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Tell us about your research and the role of urban agenda in the work you are doing. They say: “Cities now act as real innovation hubs”. Is this true and if so, what city innovations you are focusing on?
Our Next Generation investment philosophy focuses on megatrends and the structural change they are causing in our societies and our economies. The megatrends we determined as drivers of our “Future Cities” theme are: Climate change, sustainability, digitalisation and urbanisation.
Against this backdrop, we specifically look into the role of infrastructure, both classical and digital, as well as building efficiency and technology, and the innovation that is happening in these areas. While there is a lot of innovation in and around cities, we also need to be aware of the fact that cities themselves are typically slow-moving. Firstly, this is because of the long lead times decisions may take, for example, related to infrastructure and building construction. Second, it is because of the city is a long-duration asset, i.e. a multi-decade useful life of infrastructure and buildings.
Generally speaking our work on “Future Cities” very much focuses on the impact of technology, i.e. how cities can become smarter, sustainable and ultimately also more liveable.
Today AI tools and data management systems help cities to cut congestion and air pollution and help with traffic flow. What are some of the most advanced solutions in this space?
While many concepts exist of how data-driven decision-making could improve traffic flows in order to reduce congestion and air pollution, their actual implementation is lagging behind for various reasons.
First, many cities are simply not there yet. They lack the required digital infrastructure, which is the backbone of any data-driven solution that would help manage traffic flows. Second, there are concerns over data privacy. This is very much a European phenomenon as the people fear being tracked on the routes they are taking and as they are concerned about any unrelated use of their data. Third, there is a risk of public opposition, for example, to dynamic road pricing or congestion pricing. While it would make economic and environmental sense to set up a dynamic pricing mechanism for the city centres, citizens could complain about not equitable access and exclusion. All in all, this makes data-driven traffic management much more of a vision than a reality.
Many of the global cities are on their path to Net Zero. Which urban areas are the most carbon-intensive? What is the best way to achieve emission reductions in a short time span?
Any city’s carbon footprint is primarily about transportation, buildings and infrastructure. The road transportation sector accounts for 15% of global emissions with the electrification of cars being the biggest lever to bring that down. This trend is of course already well underway, especially in the developed world.
Buildings account for another 40% of carbon emissions. It is important to note that for buildings, this includes both operational carbon emissions and embedded carbon emissions. Operational emissions are related to the building's electricity consumption and their heating and cooling systems. This can be easily reduced by sourcing the electricity from clean energy and swapping natural gas boilers with heat pumps. Again, this is well underway already.
Embedded emissions are related to all the carbon that is released during the construction and demolition phase. This mainly comes from building materials, most notably concrete, steel, glass, and aluminium. Unfortunately, the decarbonisation of these construction materials is much less progressed. While we know how to decarbonise them, the required technologies are not available at scale and in a cost-competitive way. Hence, bringing down embedded emissions as of today is much more about maximising structural efficiency, choosing lower carbon alternatives, reusing materials, and minimising construction waste as well as repurposing instead of rebuilding.
Today, some of the city streets are testing robotaxies, autonomous shuttles and connected shared vehicle prototypes. How do these new technologies co-exist with conventional mobility systems?
When it comes to such solutions – robotaxies and autonomous shuttles in particular – we are still in very early innings. A lot of technological progress has been made during the past few years, but it seems that most of our cities are not yet rightly prepared to roll these solutions out. This is because the ideal conditions that exist in most of the cities where the solutions are being tested, do not exist in most others. This relates to the layout of the road network, the overall quality of the roads and also the weather conditions. Operating robotaxies and autonomous shuttles on clear and sunny days is much easier than on a foggy, rainy, or snowy day.
Furthermore, there is a lot of scrutiny from the side of the regulators. When it come to the safety of autonomous vehicles, they seem to be extra critical, putting a lot more focus on the risks than the opportunities. The evidence of fewer accidents compared to human drivers seems to be sometimes disregarded – in particular as problems with autonomous cars have been hitting the headlines more recently. Last but not least, there seems to be a growing aversion against cities in general with robotaxis and autonomous shuttles not seen as a solution.
Urban population is set to grow even further. Is there a way to create more inclusive communities and bridge the gap between different levels of economic development in urban areas?
If we look across the globe, cities are similar and different at the same time. This means that there are no one-size-fits-all solutions even though best practices exist. The sharing of these practices can help city planners avoid previous mistakes, assuming that they take the peculiarities of their city into account.
Cities are economic powerhouses, they account for more than 80% of economic output. As they continue to grow it is of utmost importance to make this growth inclusive, i.e. to enable economic participation. First and foremost, this means that citizens need to be able to get to work without facing excessive commuting times, necessitating public transportation systems that are not only reliable but also safe. Sometimes, this requires thinking outside the box as the examples of the aerial cable cars in La Paz (Bolivia) and Medellin (Colombia) show.
Another element making cities more inclusive is the energy transition. The shift to cleaner sources of energy is making them more liveable, especially those areas that are among the most disadvantaged. It allows citizens to move away from the frequently used domestic wood- and coal-fired heaters and cookers, leading to a massive improvement in the quality of life and reducing related health risks.
Creating inclusive communities is of course a much more holistic and therefore a very challenging task, including the provision of affordable housing, education and healthcare facilities and a broader range of public services. The most prominent challenges are of course related to the funding and in part also the political will – especially in emerging economies.
Carsten Menke will speak at the Formula E and Julius Baer Change. Accelerated. Live event in Monaco ahead of the 2024 Monaco E-Prix. See the agenda and check back for a recap after the event.