in 2017 to $10.2 billion by 2026 at a compound annual growth rate of 12.1%.

One of the leaders in this area is Washington, DC, which was named the first LEED for Cities Platinum city in the world in August 2017. Washington, DC requires all new public sector buildings to achieve a minimum of LEED Silver certification. And starting in 2012, all new private buildings over 50,000 square feet were required to achieve LEED certification. Once the regulations kicked in, the private sector responded by competing for LEED certifications—developers wanted to achieve higher levels of certification against their competitors.

Regulatory certainty and standardization of business together with government efforts to lead by example are key to encouraging investment in the smart buildings sector. As stated in my previous blog, cities wishing to remain competitive in the face of new emerging technologies and a new generation of top talent will want smart buildings as an action item.

 

Cities and Businesses Care about Smart Buildings: Part 1

— November 9, 2017

In September, Amazon announced plans to open a second headquarters in North America called HQ2. The company expects to invest more than $5 billion to build the facility and create as many as 50,000 high paying jobs. In its request for proposal, Amazon listed preferences to help find the perfect location for its new campus. It is looking for a city of more than 1 million people with an international airport, mass transit, quality higher education, an educated workforce, and a solid business climate. 238 proposals have been submitted by cities and regional governments. While Amazon will look at the most obvious incentives from governments such as donated land, tax breaks and subsidies, it will also need to consider which cities will attract best talent.

Attracting Top Talent from a Business Perspective

By supporting more agile ways of working and enhancing the work environment, smart buildings can play a key role in attracting and retaining employees amid increasing competition for top talent in business sectors. Smart buildings use internet-enabled technology to gather data and bring operating systems and services under central control in order to create a better workplace.

Smart buildings can not only reduce operational and energy costs, but can also create an enhanced in-building experience to help increase productivity and promote corporate brand values. They achieve this by analyzing data on occupancy, movement, and resources in real time and by adapting systems to optimize the performance of both the building and the people within it. This way, smart buildings provide opportunities to address the challenges of productivity and comfort that are at the heart of contemporary debates about workplace environment. Cities trying to entice Amazon to their streets should take a closer look at smart buildings—which can help Amazon recruit top talent.

Relevant technologies are already available, including building energy management systems, location-aware sensors and services, and mobile phone applications. In fact, Navigant Research is bullish on continued adoption of these technologies. In a recent report, IoT for Intelligent Buildings, Navigant Research projects the market to grow from $6.3 billion in 2017 to $22.2 billion in 2026 at a compound annual growth rate (CAGR) of 15.0%. The office segment is expected to grow at a 15.7% CAGR.

Attracting Businesses from a City’s Perspective

The evolution of smart buildings parallels the digital transformation in cities. Cities can now collect large volumes of high quality data from public infrastructure, such as government buildings and street light poles, that can transform a number of city service areas. For example, digital technologies are becoming an important element in traffic and transit management, public safety, social care, street lighting, and waste services. From sensors collecting data to developers building thousands of smart city apps, the Internet of Things movement is helping cities become truly smart.

Digital transformation of city services is certainly attractive to businesses, but cities can go the extra mile to enhance its competitive advantage. For cities to lure Amazon, the business environment that complements and drives investment in smart buildings should be enhanced. Smart technologies will further innovation, inclusion, and investment within a city. My next blog will explain what cities can do to spur investment in the smart buildings sector.

 

UK Cities Are Embedding Smart City Principles in City Policy

— November 7, 2017

My previous blog summarized five of the Innovation Awards spotlighted in the UK Smart Cities Index 2017, commissioned by Huawei, which assess the 20 leading smart cities in the UK. Those awards focused on five key smart city service areas: transportation, health, energy, education, and public safety. Equally important are the cross-sector strategies and technology investments that enable innovation across these service areas.

Four other Innovation Awards identify key strategic and technical areas where UK cities are making significant contributions to the development of smart city policies and infrastructure:

Sustainability: Cities are making sustainability the heart of city policy, as they recognize the need to reduce their environmental footprint and contribute to the global reduction in greenhouse gas emissions. Peterborough takes the Innovation Award for its environmental focus and commitment to becoming a circular city, as exemplified in the Share Peterborough programme for resource sharing. Also commended are Bristol, European Green Capital in 2016; London, which has launched an ambitious new environmental policy; and Manchester, which has set a goal of being a zero carbon city by 2050.

Internet of Things (IoT): UK cities are looking to establish a large-scale test bed environment that can support a rolling programme of innovation projects. Bristol Is Open continues to lead the way in terms of its scope and ambition and the contribution it is making to the city’s broader plans. Other leading examples include Manchester’s CityVerve IoT demonstrator, Milton Keynes’ MK:Smart, and Cambridge’s new LoRa-based intelligent city platform.

Data and analytics: All the cities included in this report are looking at how to use data to improve services and boost innovation. London continues to be at the forefront on data innovation with its London Office of Data Analytics and a new Chief Digital Officer accelerating the use of data to improve services across the capital. Leeds also deserves mention as one of the pioneers for open data in the UK with Data Mill North, just one of several data-focused initiatives in the city.

Strategy: The successful adoption of new technologies to improve city services requires cities to rethink the way they design, manage, and operate city services in the digital age. All the leading cities are taking a fresh view on the impact of technology on city policy making, planning, and service design. The Innovation Award goes to Aberdeen for its new Target Operating Model, which seeks to embed smart city thinking into city planning, service design, and infrastructure investment. This will be enabled by new approaches to the provision of digital infrastructure and services.

The 10th Innovation Award is for City Partner and reflects the importance of central government and other agencies in fostering collaboration between cities and supporting follower cities as they develop smart city initiatives. The Future Cities Catapult is having a strong influence across the country by helping cities initiate smart city programmes, share ideas and insight, develop common standards, and accelerate innovation in areas like smart planning.

These Innovation Awards demonstrate the range of activity occurring across UK cities. In my next blog, I will examine some of broader insights to be drawn from Navigant Research’s efforts for the report and its conversations with city leaders.

 

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