Siemens, GlobeScan and MRC publish Megacity Report

Davos, Jan 26, 2007

- Solving transportation issues has highest priority
- Interest in renewable energy is strong
- Public private partnerships seen as promising new models

Environmental issues play a central role in urban planning. However, in emerging megacities, infrastructure growth often takes precedence over the environment. This is just one of the key findings of a survey of 522 decision makers from 25 global metropolises. The research project, which is unique worldwide, was conducted by the two research institutes GlobeScan and MRC McLean Hazel and supported by Siemens. Experts presented the results of the research in a press conference at the World Economic Forum in Davos for the first time. Solving transportation issues has the highest priority in the cities surveyed, and air pollution is seen as the main environmental issue. Survey respondents believe that the private sector should play a major role in city infrastructures like energy, water, transportation and health care: more than 70 percent of them believe that public private partnerships are a promising approach.

Respondents see the enormous strain on the environment caused by the huge increase in the number of automobiles worldwide as a major urban issue. Air pollution and traffic are the most frequently named environmental challenges for megacities. In Shanghai alone, the number of cars and trucks is expected to quadruple by 2020. When push comes to shove, however, infrastructure growth takes precedence over the environment: 55 percent of the respondents from emerging countries said they would sacrifice environmental protection for growth, as opposed to only 14 percent of the respondents from industrialized countries. “If cities manage to harmonize economic attractiveness, clean environment and quality of life for their citizens, then they will drive growth in their region and be positioned for global competition,” said Dr. Klaus Kleinfeld, President and CEO of Siemens AG, in Davos.

Still, the environment weighs heavily in solving the traffic problem. According to estimates from the World Health Organization (WHO), air pollution kills approximately 130,000 urbanites a year in industrializing countries. That’s why 71 percent of the traffic experts believe that cities will focus on building out mass transportation systems in the coming years. Only 29 percent believe that automobile traffic will be given priority. A well functioning transportation system also determines a city’s economic attractiveness. 27 percent of the respondents named transportation as the main driver of their city’s competitiveness, by far more than the second driver, safety and security, which was named by only nine percent of the respondents. “Solving the transportation problem will be the foremost challenge for decision makers and the primary focus of municipal investment over the next five to ten years,” said Doug Miller, President of GlobeScan.

The environment also plays a major role in the area of energy issues. 48 percent of the energy experts said that they intended to focus on promoting sources of renewable energy in the next years. “In most countries, alternative energy contributes less than ten percent to the total energy mix,” said George Hazel, Managing Director of MRC McLean Hazel. Today, for example, the UK generates 39 percent of its energy with gas, 35 percent with coal, and 20 percent with nuclear – renewable energy provides only four percent of the total demand. “Considering the interviews, however, alternative sources of energy will have a bright future in megacities,” he continued. By 2010, the UK wants to cover ten percent of its electricity needs with renewable energy sources. Siemens Wind Power is currently building with Burbo Banks its first offshore wind park in Great Britain. Another project is the onshore wind park in Whitelee, which when completed will be the largest wind park in Europe. Kleinfeld: “Such projects deliver clean energy and will be increasingly more important in the future. We expect that by 2020 there will be 700 million tons fewer CO2 emissions due to the expansion of wind power.”

To meet growing demand for mobility, power, energy and water in the long term, megacities must not only build out their infrastructures and use them more efficiently; they must also proactively manage demand. For instance, worldwide power consumption is expected to double between 2002 and 2030, especially due to the increased demand in rapidly growing countries like China and India. “Demand management is an approach that respondents do not appreciate enough yet,” said Hazel.

The London toll system is an example of successful traffic management. Motorists pay an automatically charged fee in the city center area. Since its introduction in 2003, traffic jams have been reduced by 26 percent on average, total traffic volume in the charging zones has decreased by 21 percent, and delays have been shortened from 2.3 to 1.8 minutes per kilometer. Siemens is currently delivering the technology to extend the toll system to London’s western city districts.

