SIEMENS

New York, July 18, 2007. A column of dust and smoke rises up from a street in Manhattan. Fire trucks, ambulances, and police cars rush to the scene at Lexington Avenue near Grand Central Terminal. But they’re not responding to a terrorist attack, as initially feared. Instead, an 83-year-old high-pressure steam pipe has burst, creating a 20-m hole in the street. New Yorkers have suddenly become aware of a serious problem in their city.
New York’s steam pipe system is not only the largest in the world; it’s also one of the oldest. Dating back more than 100 years, the network for the world’s first municipal heating system extends over 170 km throughout the city, supplying heating and air conditioning units in large buildings with the steam they need. New York is also home to an extremely complex network of underground power and gas lines, subway tracks, and sewers, all of which run very close together, either next to or above or below one another. It is therefore not surprising that there are often breakdowns and accidents. In some cases, manhole covers have even become electrically charged.
New York is not alone in its predicament. London, for example, has a water main network that loses more than 30 % of its contents every day. Many residents of the British capital were unable to shower for days in the summer of 2006 because water leaking from defective pipes was being absorbed by the dry ground underneath the city.
Infrastructure is vital for the survival of any city, regardless of whether the subject is traffic, transport, production, telecommunications, electricity, water, or waste. Roads in disrepair, data and power networks with insufficient capacity, defective sewage networks, or outdated rail and subway systems can paralyze a city’s economy. Many metropolitan areas are all too familiar with this problem. A survey of U.S. mayors initiated by Siemens in 2009 ("Metropolitan Infrastructure Sustainability Study") revealed that 42 % of respondents viewed run-down and outdated infrastructure and its maintenance and repair as a key challenge.
Speaking to the German magazine Der Spiegel in the wake of the 2007 steam pipe explosion, New York Mayor Mike Bloomberg said: "Outmoded infrastructure always poses a danger, which is why we must continue to invest in modernization." The problem is that most cities are putting off sustainable modernization measures because of the economic crisis. That’s not surprising, given the immense sums involved. Even back in 1998, an auditor’s report concluded that modernizing New York’s infrastructure would cost at least $90 billion.
The picture is similar with regard to reducing greenhouse gas emissions. Cities are, after all, responsible for around 80 % of total global greenhouse gas emissions and also account for 75 % of worldwide energy consumption. "Reducing urban CO₂ emissions is a huge task," says Miami Mayor Manuel Alberto Diaz (see article "The Road to Greener Cities Begins with Public-Private Partnerships"). "That’s because emissions must be reduced very rapidly and the reduction has to be as sustainable as possible." Still, the solutions on offer are viewed by many urban planners mainly as high cost factors.

