Meeting Cities’ Energy Demand:
What Governments Can Do
William Tompson
Head of the Urban Development Programme
Regional De...
OECD urban policy expertise
Reviews of metro-regions and national
urban policy to identify opportunities to
address compet...
1. A LOOK AT GLOBAL
ENERGY AND
ENVIRONMENTAL TRENDS
304 June 14 Meeting the Energy Demand of Cities
0
10
20
30
40
50
60
70
0 1 2 3 4 5 6 7 8 9 10
Population (billions)
WORLD
GDP per capita ('000 USD)
RoWOECD
OECD
RoW
BRIIC...
The emergence of 3 billion middle-class
consumers will fuel future demand
Global middle class1
Billions of people
ROW
2030...
Most urban population growth will be in the
developing world
Total urban and rural population: world and OECD countries
6
...
04 June 14 Meeting the Energy Demand of Cities 7
Energy demand will continue to grow
World Primary Energy Demand and Relat...
0.0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
0.9
1.0
0 50 000 100 000 150 000 200 000 250 000 300 000 350 000
GDP (billions 2010 US...
04 June 14 Meeting the Energy Demand of Cities 9
The energy mix must change radically if
we are to limit warming to 2 degr...
• Rapid economic growth  rapid urbanisation.
• Rapid motorisation  sprawl.
• Informal settlements: tend to be located in...
• Climate change impacts must be considered in the contexts of
other risks and challenges, including, inter alia:
1. Unmet...
• Urban form lasts, so lock-in effects from
urban policy decisions endure.
• This means that rapidly urbanising
countries ...
2. GOVERNMENTS, CITIES
AND ENERGY
1304 June 14 Meeting the Energy Demand of Cities
Cities are part of the problem:
• Cities play an outsize role in national growth and the
generation of environmental exter...
Cities must be part of the solution:
• Urban policies can lower the abatement
costs of national environmental policy targe...
What policies do we need?
• Make pollution more costly
• Value and price the natural assets and
ecosystem services
• Remov...
Changes to:
• Investment policies.
• Regulatory policies.
• Innovation policies.
• Competition policies.
• Mobilisation of...
• National policies affect urban development
 National legislation establishes the ground rules for cities.
 National go...
• National environmental policies often reduce the returns to
action by cities: carbon pricing, fossil fuel subsidies, etc...
Make existing
revenue sources
greener
Tap new
sources of
finance
Ensure policy
alignment across
levels of
government
Finan...
Make existing
revenue sources
greener
Tap new
sources of
finance
Ensure policy
alignment across
levels of
government
• Nat...
Tap new
sources of
finance
Ensure policy
alignment across
levels of
government
• The overriding aim is to internalise exte...
Ensure policy
alignment across
levels of
government
• Carbon finance should be more accessible to cities
• Infrastructure ...
24
What are the barriers to institutional
investment in green infrastructure?
• Weak, uncertain or counterproductive
envir...
Ensure a stable and integrated policy environment
Address market failures (incl. lack of carbon pricing)
Provide a nationa...
Meeting the Energy Demand of Cities 26
The OECD Policy Guidance for Investment in
Clean Energy Infrastructure
Policy areas...
THANK YOU FOR YOUR
ATTENTION.
