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Smart Cities – how to master the world's biggest growth challenge
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Smart Cities – how to master the world's biggest growth challenge

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BCG's Holger Rubel describes how urbanization is changing the world and explores how five sectors in "smart cities" are evolving: energy, transport, water and waste, social initiatives, and buildings. ...

BCG's Holger Rubel describes how urbanization is changing the world and explores how five sectors in "smart cities" are evolving: energy, transport, water and waste, social initiatives, and buildings.

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    Smart Cities – how to master the world's biggest growth challenge Smart Cities – how to master the world's biggest growth challenge Presentation Transcript

    • Smart Cities – how to master the world's biggest growth challenge Dr. Holger Rubel, BCG Frankfurt 21 May 2014
    • Smart Cities.pptx 1Draft—for discussion only Copyright©2014byTheBostonConsultingGroup,Inc.Allrightsreserved. Urbanization is changing the world Emerging market cities have changed beyond recognition Shenzhen in 1990 Rithala Rohini West Rohini East Pitam Pura Netaji Subhash Place Pratap Nagar Pul Bangash Keshav Puram Kohat Enclave Kanhiya Nagar Inder Lok Shastri Nagar Tis Hazari Length: 8.3 km Length: 110 km Shenzhen today Delhi Metro in 2002 Delhi metro today
    • Smart Cities.pptx 2Draft—for discussion only Copyright©2014byTheBostonConsultingGroup,Inc.Allrightsreserved. Emerging market cities need to cope with massive growth Some emerging market cities will grow by as much as ~10 million inhabitants in 15 years São Paulo 18% Mexico City 22% Calcutta 31% Jakarta 33% Cairo 34% Mumbai 37% Manila 40% Tianjin 40% 40% Wuhan 43% Shanghai Chongqing 45% Guangzhou 48% Karachi 50% Delhi 50% Chennai (Madras) 50% Beijing 51% Shenzhen 52% Dhaka 53% Bangalore 59% Kinshasa 73% Lagos 75% Population growth in emerging markets mega cities 2010-2025 in % and absolute (in millions) Source: UN World Urbanization Prospects – Review 2011; BCG analysis 22 11 139 4 2315 8 1610 5 2315 8 138 5 158 6 1911 8 2320 4 2520 4 1914 4 1310 3 1511 4 2719 7 1612 5 129 3 1410 4 139 4 2820 9 1510 5 2013 7 33 Population 2010 (mio) Growth 2010-2025 (mio)Americas Asia MEA/Africa Asia driving population growth in cities – finding smart concepts key to cope with related challenges
    • Smart Cities.pptx 3Draft—for discussion only Copyright©2014byTheBostonConsultingGroup,Inc.Allrightsreserved. Developed countries cities have significant climate change goals that often go beyond national commitments • London: 38% • Berlin: 40% • Paris: 25% • Madrid: 20% • Warsaw: 20% • Roma: 20% • Dublin: 20% • Helsinki: 20% Europe: Covenant of Mayors • Covenant signatories aim to meet and exceed the European Union 20% CO2 reduction objective by 2020 • Local and regional authorities commit voluntarily to increase energy efficiency and use of renewable energy sources • > 4,000 mayors with ~ 164 million inhabitants involved • Cities fix climate reduction goals for 2020: • Stockholm: 45% • Amsterdam: 40% • Zurich: 28% • Copenhagen: 20% USA: Conference of Mayors • Establishment of US mayors climate protection agreement in 2005 • > 1,000 mayors with ~ 88 million inhabitants involved • Participating cities commit to take following three actions: – Meet/beat the Kyoto Protocol targets in their own cities (7% reduction from 1990 levels by 2012) – Urge state and federal government to enact policies and programs – Urge U.S. Congress to establish a national emission trading system Source: usmayors.org; EU covenant of mayors; BCG analysis
    • Smart Cities.pptx 4Draft—for discussion only Copyright©2014byTheBostonConsultingGroup,Inc.Allrightsreserved. Cities will have to manage two large, interrelated challenges Growth & Urbanization: More people living in cities (% and total) Climate change: Cities key to winning the climate change battle • For the overall battle against climate change to succeed, city GHG1 emissions need to be reduced significantly World population in bn 10 8 6 4 2 0 % Urban population 80 70 60 50 40 30 20 20502040203020202010200019901980197019601950 40% 30% 30% GHG1 emissions repartition in 2011 In city Possibly in city Rural 60% 20% 20% Production- based estimate Consumption- based estimate • Share of people living in cities will increase from ~ 50% today to ~ 70% in 2050 • Cities must provide infrastructure for a growing world population and an increasing percentage of people living in (mega-) cities 1. GHG: green house gases Source: United Nations Cities and Climate Change Report; World Bank Cities and Climate Change Report; World Urbanization Prospects: 2011 Revision Population Database; press research; BCG analysis World population Urban population
