Green districts add environmental and economic value

21 July 2015

Developing green districts has the potential to add considerable economic, environmental and social benefits to the people and businesses that exist there, research by McKinsey & Company shows. In green districts, energy consumption is down by 20-40%; freshwater consumption and wastewater production by 60-65%; and solid waste by 25%; while the quality of life is rated more highly. While the initial design and construction investment adds millions to the development, the long term benefits of sustainable green technologies pay for themselves in around 5-10 years through lower operating costs.

Green districts are areas which are densely populated and geographically cohesive, where technologies and design elements are deployed to reduce resource use and pollution. As more and more people globally are moving into urban and city life and environmental concerns are gaining awareness, the development of these areas might be paramount for a sustainable future.

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In a recent article, titled ‘Building the cities of the future with green districts’, McKinsey & Company considers the benefits of green districts. To do so, the consulting firm quantifies the benefits of deploying sustainable technologies in de development of future cities around the world.

For the analysis of the districts, the consultancy considered fifteen well established green district technologies, covering buildings, waste, water, transport, and utilities, as well as ten design elements, such as permeable pavements, green space, bike lanes, and building orientation. The analysis was then considered within the context of three geographic areas that have different needs: Northern North America, the Yangtze Delta in China, and the Persian Gulf region. The area considered is one-square-kilometre, and a 70-30% mix of residential and commercial space respectively. The model considers the wide deployment of the available technology within the local context.

Green technologies

Economic viability
The researchers find that green districts are economically viable, although their long term value added is dependent on the local environmental context. The analysis shows that green districts have considerable potential toward lowering the cost of living in the areas within a number of years. According to McKinsey, while the initial investment in the one-square-kilometre park is between $35 million to $70 million, or between $1,000 and $4,000 per resident, the reduction in operating cost saves $250 to $1,200 per resident annually, and would see the districts pay for themselves within a relatively short timeframe.

Environmental benefit
Besides the economic benefits of introducing the technologies considered into future builds, the environmental effects are by no means ineffective. The energy consumption of green districts is reduced between 20-40%; freshwater consumption and wastewater production drops 60-65%; solid waste drops 25%; while the number of private vehicles per kilometre travelled drops 50-80%.

People benefit
The deployment of green districts may have wider ramifications for the people that live there, with the study highlighting that better transit design and energy planning, green districts can set a course toward cleaner, less congested, more liveable cities.

Institutional developers and operators

Implementation barriers
Although the benefits of green districts are a win for the residence in terms of economics, environmental and social terms, the creation of such spaces remains problematic. One of the key issues is that the upfront investment costs of many of the technologies are relatively high, while the long term benefits to those that come to purchase the more expensive residences are not explicitly clear. “The simplest way to overcome this difficulty is for the developer and the operator to be the same—for example, in new districts built by universities, government complexes, and medical centres. These may therefore be the most logical places to start the movement, because they are well positioned to test the value of green-district technologies and design features,” the research states.

New business models will need to be developed that make the benefits of investment clear. In addition, institutional developers that themselves operate their development, might be best suited to early adopting a move toward sustainable construction design and implementation. The article concludes: “Green development will not make a bad deal a good deal; like any other project, it requires the right location, marketing, and design. But green development can make a good deal a great one by maximizing a district’s economic, social, and environmental potential. On that basis, green districts have a future—and possibly a big one.”


WEF finds no progress made on greening economy

01 April 2019

The reports of two influential bodies, in the space of a day, have warned that no progress is being made to prevent major climate change. The World Economic Forum has warned that greening of the global energy transition has stagnated over last five years, while the International Energy Agency has confirmed coal use rose again last year.

The position of the Academies of Science from 80 countries, plus a majority of scientific organisations that study climate science, is that humans are causing rapid climate change – often referred to as global warming. Roughly 95% of active climate researchers publishing climate papers endorse the consensus position that since the industrial revolution, the boom in carbon emissions from fossil fuel powered human activity has heavily impacted the planet, with rising levels of CO2 and other greenhouse gases trapping heat from the sun causing global temperatures to rise – something which will have catastrophic results in the near future.

Despite the steadfast consensus among the scientific community on the matter, however, there has been little to no meaningful action to avert disaster. In fact, while the signing of the Paris Accord was met with great excitement, since it came into force, global carbon dioxide emissions have continued to rise. Today, they sit at their highest levels yet, after a strong economy and extreme weather stoked a surge in energy demand last year.WEF finds no progress made on greening economyAccording to the world’s energy watchdog, the Paris-based International Energy Agency (IEA), energy spiked by 2.3% in 2018 – the biggest leap since 2010 – with that demand largely being met with fossil fuels. As a result, global emissions of carbon dioxide hit the record high of 33 billion tonnes in 2018, a rise of 1.7% on 2017’s figures. Commenting on the findings, IEA chief Fatih Birol said the rise in energy demand was “exceptional” and a “surprise for many.”

Birol added, “We have seen an extraordinary increase in global energy demand in 2018, growing at its fastest pace this decade. Looking at the global economy in 2019, it will be rather a surprise to see the same level of growth as 2018.”

The suggestion from Birol that 2018 is likely to be an anomaly which will not be seen again is strange, considering the added strain which the boom in emissions will place on the environment. To suggest that heightened energy demand was driven by extreme weather – which is increasingly difficult to claim is unrelated to man-made climate change – and then to suggest that such a thing is unlikely to occur any time soon in spite of emissions having increased seems contradictory.

Regardless of this, the bad news was further compounded within hours of the IEA’s release. A report from the World Economic Forum released on the same day concluded that the world's energy systems have not become any greener in the last five years. Despite the agreement of global climate targets, falling green power costs, and mounting public and business concern over the catastrophic impacts runaway climate change could wreak, the WEF’s damning assessment warned that little to no progress has been made on making energy systems more environmentally sustainable since 2014.

Coal is the largest hindrance of change on this front, according to the report. Recent years have seen improvements in energy access and security, but far too many nations remain dependent on coal power for the new energy systems to have made any environmental gains. At the same time, major economies have failed to decrease or even slow the amount of energy they use per unit of GDP, leaving smaller actors who have made changes micturating into a gale. Change on the part of the world’s largest economies is therefore crucial to driving the development of a greener, more efficient global economy, the WEF concluded.

Commenting on the findings, Roberto Bocca, leader of the WEF's future of energy and materials division, said urgent action is now needed to move toward decarbonisation. He added, "We need a future where energy is affordable, sustainable and accessible to all. Solid progress in bringing energy within the reach of more and more people is not enough to mask wider failures, which are already having an impact on our climate and on our societies."

The news comes even as sustainability continues to be talked about as a ‘top agenda item’ at the majority of the world’s largest corporations. While 85% say that it will be more important still in another five years, it is clear that the majority of the world’s most powerful businesses are failing to walk the talk on the matter, regardless of what governments do.