27
www.oecd.org/greencities
04 June 14 Meeting the Energy Demand of Cities
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Presentation on meeting cities' energy demand made at the World Cities summit held in Singapore on 1-4 June 2014, by William Tompson, Head of the Urban Development Programme, Regional Development Policy Division, OECD. http://www.oecd.org/gov/regional-policy/

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Meeting cities-energy-demand

  1. 1. Meeting Cities’ Energy Demand: What Governments Can Do William Tompson Head of the Urban Development Programme Regional Development Policy Division, OECD EU-Asia Dialogue Panel Discussion ‘Meeting the Energy Demand of Cities’ Marina Bay Sands Expo and Convention CenterSingapore, 4 June 2014
  2. 2. OECD urban policy expertise Reviews of metro-regions and national urban policy to identify opportunities to address competitiveness, sustainability and governance challenges Horizontal analyses targeting, for example, urban competitiveness, climate change, port cities and green growth in cities Policy dialogue on urban issues to facilitate knowledge exchange and best practices to inform policymakers’ agendas (Roundtable) Statistical indicators on urban and metro-regions – the fundamental tools for enhancing cross-country comparison and improving policy evaluation 34 metropolitan reviews in 20 countries: tailored studies assessing how a given metro-area can boost competitiveness New series on national urban policy that impact urban development in a country (completed: Poland, Korea, Chile; potential: China, Mexico) Thematic work •Green Growth in Cities •Compact Cities •Urban Trends and Policies in OECD Countries •Cities and Climate Change •Cities, Climate Change and Multi-level Governance •Competitive Cities in the Global Economy •Global port cities OECD Roundtable of Mayors and Ministers Unique global forum for mayors and ministers to exchange best urban policy practices 75 mayors and 47 ministers have participated in four Roundtables since 2007 OECD database on metropolitan regions and OECD regional database The fundamental tools for enhancing cross- country comparability and improving analysis and evaluation of policies 204 June 14 Meeting the Energy Demand of Cities
  3. 3. 1. A LOOK AT GLOBAL ENERGY AND ENVIRONMENTAL TRENDS 304 June 14 Meeting the Energy Demand of Cities
  4. 4. 0 10 20 30 40 50 60 70 0 1 2 3 4 5 6 7 8 9 10 Population (billions) WORLD GDP per capita ('000 USD) RoWOECD OECD RoW BRIICS WORLD GDP per capita ('000 USD) BRIICS 0 10 20 30 40 50 60 70 0 1 2 3 4 5 6 7 8 9 10 Population (billions) WORLD GDP per capita ('000 USD) RoWOECD OECD RoW BRIICS WORLD GDP per capita ('000 USD) BRIICS 0 10 20 30 40 50 60 70 0 1 2 3 4 5 6 7 8 9 10 Population (billions) WORLD GDP per capita ('000 USD) RoWOECD OECD RoW BRIICS WORLD GDP per capita ('000 USD) BRIICS 0 10 20 30 40 50 60 70 0 1 2 3 4 5 6 7 8 9 10 Population (billions) WORLD GDP per capita ('000 USD) RoWOECD OECD RoW BRIICS WORLD GDP per capita ('000 USD) BRIICS 0 10 20 30 40 50 60 70 0 1 2 3 4 5 6 7 8 9 10 Population (billions)WORLD GDP per capita ('000 USD) RoWOECD OECD RoW BRIICS WORLD GDP per capita ('000 USD) BRIICS GDP +124% GDP +478% GDP +458% GDP +295% Source: OECD / IEA database (2012) A look at the latest OECD population and environment projections… Where are we headed? 404 June 14 Meeting the Energy Demand of Cities
  5. 5. The emergence of 3 billion middle-class consumers will fuel future demand Global middle class1 Billions of people ROW 2030 3.23Latin America 4.88 3 billion Asia-Pacific North America Europe 2020 3.25 1.74 2009 1.85 0.53 1 Based on daily consumption per capita ranging from $10 to $100 (in purchasing power parity terms) SOURCE: OECD (2011), Perspectives on Global Development: Social Cohesion in a Shifting World. 0.03 504 June 14 Meeting the Energy Demand of Cities
  6. 6. Most urban population growth will be in the developing world Total urban and rural population: world and OECD countries 6 0 1 2 3 4 5 6 7 2010 2015 2020 2025 2030 2035 2040 2045 2050 Population(billions) World urban population OECD urban population OECD rural population World rural population Source: OECD calculations based on date from the UN Population Database (2009) 04 June 14 Meeting the Energy Demand of Cities
  7. 7. 04 June 14 Meeting the Energy Demand of Cities 7 Energy demand will continue to grow World Primary Energy Demand and Related Carbon Emissions by Scenario Source: IEA (2013), World Energy Outlook 2013
