Low carbon cities are US$17 trillion opportunity, says New Climate Economy

Low carbon urban development represents a US$16.6 trillion opportunity by 2050, according to a new working paper report from The Global Commission on the Economy and Climate, a major international initiative to analyse and communicate the economic risks and opportunities of climate action.

The working paper puts cities and sub-national governments at the forefront of the fight against climate change. This year, about 85 per cent of global GDP was generated in cities – and by 2050, two-thirds of the world’s population will live in urban areas.

It is therefore imperative to use resources more efficiently at this sub-national level of government, through bold policies to enable smarter low carbon cities.

In a Climate TV video interview released ahead of Climate Week NYC, Libby Ferguson, States & Regions Director, The Climate Group underlines: “In the climate change world you see a lot of focus on national governments involved in the international climate negotiations.

But there is rightly increased attention on sub-national governments, which includes cities, states and regions, who play a vital role in helping realise the economic potential of the low carbon economy.” 

Smart initiatives

One element of building smarter cities is introducing more efficient, low carbon means of transport. As well as saving money and improving citizens’ health, better transport planning can also have a monumental impact in developing countries where 90 per cent of the world’s traffic accidents happen.

There is also a huge opportunity for buildings, with the implementation of both green standards in new builds, and retrofits which are able to pay for themselves through the energy savings they bear. Authors stress that adopting green building standards in Recife, Brazil could save US$90 million by 2030, for example.

The steps that cities take to shrink their carbon footprints also reduce their energy costs, improve public health, and help them attract new residents and businesses.

 Michael R. Bloomberg, UN Secretary-General’s Special Envoy for Cities and Climate Change

“It is agreed that the vast majority of the buildings that will be existing in Europe in 2050 have already been built,” explains Ben Ferrari, Director of Partnerships, The Climate Group in a Climate TV interview.

“This means there’s a massive opportunity to look at renovation of these buildings. This can create healthier living spaces, lower emissions through better use of energy, and it can also create huge employment opportunities in the retrofit and in the renovation process. It’s a triple win: emissions reduction, better health and more jobs.”

Adopting smart initiatives like this in cities could generate a combined savings of US$17 trillion by 2050, the New Climate Economy report states.

Adding national policy interventions, the direct savings could even be as high as US$22 trillion and reduce greenhouse gas (GHG) emissions by 3.7 gigatons of CO2 equivalent per year by 2030, which is more than the current annual emissions of India.

Barriers and opportunities

But there are still many barriers to realizing low carbon cities, including financing mechanisms for developing countries. The issue is particularly urgent in Africa, where urban populations are growing at more than twice the rate of the rest of world. “Investing US$1 in improving the creditworthiness of cities can leverage more than US$100 in private finance for low carbon urban infrastructure,” the report states.

It is clear policymakers must grasp these opportunities and accelerate this transition, but businesses too, have a central role. According to the authors: “Every US$1 million invested in project preparation could yield US$20–50 million in capital support for successful projects.”

To spur this much needed change – which brings manifold economic, social and health benefits – cities must increase their level of partnership, committing to “ambitious emission reduction targets and low-emission development strategies,” the report suggests.

Almost 100 cities representing 183 million people, have done just that by signing up to the Compact of Mayors, which is committed to tracking and reducing GHG emissions under a common accountability framework.

“The steps that cities take to shrink their carbon footprints also reduce their energy costs, improve public health, and help them attract new residents and businesses,” said Michael R. Bloomberg, UN Secretary-General’s Special Envoy for Cities and Climate Change. 

“This report can help accelerate the progress cities are making in all of these areas, by highlighting smart policies and encouraging cooperation through efforts like the Compact of Mayors.”

On a broader level, initiatives such as The Climate Group’s Compact of States and Regions are an opportunity for state and regional governments around the world who are enablers of city climate action, to put forward their own low carbon plans, showing companies and investors they are serious about fighting climate change – while protecting their citizens by publicly disclosing emissions data. 

Economic growth

At the same time, the report suggests national governments must also cooperate with cities by giving them more powers to implement their climate targets.

Authors recommend the international community develops an integrated package of US$1 billion or more over five years, directed to at least the world’s 500 largest cities.

“The economic case for low carbon urban development is compelling,” the report concludes. “Even with very conservative assumptions, the current global value of that opportunity could be US$16.6 trillion by 2050. All cities should commit to developing and implementing low carbon urban development strategies by 2020, using where possible the framework of the Compact of Mayors.”

Read the new report from New Climate Economy

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