Energy Efficiency Must Be Central to the World’s Urbanisation and Industrialisation

More industrial development doesn’t necessarily have to mean more pollution, according to the Institute for Industrial Productivity’s Jigar V. Shah.

Article first published by www.IIPnetwork.org and Greentech on 3 March 2015. IIP

Cities and industry have a dynamic and interdependent relationship that has long profited both. Industry provides jobs, and cities bring people, knowledge and innovation. But with escalating greenhouse gas emissions, and air pollution taking a major toll on the health of many cities’ inhabitants, the dysfunctional aspects of this otherwise happy marriage are becoming increasingly apparent.

The Institute for Industrial Productivity’s recent report on the subject puts the imperative on clean urbanisation — an approach that will become even more important as cities swell well beyond their current capacity.

This is indeed the age of the city, and we can expect to see another 2.3 billion people living in urban centers over the next 35 years. To put it plainly, that’s the equivalent of 1.3 million people moving to a city each week. The growth rate in Asian cities far exceeds what we saw in Britain during the Industrial Revolution. In 1695, Britain’s population was estimated to be 5.5 million, but by 1801, the year of the first census, it was 9.3 million, and by 1841, it was 15.9 million. The population had almost tripled in 140 years.

Looking ahead, industry will not only remain an intrinsic part of the global urban economy, but it will have a greater presence in the fastest-growing cities. According to projections by Oxford Economics for 770 big cities, industry will add more than a billion jobs over the next few decades, generating almost 30 percent of economic output — despite a global shift toward cities providing services rather than goods. Most of this growth will be seen in medium-sized and large cities with between 1 million and 10 million people. This will bring increased demand for energy, especially in emerging economies in Asia, and to a lesser extent in the Middle East and Africa.

The world’s cities are already responsible for about three-quarters of global energy use and are the source of most of our human-generated greenhouse gas emissions. Their greenhouse gas emission profiles are varied, but industry makes up a significant share. In our recent review, it accounted for 62 percent of all greenhouse gas emissions in a sample of 11 Chinese cities, 14 percent in 14 North American cities, and 11 percent in five European and Central Asian cities.

By far the most worrying trends are playing out in growth economies like India and China. The industrial CO2 emissions of rapidly urbanising cities — particularly those with dominant industrial sectors — already far outstrip cities in OECD countries. Some of the cities with the most dominant industrial sectors are Wuhan, Wuxi and Tianjin in China; Kawasaki and Kitakyushu in Japan; Gandhinagar in India; and Cleveland in the U.S.

City_CO2_Per_Cap
The growth of cities and “supercities” has come at a grave environmental and social cost. In the current, traditional model of urban expansion, industry is often pushed out to the city boundaries to mitigate pollution. In turn, skyrocketing housing prices and the lure of jobs have led to the urban poor clustering around industrial areas, meaning they are exposed to higher levels of pollution.

Poor ambient air quality is a leading cause of death in East and South Asian countries, according to the Global Burden of Disease study. In 2010, 2.2 million people in East and South Asia died prematurely as a result of exposure. In the northern region of Beijing, Tianjin and Hebei in China, annual exposure to fine particulate matter in 2013 was 10 times the amount recommended by the WHO, and about half of this pollution could be attributed to steel, cement and brick producers.

Aside from the tragic impact on individuals and families, there is also a significant economic cost. In China, the cost of death, illness and disability associated with particulate matter pollution in cities in 2005 was equivalent to approximately $188.2 billion, or 6 percent of GDP, according to a 2012 study.

Because of their codependent relationship, the creation of sustainable cities will necessitate the greening of industry. Billowing smokestacks and wasteful use of energy can, and must, become part of our past and not our future. The decarbonisation of industry will involve multiple strategies that reach deep into urban planning efforts and government policies. One of our greatest hopes to green the machine is energy efficiency. By using energy more wisely, industry would not only drastically cut global greenhouse gas emissions, but would also spur job growth, save billions, improve competitiveness, raise productivity and mitigate risk by reducing exposure to volatile input prices.

