What is the problem?
Citizens are more and more moving into cities because, as our economies continue to move up the value chain and become ever more knowledge-intensive, this is where they can find the jobs they need.
Cities, becoming thus even more focal points of our economies and societies at large, are exposed to a strong urbanisation trend. This means that the energy and climate change challenges of the 21st century will be won and lost in the cities (already responsible for ca. 70% of energy consumption in the EU and ca. 75% of greenhouse gas emissions). But more than this, cities also face challenges in the economic and social domains: they need to remain attractive to old and new citizens and to the businesses underpinning their economies.
Add to this that for many of our cities this is a time of economic crisis and the dimension of the challenge becomes obvious.
Why is EU action required?
The kind of smart city solutions that can help addressing the urban climate and energy challenges, whilst also helping to strongly positions the EU's industry in an international growth market, do not yet exist on the market. We are specifically talking about solutions here that cross sectoral boundaries and leverage synergies between the ICT, energy and transport / mobility sector (e.g. in terms of putting infrastructures to multiple uses). Here we need to move on from projects to products, meaninng that a market should be created thus also driving down unit costs.
Demonstrating such solutions at large scale hence brings with it certain first mover risks and costs, which is why we do not see sufficient dynamics in the market. To address this market failure the EU should step in, bringing stakeholders together to fully realise yet untapped synergy potentials as well as buy off certain elements of risks through public co-funding.
Moreover, in order to minimise up-front investments and thus alleviate the financial burden on cash-stripped city administrations industry must develop solutions that, as much as possible whilst taking into account the uniqueness of each city, leverage economies of scale – only to be had at EU level.
What has the Commission done so far?
- FP7 initiatives such as the Energy-efficient Buildings PPP, but also the Green Cars PPP, always had an urban dimension (and in case of the former even progressively built up to eventually address large neighbourhoods and districts). Furthermore, through DG CONNECT's city network, the Green Digital Charter, the Commission has successfully lobbied major cities around Europe to voluntarily commit on not only cutting down on the environmental footprints of their ICT sectors, but also on rolling out large ICT-driven smart city projects. Also, ongoing work to refine international standards for measuring GHG emissions and energy consumption of ICT goods and services specifically targets projects in cities so to enable cities to get clearer ideas of the green benefits that can be derived from smart city solutions.
- In summer 2012, the Commission further intensified its efforts around smart cities by announcing the European Innovation Partnership on Smart Cities and Communities; earlier this year we have obtained Council conclusions thus officially launching the Partnership and in October the Partnership's High Level Group (consisting of VPs Kroes and Kallas, Cmr Oettinger as well as, for example, city mayors and CEOs/board members from industry) adopted a Strategic Implementation Plan, thus following the model of other, ealier European Innovation Partnerships. The partnership mobilises actors from the private and public sector through launching Calls for Commitments and has already heavily inspired the H2020 focus area 'Smart Cities' and its Lighthouse Projects, a concept that has been at the hear of the Partnerhsip since the lauch of the Communication in summer 2012. The Partnerhip is jointly implemented, together with DGs ENER and MOVE, with DGs REGIO and ENV having observer status. (cf. DAE Action 70)
- Calls for Proposals for Lighthouse Projects in the H2020 focus area 'Smart Cities' were published on 11 December 2013. These projects are of a larger-than-usual scale and will involve a greater number of cities, thus being designed to achieved maximum replicability so to speek up our progress towards market-creation.
What will the Commission do next?