A seven-point guide to getting the net zero transition on track

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A seven-point guide to getting the net zero transition on track by  whose advice is about:

  • Several key issues must be addressed to accelerate our efforts to reach net zero.
  • This includes innovative energy solutions, driving down technology costs and developing new financing mechanisms, to name a few.
  • Entirely new opportunities will also be created by the transition.

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A seven-point guide to getting the net zero transition on track

Image (Credit: Unsplash)

This article is brought to you thanks to the collaboration of The European Sting with the World Economic Forum.

Author: Mekala Krishnan, Senior Fellow, McKinsey Global Institute, McKinsey & Company, Humayun Tai, Senior Partner, Electric Power & Natural Gas, McKinsey & Company


 

The refrain has become disturbingly familiar: though there has been meaningful momentum, the net-zero transition is not on track.

Faced with the enormous complexity of this task, where should CEOs and policymakers focus their efforts? We have identified seven essential steps – areas where accelerating progress in the next decade is critical – for global climate goals to be met.

First, deploy lower-cost solutions to reduce emissions. The world currently emits more than 55 metric gigatons of greenhouse gases annually. Yet by 2030, relatively cheap solutions — costing less than $20 per metric ton of gas abated — could potentially decrease as much as 19 metric gigatons annually. Examples include improving energy efficiency, reducing methane emissions in fossil fuel extraction, and stopping deforestation.

Despite this, the investment needed for many of these solutions falls short. Incentives that could boost investment include tighter energy and fuel efficiency standards, rebates or tax incentives to reduce energy use, and financial incentives to protect forests.

 

Second, drive down the costs of expensive solutions. Many technologies needed to reach net zero are not yet mature and cost-competitive. Various analyses suggest that only 10-20% of the emissions reductions required by 2050 could come from technologies that are already commercially mature.

The good news here is that most of the remaining technologies exist in some form already. The power of the private sector must be unleashed to improve their viability, reduce their cost, and scale them up. In some cases, boosting funding for research and development (R&D) can help. Market-stimulating mechanisms will be important for technologies that are starting to mature.

Third, build effective financial mechanisms to drive capital where it is needed. Reaching net zero by 2050 would require trillions of dollars spent on low-emissions technologies. Many of those technologies are new, making it harder for investors to evaluate their viability and risk. Again, many of these are not yet cost-competitive likewise holding back the flow of capital. Developing countries, especially, may find raising financing particularly challenging.

Public funds and ordinary loans will not be enough. Entirely new asset classes may be necessary. These would include industrial venture capital funds, growth infrastructure funds, and “brown-to-green” funds. Scaling up blended finance, which combines public and private capital, could help increase capital flows by reducing the risk faced by private capital providers. Incentives to reallocate companies’ capital resources from high- to low-emissions businesses could also be useful.

Fourth, anticipate and remove physical bottlenecks. The transition at its core is a massive physical transformation. The transition requires an enormous supply of minerals, manufactured goods, land, new infrastructure (for example EV charging networks, electrical grids, and hydrogen pipelines), and a great deal of labour to build and operate all those assets.

Bottlenecks could limit access to these inputs, especially between now and 2030. Long lead times are often a problem. For example, starting a new mine can take five to 15 years. The availability of necessary skills or concentration of minerals and manufacturing capacity in a handful of countries also poses challenges.

Stakeholders can address bottlenecks by unlocking supply and reducing demand for these inputs. Examples include recycling materials, training workforces, developing new battery chemistries that rely less on highly scarce materials, and streamlining permitting processes for new infrastructure.

Fifth, revamp energy markets and planning approaches for an electrified world. In a world of net zero emissions, electricity systems could provide about three times as much energy as they do today, and the share of all electricity generated by wind and solar power would also likely grow.

This would require the redesign of electricity markets and planning approaches to build flexible capacity. Such assets must be able to provide electricity when wind and solar cannot and would include batteries and nuclear plants. Incentives will also be needed to build transmission and distribution infrastructure. Another issue is accounting more carefully for weather, both because of the increase in wind and solar generation (which depend heavily on weather conditions) and the changing climate.

Sixth, manage existing and emerging energy systems in parallel. As the net zero transition unfolds, the world will need to run two energy systems in parallel: Smoothly ramping down the old, fossil fuels–based one while scaling up the new.