    • Smart Cities.pptx 5Draft—for discussion only Copyright©2014byTheBostonConsultingGroup,Inc.Allrightsreserved. "Smart Cities" improve sustainability, economic viability, and citizen well-being using innovative services and concepts Environmental, social and economic objectives of cities Smart City definition for this presentation 1. Information and Communication Technology Source: Pike research; European Smart Cities project; European Commission; press research; businessdictionary.com; BCG analysis Smart Cities employ innovative services and concepts to improve environmental sustainability, economic viability and citizen well being by using ICT based technologies – e.g. high speed networks – e.g. sensor and actuation technologies – e.g. advanced analytics Non ICT based innovative technologies – e.g., renewable power generation – e.g., low emission vehicles – e.g., energy efficient building design Urban Planning concepts – e.g., sustainability-enhancing city layouts – e.g., innovation, technology and business platforms • Investment • Jobs • Innovation Economic viability • Energy efficiency • Pollution • Resources Environmental sustainability • Public safety • Education • Healthcare • Social care Citizen well-being 1 2 3
    • Smart Cities.pptx 6Draft—for discussion only Copyright©2014byTheBostonConsultingGroup,Inc.Allrightsreserved. Five major sectors in smart cities Technology examples Smart Buildings (Remote, cross) Building/Energy mgmt. systems Smart Energy Smart meters Electric vehicle infrastructure Distributed generation integration Demand-Response Smart Transport Intelligent transportation systems Tolling & Congestion charging Smart Water&Waste Smart water meters Distribution network control, leak detection, GIS Smart Social E-government Remote social infrastructure (health, education) Safety & Security Public transport system information sharing Smart parking Smart consumer appliances and devices Storm and flood management ICTNonICT Co-Generation Renewable Generation Low emission vehicles Low emission public transport system Purification methods Leakage reduction Green hospitals ... Energy efficient building design Energy efficiency refurbishment of old buildings ... ... ... ...
    • Smart Cities.pptx 7Draft—for discussion only Copyright©2014byTheBostonConsultingGroup,Inc.Allrightsreserved. Smart cities can be mapped along two key dimensions + – – Importance of ICT age of city 'Make an old city smart' ' Build a new city' 'Focus on urban planning' 'Leverage ICT' Rio Operations Center Songdo Masdar Amsterdam Public/private partnership Private corporations/investors Government/state owned 1 2 3 4 + Europe/NA/LatAm Asia/Middle East • Existing cities • Typically smaller pilots/ projects • Higher ICT share • New cities • Large scale projects • Urban planning focused Chicago Open Data 5
    • Smart Cities.pptx 8Draft—for discussion only Copyright©2014byTheBostonConsultingGroup,Inc.Allrightsreserved. Songdo – South Korea's new sustainable business hub Key facts Songdo Project Overview Key data Key objectives Major Partners1 • Largest private real estate development in history • Aims to create new and sustainable business hub in Asia • Cost: $40Bn • Size: 1´500 acres, 80´000 apartments, 75´000 residents • Timeframe: 2003-2020 • Environmental sustainability: Become a leading sustainable city worldwide • Economic viability: Develop a concentrated financial, economic and technology center • Citizen well being: Provide state of the art social, cultural and sports infrastructure 1. Exemplary, no exhaustive list NY-based private real estate development and investment firm South Korean Engineeirng and Construction firm 1
    • Smart Cities.pptx 9Draft—for discussion only Copyright©2014byTheBostonConsultingGroup,Inc.Allrightsreserved. Citizen well being Economic viability Environmental sustainability Songdo is the largest private real estate investment in history Urban planning • Incentivization of public transportation means • Reduction of energy and water consumption as well as waste • Building construction according to sustainability certification standards • Concentrated financial, economic and technology center, free economic zone • 3.5 hours flying time from one third of the world´s population • International Airport Incheon 15 minutes drive from Songdo • 40% of open space (600 acres) • City design around central park (100 acres) • State of the art educational, cultural, shopping and health care infrastructure Office space Commercial space Residential space Public space Opera house Golf Course Central Park4.645.000 sm office space 225.000 housing opportunities Large shopping malls, department stores 1
    • Smart Cities.pptx 10Draft—for discussion only Copyright©2014byTheBostonConsultingGroup,Inc.Allrightsreserved. Songdo focuses on activities across four of the five major sectors Smart Energy Smart Transport Smart Water&Waste Central Park canal uses seawater instead of fresh water Smart Buildings Sector Initiatives and projects EV charging stations 25km bicycle lanes 5% parking for low-emission vehicles Most buildings LEED certified 75% of building materials recycled 10.000 Cisco telepresence units planned Centralized pneumatic waste collection system Central, city-wide co-generation facility fueled by natural gas Energy efficient LED traffic lights ICT 1
