Cities Going Green: How cities are leading the next economy

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Executive summary

The report ‘Going Green: How cities are leading the next economy’ provides an up-to-date overview on the experiences of 90 cities around the world in the transition to the green economy. The report consists of two parts. The first, section A, is a global survey of city governments that was conducted by LSE Cities, ICLEI and GGGI in the run-up to the Rio+20 conference and the 2012 Global Green Growth Forum in Copenhagen, in order to increase awareness of the strengths and weaknesses of cities as key contributors to this global green transformation. Its principal aim is to offer a fresh perspective on the environmental challenges that cities face along with the opportunities, progress and barriers to going green and fostering economic growth. The survey covers key aspects of green policies and the green economy, smart city technology, green policy assessment and urban governance.

The second part, section B, investigates in greater detail the experience of eight case study cities in facilitating green growth. Given the importance of integrating policies for delivering green growth, four cross-cutting policy programmes were examined, including (1) land-use and transport; (2) eco-districts and buildings; (3) waste, recycling and energy; and (4) electric mobility and renewable energy. Two case study cities were selected for each theme, allowing for comparative analysis, and exploration of how similar objectives are being pursued in different contexts, with different policy tools, and using different types of public-private partnership (PPPs).

SECTION A: Going Green City Survey

Section A provides results from an analysis of 90 cities that responded to the survey on the green economy. The sample of respondents comprises a diverse set of cities from North and South America, Europe, Asia and Africa. The cities also represent a range of population sizes and are located in countries of varying income levels. The results highlight a number of common experiences shared by most cities. However, it also identifies significant differences not only

in the type of challenges that cities face, but also the speed and ambition of different cities in moving to the green economy. Below follow the survey’s main findings across three key areas:

  • Going green: city challenges, green aspirations and triggers, progress to date 
  • Building the green economy: green economic objectives, opportunities and barriers, technology
  • Governance and the green economy: strategy and stakeholders, government co-ordination, skills and capacity

A1 Going Green

1. CITY CHALLENGES Environmental problems are deeply intertwined with many of the most critical challenges cities face today. Road congestion, lack of affordable housing and urban sprawl are among the most important challenges facing cities today. The majority of cities also identify air pollution, severe storms and flooding, and solid waste management as key environmental challenges. Cities in middle- and low-income countries face a wider set of challenges, including water shortages, sewage treatment, over-crowding, informal land development, lack of infrastructure and insufficient public services.

2. GREEN ASPIRATIONS AND TRIGGERS All cities in the survey aspire to be green, and green policies have become increasingly important since the Rio Summit in 1992. In the majority of cities, green objectives have been introduced since the Rio Summit in 1992. A small group of leading cities have a longer history of prioritising green objectives, dating back 40 years or more. Public opinion, a change in local political leadership and pressure from stakeholders have been the most important triggers for going green. In middle- and low-income countries, public opinion and pressure from national governments/international organisations have been particularly important.

3. PROGRESS TO DATE Substantial progress has been made in achieving green objectives related to recycling, green space and water pollution. Resource efficiency and energy security are more challenging. Cities in high-income countries report more success in achieving green outcomes, and tend to make greater use of environmental indicators to measure progress. For example, greenhouse gas emissions are measured by 23 out of 25 European cities, 21 out of 26 North American cities, but only 11 of the 21 Asian cities in the survey. Cities that define themselves as ‘green’ report more success than others in addressing energy security. City governments highlight a range of tools for delivering green policy, including planning, raising public awareness, regulation and public funding. Taxation is regarded as an important tool by most Asian cities.

A2 Building the green economy

4. GREEN ECONOMIC OBJECTIVES Overall, 93% of city governments expect their green policies to have a positive economic impact. But only 24% have a co-ordinated strategy for ‘green growth’. The three top aspirations of cities are economic development, transport improvements and responding to climate change. For most cities, green economic development is a key part of their overall political agenda, with 65% of cities describing economic growth as a primary goal of their green policies. The majority of cities expect economic impacts from green policies to include growth, job creation, inward investment, innovation, entrepreneurship and attracting skilled workers. However, only 22% of cities are aware of any economic impact assessment of their green policies.

5. OPPORTUNITIES AND BARRIERS Urban transport, buildings and energy are key sectors for green economic growth, while the main barriers are lack of public funding and insufficient support from national government. In the building sector, cities see growth potential from both new green buildings and from retrofitting existing buildings. In the energy sector, renewable energy production and distribution networks have potential for growth. Cities in middle- and low-income countries face a wider range of barriers, including lack of support from the general public and other levels of government. Lack of local skills and barriers to accessing international bilateral and multilateral funds are also frequently identified by these cities.

