Global Problems: City Solutions

Cities have clearly played a major role in the creation of the problem of anthropogenic climate change and they will form a central part of any response. No effective global collaborative agreement to tackle climate change can be delivered without the full involvement of cities. Yet the evidence suggests that measures that make cities work better in terms of emissions and sustainability, are also measures that make them work better as prosperous and attractive places to live and work.

Cities are well placed to lead the process of low-carbon innovation. They combine a mix of specialisation and diversity derived from a concentration of people and economic activity that generates a fertile environment for innovation in ideas, technologies and processes. They produce and distribute the resources that provide better livelihoods for urban and rural residents alike. Their size and economic complexity mean that city-specific problems such as congestion, waste, education and crime require considered, city-specific public intervention. At the same time high population density and compactness can allow for economics of scale and collaboration.

Greenhouse gas emissions are directly related to income. Per capita incomes are generally higher in cities than in surrounding rural areas, generating higher average per capita demand related to major emissions sources. But not all cities are the same. There is an enormous variation in emissions among cities with similar per capita incomes as a result of local climatic conditions, their energy mixes and industry shares, as well as the extent to which they simply export their emissions. It is the last point that tends to make most developed world urban areas look far better than they actually are, as it ignores emissions linked to their material consumption and the embodied energy generation that occurs elsewhere.

But emissions have also been associated with differences in settlement patterns, leading to an underlying tendency to lower average per capita emissions in denser, compacter cities. Consequently, even when appropriately acknowledging that cities are not self-sufficient entities and ought to share responsibility for carbon-intensive activities beyond their boundaries, some world metropolises seem to be relatively energy and carbon efficient, whether measured by unit output or per capita. Paris, São Paulo, London, Dhaka, Hong Kong and Tokyo have among the world’s lowest levels of energy intensity – about one-quarter of that of the five highest scoring cities and less than half of the fifty-city average1.

Cities with limited urban sprawl and integrated urban transit systems have in many cases become affluent with low emissions per head. Their relative resource efficiency is mainly a result of greater transport energy efficiency due to reduced distances and greater shares of green transport modes, greater heat and cooling energy efficiency in buildings, due to lower surface-to-volume ratios of compacter building methods, and lower embedded energy demand for urban infrastructure due to greater utilisation. But compact, well-managed cities with intelligent infrastructure can also be more attractive to footloose workers than suburban or rural communities. Inner-city Paris, Rome, Barcelona and London, together with New York, Singapore and Tokyo provide examples of creative, growing city centres with access to a variety of amenities, including green space. Dense cities tend to have lower per-capita emissions, provided they are also served by good public transport systems2.

With shorter transport networks and less diffuse utility infrastructures, denser cities generate significant savings in operating costs, running to thousands of US$ per year for the average household3. But suburban living remains popular, so dense cities need to be carefully planned to attract wealth creating individuals who can choose other options. Without coordinated planning, cities will be at risk of ‘locking in’ to long-lived, high-carbon capital infrastructure that will be costly to reverse. Not surprisingly, cities that today are regarded as green leaders have a track record in long-term and integrated planning, particularly related to land use and public transport infrastructure.

Implementing greenhouse gas reduction strategies can pay economic dividends beyond reduced risks of the great potential damage associated with climate change. It can drive efficiency and allow cities to reduce waste and cut costs. Cities offer a unique environment to innovate, develop and scale up new ideas and processes. These promote the growth of clusters of expertise in knowledge-intensive green production sectors. Cities have become laboratories for action on climate change where learning and experience induces further innovation and falling cost in new technologies. Integrated recycling networks, electric mobility based on renewable energy production, methane capture and combined heat and power have relied on ready access to new technologies and skilled engineers and installation experts, which are all easier to access in a compact urban environment. Scale economy benefits of urbanisation mean that cities can capitalise on developing ‘green’ investments, such as integrated public transit, sewers and water systems, congestion pricing, smart grids, smart buildings and decentralised energy networks4. According to some reports, urban regions already produce ten times more renewable technologies patents than rural regions5.

