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The rise of smart cities

12 February 2021

Will Simpson, Sustainable Investment Assistant

The global population is increasing. The UN has estimated global population to reach 9.7 billion by 2050, an increase of 2 billion on the current global population.[1] Today, 55% of the population – 4.2 billion people live in cities and by 2050 urban population will more than double that. Cities are hubs for economic activity with 80% of global GDP generated in them.[2] Whilst cities face clear population challenges, they can continue to play a central role in development if they can adapt and develop, and the investment in 'smart city' technology is crucial to this.

A 'smart city' is a city that integrates digital technologies into its core infrastructure in order to promote sustainable development and address urban challenges. Smart cities are constructed around the burgeoning Internet of Things (IoT) technology – a series of interconnected devices and applications embedded with sensors, collecting real time data to connect different stakeholders. The communication between these devices provides data that forms the base of the smart city model.

Smart city technology in action

Waste management, not time

In the district of Xixian in China, automated waste management systems have been installed, thereby reducing the need for garbage trucks on public roads[3] whilst alleviating noise pollution and traffic congestion. The waste system is able to separate recyclable and non-recyclable waste and automatically dispose waste through a series of pressured pipes, sending them straight to the relevant recycling centre. It can even sensor and spray perfume from the pipes in areas that start to smell! In Europe, Enevo, a Finnish start-up has created similar technology, installing sensors in waste containers to signal when they are full, triggering collection only when needed.[4]

The road to success

By 2050, it is predicted 3 billion cars be on the road 2 billion more than in 2015, driving traffic congestion.[5] By adopting smart city tech, cities can develop more efficient transport and traffic management systems. In London, smart technology is being used to ease congestion with drivers using apps to quickly locate car-parking availability. Studies show this reduction in circling or finding car parking spaces can alleviate city congestion by 30%.[6] Smart motorways can also manage the flow of traffic, providing quicker routes and opening hard shoulders as lanes during rush hour or typical congested times. Across the Atlantic, in Palo Alto, Silicon Valley, real time congestion data is being taken one-step further and used to provide, for example, designs for more efficient intersections.[7]

Bringing positive energy

Transportation currently accounts for 28% of total energy consumption, 91% of this is produced petroleum products, an air polluting energy source.[8] In Pau, France, the world's first fleet of hydrogen buses have launched.[9] Importantly, hydrogen emits only two substances – warm air and water at no cost to the environment. In the Sustainable Portfolios, there is exposure to Linde, a company that has installed 160 zero-emissions hydrogen-fuelling stations around the world. Alfen, another Dutch company that there is exposure to in the portfolios, produces and installs fast-charging Electric Vehicle (EV) stations across Europe. The introduction of both of these technologies are core to limiting pollution and working towards a low carbon economy.

There are also passive approaches to a city becoming 'smart', without reliance on advanced technology. For example, passive ventilation systems that use natural outside air movement and differences in air pressure can cool and ventilate modern buildings, circulating fresh air and regulating temperatures without energy intensive air conditioning systems. Foliage can be planted on walls, creating 'green walls' that provide a natural air purification system. In 2019, LGT was awarded the Stiftung Natur & Wirtschaft label for the exemplary design and integration of nature into our business' office in Bendern, Liechtenstein. The grounds integrate nature, support indigenous biodiversity and contribute to plant species diversity whilst purifying air.

Smart cities present great opportunities for our cities to integrate technology, improve our quality of life, strengthen and diversify the economy whilst importantly overcoming urban challenges. It is important to understand every city is different and each requires its own smart innovations to tackle challenges faced. However, common to all cities is the role that smart tech can play in building our cities of tomorrow, through a combination of technological advancements and supportive government policy, global sustainability targets common to all countries are far more achievable.










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