An additional 2.5 billion people will be living in cities across the globe by 2050. In India, too, existing urban centres will see a steady increase in population while a number of small towns and semi-urban areas will morph into mid to large sized cities. This large scale urbanisation, which is backed by rapid economic growth, is also leading to a strong increase in consumption of power. Cities and suburbs will thus undergo significant transformation in future to create sustainable living conditions for their citizens.
Energy and mobility are the twin pillars for these sweeping transformations and both will require radical adaptation to meet the challenges from an expanding population without increasing congestion and pollution.
The Fourth Industrial Revolution thus offers an unprecedented opportunity for policy-makers and business leaders to combine energy and mobility systems in a manner that maximises benefit for environment, drives greater efficiency and support economic growth.
Mobility is changing
As electric vehicles (EVs) become more affordable, they may constitute almost a third of new-car sales by the end of the next decade. Ride-sharing continues to surge with estimates that by 2030, it will account for more than 25 per cent of all miles driven globally, up from 4 per cent today. These changes are just the first hints of what is to come as we will soon see autonomous vehicles (AV) and commercial fleets of EVs integrated as parts of everyday life.
In the future, AVs will also cost significantly less per mile than vehicles with internal combustion engines for personal-use – by as much as 40 per cent – and could also reduce both congestion and traffic incidents.
Energy is changing
We are in the midst of a massive global shift towards renewable power systems that are cleaner and increasingly decentralised, with energy generated and distributed closer to the final customers, as innovations make it possible to store electricity. At the same time, digitalisation will allow customers and electricity system operators to control where, when, and how electricity is being used. And finally, the paradigm shift in electricity generation and distribution will find application in several new areas with mobility being one of the critical ones.
These trends have the potential to make our cities smarter and address the problems of a burgeoning population. It is crucial that business leaders and policy-makers must act now to lay the foundation for sustainable innovation in urban environment, where we are able to capture and combine these new trends.
Better energy, greater prosperity
As a Commissioner of the Energy Transitions Commission (ETC), I am privileged to be part of a diverse group of energy leaders who are driving the urgent need to ramp up the transition to low-carbon energy systems. The ETC recently released its ‘Better Energy, Greater Prosperity’ report on realistic opportunities for governments, businesses, and investors to cut emissions to half by 2040.
This report shows that energy transition is technically and economically possible, in both mature and developing economies like India. It maps out how to achieve rapid progress along four dimensions:
Decarbonisation of power combined with extended electrification
In many countries, new utility business models are taking shape to leverage a shift towards decentralised solutions such as micro-grids and energy storage. Smart meters and on-site generation capabilities are giving utilities the flexibility and speed to deliver power when and where customers need it. In addition, opportunities for extended electrification are increasing. The ETC report indicates that in the residential and commercial building sector alone, at least 35 per cent of energy needs, which are not currently met by electricity, could be electrified by 2040. In transportation, electric vehicles could become at least 95 per cent of new sales and 73 per cent of the stock of light duty vehicles by 2040.
Decarbonisation of activities that cannot be cost-effectively electrified
The decarbonisation of ‘hard-to-electrify’ industrial applications and long-haul transport is begging for innovation from the private sector. Switching to fuels such as biofuels and hydrogen, capturing carbon, and converting carbon into products and storage, all show promise. Carbon pricing (a tax or payment linked to CO2 emissions) is one way to amplify innovation and investment.
Acceleration in the pace of energy productivity improvement
Moving towards greater electrification is a significant first step. The next is making sure electrified activities are as energy-efficient as possible. We need to speed up the pace of energy productivity improvement to meet the Paris climate objectives since the energy efficiency potential is still significant. Improvement must rise from 1.8 per cent to 3 per cent per year globally. In buildings, for example, 82 per cent of the energy efficiency potential is not yet tapped. In industry, that number is 58 per cent.
Optimisation of fossil fuels use within overall carbon budget constraints
Today, fossil fuels account for 70 per cent of final energy demand. The ETC reports that this number must drop to about 50 per cent by 2040 if the 2015 Paris agreement’s call for action to limit worldwide temperature to well below 2 degrees is to be implemented. Fossils fuels still play a major role in the energy mix, especially as they remain the primary source of energy in a growing world economy. We therefore must optimise their use by type, and escalate carbon capture.
Towards a new energy world
Enabled by the convergence of Operational Technology and Information Technology, the Industrial Internet of Things (IIoT) is accelerating next-generation energy management and automation processes that can increase operational efficiency, energy efficiency and process agility.
By leveraging digitisation, IIoT improves asset management and performance in oil and gas, simplifies operational processes, heightens operational efficiency, and engenders proactive and agile operations upstream, midstream, and downstream.
Given that the world is moving towards rapid urbanisation, it is critical that cities must start to turn smart now to accommodate the rising tide, harness technology for wide variety of solutions, ramp up key infrastructure in areas like water, power and mobility, and ensure optimum utilisation of resources.