6. TECHNOLOGY Overall, 74% of cities are willing to invest in new green technology to spur change, but almost two thirds of these cities are constrained by budgets.  New technologies are used or planned for use in the green transport, energy generation and distribution, green buildings, water and waste management sectors. In the transport sector, well- used new technologies include low-emission vehicles, integrated multi-modal transport systems, intelligent traffic management and electric vehicles. Building and energy technologies are also well used, but information and communications technologies (ICT) are generally regarded as ‘enabling tools’ rather than core components of cities’ green agendas. The majority of Asian cities regard smart waste and water management systems as important.

A3 Governance and the green economy

7. STRATEGY AND STAKEHOLDERS Overall, 94% of cities have a green strategy, but only 7% of these are legally binding. Strategic plans are most commonly formulated through a strategic city development plan or through sector-specific action plans. However, one in ten cities simply has ‘a general commitment to sustainability’. The majority of cities also identify the general public, non-government organisations (NGOs) and business or industry associations as important stakeholders. Cities in middle- and low-income countries place a greater importance on a wider range of stakeholders, notably international agencies, national government agencies, state or regional government as well as universities and other research institutions.

8. GOVERNMENT CO-ORDINATION According to 51% of cities, national policy frameworks fall short of providing full support to the city’s green agenda – particularly in North America and Europe. In 55% of cases, the municipal department of economics is not heavily involved in green strategy development. Policy frameworks are most supportive of the city’s green agenda at state level, less supportive at national level and least supportive at supranational level. Energy generation and energy efficiency are the policy areas most often supported by higher level policy frameworks, as well as a range of climate change, transport and air pollution policies. However, a number of other cities report that national and state governments undermine the city’s green transport and energy objectives. Most municipal governments involve departments of environment, planning and transport in developing their overall green strategy. In contrast, departments of finance, economic development and technology are rarely involved.

9. SKILLS AND CAPACITY While city governments have many of the capabilities for delivering the green economy, skills in innovation-based economic development could be improved – particularly for cities in middle- and low-income countries. Over 80% of cities view their capabilities as ‘good’ or ‘excellent’ in urban planning or policy and a further 74% in legislative drafting. In contrast, 42% of cities regard their capabilities in innovation-based economic development as ‘very limited’ to ‘moderate’. Monitoring and enforcement of policies is also an area where capabilities could be strengthened.

SECTION B: Green Growth Case Studies

Section B provides results from analysing eight case study cities in more detail: Copenhagen and Hong Kong (land-use and transport), Stockholm and Portland, Oregon (eco-districts and buildings), Belo Horizonte and Durban (waste, recycling and energy), and Berlin and London (electric mobility and renewable energy). The cities, representing a range of population sizes, geographic regions and income levels, are recognised as innovators in green growth policy programmes and many are first movers in their field. The analysis draws a number of common lessons from the case studies as well as highlighting different approaches and policy tools used for achieving similar aims. Below follow the main lessons across four key areas that emerged from the case studies:

  • Leadership: city leadership, national frameworks, first mover advantage 
  • Finance: public funding, public-private financing, international funds
  • Regulation and planning: compact city planning, regulation and standards 
  • Partnership building: city management, community innovation, national competitions, research partners

B1 Leadership

1. CITY LEADERSHIP City leadership is essential for implementing green growth strategies. Across all case study cities and policy programmes, leadership at the city level is essential for delivering change on the ground. To strengthen land-use and transport integration, city governments in Hong Kong and Copenhagen make use of density, land-use and parking regulation. Electric mobility programmes in London and Berlin have relied on city governments taking the lead in applying for national funding. Eco-districts in Stockholm and Portland have been created due to the vision and strategic direction of the mayor. While waste programmes in Belo Horizonte and Durban would not have been possible without strong commitments from city governments.

2. NATIONAL FRAMEWORKS: National level support and policy frameworks are essential. Whether long-term and large scale developments related to land-use and transport or eco- districts, or whether implementing relatively rapid projects such as electric mobility charging infrastructure and waste-to-energy plants over a few years, the policy programmes examined have relied to a significant degree on leadership, policy frameworks and funding provided by national governments. While ambitious policy targets send important signals, they also need to be realistic, and this often requires the support of national and state governments.

3. FIRST MOVER ADVANTAGE.  First mover green cities can increase reputation, brand and export opportuntiies.  The majority of case study cities have identified important advantages of being a first mover with their policy programme. Green growth strategies differ significantly across cities but a clear strategic priority and drive in each case has been essential for these pioneering cities. The benefits of a modern, green brand include attracting inward investment for innovation and delivery, as well as opportunities to export technologies and services developed locally to overseas markets. Some of the case study cities have dedicated export agencies for their green innovations.

