Climate Finance: Regulatory and Funding Strategies for Climate Change and Global Development

Chapter 26 Cities and GHG Emissions Reductions: An Opportunity We Cannot Afford to Miss

234 Climate Finance Chapter 26 Cities and GHG Emissions Reductions An Opportunity We Cannot Afford to Miss Partha Mukhopadhyay Senior Research Fellow, Centre for Policy Research, New Delhi Key Points • Lower-carbon cities can substantially contribute towards mitigation efforts. Existing variations in energy use across cities have roots in local and national policies as well as patterns of behavior and cultural norms, all of which can be altered to reduce carbon intensity. • Reducing carbon intensity of cities may not only require many conventional urban policies on financing and building codes to be re-examined, but also other macro policies such as tax breaks for homeownership and fiscal transfers to local government may need a fresh look. In particular, without changes in individual behavior, low-carbon cities are unlikely. • Due to the rapid pace of urbanization and the immense lock-in effects once urban capital stock is built, policymakers may need to act even if the outcomes are uncertain. The wait for more clarity may be interminable and the consequences irredeemable. Urban areas consumed about two-thirds of the world’s energy in 2006. This is expected to increase to three-fourths by 2030. However, even in cities at similar levels of development, per capita urban energy use, and thus GHG emissions per capita, varies considerably. In light of this variation , would it be possible for governments to enact policies to promote Cities and GHG Emissions Reductions 235 less carbon-intensive cities? If so, what role could such policies play in a new climate change agreement? An Underappreciated Opportunity The average urban American consumes more than twice as much energy as the average urban European. Cities like Hong Kong, Tokyo, Singapore, and Amsterdam require less than a seventh of the energy of Houston, Phoenix, Detroit, and Denver to meet their transportation needs. Even within the United States, per capita energy consumption varies by a factor of three across cities. Many developing countries, especially India and China, are rapidly urbanizing, and similar discrepancies are beginning to emerge in these countries. For instance in China, energy use varies by a factor of seven from Chongqing to Hohhot, depending on income, climate, and energy intensity of industries. Given this variation, energy paths chosen by cities in emerging economies will have a huge impact on global GHG emission levels. In fact, lower-carbon cities could contribute over a third of the carbon mitigation in countries like India by 2050. This is an opportunity too big to miss. Unfortunately, changes in city forms, behavior, and building types do not appear to be part of the mainstream climate change discussion. McKinsey’s GHG cost curve, discussed extensively in this book, assumes very limited savings from behavior changes. The UNFCCC, in their “Investment and Financial Flows to Address Climate Change” in 2007, avers that “nearly all additional transport investment needed under the mitigation scenario is for the purchase of motor vehicles and production of transport fuels, [and] there will be no significant change to large transport infrastructure investments between the reference and mitigation scenarios .” It also assumes that “most emission reductions in the buildings sector result from increased efficiency of appliances, space and water heating and cooling systems, and lighting.” What Opportunities Exist to Influence Energy Consumption in Cities? Can policy actually make cities more compact, increase use of public transport , and affect building form? In order to encourage the development of 236 Partha Mukhopadhyay more energy efficient cities, we first need to identify factors that may help explain variations in energy use across cities. While there is still debate, there seem to be some broad commonalities among cities with low energy use. Compactness of course helps, as residents travel less and use more public transportation. But building types, and the interaction of building type with behavior, seem to matter as well. In a survey in Taiwan, Hwang et al. (2009) found that 57% of respondents used the air-conditioner at work when they felt warm, but only 16% did so at home, while 58% used the fan or opened a window. While who paid the bill must have been relevant , it was also true that “only a quarter of workplaces . . . visited [were] equipped with fan or [had] . . . operable windows.” Nivola (1999) asked why European cities were more compact than American ones and offered the following answers: (a) less inner-city crime and (b) more investment in mass transit instead of highways, but also (c) agricultural...