Why it Pays to be Green. The environment and the economy need not be mutually exclusive. On the contrary, energy efficiency measures generally pay for themselves quickly. Many projects that Siemens is implementing around the world through its Environmental Portfolio clearly demonstrate how cities can reduce their emissions and energy costs while recouping most of the associated investment.
In Istanbul, for example, the company is equipping Bosporus Strait ferries that are used by some 250,000 people every day with modern diesel-electric drive systems, which consume much less fuel than the engines previously employed. Siemens has also improved the efficiency of the Ambarli combined cycle power plant by 5 % through design optimization measures, whereby the increase corresponds to an added output of around 65 MW. In addition, Siemens has been operating one of its most efficient production facilities near Istanbul since 2008. The plant, which makes switchgear, boasts 30 % higher production output than its predecessor, while also consuming 25 % less energy and 50 % less water (see Istanbul).
In many cities around the globe, Siemens is equipping traffic light systems with state-of-the-art light-emitting diode (LED) technology that consumes 80 to 90 % less electricity than conventional traffic lights, and also lasts at least ten times longer (see article "Lots of Light for Little Power" in the drop down box next to the article "A Model of mobility"). The investment pays off, as a large city with around 700 intersections can save €1.2 million each year in energy costs just by replacing the lights. "In this era of tight budgets, LED traffic lights offer a perfect example of how ecological and economic goals can be achieved simultaneously," says Dr. Christoph Roth, a product manager for signals at Siemens Traffic Solutions.
Airports are particularly big energy consumers. In fact, the energy they use could power tens of thousands of households. Denver International Airport, for example, consumed around 216 mill. kWh in 2007. Unhappy with these figures, the airport’s operating authority asked Siemens to identify energy saving potential at the facility. As a result of Siemens’ extensive range of modernization proposals it will be possible to reduce energy costs by 10 % (see article "Flight from Carbon Dioxide").
The following example illustrates the type of savings that modern infrastructure solutions can generate: Taking the ratio of the energy a country consumes and its gross domestic product yields a measure of how efficiently that nation utilizes energy. This value is 3.7 for Germany, 6.7 for the U.S., and 17.1 for China. Raising energy productivity in the U.S. and China to Germany’s level would reduce global energy consumption by 21 %, assuming the same volume of economic output. The same applies to emissions. Reducing relative emissions in those two nations to Germany’s level would result in a 25 % decline in global greenhouse gas emissions.
Companies like Siemens offer sophisticated financing packages that enable significant energy savings to be achieved without placing additional burdens on cities strapped for cash. In the case of LED traffic lights, for example, the resulting energy savings can be used to finance the installment payments associated with the investment. Siemens offers such energy performance contracts for public buildings for 20 years (see article "Green Campus"). "With this combined package of consulting, installation, and financing services, customers don’t have to make an initial investment," says Andreas Schierenbeck, CEO of Siemens Building Automation, which is responsible for the worldwide implementation of the program. "Customers simply pay off installments over a set period through the energy savings they achieve."
Government stimulus packages in the wake of the economic crisis will also boost infrastructure expansion. According to a study by Germany’s DekaBank, governments around the world approved financial injections totaling around €2 trillion between the beginning of 2008 and the summer of 2009. That’s equivalent to 4.7 % of gross world product. Although most of this money is going toward tax breaks, around €700 billion is targeted toward infrastructure improvements. Indeed, the U.S. government alone is making €253 billion available for infrastructure projects (see article "Trillions of Dollars for the Modernization of Infrastructures").
Such huge investments are meant to jump-start economies, and naturally Siemens is looking to benefit from associated contracts. "We’re hoping to receive contracts worth €15 billion worldwide, 40 % of which should be directly related to the green portfolio. That’s around €6 billion," says Barbara Kux, member of the Siemens Managing Board with responsibility for Supply Chain Management and Sustainability. "The biggest opportunities for Siemens are in the U.S. and China, although we also anticipate contracts worth some €2 billion in Germany between now and 2012. We expect the green share of these contracts to amount to around 50 %, quite high in view of the fact that Germany is already considered to be the world leader in energy efficiency."

Cutting CO₂. A study by McKinsey on infrastructure in London and a study by the Wuppertal Institute for Climate, Environment, and Energy regarding a CO₂-free future for Munich (see Pictures of the Future, Fall 2008, "Shrinking our Footprints", and see article "Paths to a Better Planet", Pictures of the Future Spring 2009) indicate what a sustainable long-term investment might look like. Siemens participated in both studies. In London, for example, it would be possible to use currently-available technology to reduce energy consumption, water consumption, waste, and emissions by over 40 % by 2025. What’s more, it would be possible to do so without negatively impacting the lifestyles of the city’s residents. The investment required over 20 years would be equal to less than 1 % of London’s annual economic output.
Munich, for its part, could reduce its CO₂ emissions by 80 to 90 % by 2058. Here the emphasis is on measures for increasing energy efficiency. The list includes heat insulation and heat recovery systems in buildings; the exploitation of energy-saving electrical devices and lighting systems; more extensive use of buses, trains, and electric cars; the construction of combined heat and power plants and renewable energy facilities; and the transmission of low-CO₂ electricity over long distances.
Some €13 billion would also have to be invested in the modernization of existing buildings and the construction of new ones in accordance with the energy-saving passive house standard. Such investments would, however, be offset by annual energy-cost savings of €1.6 to €2.6 billion by 2058, which corresponds to savings of around €2,000 per resident. All in all, the savings achieved over 50 years would total over €30 billion — a figure that should convince even skeptics that, when it comes to energy and infrastructure modernization, the economy and the environment go hand in hand.