Sustainable cities need clean air – and investments to make it a reality

Kenneth Söderling Development Impact Adviser kenneth.soderling@finnfund.fi

Sustainable development goal 11 aims to make cities inclusive, safe, resilient and sustainable. It is not a matter of small scale, as more than half the world’s population lives in cities. By 2030, it is projected that 6 out of 10 people will be urban dwellers.

One of the main problems in cities, is the air quality. In 2016, 9 in 10 people living in urban areas breathed air that did not meet the World Health Organization´s air quality guidelines for particulate matter . These fine particles, less than 2.5 microns, are major environmental risk to health. By reducing air pollution levels, cities can decrease the risk of premature death, heart attack and asthma. According to the WHO, 91% of air pollution related deaths occurred in low- and middle-income countries.

The main causes for air pollution are industry, unclean cooking methods, combustion engine transport, and burning of municipal and agricultural waste. There is no single solution that works in every city as air pollution is always a sum of many causes.

Reducing air pollution is smart business

One thing is clear; reducing air pollution makes economic sense. The annual global welfare costs of air pollution are set to rise from 3 trillion (2015) to 18-25 trillion in 2060. The annual effects to the GDP vary in different regions, from -0.5% in Sub-Saharan Africa to -3% in the Caspian region. The main reasons are loss of labour productivity, health expenditures and decrease of agricultural productivity. Reduction of air pollution has also co-benefits such as tackling the climate change, as most of the causes are related to burning of fossil fuels. It might even ease tackling the pandemics as coronavirus might be more deadly in highly polluted areas.

Solving this problem is a great opportunity for a development financier. These projects are economically sustainable, save lives and improve wellbeing. Finnfund has already invested in several projects that can help to reduce air pollution and is constantly looking for new ones. For instance, Starsight, our investee, offers solar-diesel-battery hybrid generation and efficient cooling and lighting solutions to commercial and industrial clients in Nigeria. Their customer’s use of fossil fuels can be cut by up to 70% thanks to improved energy efficiency and the use of solar power.

Over the years, we have also invested e.g. in solar home systems and clean cooking solutions which decrease the household air pollution. Finnfund is also interested in opportunities in electronic transportation and waste-to-energy industry.

We all have a right to breath clean air

Cities that meet the guidelines for clean air should be the standard, not the other way around. Our old-fashioned habits for cooking, transport, industry and waste management need to change to ease our breathing and living in cities. Luckily most of these old habits are losing their economic power, as renewable energy, electronic vehicles and waste-to-energy solutions are becoming more affordable.

The need for investments to change these old habits is huge but so are the costs of our old habits, too. That is where not only a development financier (or any smart investor) but anyone of us as a consumer and a citizen, can make the change.

Kenneth Söderling
Impact Analyst
Finnfund