Can you imagine how much money and natural resources could be saved if the world adopted energy efficiency as a priority in sectors such as public lighting or industry?
Although this is an essential concept for the future of infrastructure, it’s still little known in countries such as Brazil. In 2016, for example, when the American Council for an Energy-Efficient Economy (ACEEE) examined policies and performance of the world’s 23 top energy-consuming countries, the Latin American giant ranked 22nd.
Insufficient investment in infrastructure helps explain this outcome, as well as Brazil’s lagging economic growth over the past seven years. Over the last two decades, investments were well below the estimated cost to replace or repair existing infrastructure (estimated at 3 percent of GDP). Energy saw investments decrease from above 2 percent of GDP in the 1970s to 0.7 percent of GDP in 2016, according to a recent report.
However, a new initiative – combining financing and technology innovation – can help fill this gap, and render Brazil’s energy sector more efficient and sustainable. Over the next 15 years, the World Bank’s Financial Instruments for Brazil Energy Efficient Cities (FinBRAZEEC) Project will focus on two urban sectors that have the potential to attract private sector investment at scale: efficient street lighting and industrial energy efficiency.
With FinBRAZEEC, Brazilian cities can create subprojects to completely replace the current sodium-vapor lamps for LED. Also, industries will be able to update pumping systems, engines, furnaces and other types of equipment. Given Brazil’s 86% urbanization rate, these initiatives have tremendous potential to reduce energy use, pollution and greenhouse gas emissions.
To enable them, FinBRAZEEC is piloting one of the most innovative financing structures the World Bank has developed to date. The World Bank will partner with Caixa Econômica Federal (CEF), the second largest state-owned financial institution in Latin America and the fourth largest bank in Brazil, as the project’s financial intermediary.
Under the project, CEF will lead the co-lending arrangement comprising the Green Climate Fund (GCF), CEF, and commercial lenders to eligible efficient public street lighting and industrial energy efficiency projects.
In order to mitigate the credit risk of energy efficiency projects, commercial lenders will benefit from a partial credit guarantee offered by CEF. The guarantee product will be backstopped by a $200 million contingent loan from the World Bank and grants from the GCF and the Clean Technology Fund (CTF) – $195 million and $20 million, respectively –, providing additional credit enhancement by supporting the facility, when needed, to meet its debt obligations to commercial lenders.
Altogether, this financing facility is expected to make more than $1 billion available for urban energy efficiency projects, leveraging the concessional financing being provided by the World Bank and other international organizations.
FinBRAZEEC is expected to serve as a demonstration model for leveraging private sector capital for clean energy investments in Brazil. Once the model is proven, it can be replicated in other countries, and in other sectors in Brazil. Moreover, it will provide an example of how Brazil’s now scarce public-sector resources, particularly those of the public banks, can be used to leverage private sector capital for infrastructure investments.
Currently, while there is private investment in infrastructure, the majority – around 70 percent – comes from public sources, including state banks, where resources are increasingly limited.
Mobilizing private sector investments not only are essential to help Brazil fill its infrastructure gap: without them, meeting the United Nations Sustainable Development Goals (SDGs) targets by 2030 will be much harder. The United Nations Conference on Trade and Development (UNCTAD) estimates that developing countries alone would require annual investments of between 3.3 trillion and 4.5 trillion dollars. About 2.5 billion dollars a year are missing to fill that need.
Climate change contributions
FinBRAZEEC is expected to help Brazil avoid the equivalent of 12.5 million tons of CO2 equivalent over the life of the project, as well as to help the country meet its goal of improving energy efficiency in the power sector by 10 percent by 2030, set as part of its Nationally Determined Contribution under the Paris Agreement on climate change.
The facility will be complemented by support for technical assistance and project preparation being provided by the GCF, the Global Infrastructure Facility, and the World Bank’s Energy Sector Management Assistance Program (ESMAP).
FinBRAZEEC draws on a series of lessons learned from previous World Bank experience in Brazil. ESMAP technical assistance helped identify viable business models for investment in urban street lighting, industries, transport and public buildings, providing useful tools and lessons for designing the FinBRAZEEC project.
The project also builds on the experience of another recent World Bank contingent loan for Uruguay’s national power company, which provided the government with a new financial mechanism to mitigate the impact of drought – and resulting decrease in hydroelectric energy generation – on the cost of electricity and on public sector accounts.
How cities can save on commuting time, double job access
A new report released today by the World Economic Forum pinpoints how cities can use mobility options to improve social equity and economic growth.
The white paper, How Mobility Shapes Inclusion and Sustainable Growth, identifies over 40 potential solutions to improve inclusivity in mobility, with simulations of over 40 million daily trips, global benchmarking and in-depth interviews with key stakeholders.
Prepared in collaboration with the Boston Consulting Group and University of St Gallen, the study identifies transportation ‘pain points’ in three cities – Beijing, Berlin and Chicago. Using a six-step transportation equity methodology, the white paper analyses the mobility challenges each city faces, their affected communities and how transportation is driving, or failing to drive, economic growth and well-being. It also offers recommendations that result in real gains.