Industrial energy efficiency is not a new concept, but it has become unexciting. However, recent research in this arena says it all. Between now and 2035, taking advantage of economically viable measures to improve efficiency in industry could cut global energy use by the equivalent of 50 billion barrels of oil, according to the International Energy Agency. That’s more than three times the total amount of energy the United States produced in 2012.

This could generate an additional $18 trillion in global economic output, and GDP gains of 2 percent to 3 percent per year for China and India. Without supportive policies, however, more than 60 percent of these energy savings would be lost.

We already have much of the technology and know-how required to meet industry’s energy needs in an efficient manner. The following eight important factors, which have been discussed before, will help institute this level of change:

  • Smart government policies and programs
  • The broad uptake of energy management systems by industrial firms
  • Transparent business practices, including disclosure of emissions
  • Putting a price on carbon
  • Benchmarking energy use so that firms can learn from each other
  • Encouraging energy efficiency along the entire supply chain
  • Research and innovation
  • Investment in energy-efficiency projects

Energy-efficiency projects are also becoming a smart option for cities, particularly because of the short payback periods. An analysis of low-carbon investments in six cities in India, Malaysia, Indonesia, Peru and the United Kingdom came up with cost-saving solutions that would reduce carbon emissions by 14 percent to 24 percent by 2025. And the payback periods for these investments all came in at under four years, with some being paid off in less than a year. Not only that, but for five of these six cities, industry offered either the most cost-effective mitigation options or the largest margin of potential reductions in greenhouse gas emissions.

Energy efficiency also helps alleviate demand for new coal-fired power plants. In South Africa, peak electricity demand is expected to almost double by 2025, and the local utility company, Eskom, is building two new coal-fired plants, but it is under pressure not to build anymore because of concerns about climate change. End-use efficiency investments will help provide a solution for these concerns, along with other reforms like pricing adjustments and public financing.

Recycling of energy or reusing waste also offers a unique solution for cities and industry, and this is already at work in some countries. In Lulea, Sweden, residual gases produced by a steel mill are used in a nearby combined-heat-and-power (CHP) plant to heat most of the buildings in the city, as well as to power the mill. The upshot is that local consumers pay some of the lowest prices for heating in all of Sweden. CHP has other benefits, as well. After Hurricane Sandy hit the East Coast of the U.S. in 2012, facilities like schools and hospitals that had CHP systems were able to power on despite losing electricity from the regional grid.

India is also looking at smart ways of generating and using energy. The Cement Manufacturers’ Association of India has set up a project to use municipal solid waste instead of coal in the production of cement. If successful, the sector would save millions in cumulative fuel costs and significantly reduce its CO2 emissions.

There are so many other innovations coming on stream now that will help both industry and cities to be more efficient and work to their optimum capacity without placing a strain on the environment. But, according to the World Bank, less than 20 percent of the world’s largest cities are equipped for low-carbon planning. This is a woefully low figure.

The creation of sustainable cities presents a complicated and thorny set of development issues. Alongside smart urban planning to manage energy use, cities must ensure access to clean water, sanitation and other basic services. They must build transparent, accountable and responsive government agencies that fairly and effectively enforce regulations. And they must strive to promote economic development. With limited resources and faced with diverse challenges, cities should focus on the basics first and lay the groundwork for progressively more ambitious actions down the line. In terms of energy efficiency, this includes being able to accurately account for energy use and emissions by key sectors in their jurisdictions.

This effort will require a partnership between industrial companies, local city governments, financial institutions, technical service providers, and higher levels of government, as well as international networks and organisations. But the outcome is surely worth the effort. The environmental and social challenges our cities face give us real cause for positive change — and an opportunity to build smart, innovative and green cities that work hand in hand with green industry.

 

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