Investing In Low-Carbon Cities Could Save $17 Trillion By 2050

September 9th, 2015 by Derek Markham

New research suggests that by investing in low-carbon infrastructure, including transport, building efficiency, and waste management, cities could save $17 trillion by 2050, while also reducing greenhouse gas (GHG) emissions by 3.7 gigatons of CO2 per year by 2030.

The research, published by the New Climate Economy under the title Accelerating Low-Carbon Development in the World’s Cities, makes the economic case for low-carbon strategies, and is a supporting paper to a larger work, titled Seizing the Global Opportunity: Partnerships for Better Growth and a Better Climate. This paper is yet another strong advocate for low-carbon action, not just for the climate’s sake, but also as a means for saving money and improving the quality of life in cities.

“As shown in Better Growth, Better Climate, cities have much to gain from adopting more compact, connected and efficient forms of development: greater economic productivity and appeal to investors, improved air quality and public health, reduced poverty and enhanced safety, and substantial avoided infrastructure and public service costs. For urban leaders, low-carbon strategies are thus as much about building healthier, more liveable and more productive cities as about reducing GHG emissions.” – New Climate Economy

With cities growing at an unprecedented rate in the developing world, a move toward low-carbon development is becoming increasingly important, as an estimated 60% of the global population will live in urban areas by 2030, producing about 87% of the global GDP by then. Cities are currently responsible for up to 76% of all energy use worldwide, as well as up to 76% of all energy-related GHG emissions, so increasing efficiencies and reducing emissions at the city level has the potential to have a big impact, for better or for worse, in the years to come.

To meet the needs of this growing population, cities can choose to pursue either high-carbon or low-carbon development strategies, and the historical precedent has been to opt for high-carbon solutions, perhaps in part because low-carbon solutions have been seen as more expensive, but this working paper indicates otherwise. For the paper, a global analysis of the direct costs, the returns, and the payback periods for low-carbon investments in cities was conducted, with the general recommendation that cities prioritize both policies and investments in public and low-emissions transport (including non-motorized options), renewable energy, building efficiency, and more efficient waste management practices.

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

The move toward low-carbon development strategies on a local, regional, national, and global level will require a strong economic case for doing so, which this paper makes. Like any development, these low-carbon improvements require investments, which the paper suggests could come from cities, development banks, and donor agencies, at a commitment level of at least $1 billion for capacity-building, financing, and technical assistance in the world’s 500 largest cities, which in turn could attract another $5 to $10 billion in private investment.

“US$17 trillion in savings is actually a very conservative estimate, because it only looks at direct energy savings generated from investment, which are a small proportion of the wider social, economic, and environmental benefits of these investments.” – Nick Godfrey, Head of Policy and Urban Development at the New Climate Economy

One of the paths to overcoming the financial barriers to low-carbon development could come through “creative policy instruments and innovative financing,” and the report claims that for every dollar invested in improving cities’ creditworthiness, more than $100 could be leveraged in private finance, and for every $1 million invested in project preparation could produce anywhere from $20 million to $50 million in capital support for projects.

The report also specified five distinct economically viable areas of low-carbon development action for cities, with case studies for each:

Making new buildings more energy efficient

Retrofitting existing buildings for efficiency

Expanding and improving mass transit

Promoting cycling

Increasing distributed energy generation

The full paper is available for download from New Climate Economy (PDF): Accelerating Low-Carbon Development in the World’s Cities









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