This methodology fills a void in current transportation analysis and can serve as the centrepiece of a strategy for developing mobility-based social inclusion programmes and policies in the identified cities and elsewhere.
Beijing, People’s Republic of China
This high-density megacity can become nearly 30% more efficient, saving commuters about five days-worth of travel time per year:
- Pain point: Very high demand has overwhelmed Beijing’s public transit network, with queuing times to get into some train stations consistently over 15 minutes, leading many residents to choose driving as an alternative.
- Solution: A digital platform for metro reservations to flatten peak-hour demand and reduce commute time for rush hours.
- Benefit: This equates to a 29% average reduction in travel time for the service users in the modelling for Beijing, an average reduction of 115 hours waiting a year per user.
The report shows how this compact, middleweight city is raising $295 million more per year for inclusive mobility projects:
- Pain point: As central districts have become gentrified, populations have been pushed further from the city centre, where public transport is more limited and fragmented. Berliners in these peripheral areas take about 27% more time commuting than central Berliners.
- Solution: Creating differentiated service levels for public transit increases usage and brings in additional revenue that can be used to improve public mobility systems for the underserved.
- Benefit: A differentiated service level on public transit increased the share of public transit trips by 11% while at the same time generating 28% higher revenue for the public transport operator – an equivalent of $295 million – that can be used to improve access for underserved populations.
A car-centric city such as Chicago can give low-income neighbourhoods access to hundreds of thousands of more jobs:
- Pain point: Low-income households in Chicago spend up to 35% of their income on transportation, due to the high cost of vehicle ownership and reliance on cars for mobility. Average work commute time on public transit for individuals in low-income areas is also nearly 15 minutes longer when compared to residents in some high-income areas.
- Solution: Introducing on-demand shuttles to cover the first and last mile of transport can greatly increase access for underserved communities.
- Benefit: The solution would increase the share of public transit usage in Chicago by 26% and would broaden the number of jobs reachable in 40 minutes – the rough ceiling for a desirable commuting time – by 90%; this would result in improved access to 224,000 jobs from neighbourhoods that did not have access before.
The white paper also finds that in order to foster social inclusion through mobility, both supply and demand must be considered. Purely increasing mobility infrastructure does not always yield the desired results.
For example, adding 10 new subway cars may do little to increase ridership among people with disabilities even if they do not have other transportation options, mainly because getting to a subway station is a challenge in and of itself. Other solutions such as an on-demand mobility service for the disabled community, such as Hyundai Motor Groups’s EnableLA universal mobility service, may be the more appropriate option.
Next Steps for Policymakers
Access to transportation infrastructure is essential to social development and economic growth, and improving the mobility situation for underserved population groups needs to be one of the top priorities for decision-makers.
Since every city has its own mobility and socioeconomic challenges, data collection processes and the current understanding of rider demand must be re-examined in order to gather important information about mobility challenges affecting minorities.
Understanding the baseline conditions of the mobility conditions of each urban environment is crucial in effectively determining the appropriate solutions for individual cities.
Public-Private Collaboration Will Define New Era for Cities
At the World Economic Forum’s inaugural Urban Transformation Summit, which closed on Wednesday, global leaders underscored the need for increased public-private collaboration to capitalize on new infrastructure funding and tackle growing urban challenges around the globe.
“Our cities and our communities are changing right before our eyes. Digitization is transforming urban economies, public health and safety concerns are tearing at the social fabric of communities—and trillions of dollars of new infrastructure funding across the globe holds the potential to transform the physical environment,” said Jeff Merritt, Head of Urban Transformation at the World Economic Forum. “Now more than ever, it is critical that public and private sector stakeholders come together to shape a future that does not just work for the privileged few but delivers for all residents.”
“We have to be real about what this moment in time presents for us and not dismiss it, said Michael Hancock, Mayor of Denver. “We have to be very intentional in our efforts and say we’re going to create a new opportunity that America has not seen and give a chance to right the wrongs of some of the great epic moments in our history.”
“Climate change is not some far distant activity. It is real, and it is occurring now,” said Yvonne Aki-Sawyerr, Mayor of Freetown, Sierra Leone.
Mike Duggan, Mayor of Detroit, said: “We don’t need any more think tanks, we don’t need any more papers. We need public-private partnerships.”
The summit, which comprised both in-person events in Detroit and virtual convenings, included more than 350 mayors, business executives, community leaders and experts in urban development from 38 countries in North America, South America, Europe, Africa, Asia and Australia.
It marked the official launch of the World Economic Forum’s new global Centre for Urban Transformation and spurred a series of new initiatives and collaborations to support the development of more sustainable and inclusive cities.
