SMART CITIES – SMART FINANCING: FORGING RESILIENT ENERGY AND

CLIMATE SOLUTIONSD R . D A V I D J . J H I R A D

C O P E N H A G E N , M A Y 5 , 2 0 1 1

MISSION OF A SMART CITY

• A Smart City must address global energy and climate challenges:• Mitigate global greenhouse gas

emissions through efficient and low-carbon energy technology, and be resilient to climate change impacts

• Minimize petroleum dependence, ensure energy security, and enhance energy reliability

• Attract capital investment into low or zero-carbon technologies

• Reduce global energy poverty

THE RELIANCE ON CCS IN EMISSION REDUCTION SCENARIOS

Source: IEA

THE RELIANCE ON CCS IN EMISSION REDUCTION SCENARIOS

Source: IEA

THE RELIANCE ON CCS IN EMISSION REDUCTION SCENARIOS

In this Scenario almost 2/3 of all fossil fuel generation globally is fitted with CCS by 2050. Is this realistic?

Source: IEA

THE IMPORTANCE OF COAL –RECOVERABLE RESERVES

Source: MIT

COAL – AN ISSUE OF EFFICIENCY

• World wide coal fired power plant average efficiency is 30%(480 gcoal/kWh electricity)

• State of the art Danish “Ultrasupercritical” power plant efficiency can reach 45% plus (320 gcoal/kWh electricity).

• (Nordjylland Power Plant and Avedore Power Plant)• Increase of efficiency of a power plant from 30 to 45%

• reduces the consumption of coal (from 480 to 320 g/kWhe)

• consequently reduces the CO2 emissions by 33%• Future technology development can increase thermal power

plant efficiency to 50%

Increase the efficiency of coal fired power plants

The Sugar Cubes: Relative CO2 index emissions of power plants around the world

Europeaverage

100

World average

136

Denmark

83

USA average

127

COAL – AN ISSUE OF EFFICIENCY

Nordjylland Power Station unit 3

Fuel: Imported coalCoal consumption: 120 t/hrHP-Steam: 972 t/hr/290 bar/582°CIP1-Steam: 886 t/hr/ 80 bar/580°CIP2-Steam: 766 t/hr/ 23 bar/580°CBoiler efficiency: 94.8%Plant net efficiency: 47.1%Availability: > 98%

Vattenfall Nordic, DenmarkStart of operation: 1998Boiler design: BWE

STATE OF THE ART COAL FIRING:

Avedøre II, DONG Energy, Denmark, 1067 t/h

• Burners converted (2002):Gas/Oil => Gas/Oil/ Wood dust

• Burner size: 50 MWth on wood dust• To be used together with gas• Suitable for flexible mechanisms under

the Kyoto Protocol

RETROFIT FOR FUEL CHANGE

LEVELIZED ELECTRICITY COSTS (CENTS/KWH)

0 5 10 15 20 25 30

Wind-Off

Wind-On

Solar PV

Solar CSP

Biopower

Geothermal

Nuclear

NGCC

NGCC-CCS

Coal

Coal CCSBaseload

Intermittents

9-155-9

7-104-7

6-1310

8-10

8-2014-30

4-105-18

National Academy, America’s Energy Future, 2009

SMART ELECTRIC POWER GRIDS

• Reduce peak demand by managing customer behaviour and hence demand

• Balance power reliability and quality needs

• Encourage application of energy efficient technologies

• Improve overall efficiency of the transmission and distribution grid

• Integrate intermittent renewable energy technologies

Source: IEA

DISTRICT ENERGY –“TRI-GENERATION CHP”

District Cooling could greatly increase the energy efficiency of very densely populated cities such as New York City, replacing the need for air conditioning and hence greatly reducing electricity consumption.

Sources: Cenergy and Logstor

EFFICIENCY IMPROVEMENT

32

48

90

0

10

20

30

40

50

60

70

80

90

100

US average USC Coal USC + District energy

Elec

trica

l and

Ther

mal

Effi

cien

cy in

%

Source: Logstor

DRIVERS OF CHANGE: DEMAND SHIFT TO THE EAST

DRIVERS OF CHANGE: EMERGING MARKET VEHICLE OWNERSHIP

SUSTAINABLE MOBILITY IN A SMART CITY

• A Smart City incentivizes and supports:• Non-motorized transport through

prioritization of bicycle and pedestrian infrastructure development

• Transit-oriented development of residential and commercial areas

• Use and efficiency of public transport (e.g. Bus Rapid Transit)

• Affordable transport solutions for everyone

• But puts in place disincentives for:• Individual car use through measures such

as congestion charging, limited parking, and vehicle taxes

• Urban sprawl through proper zoning

THE PROBLEM OF CONGESTION

And higher population density means lower average traffic speed, in turn increasing vehicle fuel consumption

Source: OECD JTRC Source: hofstra.edu

NEGATIVE ECONOMIC IMPACT

-12.0 -10.0 -8.0 -6.0 -4.0 -2.0 0.0 2.0 4.0

Mexico City

Sao Paulo

Buenos Aires

Bangkok

Santiago

Dakar

Land and ParkingCongestionAccidentsNoiseAir PollutionRoad Revenues

10.7

7.1

8.4

5.7

5.9

5.6

1.0

1.6

Source: World Business Council on Sustainable Development, 2001.

THE POST-PETROLEUM CITY AS AN ULTIMATE GOAL ?