It will be critical to scale up the new energy system as quickly as possible. But even according to demand scenarios in which global warming is kept at 1.5°C, fossil fuels will continue to play a part in the energy mix in the next few years. An important step, therefore, is to reduce Scope 1 and 2 emissions from fossil fuel operations as much as possible.

And any future investments in the fossil fuel system must be made carefully. We must ensure a robust energy supply and prevent price volatility while sustaining the net zero transition.

Seventh, compete for opportunities created by the net zero transition using comparative advantage as a guide. As demand for high-emissions products falls, jobs and output in some parts of the economy may be impacted. This will require reskilling and support to workers and affected communities.

Importantly, entirely new opportunities will also be created by the transition. As countries and companies begin to explore these areas, they should be guided by their potential to gain comparative advantages. Some countries could benefit from their natural endowments like access to sunshine or critical minerals. Other countries and companies may have technical know-how to help them manufacture the goods needed for the transition.

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On the frontline of battle against climate change

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—A Global Problem that is taken quite seriously in the Middle East, especially in Saudi Arabia, appears to be on the frontline of the battle against climate change, especially against desertification

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Saudi Arabia’s on the frontline of battle against climate change

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Saudi Arabia’s on the frontline of battle against climate change

Events such as MENA Climate Week in Riyadh in 2023, the UAE’s COP28 in 2023, and Egypt’s COP27 in 2022 underscore the region’s commitment to addressing this pressing issue to safeguard their future. (SPA)

  • Middle Eastern countries face unique challenges that compound the urgency of tackling this environmental crisis.

RIYADH: As temperatures continue to rise worldwide, the Arab region is on the frontline of the battle against climate change.

In the global race to achieve net-zero, the Middle Eastern countries face unique challenges that compound the urgency of tackling this environmental crisis to safeguard their future.

The Gulf region is one of the areas most heavily impacted by climate change, primarily due to the already elevated temperatures that have exceeded the global average.

In recent years, the Arab world has heightened its focus on the ramifications of global warming, particularly its economic impacts, to avert the detrimental consequences.

Events such as MENA Climate Week in Riyadh in 2023, the UAE’s COP28 in 2023, and Egypt’s COP27 in 2022 underscore the region’s commitment to addressing this pressing issue.

Speaking to Arab News, Sal Jafar, CEO of ESG MENA, underscored these efforts, stating: “I have observed firsthand the transformative strides the GCC countries are making in the realm of energy transition and climate change efforts.”

He added: “This region, historically reliant on hydrocarbon economies, is now at the forefront of a pivotal shift toward sustainability and environmental stewardship, underpinned by an ESG framework.”

The intricate relationship between atmospheric changes and financial growth in these nations underscores the necessity of adopting sustainable development practices.

A recent report by the Arab Monetary Fund states that by the year 2050, the region may experience a significant reduction in water availability and agricultural productivity.

This decline, which is connected to climate-related water scarcity, could result in economic losses equivalent to 14 percent of the area’s gross domestic product.

Saudi Arabia, a pivotal player in the Middle East and a significant oil producer, embodies the region’s complexities and potential for transformation.

The Kingdom has been keen to amplify its efforts in energy transition for at least a decade, Yousef Al-Shammari, the CEO of CMarkits, a UK-based energy research consultancy firm, told Arab News.

These measures began with the launch of the King Abdullah City for Atomic and Renewable Energy in 2013, he noted, saying: “At that time, the aim was to minimize crude oil consumption by utilizing alternative sources of energy. Especially because the local consumption of crude is projected to keep rising because of national consumption of electricity and, of course, road transport demand.”

This region, historically reliant on hydrocarbon economies, is now at the forefront of a pivotal shift toward sustainability and environmental stewardship, underpinned by an ESG framework.

Sal Jafar, CEO of ESG MENA

Crude oil demand is projected to rise to as high as 8 million barrels per day, while the Kingdom produces 10 million barrels. This will inevitably lead to an “economic security risk” and result in the nation’s first motive of ensuring energy efficiency, Al-Shammari said.

However, with rising concerns about escalating temperatures and environmental sustainability, the nation launched its Vision 2030 in 2016 to position itself as a global leader in clean energy production and divert its economy from oil dependency.