Notable outcomes and commitments:
Two cities in Europe – Stockholm and Lisbon – were added to the roster of City Strategy Dialogues planned for 2022. In collaboration with MIT, the convenings, which include both public-facing events and more intimate workshops, pair mayors and senior city leaders with global experts and business leaders to forge new approaches to pressing urban challenges.
“New technologies are promising to transform cities in a way similar to what the automobile did in the 20th century,” said Carlo Ratti, Professor of Urban Technologies and Planning Director of the MIT SENSEable City Lab. “That’s why we need new forums – such as the Urban Transformation Summit, the City Dialogues that MIT will co-host with the Forum – to share knowledge and lessons from all over the world.”
Eight cities in Latin America, Africa and Asia – Bogotá, Buenos Aires, Lagos, Dhaka, Jakarta, Kigali, Nairobi, and Rio de Janeiro – have designated neighbourhoods as urban testbeds for new businesses, products and services that can improve quality of life for local residents and mitigate social and environmental challenges associated with rapid urbanization.
Following a four-month review of key barriers to public-private collaboration in cities, Accenture has announced plans to work with the World Economic Forum and its partners to develop new resources and tools to help cities better coordinate place-based strategies and accelerate community partnerships.
Design Core Detroit will lead a participatory design process in collaboration with the Forum to design a Fellowship Program in Detroit. The design process will identify and map new opportunities to scale community-based solutions that will connect Forum business partners to contribute technical assistance towards achieving community-led goals.
Plans for the next edition of the Urban Transformation Summit have already been set in motion. The event will convene once again in Detroit, 11-13 October 2022.
Urban leaders, influencers, chart new path for world cities
Mayors of Mexico City, Bogotá, New Orleans, Freetown, Gaziantep and Barcelona joined other urban leaders, designers, activists and thinkers from around the world on Wednesday, to chart a new path for cities.
A launch event called Cities at the Crossroads, kicked off at the British Academy in London – marking the inaugural session of the new UN-backed Council on Urban Initiatives.
The international group of eighteen mayors, activists and academics was formed in response to UN Secretary-General’s call to use the COVID-19 pandemic as an “opportunity to reflect and reset how we live, interact, and rebuild our cities.”
In a video message showed at the event, António Guterres remembered that cities large and small, “have been epicentres of COVID-19 and are on the frontline of the climate crisis.”
They also face severe risks from climate change, which will only grow, according to UN estimates.
By mid-century, over 1.6 billion urban residents may have to survive through average summertime highs of 35 degrees Celsius. More than 800 million could be at direct risk from sea level rise.
‘A bold new narrative’
For the UN Secretary-General, the pandemic “must be an inflection point to rethink and reset how” people live, interact and build cities.
“Investment in pandemic recovery is a generational opportunity to put climate action, social justice, gender equality and sustainable development at the heart of cities’ strategies and policies”, Mr. Guterres said.
The UN Chief also noted that more and more cities across the world are committing to net zero by 2050, or before.
“The sooner we translate these commitments into concrete action to reduce emissions, the sooner we will achieve green job growth, better health, and greater equality”, he argued.
Also addressing the event, the UN-Habitat Executive Director asked for “a bold new narrative now.”
“We need to bring visionary mayors to the table to help address these interlinked global crises and reframe the discourse on the role of cities, urban governance, design and planning”, Maimunah Mohd Sharif said.
The Council’s mission is to ensure a healthy global debate over urban issues, to help chart a sustainable future. The work will be organized around three challenges: the JUST city, the HEALTHY city and the GREEN city, said UN-Habitat.
The new Council starts its work as the UN’s COP26 climate conference continues in Glasgow, Scotland, trying to keep the goal of 1.5 degrees of global warming, within reach.
Being responsible for approximately 75 per cent of the world’s energy consumption and over 70 per cent of global greenhouse gas emissions, cities are at the core of climate action.
A global challenge
Also this Wednesday, at the World Expo in Dubai, the UN launched the Climate Smart Cities Challenge.
The initiative is an open innovation competition to identify climate smart solutions and reduce urban impact, between the cities of Bogotá, Colombia; Bristol, United Kingdom; Curitiba, Brazil; and Makindye Ssabagabo, Uganda.
According to UN-Habitat, “the climate ambitions of these cities are impressive and addressing them will have a powerful impact in shaping how city leaders, innovators and local communities respond to the climate emergency.”
With these four cities selected, the competition is now asking innovators, including technologists, start-ups, developers, finance experts and more, to submit their best solutions to the unique challenges identified. The application period closes on 5 January.
Up to 80 finalists (up to 20 per city) will be selected to work closely with these four cities, learn more about their challenges, collaborate on solutions, and ultimately form teams to demonstrate solutions in the real-world.
The winning teams will share up to 400,000 Euros to leverage further investment and build towards system demonstration in 2023.
Around 4.5 billion people live in cities today, but that number is projected to grow by almost 50 per cent, by 2050. By mid-century, over 1.6 billion urban residents may have to survive through average summertime highs of 35 degrees Celsius.
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