Smart Cities, sustainable cities

By Frédérique Carrier, Head of Investment Strategy, RBC Wealth Management

With cities around the world facing increasing environmental pressures and infrastructure needs, the final article of the SusTech series focuses on metropolises that use high-tech solutions to manage the challenges of urbanization in the 21st century. As these Smart Cities enable urban sustainability, the companies and industries at the forefront of this transformation should see long-lasting channels of growth.

With urbanization rates climbing, and world governments having set ambitious targets to reduce carbon dioxide emissions, pressure is mounting to make cities more efficient while limiting their impact on the environment. Cities account for more than two-thirds of global CO2 emissions. Some have picked up the gauntlet and are using technology to help manage the challenges of urban sustainability. More efficiently run cities can improve productivity, reduce costs, and foster economic growth.

This trend toward smart, sustainable cities is being made possible by the confluence of necessity, government support, and technological innovation. The companies that provide solutions should enjoy tailwinds of secular growth.

Redefining cities

“With a municipal network of 500km of optical fibre, free WiFi routed via street lighting, and sensors to monitor air quality, parking spaces, and even waste bins, Barcelona has been at the cutting edge of testing the internet of things,” trumpets the Financial Times. Barcelona is one of Europe’s Smart Cities.

Smart Cities use technology to improve urban management, making everyday life easier and better for the people that live and work there, while optimizing the use of natural resources to minimize their environmental footprint.

More specifically, sensors collect data from across the urban landscape: traffic, transportation systems, air quality, waste management, hospitals, and law enforcement, among others. The data is stored, analyzed, and used to respond to challenges in real time.

Smart City solutions span a wide array of uses and services. They can offer more effective transport networks, better calibrated and less wasteful water supply, just-in-time waste management, efficient lighting and heating of buildings, and safer public spaces. This all may sound futuristic, but many cities we live in already have implemented some smart solutions, such as ride-hailing, municipal water leakage detection, intelligent traffic signals, telemedicine, and emergency response optimization.

Increasing urbanization

Rising urbanization rates, and the many challenges they create, are pushing city planners and authorities to increasingly adopt smart systems. Cities gobble up more than 60 percent of the world’s energy and generate some 70 percent of global CO2 emissions. With most governments having pledged to reduce national emissions, lowering the footprint of large cities is key. Moreover, deteriorating air quality causing health problems, lack of access to fresh water (particularly at times of flooding), overwhelmed waste management, and perennial congestion have long been critical issues and are becoming ever more pressing.

These challenges will only be amplified in the future. Global urbanization rates are expected to reach 70 percent by 2050, up from today’s 56.2 percent, according to the World Economic Forum. India and China alone are expected to take in an additional 300 million and 400 million city dwellers by then, respectively. Urbanization in North America, already high at 83.6 percent, is anticipated to inch higher still.

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