  8. 8. 0.0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1.0 0 50 000 100 000 150 000 200 000 250 000 300 000 350 000 GDP (billions 2010 USD PPP) WORLD Emissions intensity (kg CO2e / 2010 USD PPP) RoW OECD OECD RoW BRIICS WORLD BRIICS 0.0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1.0 0 50 000 100 000 150 000 200 000 250 000 300 000 350 000 GDP (billions 2010 USD PPP) WORLD Emissions intensity (kg CO2e / 2010 USD PPP) RoW OECD OECD RoW BRIICS WORLD BRIICS 0.0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1.0 0 50 000 100 000 150 000 200 000 250 000 300 000 350 000 GDP (billions 2010 USD PPP) WORLD Emissions intensity (kg CO2e / 2010 USD PPP) RoW OECD OECD RoW BRIICS WORLD BRIICS 0.0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1.0 0 50 000 100 000 150 000 200 000 250 000 300 000 350 000 GDP (billions 2010 USD PPP) WORLD Emissions intensity (kg CO2e / 2010 USD PPP) RoW OECD OECD RoW BRIICS WORLD BRIICS GHG emissions rise even with declining carbon-intensity of GDP 0.0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1.0 0 50 000 100 000 150 000 200 000 250 000 300 000 350 000 GDP (billions 2010 USD PPP) WORLD Emissions intensity (kg CO2e / 2010 USD PPP) RoW OECD OECD RoW BRIICS WORLD BRIICS BRIICS GHG emissions 39 GtCO2e OECD GHG emissions 19 GtCO2e World GHG emissions 81 GtCO2e RoW GHG emissions 22 GtCO2e RoW GHG emissions 13 GtCO2e BRIICS GHG emissions 19 GtCO2e OECD GHG emissions 16 GtCO2e World GHG emissions 48 GtCO2e 804 June 14 Meeting the Energy Demand of Cities
  9. 9. 04 June 14 Meeting the Energy Demand of Cities 9 The energy mix must change radically if we are to limit warming to 2 degrees C Total primary energy supply, 2011 and various future scenarios Source: IEA (2014), Energy Technology perspectives 2014. Question: What policies are needed to deliver such change?
  10. 10. • Rapid economic growth  rapid urbanisation. • Rapid motorisation  sprawl. • Informal settlements: tend to be located in environmentally fragile areas. Poor construction quality and infrastructure adds to fragility. • Industrial structure: cities as industrial centres. • Location  greater vulnerability to climate change. • Resource and capacity constraints. 10 Particular challenges for cities in Africa, Asia and Latin America 04 June 14 Meeting the Energy Demand of Cities
  11. 11. • Climate change impacts must be considered in the contexts of other risks and challenges, including, inter alia: 1. Unmet resource requirements and bottlenecks to growth. 2. Congestion and lagging service provision giving rise to social tensions and public health challenges. 3. Poverty, inequality and social exclusion. 4. Governance challenges. • Concern with equity and well-being means that growth remains an imperative. Bottom line: there can be no green without growth in the emerging economies of the global South. And neither will be possible without better governance at all levels. 11 Climate change is not the only risk facing cities 04 June 14 Meeting the Energy Demand of Cities
  12. 12. • Urban form lasts, so lock-in effects from urban policy decisions endure. • This means that rapidly urbanising countries have options. • We are in the midst of what is likely to be the last great wave of urbanisation. • The choices we make over the next decades will last for a very long time. 12 Urbanisation as opportunity 04 June 14 Meeting the Energy Demand of Cities
  13. 13. 2. GOVERNMENTS, CITIES AND ENERGY 1304 June 14 Meeting the Energy Demand of Cities
  14. 14. Cities are part of the problem: • Cities play an outsize role in national growth and the generation of environmental externalities. • Past urban development too no account of climate change risks. Cities are extremely vulnerable to climate change: • Worldwide, coastal areas are disproportionately urban – and more so in the Tropics than elsewhere. • Complex urban systems are particularly vulnerable to extreme weather events (the risk of ‘concatenated hazards’). Cities and the challenge of climate change 1404 June 14 Meeting the Energy Demand of Cities
  15. 15. Cities must be part of the solution: • Urban policies can lower the abatement costs of national environmental policy targets. • Cities are key spenders on infrastructure relevant to green growth. • Concentration of people, activity and infrastructure can also generate economies of scale, scope or proximity for measures that address climate change adaptation. 15 Cities and the challenge of climate change 04 June 14 Meeting the Energy Demand of Cities
  16. 16. What policies do we need? • Make pollution more costly • Value and price the natural assets and ecosystem services • Remove environmentally harmful subsidies • Devise effective regulations and standards • Encourage green innovation 1604 June 14 Meeting the Energy Demand of Cities
  17. 17. Changes to: • Investment policies. • Regulatory policies. • Innovation policies. • Competition policies. • Mobilisation of the demand side. 04 June 14 Meeting the Energy Demand of Cities 17 What does this imply?
