By 2050, more than 65 per cent of the world population will live in cities. While today the focus of carbon reduction and energy-efficiency policies remains at national and international levels, local authorities have substantial influence on some of the key levers to achieve significant and concrete results. Indeed, Arthur D. Little’s study of Spain’s 15 largest cities found that, with the right local policy levers in place and without any major refurbishing of citizens’ homes, Spanish cities could achieve a c.40 percent reduction in consumption by 2027. This represents annual savings of €3.3 billion, an 18.8-million-ton reduction in CO2 emissions, and a 25 percent drop in particulate matter. So, which Spanish cities are set up for success, and which risk falling behind in the race to provide sustainable-energy solutions?
Spanish cities leading in energy efficiency
To understand which Spanish cities are poised to make the most significant energy savings, we looked at current energy usage in the residential sector, the services sector, and transportation. In Spain today, urban dwellers make up 43 percent of overall energy usage, mostly in heating and cooling their homes, and keeping the lights on. Businesses, or the services sector, consume 31 percent of energy to power everything from the retail sector to commercial real estate and the hospitality industry. Finally, transportation makes up the remaining 26 percent of cities’ total energy needs – largely in private transportation.
Considering overall energy consumption, current efficiency practices, and the city’s commitment to sustainability, Bilbao is Spain’s most energy-efficient city, with Zaragoza a close second. Large cities such as Madrid and Barcelona perform in the middle of the pack, underscoring that a city’s size has little to do with its energy efficiency. Gijón and Valencia are Spain’s least energy-efficient cities, largely due to high home-heating costs and limited public transportation options.
Like in so many cities around the world, Spanish city-dwellers have the potential to dramatically improve energy efficiency in their homes and transportation choices. In old homes and apartments, modest upgrades of energy-consuming equipment can lead to around 40 percent of residential energy savings – for example, by replacing inefficient heating systems with more advanced systems such as low-temperature boilers, or by improving household insulation. Households can use a mix of actions that make economic sense and do not require major refurbishing. In the transport sector, as more cities incentivize public transportation, we expect to see 27 percent energy savings, mainly driven by the shift away from private-vehicle use and the rise of electric vehicles.
For businesses, energy efficiency makes economic sense, so we expect consumption to drop as prices rise. Specifically, the services sector could achieve 41 percent energy savings by improving the efficiency of heating and air-conditioning systems and installing better building insulation. The remaining savings will come from lighting improvements in offices and commercial centers, as well as efficiency gains in the hot-water systems of hotels and hospitals.
Smart cities in Spain
As the younger generation flocks to Spain’s urban centers, local and regional authorities must align their priorities to reduce overall energy consumption through comprehensive policies that incentivize residents and businesses to invest in energy-efficient homes, operations, and modes of transportation. Working with technology experts, energy companies, and the automotive industry, urban policy makers can develop smart-city initiatives that guarantee Spain becomes a leader in low-energy urban living.
By David Borràs, Partner at Arthur D. Little