The road to net-zero

The Kingdom has embarked on various initiatives to reduce its carbon footprint and diversify its economy beyond oil.

Mitigative efforts include ambitious targets of 44 million tonnes of carbon dioxide captured annually by 2035 and 2 million tonnes of CO2 seized and utilized daily to produce glycol, urea and green methanol, as well as clean fuels, according to the 14th IEA-IEF-OPEC Symposium on Energy Outlooks.

This is being made possible through the circular carbon initiative, which was introduced during the Kingdom’s presidency of the G20, the CEO highlighted, saying: “The circular carbon initiative that includes removal reduce, reuse, and recycle,” he explained, adding: “Saudi Aramco is pursuing a very ambitious program on that line. I think there is one major project, which is starting in 2027, which will be the world’s largest CO2 capture project.”

The facility, which Aramco is said to play a significant role in, seeks to capture 9 million tonnes per annum of CO2 by 2027, with the aim of increasing its capacity to 44 million tonnes per annum by 2035, Al-Shammari outlined.

In October of 2022, the  Kingdom’s sovereign wealth fund launched its regional Voluntary Carbon Market company during the sixth edition of the Future Investment Initiative in Riyadh.

This move allowed for tradable CO2 shares to be launched on an exchange, with major players in the Saudi energy field, like Aramco and SABIC, taking part.

The idea of the VCM is to allow companies to pay to compensate for their CO2 emissions. Additionally, the market’s voluntary nature presents a greater chance for success than compulsory sectors implemented in other regions, Al-Shammari outlined.

He said: “It’s voluntary, which means it can have a bigger impact than compulsory carbon markets, which we have seen in Europe, which did not really lead to any carbon reductions. The idea is, by being voluntary, it essentially enables companies to make economic sense of it. So when you have an economic return by having these investments in carbon markets, that would pay off the cost of capturing carbon. So somehow, it encourages producers to minimize their carbon emissions.” He added: “There is so much research and literature that has been done on that and the optimism about the
voluntary market is so huge and encouraging producers to minimize emissions compared to the compulsory markets.”

Greening the world

Equipped with a strategic location at the crossroad of three continents, the Kingdom is well positioned to lead in renewable energy exports globally.

Two ambitious projects outlined in the Symposium on Energy Outlooks include exporting 150,000 tonnes of clean ammonia globally and building the world’s largest green hydrogen project in NEOM.

Therefore, the nation’s location essentially allows it to export its potentially massive renewables supply east or west, Al-Shammari highlighted.

As European countries look to produce and import green hydrogen, Saudi Arabia will remain the continent’s supplier “for the foreseeable future,” he outlined.

He said: “As a part of the decarbonization plans, if you want to produce green hydrogen in Germany, it’s going to cost you $5 a kilogram and you’re going to produce it in Saudi Arabia, it’s going to cost you between $1 and $2 a kg.”

He added: “In the meantime, for the foreseeable future, Germany, which is Europe’s largest economy, will be dependent on and will need to import green hydrogen from cheap places like Saudi Arabia.”

Similarly, Saudi energy giant ACWA Power currently holds the world’s most extensive green hydrogen storage unit, with 1.2 million tonnes of ammonia produced per annum.

The company can “easily” import and export this large sum from its site in the northwest region of the Kingdom to Europe.

These efforts are allowing the country to shift its global image from a crude oil exporter to a major player in all energy fields.

Arab News

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‘World heading for 3°C trajectory’

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For once, everyone around the world agrees on the ‘World heading for 3°C trajectory’, at least that if we don’t manage to put our short-term benefits aside and focus on what’s more important.,

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‘World heading for 3°C trajectory’

Wood Mackenzie analysed impact of delayed energy transition, amid political uncertainties, inflation and elections

A five-year delay to the energy transition could see the global average temperature rise to 3°C above pre-industrial levels, according to Wood Mackenzie’s latest analysis.

The data provider has studied the implications of a delayed energy transition, amid political uncertainties, inflation and elections across the world might have on global decarbonisation efforts.

In terms of total investment, a delayed transition could cost up to $48tn, a “significant decrease” from Wood Mackenzie’s net zero scenario, which estimates a total of $75tn.

