Urbanisation and the future energy pathway

Energy shift: Windmills harness the power of winds to generate electricity in the US. The global system’s evolution will depend first and foremost on technology and policy choices. — Bloomberg

FOR the first time in history, most of the world’s population is living in urban areas, even in less-developed regions, and that will soon be true even if rapidly urbanising China is excluded.

Like the shift in the centre of the global economy from the North Atlantic to Asia, the transition from fossil to non-fossil energy, and population ageing, urbanisation is one of the economic mega-trends.

It is in the rapidly growing cities and megacities of Asia, the Middle East, Africa and Latin America where the predominant shape of the future energy system will be determined.

Urban populations first overtook their rural counterparts in 2007, according to estimates compiled by the United Nations (UN) based on national definitions of urban and rural.

In more-developed regions, defined by the UN as North America, Europe, Japan and Australia/New Zealand, an urban majority first emerged during the 1930s and 1940s.

In less-developed regions, however, that happened for the first time only in the last five years, driven mostly by the great migration from the countryside to the cities in China.

Even excluding China, the less-developed regions of the world will have an urban majority for the first time by 2023 as stated by the UN’s “World urbanisation projections” in 2018.

Rural populations have, however, continued to rise in absolute terms, but that too is about to change as the rapid migration to cities outweighs the natural reproduction and increase in rural areas.

Rural populations are projected to peak between 2021 (globally), 2024 (less-developed regions) and 2036 (less-developed regions outside China).

By contrast, urban populations are expected to grow every year in both more-developed and less-developed areas through 2050.

The anticipated transition to a non-fossil energy system will play out in urban centres, especially in Asia and other less-developed regions.

But the interaction between urbanisation and energy use is ambiguous.

Densely populated urban areas tend to consume less energy per person, especially for mobility, because they can support more public transportation systems, including for daily commuting and other short journeys.

Urban residents tend to be more concerned about air pollution, and more willing and able to push for pollution controls to reduce health risks, at least once incomes pass a certain threshold.

But urban areas also generate higher levels of productivity and personal incomes, which translates into increased demand for energy services, including long-distance transportation, such as cross-border aviation.

Urbanisation could therefore either increase or reduce per capita energy consumption, depending on specific technology and policy choices, including land use and transportation planning.

Increased urbanisation could be compatible with a wide range of different energy systems – ranging from petroleum-fuelled cars and aircraft to wind and solar-powered electric cars, buses and trains.

Any credible projection for the global energy system must locate it within the context of other mega-trends.

Treating the development of the global energy system in isolation makes no sense; energy pathways must be consistent with urbanisation, population ageing and the shift of economic activity towards Asia.

The global system’s evolution will depend first and foremost on technology and policy choices, ranging from intervention to laissez-faire, in the rapidly growing urban centres of Asia and other less-developed regions.

These are the areas that will see fastest population growth, greatest potential increase in per capita energy consumption, and where technology and policy choices will have the most impact at global scale.

Nonetheless, urban populations in more-developed regions have an important role to play, through demonstration effects, pioneering technology, learning curves, and the golden rule of “do unto others as you would wish them to do unto you”.

Already urbanised populations in more-developed regions cannot credibly demand their newly urbanising counterparts in less-developed regions avoid increased carbon emissions unless they are prepared to do the same.

And energy system choices by the declining rural populations in both more-developed and less-developed areas are important for similar reasons. — Reuters

John Kemp is a Reuters market analyst. The views expressed here are his own.

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