European Smart City Initiative - Assessment of Best Practices to StimulateMarket-/Demand-Pull

The European Community's approval of the Kyoto Protocol in 2002 triggered the 2007 "Energy Policy for Europe" which in turn gave rise to a number of initiatives, the European Initiative on Smart Cities being prominent among them. Its objective is to reduce by 40% the greenhouse gas emissions (reference year 1990) by 2020, that will demonstrate not only environmental and energy security benefits but also to provide socio-economic advantages in terms of quality of life, local employment and businesses, and citizen empowerment.

Particularly Denmark and Germany but also Finland and Netherlands are doing extremely well while Austria is performing rather poorly since 1990, the reference year of the Kyoto Protocol. Unlike demands for IT products, e.g. computers, smart phones etc., experience suggests that demand for smart city technologies is not created by market mechanism alone. Denmark's long-term energy goal is to become independent of fossil fuel use by 2050. This energy policy is consistent at all levels from the legal framework at national and regional level down to decisions which research and innovation projects to support and which investments to undertake or prevent. Already in 1990, the Copenhagen city council banned new oil-fired heating systems. As a result, greenhouse gas emissions dropped by 40% since it peaked in 1996.

In 2009, the Finnish Government decided that at least 80% of all buildings must have smart meters by December 2013. However, the nation-wide rollout of smart meters has already been completed in Finland in 2013. Push the demand for smart meters nationwide early on by law then let the market mechanism take over to offer useful apps (application software) and speed up innovation processes through public-private partnerships in the smart grids and energy markets domain to become a global technological leader in smart grids. The Finnish invention of SHOK - Finnish for Strategic Centres for Science, Technology and Innovation - are public-private partnerships for speeding up innovation processes. Their main goal is to renew industry clusters and to create radical innovations. Testing and piloting environments and ecosystems constitute an essential part of the Strategic Centres' operations.

Austria's energy policy and thus smart city policy differs from these findings in more than one aspect. No consistent policy to substantially reduce greenhouse gas emissions emerged. Quite the contrary: While obtaining new oil-fired heating systems was already banned in Denmark, it was still subsidised in Austria. Large Austrian greenhouse gas emitters like OMV and Verbund continued to invest heavily in fossil fuel technology resulting in Verbund's stranded assets of thermal power stations worth 1.030 million EUR.

In the new Bundes-Energieeffizienzgesetz the term "greenhouse gas emission" is not mentioned once. On the other hand, the Austrian Klima- und Energiefonds and the Austrian Ministry for Transport, Innovation and Technology are funding projects towards the goal 'Zero Emission Austria". A policy that encourages and supports both, the demand for fossil fuel based technologies as well as the demand for smart city technologies is neither efficient nor consistent and thus ineffective.

In Austria, the discussion on the necessity of smart meters is still ongoing even though the European Union directive states that at least 80 % of electricity consumers should be equipped with intelligent metering systems by 2020. In Finland, it is assumed that demand for smart grids is triggered by smart meters thus giving high priority to the nation-wide rollout of smart meters. As Austria is installing smart meters at just the pace required by the European directive on energy efficiency, it lags behind Finland at least six years and thus misses the opportunity to become a technological leader in smart grids.