Masdar City Concept in Abu Dhabi

BUS RAPID TRANSIT COMPONENTS

• Dedicated lanes and bus stops with easy access

• Local, Express and Feeder Services

• Tickets integrated across whole system and affordable for general public

• Reliable user information system

• Clean buses with low emissions, e.g. using CNG

• Integrated into zoning to enable transit-oriented hubs

ELECTRIC VEHICLES

• Electric Vehicles are entering the main stream

• Range anxiety largely unjustified in urban context

• But they still face many problems:• Battery life• Only as clean as plant that

generated electricity• No solution to congestion

problem

OTHER TRANSPORT OPTIONS –“PIE IN THE SKY”

Dubai Metro: Driverless train underground and on viaducts

Intelligent cars communicating with each other could increase road capacity

Google invested of $1m in pedal-powered monorail technology

Fuel Cell-powered cars as part of a hydrogen-based economy

COPENHAGEN: A TOD MODEL CITY

• The greater Copenhagen “Five-Finger-Plan” is a great example of Transport-Oriented Development (TOD)

• Envisaged in 1947• 5 “fingers” of railway

extending from city center• Housing built along railway,

no further than 1km from nearest station

• Green wedges in between fingers

Source: Danish Ministry for the Environment

DENMARK’S ENERGY DEVELOPMENT

0

0,2

0,4

0,6

0,8

1

1,2

0

50

100

150

200

250

1980

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

2006

2008

Qua

drill

ion

BTU

Billi

on U

SD

Nominal GDP bil USD

Total Primary Energy Consumption (Quads)

0

20000

40000

60000

80000

100000

120000

140000

0

1000

2000

3000

4000

5000

6000

7000

8000

1980 1985 1990 1995 2000 2005

Heat

Pro

duct

ion

in TJ

Elec

trici

ty O

utpu

t in

GW

h

Municipal waste

Primary solid biomass

Wind

Heat Production (right Axis)Sources: EIU, IEA, and EIA

EMERGING ECONOMIES WILL NEED THE MOST INVESTMENT

$33 trillion of investment is needed in global energy-supply infrastructure to 2035,with just over half going to power generation

0 1 2 3 4 5 6 7

OECD North AmericaChina

OECD EuropeLatin America

AfricaIndia

Other AsiaMiddle East

RussiaOther E. Europe/Eurasia

OECD Pacific

Trillion dollars (2009)

Power Infrastructure

Oil EPT

Gas EPT

Coal Mining

Biofuels

Cumulative investment in energy-supply infrastructure in the New Policies Scenario

HOW MUCH INVESTMENT WILL GO INTO RENEWABLES?

In the New Policies Scenario, cumulative investment in renewables for electricity totals $5.7 trillion over 2010-2035; another $335 billion goes into biofuels

Cumulative investment in renewables in the New IEA Policies Scenario, 2010-2035

0 300 600 900 1 200 1 500

China

European Union

United States

India

Brazil

Japan

Russia

Canada

Indonesia

Billion dollars (2009)

ElectricityBiofuels

WHY DO WE NEED SMART CITIES? – RISE OF MEGACITIES

More megacities mean higher population densities

Source: S.A.P.I.E.N.S.

1.4 billion people lack access to electricity – achieving universal modern energy access requires investment of only $36 billion per year over the next two decades

NUMBER OF PEOPLE WITHOUT ACCESS TO ELECTRICITY (MILLION)

INVESTMENT NEEDS FOR UNIVERSAL MODERN ENERGY ACCESS BY 2030

Achieving the more ambitious goal of universal modern energy access by 2030 requires investment of only $36 billion per year over the next two decades

GETTING SWF INVOLVED

ENGAGE SOVEREIGN WEALTH FUNDS(SWF’S)

\.

In October 2010, Columbia University organized a conference focusing on the uniqueaspects of SWFs and long term, state owned investors.

• The conference took an innovative approach: it provided a forum for debate between investors,academics, and policy makers on the global benefits SWFs present

• More than 30 funds representing more than $7 trillion attended

• A second conference will take place in 2011 in Paris (Oct 17th and 18th) with:• Confirmed keynote addresses by Professor Joseph Stiglitz and Vice President Al Gore• New themes: barriers to SWF investment, monetization of long term horizon, sustainableInvestment • Working sessions, which will provide opportunities for in depth discussion

• New partners are supporting the project (The Rockefeller Foundation is hosting a private seminar in May 2011) and we are planning a 2012 conference in Beijing in 2012.

Sov Sovereign Wealth Funds and Long-Term Investors

Sovereign Wealth Fund Research Initiative

SWFs and Long-Term Investors

State Oil Fund of the Republic of Azerbaijan

Pension Reserve Fund Chile

PREVI

New Zealand Superannuation Fund

PREDICA

TIAA-CREF

OMERS

National Fund for Hydrocarbon Reserves MauritaniaAbu Dhabi Investment AuthorityAbu Dhabi Investment Council

Caisse des Depots et ConsignationsAustralian Future Fund

Government Pension Fund Global Norway

Caisse de depot et placement du Quebec

Kuwait Investment AuthorityGIC

Cassa Depositi e Prestiti

Namibian Government Investment Pension Fund

Korea Investment corporation

Central Bank of Brazil

International organizations

Sovereign Wealth Fund Research Initiative

International Organizations

Oxford SWF Project

Rockefeller Foundation

Roubini Global EconomicsClinton Climate Initiative

Environmental Defense Fund

International Monetary Fund

Carbon Disclosure Project

International Finance Corporation

Bruegel

United Nations

NEXT STEPS

• Assemble a core of SWFs willing to allocate a fraction of theirassets to triple bottom line investments

• Establish an International Low Carbon Investment Fund, with adeal flow of tens of billions of dollars in the first year

• Establish a supranational umbrella structure to monitor,regulate, and guide SWF triple bottom line investments

• Identify a high-profile personality to support the idea• Build off the working session that involved six major funds at

the Columbia University conference in October 2010

Thank you for your time!

David J. Jhirad, Phd

djhirad1@jhu.edu