Renewables-led electrification looks increasingly more challenging, in the company’s delayed scenario.

Solar and wind dominate power markets in the longer term, but near-term additions are slowed due to transmission bottlenecks.

Unabated thermal supply provides much of the flexible generation to balance power grids.

Higher interest rates and supply chain bottlenecks raised renewables costs by 10% to 20% in recent years, according to previous Wood Mackenzie analysis.

Expensive renewables costs will further delay low-carbon hydrogen cost declines and a slower transition would mean carbon capture and removal technologies would need to play a dominant role in restoring the carbon balance and achieving long-term climate goals.

“With half of the global population heading to polls in 2024, political realities and climate scepticism in the major emitting countries, such as the US and Europe, could reduce the support for the transition as voters seek economic security and price stability,” said vice president, scenarios and technologies at Wood Mackenzie, and author of the report, Prakash Sharma.

“The global stocktake at COP28 in December 2023 also confirmed that no major country was on track to meet the Paris aligned commitments and that strong policy action and capital investment were necessary to accelerate the transition.

“Indeed, Europe and the UK have already pushed back 2030 climate goals and other countries may follow suit,” Sharma added.

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The double costs of conflict-driven climate change in MENA and beyond

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Atlantic Council proposed a MENASource article on the double costs of conflict-driven climate change in MENA and beyond, which is of actuality these latter days.  It is well known that the MENA Region is headed for more insecurity due to climate change, but it is best to calm down and look beyond the tip of one’s nose to ensure a respectable future for all.

 

Above image Creator: Amr Alfiky Credit: REUTERS

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The double costs of conflict-driven climate change in MENA and beyond

By Ariel Ezrahi

29 April 2024

While much of the world’s attention was on the ongoing Gaza war, the Middle East and North Africa (MENA) region was also dealing with unprecedented heavy rainfall in the United Arab Emirates and surrounding countries this month, coupled with record heat waves throughout the region. These events were stark reminders of the climate change challenges faced not just by the region but the world.

With wars raging in Ukraine since 2022 and in Gaza since October 2023, not to mention other conflicts, one question that comes to mind is the cost in terms of climate change. First, direct conflict-related emissions from military equipment, damage to facilities that cause emissions—such as fuel reserves and chemical plants—or fires, and a reversion and reliance on carbon-heavy fuels, including coal. Most estimates quantify emissions from the Ukraine conflict, for example, as equivalent to Belgium’s annual emissions. The other is the opportunity cost of the lack of cooperation on climate issues across borders. (For more on this topic, see the author’s forthcoming report for the Atlantic Council to be released in summer 2024.)

As long as Israel and Lebanon, for example, cannot agree how to cooperate on optimizing exportation from the region and eventually transition out of natural gas reserves from any shared sources towards cleaner sources of energy, both countries and the wider region will lose. (It’s worth noting that under the important Lebanese-Israeli Maritime Agreement, brokered by the United States, there are some provisions for how the parties will exploit any said gas fields and any revenue therein, but as long as the parties are not in direct contact and dependent on mediation, any additional prospect for cooperation beyond exploitation and border demarcation likely will be limited.) The same principle applies to cooperation in mitigation of extreme weather impacts through exchange of meteorological data, for example. The first cost is more straightforward to quantify, but the consequences of the second cost will only be assessed by future generations. These are the “double costs” of conflict-driven climate change impacts.

With the ongoing wars, it’s easy to dismiss the notions of climate change cooperation across borders as detached from reality. Unfortunately, the devastating impacts of climate change are not going away because of the existential threats posed by conflict. Instead, they are being worsened because of conflict.

For most countries, climate change has become a national security issue as they face mounting challenges from its impacts. In the MENA region, the risk for conflicts increases as the region becomes dryer, with scarcer sources of water, food, and energy. As the region looks to undertake an effective energy transition—which entails sharing of emission-reduction technology such as carbon capture, interconnecting electricity grids that are also capable to include increasingly renewable energy-based electricity, etc.—cooperation across borders becomes critical. Unless countries in the region and beyond find ways to work to mitigate and adapt together, it will turn into a race to the bottom—a lose-lose situation.

