Should cities invest in climate mitigation?

There are compelling economic opportunities for cities to reduce their carbon footprints – but will these measures be enough to stay below 2 degrees of warming?

Blog by
21 September 2015

Sarah Colenbrander is a researcher with IIED's Human Settlements Group

In 1992 the United Nations called Mexico City "the most polluted city on the planet". City authorities took radical steps to cut pollution, but Mexico City still has smog and is increasingly vulnerable to climate change (Photo: Fidel Gonzalez, Creative Commons via Wikimedia)

Climate-smart cities could save USD $17-22 trillion by 2050 – over a fifth of global GDP (2014). However, implementing just economically attractive measures will not be enough to avoid dangerous levels of climate change.

To achieve sustainable and inclusive urban development, grassroots organisations must play a leading role. A new working paper from the Global Commission on the Economy and Climate, Accelerating low-carbon development in the world's cities (PDF) (of which I am one of the authors), looks at the direct costs, returns and payback periods of implementing 11 low-carbon measures in cities around the world.

The measures include building more energy-efficient homes, expanding public transport systems and improving waste management. 

If cities around the world were to implement these measures, they could save 3.7 gigatonnes of carbon dioxide equivalent (Gt CO2e) by 2050 – an amount roughly equivalent to the European Union's carbon footprint in 2013.

What is the economic case for urban action?

These measures would collectively cost $977 billion a year in 2015–2050, but would more than pay for themselves: we estimate that the current value of the net savings is $16.6 trillion. If national governments were to introduce favourable policies, such as reducing fossil fuel subsidies, establishing carbon pricing schemes or supporting low-carbon research and development, the current value of the net savings would rise to $21.8 trillion.

This global assessment has been substantiated with research at the local level. City-scale studies in Indonesia, Malaysia, India, Peru and the UK identify a wide array of cost-effective climate actions, with each city able to reduce emissions by 15-24 per cent relative to business as usual trends. These investments would generate energy savings worth 1.7-9.5 per cent of city GDP. 

Our results demonstrate that a huge array of mitigation options available today are not only economically feasible, but economically attractive. Research like this is essential to change the conversation around low-carbon development from one of costs to one of opportunities. 

Will this be enough to avoid dangerous levels of climate change? 

Despite these encouraging findings, the study found that the economic opportunities for climate action are ultimately limited in their scope. A separate working paper from the Global Commission calculates that implementing low-carbon measures that enhance economic growth might only close the 'emissions gap' by 59 per cent.

In other words, given current energy prices and technologies, it is not yet possible to decarbonise cities by implementing only the economically attractive options. 

This means it is essential to cultivate environmental citizenship in cities, fostering both individual and collective commitment to improving urban sustainability. It is particularly important in wealthier cities, where inhabitants will have to radically change their ways of life if they are to reduce their carbon footprint to sustainable levels. 

Encouraging a sense of personal responsibility for the environment could increase the impact of economically attractive low-carbon measures (such as increasing recycling and use of public transport), and make people more willing to bear the costs and inconveniences of less economically favourable actions (such as retrofitting homes and offices to make them energy efficient). 

Engaging with environmental issues can also motivate people to get more involved in civil society and civic processes. This in turn can enable more transformative change by increasing public support for local authorities' climate actions

Local and national governments should therefore support grassroots environmental initiatives, which can help to build consensus on the need for climate actions above and beyond those with the best financial risk-reward ratio.

What are the implications for human development goals?

While the working paper identified significant opportunities for cost-effective low-carbon investment in developing country cities, it is critical that decision-makers do not privilege climate mitigation over alleviating poverty or ensuring climate resilience. 

One in seven of the world's population lives in poor-quality, often overcrowded urban areas. Many, if not most, lack access to clean water, safe sanitation or modern energy. These people make almost no contribution to global greenhouse gas emissions, yet are among the most vulnerable to the impacts of climate change.

So while there is certainly some scope to pursue a low-carbon development path in Least Developed Countries, we must be careful to ensure that the burden of climate action does not fall on low-income and other marginalised groups of people. 

A conventional regulatory or investment-led approach is unlikely to sufficiently improve the living standards or climate resilience of those outside the formal economy.

Indeed, there is evidence that poverty can only be reduced significantly when urban poor groups have influence over relevant government agencies and space to implement their own initiatives. 

Therefore, while local or national governments should consider pursuing economically attractive climate actions, they must ensure that community organisations are explicitly included in planning processes.

Governments and international agencies can also support urban poor groups to innovate, act and scale-up successful environmental and development initiatives, which can be the most effective way to improve the living standards and build the resilience of vulnerable groups. 

The Global Commission's working paper provides a rallying call for the public and private sector to act on climate change. It showcases opportunities for cities to reduce their carbon emissions in a way that generates significant economic returns and social co-benefits. 

As welcome as these findings are, we should not forget the critical role individual citizens and organised groups of urban residents can play in the transition to a low-carbon society.

In wealthier cities, an environmentally-engaged population can enable more transformative change. In cities everywhere, but particularly in low- and middle-income countries, community-led approaches can ensure a more inclusive transition.

Only with grassroots support can we hope to see a really new climate economy.

Sarah Colenbrander (sarah.colenbrander@iied.orgis a researcher with IIED's Human Settlements Group and one of the authors of Accelerating low-carbon development in the world's cities (PDF).

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