However, city government experts are aware of the fact that efficiency must be improved significantly. Eight out of ten respondents expect IT solutions to be implemented that make their work more efficient and transparent. Denmark offers a good example in this regard: electronic purchasing systems help the Danish government save taxpayers US$188 million annually. More than half of the specialists surveyed consider improving city management more important than boosting city spending, which was named by only twelve percent. More and more, city officials are evolving from administrators of public institutions to active, efficiency-oriented managers of municipal services. “The more efficiently cities are managed, the better they can contribute to the well-being and quality of life of their citizens,” said Kleinfeld.

The survey also investigated how privatization can contribute to solving the problems of urbanization. Over 70 percent of the respondents are interested in public private partnerships (PPP). Surprisingly more than 60 percent of the respondents expect greater efficiency to result from private sector involvement. “Issues related only to financing are secondary to governance,” said Miller. Bangalore International Airport is an example of a successful public private partnership; it’s India’s first airport project that is co-financed by the private sector. Aside from financing, Siemens provides the full range of airport technologies, from baggage handling, transportation, communication, fire protection and air conditioning systems to energy technology.

As a global leader in technology, Siemens has been contributing outstanding products and solutions for city infrastructures for many years. Kleinfeld: “Not only cities and their citizens will benefit, but Siemens will as well from the fact that urbanization is progressing at tremendous speed. That’s a strong tailwind for our business – it will help us meet our goal of growing at least twice as fast as the global GDP.”


About the survey method used for the Megacity Report: The results of the survey reflect the opinions of a total of 522 respondents from 25 major metropolitan areas in Africa, Asia, the Americas and Europe. Respondents include selected political leaders, city government employees, urban planners, representatives of infrastructure providers, construction companies, financiers and opinion leaders, such as academics, NGO representatives and journalists. During October and November 2006, the respondents were asked what impact they expect rapid urbanization to have and how they intend to harmonize economic attractiveness, quality of life and environmental protection.

To view a summary of the Megacity Report and photographs of megacities, please point your browser to www.siemens.com/presse/megacities.

GlobeScan Incorporated is a global public opinion and stakeholder research consultancy with offices in Toronto, London and Washington. GlobeScan conducts custom research and annual tracking studies on global issues. With a research network spanning 50+ countries, GlobeScan works with global companies, multilateral agencies, national governments, and non-government organizations to deliver research-based insights for successful strategies. Further information is available on the Internet at: http://www.globescan.com

MRC McLean Hazel Ltd (MRCMH) is a consultancy specializing in strategic urban policy and research and transport policy and planning for the public and private sectors. MRCMH is a subsidiary of McCormick Rankin Corporation (MRC) with over 350 employees throughout Canada, Australia, New Zealand, Europe and the UK. The MRC family of companies supplements the resources of MRCMH with technical expertise that includes investment geography, innovative public finance, public transport, telematics, road safety, traffic modeling and engineering, and environmental sciences. The team of experienced consultants in Europe is led by Prof George Hazel OBE with offices in Edinburgh, Leeds, and Brussels. Further information is available on the Internet at: http://www.mrcmcleanhazel.com

Siemens (Berlin and Munich) is a global powerhouse in electrical engineering and electronics. The company has around 475,000 employees (incl. discontinued operations) working to develop and manufacture products, design and install complex systems and projects, and tailor a wide range of services for individual requirements. Siemens provides innovative technologies and comprehensive know-how to benefit customers in over 190 countries. Founded more than 155 years ago, the company focuses on the areas of Information and Communications, Automation and Control, Power, Transportation, Medical, and Lighting. In fiscal 2006 (ended September 30), Siemens had sales of €87.3 billion and net income of €3.033 billion, according to U.S. GAAP. Further information is available on the Internet at: www.siemens.com.

Reference number: AXX200701.41 e

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Monika Brücklmeier

Siemens AG

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