As long as the world has reckless and authoritarian leaders who are bent on continuing to rule by force and conflict, the rest of the world will suffer. Beyond the immediate loss of human life in conflict zones—including Ukraine, the Israel-Hamas war, Sudan, and Myanmar—other parts of the world will suffer the impacts of the “double cost” of climate change due to these events.

The trouble is that most politicians think short-term due to election cycles. So, medium- to long-term climate impacts are often not prioritized. Democratic countries governed by policies endeavoring to tackle climate change impacts can play an important role, as has been demonstrated by governments in Europe and North America. However, the continued success of such policies only works as long as a new government isn’t sworn in with a change of policy towards climate change, which undermines the milestones achieved. This was evident when then US President Donald Trump withdrew from the Paris Climate Accord in 2020. If he returns to the White House, Trump may repeal the Inflation Reduction Act, a move that would take away incentives for companies to invest in cleaner energies and, rather worryingly, send a strong signal to other global players that the United States is not a reliable partner for dealing with climate change.

A successful energy transition will address developing and developed economies’ current real energy needs, including hydrocarbons, for a defined period. However, it will critically establish medium- to long-term plans to scale up green energies. Moreover, democratic systems of government with policies and agendas in place to adapt and mitigate the effects of climate change would be wise to consider establishing mechanisms that help ensure the longevity of these policies beyond a change of government. This is a tall order to ask democratic governments to do, especially as the tools they have to limit the ability to reverse such policies are restricted. Nonetheless, the more such policies are enshrined, for example, in international relations, and with clear economic incentives, the more difficult it is to undo them.

While it is tempting to focus on the here and now, especially with respect to devastating live conflicts, it is critical to equally take steps to enable climate change mitigation and adaptation cooperation across borders—including across conflicting ones. Although nearly impossible to contemplate in the midst of conflict, this is precisely what needs to be done. Warmongering leaders in the region and beyond inflict not only direct losses today, but the impacts will be felt for generations to come. In the national security realm of climate change, this means that damage done to the planet is not just the direct emissions from conflict but also the opportunity cost of the lack of cooperation in dealing with the largest threat facing humanity. The “double costs” of conflict-driven climate change need to be understood and acted upon today in the MENA region and beyond.

Ariel Ezrahi is a nonresident senior fellow with the Atlantic Council’s Middle East Programs. Ezrahi currently serves as the director of climate strategy at a fintech fund. Ezrahi is also on the board of the MENA2050 Climate Action Committee and the chairman of its Energy Transition Subcommittee. He was the architect of the Gas for Gaza project, the inaugural director of energy at the Office of the Quartet, and the Energy Adviser to the Quartet Representative, former UK Prime Minister Tony Blair. 

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Building An Intelligent Drainage System to Prevent Urban Flooding

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OMRON is Building An Intelligent Drainage System to prevent urban flooding worldwide; regions prone to frequent typhoons and heavy rainfall experience heightened flood risks. Even Dubai’s freak rain, whether through cloud seeding or otherwise, could be of some interest 

Building An Intelligent Drainage System to Prevent Urban Flooding

24 April 2024

In recent years, the escalation of extreme weather phenomena worldwide, fueled by ongoing global warming, has exacerbated climate disasters such as flooding.

Across the world, regions prone to frequent typhoons and heavy rainfall experience heightened flood risks. Many cities struggle to cope with sudden heavy precipitation due to deficiencies in their drainage infrastructure, resulting in problems such as waterlogged streets and flooded subway stations. Residents suffer from many inconveniences, including risks of property damage and injuries.

As a global leader in the field of automation, OMRON has long been committed to creating”innovation driven by social needs” through automation to empower people. In response to the pressing issue of urban flooding, OMRON is actively exploring innovative solutions to preserve the ecological balance of the earth and promote sustainable development of society.

 

Navigating the Urgency of Urban Drainage

According to recent statistics, flooding has affected 52.789 million people in China throughout the year, resulting in direct economic losses totaling 244.57 billion RMB.

In order to mitigate flooding impacts, the Chinese authorities advocate for accelerating the establishment of a comprehensive urban drainage and flood prevention system that emphasizes ‘source reduction, pipeline discharge, integrated storage and drainage, as well as emergency response protocols.’

Leveraging its three-decade presence in China, OMRON aims to contribute to flood prevention in Chinese cities by establishing a comprehensive intelligent urban drainage system, drawing upon its expertise in the field of automation.