B2 Finance

4. PUBLIC SPENDING Substantial financial resources are needed for a green economy transition at city level but there are significant direct and indirect returns. The scale of public funding necessary for many green growth programmes should not be underestimated. However, with the right financing mechanisms and strong partnerships, experience from the case studies shows that major shifts in technology and infrastructure can be achieved at low cost as long as upfront capital is available. For example, a comprehensive public transport network requires significant public investment or land value capture but can lead to high-value land development. When the wider economic benefits of a strong, clean tech brand and improved quality of life in the city are considered, then the economic returns are potentially great indeed.

5. PUBLIC PRIVATE FINANCING.  Major public investments should be combined with private financing where appropriate to ensure private sector buy-in and to accelerate the green growth transition. The roll-out of electric mobility in Berlin and London depends entirely on co-financing arrangements and joint commitments from the public and private sectors. Stockholm was able to leverage 85% of the investment from the private sector for one of their eco-districts, while new innovation projects on smart grids and information technology are benefiting from 50:50 matched public and private finance for research.

6. INTERNATIONAL FUNDS.  Funds from the international community are often essential for cities to make low carbon projects financially viable in developing countries.  carbon projects financially viable in developing countries. International funding, whether through grant aid or access to carbon markets such as the UN’s Clean Development Mechanism, are essential for ensuring that the waste-to-energy projects in Belo Horizonte and Durban provide an investment return. Electricity generation from the grid is often lower cost than energy from landfill gas extraction unless the carbon price is included. At the same time, accessing CDM credits is heavily bureaucratic and requires upfront funding for registration and set-up costs. Consequently, seed funding is essential and for many developing country cities this needs to be raised nationally or from other international sources.

B3 Regulation and planning

7. COMPACT CITY PLANNING Effective spatial planning promoting compact city development is a fundamental support system for green growth. Importantly, the political powers for spatial planning generally reside with the city government. In all case study cities and across a diverse set of policy areas, green growth solutions have directly or indirectly benefited from compact urban form. Particularly in the cases for integrating land-use and transport in Copenhagen and Hong Kong and for implementing eco-districts in Stockholm and Portland, plan-led urban development supporting density, mixed use and public transport accessibility has been essential. Even the electric mobility strategies in Berlin and London are indirectly profiting from density thresholds allowing for more cost-effective implementation of charging infrastructure.

8. REGULATION AND STANDARDS Strong regulatory frameworks at national and city level create new markets for innovation, deployment and export. Increasing the uptake of electric mobility offerings in cities such as Berlin and London relies on the standards set for charging and battery equipment. Similarly, energy efficiency standards for buildings set by the national government in Sweden have been backed up with highly stretching standards for Stockholm’s eco-districts and other city-designated land. These standards are now driving research partnerships and innovation that will put companies at the cutting edge of building technology and design, leading to export opportunities. Similarly, integrating transport infrastructure with urban development in Copenhagen and Hong Kong is based on a comprehensive range of regulatory instruments to guide land-use decisions in a strategic direction.

B4 Partnership building

9. CITY MANAGEMENT City governments play the central role in establishing and supporting public private partnerships. In all the case studies, city government was the central actor driving policy programmes and public private partnerships. The waste policy programmes of Durban and Belo Horizonte are coordinated and managed by city departments. In Portland, the mayor set up a central institute specifically to build partnerships for innovative eco-districts. In Stockholm, the city has been central to developing multiple partnerships around strategy, finance, innovation and communication, each designed to find new solutions for developing eco-districts. While in Berlin and London, the city governments have brought together the large range of actors needed to make electric mobility succeed economically and environmentally.

10. COMMUNITY INNOVATION Local residents and workers are essential actors in the green innovation process.  In Berlin and London, electric mobility programmes rely on citizens exploring new technological opportunities and feeding back on usability, comfort and general acceptability. Compact city transport strategies in Copenhagen rely on citizens to take part in the city’s dominant cycle culture. While in Portland, the success of their eco-district pilots relies heavily on the buy-in and creative ideas of the local community itself. Consensus building is a major challenge and if ignored, can lead to the delay or failure of projects. In Durban, information has been provided to local residents to explain the health benefits of extracting methane from old landfill sites.

11. NATIONAL COMPETITIONS Competitive bidding of cities for national funding is important for fostering local partnerships.  In Germany and the UK, the national bidding process for establishing electric mobility programmes in cities and regions has established effective collaboration between public, private and third party stakeholders even at the bidding stage. Competitions not only foster partnerships but provide backing for new innovations that might otherwise face too many financial and administrative barriers to succeed.

12. RESEARCH PARTNERS Universities and local research institutes are key partners in successful green growth policy programmes.  In most case study cities, local research institutes have been central or key actors in city partnerships, often alongside researchers from the private sector. Durban’s waste-to-energy programme was kick-started by the World Bank through a local university which also went on to develop technological solutions for the plants. Berlin has established itself as an international innovation centre for electric mobility, which cuts across universities, research centres and a large group of private sector players. While in Portland, a local university is at the centre of one of their eco-district pilots.

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