  18. 18. • National policies affect urban development  National legislation establishes the ground rules for cities.  National governments intervene directly in a large number of policy domains that affect cities – yet explicit national urban policies are often narrowly conceived.  Inter-municipal co-ordination needs support from above.  Urban challenges need to be addressed at the level of city systems. • Competitiveness, environmental challenges and inclusive growth all require a multi-level approach. Policy coherence across levels of government requires national leadership 04 June 14 18Meeting the Energy Demand of Cities
  19. 19. • National environmental policies often reduce the returns to action by cities: carbon pricing, fossil fuel subsidies, etc. • Fiscal and financial frameworks often contradict sectoral policies.  Example: property taxes and urban sprawl.  Example: financial regulation and infrastructure investment.  Example: rules governing the use of transfers. • Land-use, economic development and transport planning are often segregated.  Example: congestion charges and parking fees.  Example: outdated and fragmented planning frameworks. • Transversal policy challenges are often reframed to “fit” sectoral policy templates.  Example: accessibility is redefined as mobility. 04 June 14 Meeting the Energy Demand of Cities 19 Policy coherence is often lacking
  20. 20. Make existing revenue sources greener Tap new sources of finance Ensure policy alignment across levels of government Financing green cities: The Chicago Proposal 2004 June 14 Meeting the Energy Demand of Cities
  21. 21. Make existing revenue sources greener Tap new sources of finance Ensure policy alignment across levels of government • National policies are key • Remove barriers to local government action • A holistic approach is necessary • Keep the policy package simple Financing green cities: The Chicago Proposal 2104 June 14 Meeting the Energy Demand of Cities
  22. 22. Tap new sources of finance Ensure policy alignment across levels of government • The overriding aim is to internalise externalities • Road-pricing policies can help reduce traffic and pollution • Transport-related revenue sources require coherent planning • Fees for water and waste services should be more responsive to actual resource use • Where appropriate, intergovernmental grants should take into account environmental objectives Make existing revenue sources greener Financing green cities: The Chicago Proposal 2204 June 14 Meeting the Energy Demand of Cities
  23. 23. Ensure policy alignment across levels of government • Carbon finance should be more accessible to cities • Infrastructure needs related to new development should be internalised in the financing of development projects • National-local cooperation is essential to developing access to new forms of green finance Make existing revenue sources greener Tap new sources of finance Financing green cities: The Chicago Proposal 2304 June 14 Meeting the Energy Demand of Cities
  24. 24. 24 What are the barriers to institutional investment in green infrastructure? • Weak, uncertain or counterproductive environmental, energy and climate policies • Regulatory policies with unintended consequences • A lack of suitable financial vehicles with attributes sought by institutional investors • A shortage of objective information and data to assess transactions and underlying risks Meeting the Energy Demand of Cities 04 June 14
  25. 25. Ensure a stable and integrated policy environment Address market failures (incl. lack of carbon pricing) Provide a national infrastructure road map Facilitate the development of appropriate financing vehicles or de-risking instruments Promote public-private dialogue on green investments Promote market transparency and improve data on infrastructure investment Reduce the transaction costs of green investment Weak & uncertain environmental, energy and climate policies Regulatory policies with unintended consequences Lack of information and data to assess transactions and underlying risks Lack of suitable financial vehicles 04 June 14 Meeting the Energy Demand of Cities 25 Mobilising investment in green infrastructure
  26. 26. Meeting the Energy Demand of Cities 26 The OECD Policy Guidance for Investment in Clean Energy Infrastructure Policy areas Questions/issues for policy makers consideration 1. Investment policy • Non-discrimination of foreign versus domestic investors • Intellectual property rights • Contract enforcement 2. Investment promotion and facilitation • Removing fossil fuels subsidies and pricing carbon • Long term policy goals • Policy incentives for investment • Licensing • Policy coherence and coordinationy 3. Competition policy • Electricity market structure • Non discrimination in access to finance • Competition authorityp y 4. Financial sector development • Facilitate access to finance • Specific financial tools and instruments • Strengthening domestic financial markets 5. Public governance • Regulatory quality of the electricity market • Multi-level governance 04 June 14
  27. 27. THANK YOU FOR YOUR ATTENTION. 27 www.oecd.org/greencities 04 June 14 Meeting the Energy Demand of Cities

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