 

Exploring the Causes of Waterlogging

To address the drainage and flood prevention challenges in City H, OMRON made collaborative efforts with relevant departments to ensure alignment on the construction of an effective drainage system.

OMRON started with the tunnel industry based on its mature business operation and technical expertise in the field. Through extensive technical discussions and consultations with design institutes, owners, and partners, OMRON identified the urgent need to prevent and reduce urban tunnel flooding through enhancing the intelligentization and digitalization of urban tunnels and supporting drainage pumping stations.

 

Creating ‘Tools’ to Strengthen Integration

During the construction, OMRON conducted in-depth research to achieve data sharing, early scientific warning, and integrated multi-party management of the intelligent drainage system.

“However, in China, there are limited proven cases of urban intelligent drainage systems.” As the head of the Smart City Division, Zhu Liuqiao was under pressure. “Our team not only had to fully communicate with multiple stakeholders, but also encountered technical challenges such as solution formulation, software development, and hardware development.”

Zhu Liuqiao continued, “But we were not discouraged. Everyone brimmed with confidence and responded actively. Leveraging our expertise in presenting professional proposals and rich experiences in project innovation, we facilitated multiple discussions with stakeholders and reached a consensus on the approach to resolving the issues.” The primary challenges in software design stem from the large number of devices and the absence of standardized interface protocols in intelligent drainage systems. “We engaged in extensive discussions and repeated technical testing with partners to ensure the stability, reliability, and security of the intelligent drainage system.” In terms of hardware, the team supplemented third-party system hardware, established selection principles, and conducted multidimensional evaluations of system requirements, finally enabling the successful development of the urban intelligent drainage system. “Now, all our efforts have paid off, and everyone is filled with excitement!”

During the implementation of the intelligent drainage system, OMRON fully leveraged its strengths in sensing, control, AI, and other technologies, offering core technical support for the urban tunnel management platform through data services and value creation. To mitigate and prevent future disasters in City H, OMRON has implemented the following measures to tackle the existing challenges of low integration and decentralized management in the drainage system:

  • Platform scheduling and remote coordination allows the intelligent management of the drainage system, enabling real-time monitoring of drainage facilities and timely response to problem-solving, thereby improving overall efficiency.
  • Through measures such as energy conservation, emission reduction, optimization of resource allocation, OMRON has achieved a 30% reduction in operating costs, resulting in improvements in economic efficiency and environmental protection.
  • Automated management of 51 drainage pumping stations in City H has been accomplished through the utilization of automation control and remote monitoring technology, thus optimizing human resources while improving operation efficiency and management standards.
  • A comprehensive monitoring and warning system provides full-scale supervision of the urban drainage network, promptly detecting and alerting potential risks and hazards to safeguard the safety of residents and their property.
Intelligent Drainage Management Platform Built by OMRON

 

Ushering in the Era of Smart Cities

The project aims for City H to become ‘intelligent’, ‘green’, ‘efficient’, and ‘safe’, promoting a more scientific approach to urban flooding prevention management while greatly reducing operational costs. Intelligent management systems have been implemented in urban tunnels and drainage pumping stations alongside continuous early warning monitoring to enable precise flood prevention measures. By utilizing OMRON’s technology and scientific early warning, Cities like City H have successfully transitioned from automated management to intelligent and digital management in urban infrastructure construction to achieve efficient flood prevention.

Urban Tunnel Drainage

Reflecting on the successful application of OMRON’s Intelligent Urban Drainage Solution in City H, Zhu Liuqiao, head of the Smart City Division, commented, ‘OMRON is committed to helping cities achieve intelligent and sustainable drainage management through innovative technologies and comprehensive solutions. We strive to not only address current challenges but also lay the groundwork for future urban development. We hope that our efforts in effectively addressing challenges such as climate change and environmental protection will make our city a better place to live.’

The development of intelligent urban drainage system is an ongoing journey that requires continuous exploration and innovation. In the future, OMRON is dedicated to implementing its new long-term vision ‘Shaping the Future 2030’ and adhering to its corporate philosophy of ‘Contributing to a Better Society’. OMRON will continue to optimize intelligent urban drainage solutions and applications, promote sustainable development of cities, and improve people’s lives.