Skip to main content

Low-carbon cities are a $17 trillion opportunity

Copenhagen, Johannesburg and Singapore are among the stars of a new report that touts better transportation, buildings and waste management to generate massive savings.

The disparate efforts of cities around the world to take climate action were amplified on the international stage late last year when more than 2,000 municipalities around the world signed the Compact of Mayors, which focuses on scaling up climate resilience efforts, energy efficiency programs, resilient financing mechanisms and public carbon emissions reporting.

Pursuing such low-carbon policies actually could have a hefty payback, according to new research from the New Climate Economy. Investing in public and low emission transportation, building efficiency and waste management in cities could generate savings with a current value of $17 trillion by 2050.

These low-carbon investments also could reduce greenhouse gas emissions by 3.7 gigatons of carbon dioxide equivalent (Gt CO2e) per year by 2030 — more than the current annual emissions of India.

To reform a ‘carbon culprit’

Cities are the world’s largest carbon culprits: despite covering only 2 percent of the world’s land area, they account for a whopping 70 percent of global greenhouse gas emissions, according to UN-HABITAT. More than half of the world’s population already lives in cities, which is fast approaching 60 percent by 2030.

As many cities’ populations swell, sustainability and resilience challenges multiply — including energy, water and waste issues, along with rising economic inequality.

Properly addressing these problems isn’t easy, or cheap.

That’s why many cities have decided to get “smarter” by leveraging Big Data to make better use of limited resources, as well as forming public-private partnerships to unleash business innovation to solve public problems.

In fact, businesses and cities are becoming “increasingly significant” actors in the fight against climate change and are set to contribute national-scale emissions cuts, said the United Nations.

How to pay for climate action

Even with the promise of a future payoff for sustainability investments, many cities still may lack the upfront capital to cover initial costs. But creative policy instruments and innovative financing can help cities overcome barriers to action, the New Climate Economy report said.

For every dollar invested in improving the creditworthiness of cities, for example, more than $100 can be leveraged through private finance for low-carbon urban infrastructure. And every $1 million invested in project preparation could yield $20 million to $50 million in capital support for successful projects.

The report highlights how cities around the world already see economic returns from investments in transportation, building efficiency and waste.

Bus rapid transit in Johannesburg

For years, commuting between Soweto Township and the Central Business District of Johannesburg, South Africa, meant being stuffed in 16-person carbon-spewing minibus taxis, which rarely were on time. Recognizing the success of bus rapid transit systems pioneered in Curitiba, Brazil, and Bogotá, Colombia, Johannesburg decided to build the Rea Vaya, Africa’s first bus rapid transit system. The name means “we are going” in South African slang.

BRTs are particularly attractive to cities in the global South due to the relatively low investment needs, which average around $10 million — less than half the cost of light rail transit or a tenth of metro rail transit.

And there was a profound payoff for Johannesburg — the economic returns of Rea Vaya in its first phase were close to $900 million, the report said. The city paid for the project through a Green Bond.

Bicycle ‘Super Highways’ in Copenhagen

Similar to bus rapid transit, cycling has multiple benefits for cities: It costs far less than motorized travel, both for the public and in terms of infrastructure investment needed.

Recognizing this, the city of Copenhagen, Denmark is planning to build a series of “Cycle Super Highways,” which should generate significant healthcare savings from increased physical activity, reduced air pollution levels and reduced road fatalities. Cycling also is an equitable transport mode, the report noted, that can enhance mobility for the urban poor and increase interaction among nearly all groups.

The highways are estimated to have an internal rate of return on investment of 19 percent annually.

‘Green Mark’ buildings in Singapore

In skyscraper-studded Singapore, buildings are a huge source of carbon emissions and energy costs. To help reduce these environmental and economic impacts, the city-state launched a green building rating scheme called the “Green Mark” program. Developed by the Building and Construction Authority specifically for the tropics and sub-tropics, the program is intended to promote sustainability in the built environment and raise environmental awareness among stakeholders.

Singapore’s “Green Mark” program aims to cover 80 percent of its buildings by 2030, and could see a reduction in building electricity use of 22 percent as well as a net economic savings of over $400 million.

Economic gains from waste reduction

The report didn’t develop investment costs or energy savings for recycling, but research suggests that recycling in certain circumstances can generate net economic returns.

Also, cities may be able to find economic savings by generating electricity from landfill gas, the report said.

Low-carbon policies needed on a global scale

With complementary national policies such as support for low-carbon innovation, reduced fossil fuel subsidies and carbon pricing, the savings from low-carbon investments could be as high as $22 trillion, the report said. It recommends that the international community should develop an integrated package of $1 billion or more over five years to help accelerate and scale up low-carbon urban strategies in at least the world’s largest 500 cities.

The alternative to investing in this low-carbon infrastructure is locking the world into a high-carbon path that scientists say will lead to catastrophic global environmental impacts.

When it comes to investing in a sustainable and resilient future, cities have everything to gain, and everything to lose.

More on this topic