    • Smart Cities.pptx 11Draft—for discussion only Copyright©2014byTheBostonConsultingGroup,Inc.Allrightsreserved. Amsterdam – 30 Smart City pilot projects Key facts Amsterdam Project Overview Key data Key objectives • Public/private partnership with the aim to develop Amsterdam into smart city • Main tool: inform. platform where entrepreneurs can initiate innovative solutions and test them on larger scale • Environmental sustainability: Reduce ecological footprint of city • Economic viability: Provide entrepreneurs with possibility to test concepts on large scale • Citizen well being: Improve quality of living in Amsterdam • Project themes: Living, Working, Mobility, Public facilities, open data • Size: 30 Projects in 3 neighborhoods of Amsterdam 1. Exemplary, no exhaustive list Major Partners1 3
    • Smart Cities.pptx 12Draft—for discussion only Copyright©2014byTheBostonConsultingGroup,Inc.Allrightsreserved. Citizen well being Economic viability Environmental sustainability Amsterdam is running 30 projects in the city area • Introduction and roll out of new energy concepts • Improvement of energy efficiency of public and private infrastructure • Incentivization of energy efficient means of private transportation (e-cars, car sharing) • Provide opportunities for young entrepreneurs to test ideas/concepts on a large scale • Attract large and small corporations with affinity for sustainable city development • Introduce new/smart work concepts • Development of sustainable sports and cultural facilities • E-government and e-healthcare solutions based on ICT 3
    • Smart Cities.pptx 13Draft—for discussion only Copyright©2014byTheBostonConsultingGroup,Inc.Allrightsreserved. Sector Initiatives and projects Projects are addressing all sectors Smart Energy Smart Transport Smart Water&Waste Introduction of ICT solutions at care institutions Smart Buildings New car sharing platform Smart work centers equipped with latest ICT infrastructure Smart Social Energy efficient public swimming pools Energy saving behavior projects and competition Smart grids for optimized power usage (LV/MV monitoring 200 shore power stations allowing ships to connect to green energy Introduction of tele-presence units Introduction of smart containers Smart building concepts minimizing energy usage Fuel cell pilot in 17th century building E-car charging stations ICTICT ICTICT ICT 3
    • Smart Cities.pptx 14Draft—for discussion only Copyright©2014byTheBostonConsultingGroup,Inc.Allrightsreserved. City Type: Existing city Project Scope: Pilot projects; roll-outs Sector Focus: Energy Smartness Degree: High (e.g., smart metering) City Type: Existing city/ hypergrowth Project Scope: City-wide enrollments Sector Focus: Transportation, Security Smartness Degree: Medium (Transportation), High (Security) City Type: Existing city Project Scope: Pilot projects; roll-outs Sector Focus: Energy, Transportation Smartness Degree: High (e.g., smart metering) City Type: New city/hypergrowth Project Scope: City-wide enrollments Sector Focus: Energy, Transportation, Water&Waste, Education Smartness Degree: High (e.g., driverless urban transport, renewable) City Type: New city/hypergrowth Project Scope: City-wide enrollments Sector Focus: Energy, Water&Waste, Transportation Smartness Degree: Low (basic infrastructure) City Type: Existing city Project Scope: Pilots and city-wide enrollments Sector Focus: Energy, Transportation, Social Smartness Degree: High (e.g., electric vehicles, telepresence social infra.) Different approaches to smart city development Key regional characteristics – overview North America South America Europe Middle East Developing Asia Developed Asia Source: Press Research, BCG analysis
    • Smart Cities.pptx 15Draft—for discussion only Copyright©2014byTheBostonConsultingGroup,Inc.Allrightsreserved. Today: North America To come: Europe Long-term: Asia Pacific Different growth patterns and changing regional relevance Largest market today • First step: Smart meters (roll-outs started) and buildings • Second step: Smart transport and government • Greatest risk is the lack of a coherent approach Greatest market to come • Supranational (EU) decisions and support for new technology pilots and regulation/technology penetration targets create huge opportunity1 • First step: Smart meters and buildings • Second step: Smart transport and government Long-term largest market • Overall market driven by Chinese investments • South Korea, Japan and Singapore the centers for smart city innovation • In developing countries (China and India) strong basic infrastructure investments • First step in developing countries: Smart meters (basic technology, theft prevention focus), public transport, traffic management and electric vehicles • Second step in developing countries: Smart buildings 1. E.g. regulation for smart meter deployment, greenhouse gas emission targets, energy efficiency targets etc. Source: Pike Research; press research; BCG analysis