Press release

National governments can unlock nearly $24 trillion by investing in zero-carbon cities

A new report from the Coalition for Urban Transitions shows that national governments that invest in low-carbon cities can enhance economic prosperity, make cities better places to live and rapidly reduce carbon emissions.

SEI was among 50 institutions that contributed to the report.

Published on 19 September 2019

Press release contact

Emily Yehle

The report – Climate Emergency, Urban Opportunity – finds that implementing low-carbon measures in cities would be worth almost US$24 trillion by 2050 and could reduce emissions from cities by 90%. It is the most comprehensive report to date to examine the critical role of national governments in achieving equitable and sustainable economic development in cities, which are home to over half the world’s population and which produce 80% of gross domestic product and three-quarters of carbon emissions.

In particular, SEI researchers looked at how much potential there is to reduce GHG emissions in urban areas, and the role national governments can play in realizing that potential.

Although local governments can do a lot to reduce carbon emissions, climate change still poses a collective action problem.

SEI Senior Scientist Derik Broekhoff, who contributed to the research

The new report concludes that local governments cannot drive the zero-carbon transition on their own, and that national governments must play a critical role. In particular:

Local governments have direct power over less than 1/3 of the emissions reduction potential in their cities. National and state governments have power over a further 1/3. More than a 1/3 depends on different levels of government working together to cut emissions. If electricity decarbonization is included, national and state governments have over two thirds of the responsibility for urban mitigation.
Half of the possible urban emissions reduction lies in cities with fewer than 750,000 people, which often lack the financial and technical resources of larger cities, and therefore are in particular need of national government support.
National governments are uniquely placed to seize this opportunity by putting inclusive, zero-carbon cities at the heart of long-term economic and social development plans. Today, fewer than two in five countries have an explicit national strategy for cities, and only a handful of these prioritize emission reductions.

The transition to net-zero emissions in cities will require national leadership and engagement, to catalyze the efforts of proactive cities and to replicate similar efforts across all urban areas, large and small.

SEI's Derik Broekhoff

This report also presents six key priorities for actions that national governments can take to seize this opportunity:

Develop an overarching strategy to deliver shared prosperity while reaching net-zero emissions – and place cities at its heart, which can guide all line ministries to incorporate urban development into their approach, de-risk low-carbon investment by providing clear signals to private actors, and empower local governments to go farther and faster.
Align national policies behind compact, connected, clean cities. Examples include removing land use and building regulations that limit higher, liveable density; banning the sale of fossil fuel-powered vehicles; and adopting green alternatives to steel and cement.
Fund and finance sustainable urban infrastructure. Examples include eliminating subsidies for fossil fuels and establishing a carbon price of US$50–100 per tonne to sharpen investment incentives; reforming land and property taxes; and shifting national transport budgets from road-building to public and active transport.
Coordinate and support local climate action in cities. Examples include authorizing local governments to introduce climate policies and plans that are more ambitious than national policies; and allocating at least one third of national R&D budgets to support cities’ climate priorities.
Build a multilateral system that fosters inclusive, zero-carbon cities. Examples include placing cities at the heart of enhanced Nationally Determined Contributions in 2020 and 2025 and ensuring that all international development assistance is aligned with national urban strategies compatible with the Paris Agreement and the 2030 Agenda for Sustainable Development.
Proactively plan for a just urban transition. Examples include using revenues from carbon taxes or fossil fuel subsidy reform to compensate those who bear the costs of climate action; supporting community-led upgrading of informal settlements to reduce poverty and enhance climate resilience; and anticipating, protecting and supporting the workforce of the future, including by developing transition plans for fossil fuel-based workers and industries.