Smart climate investments could save cities $17 trillion, says New Climate Economy
September 15, 2015
Investing in public and low emission transport, building efficiency, and waste management in cities could generate savings with a current value of US$17tn by 2050, according to research by New Climate Economy. These low-carbon investments could also reduce greenhouse gas emissions by 3.7 Gt CO2e per year by 2030, more than the current annual emissions of India.
The New Climate Economy is the flagship project of the Global Commission on the Economy & Climate. It was established by seven countries – Colombia, Ethiopia, Indonesia, Norway, South Korea, Sweden and the UK – as an independent initiative to examine how countries can achieve economic growth while dealing with the risks posed by climate change.
With complementary national policies such as support for low-carbon innovation, reduced fossil fuel subsidies and carbon pricing, the savings could be as high as $22tn, it says.
“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 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.”
The Compact of Mayors is a global coalition of mayors and city officials pledging to reduce local greenhouse gas emissions, enhance resilience to climate change and to track their progress transparently.
The report recommends that cities commit to low-carbon urban development strategies by 2020. It also recommends cities commit to the Compact of Mayors. More than 130 cities – representing more than 220 million people – have already committed to the Compact of Mayors and will be setting ambitious emissions reduction targets and reporting publicly.
“Better, more resilient models of urban development are particularly critical for rapidly urbanising cities in the developing world,” said Eduardo Paes, mayor of Rio de Janeiro and chair of C40 Cities. “Cities around the world are already leading the way in implementing sustainable and innovative urban solutions. By sharing and scaling-up these best practices through international collaboration, cities can save money and accelerate global climate action."
Creative policy instruments and innovative financing can help cities overcome barriers to action, the report says. For every $1 invested in improving the creditworthiness of cities, more than $100 can be leveraged through private finance for low-carbon urban infrastructure. And every $1m invested in project preparation could yield $20m to $50m in capital support for successful projects.
“Developing country cities have a major opportunity to lead the low-carbon future,” said Parks Tau, mayor of Johannesburg. “In Johannesburg, the Rea Vaya Bus Rapid Transit and the highly competitive R1.5bn green bond both demonstrate a commitment to economic growth and investment rooted in resilient, sustainable urban development.”
The report offers numerous examples of cities that have achieved or can achieve economic benefits from green investments.
- Bus rapid transit: The economic returns of Johannesburg’s Bus Rapid Transit system in its first phase were close to $900m.
- Building efficiency: Singapore’s Green Mark programme, for instance, which aims to cover 80 per cent of its buildings by 2030, could see a reduction in building electricity use of 22 per cent and net economic savings of over $400m.
- Cycling: Copenhagen’s planned cycle super highways are estimated to have an internal rate of return on investment of 19 per cent per year.
“$17tn in savings is actually a very conservative estimate,” saidNick Godfrey,head of policy and urban development at the New Climate Economy and an author off the report, “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.”
The report also recommends that the international community should develop an integrated package of $1bn or more over five years to help accelerate and scale up low-carbon urban strategies in at least the world’s largest 500 cities.
Chaired by former Mexican president Felipe Calderón, and co-chaired by economist Lord Nicholas Stern, the Global Commission on the Economy & Climate comprises 28 leaders from 20 countries, including former heads of government and finance ministers, leading business people, investors, city mayors and economists.
Research for the commission has been carried out by a partnership of global economic and policy institutes, including the World Resources Institute (managing partner), Climate Policy Initiative, Ethiopian Development Research Institute, Global Green Growth Institute, Indian Council for Research on International Economic Relations, Overseas Development Institute, Stockholm Environment Institute and Tsinghua University.
The Compact of Mayors was launched in September 2014 by UN secretary-general Ban Ki-moon and Michael Bloomberg. The compact was activated under the leadership of the global city networks – C40 Cities Climate Leadership Group, Local Governments for Sustainability (ICLEI) and United Cities & Local Governments (UCLG) – and with support from UN-Habitat, the UN's lead agency on urban issues.