Climate policy also yields mutual benefits at the local level, while investment in attractive and successful cities will yield climate benefits. Lower particulate pollution reduces health care costs, increases city attractiveness, and promotes competitiveness, while reduced waste makes for a more attractive environment (for example through reduced use of landfill) and enhanced energy security by limiting reliance on imported energy and raw materials6. This means policies must be well planned: for example, efficiently reducing congestion and emissions requires complementary measures on public transport, cycling, electric and shared vehicle infrastructure, urban planning, zoning and carbon pricing. During economic downturns, such programmes can boost job creation and stimulate activity, especially in ‘shovel-ready’ sectors such as building efficiency retrofits, broadband infrastructure and retooling manufacturing. Policies to increase vegetation and green spaces not only reduce the heat island effect, but also improve resilience to flooding.

Implementing Bogotá’s TransMilenio bus system was primarily motivated by an urgent need for cost-effective, high-capacity urban transport, congestion reduction and improving the quality of life locally rather than aiming to reduce global carbon emissions. However, this scheme has not only reduced emissions, it has shortened travel time and lowered congestion at peak times by 40 per cent7. Overall, health benefits in cities as a result of green transport strategies are particularly high as they combine emission reduction, increased physical activity levels and road safety. Health and safety benefits have been estimated as 5 to 20 times greater than the cost for integrated non-motorised and public transport measures in diverse cities such as Bogotá, Morogoro and Delhi8 and these are in addition to the substantial benefits in terms of saving time and resources.

Transport contributes around 22 per cent of the world’s energy related greenhouse gas emissions. Of about ten billion trips that are made every day in urban areas around the world, a significant and increasing share is with carbon and energy intensive private motorised modes. Until now, many aspects of commuting and transport design have been wasteful and inefficient. Even within the European Union, a highly urbanised region with ambitious carbon reduction policies in place, transport-related CO2 emissions increased by 36 per cent between 1990 and 2006, while other key sectors have achieved at least modest reductions9. In the UK, the cost of public transport relative to private transport has risen sharply over the past twenty years, compounding the waste from congestion. Congestion of roads in the UK causes estimated annual losses of around GB£7 to 8 billion, around 0.5 per cent of the GDP (US$11 to 12.6 billion; €8.1 to 9.3 billion)10. Costs are even higher in developing countries with rapidly growing cities unable to catch up with population growth and motorisation. The costs of congestion in Buenos Aires are estimated at 3.4 per cent of local GDP, in Mexico City 2.6 and in Dakar 3.4 per cent11.

Time losses, wasted energy, higher accident risks and the negative impact on the quality of life make a powerful case for strategies to reduce congestion. London’s congestion charge reduced congestion by an estimated 30 per cent between February 2003 and February 2004, in comparison to the same period in previous years12 and CO2 emissions from traffic inside the charging zone were cut by 19.5 per cent13. Mexico City and Bogotá have introduced number plate restrictions with measurable impacts on congestion and air quality14. Efficient, affordable and reliable public transport alternatives further reduce the appeal of the private car. In recent years, more established cities of the global North, like Copenhagen, Amsterdam, London and New York, have consistently invested in pro-cycling and walking strategies.

Electricity and heat production contribute 37 per cent of global energy related carbon emissions15. Some cities have invested heavily in clean electricity and heat production such as photovoltaic (PV) systems located on building roofs and facades, or in dedicated open areas. In Freiburg, PV systems cover 13,000 square metres (139,931 square feet) of the city’s building surfaces – including the main railway station – while San Francisco operates the largest city-owned solar power system in the United States16. Further opportunities are offered by wind energy, with turbines typically located outside city boundaries. The ‘London Array’ offshore wind-turbine system is projected to produce 1,000 MW, enough to power 750,000 homes17. These investments typically carry a higher up-front cost than conventional energy generation, but with the potential for significant energy cost savings in the longer term, greater energy security, and the ability to drive innovation in dynamic export technology sectors.

Copenhagen’s district heating system, which captures waste heat from electricity production, normally released into the sea as hot water, has helped reduce emissions and shaves €1,400 (US$1,907) off household bills per annum. It is estimated that people in metropolitan Portland, Oregon, save US$2 (€1.47) billion annually through coordinated changes in land use and transport policies over the last three decades. These include modest increases in building density, light rail transit schemes and policies to encourage walking and cycling. In many European cities, recycling levels are in the region of 50 per cent of domestic waste, while Copenhagen sends only 3 per cent of its waste to landfills18. Buildings contribute 25 per cent of the world’s energy-related greenhouse gas emissions19. The imposition of tough building standards and mandatory energy certificates, as well as the provision of tax incentives and loans, has also had a measurable impact on energy demand in a number of European and American cities20.

Integrated technologies will help make dense complex cities work efficiently and consume more collaboratively. Cities provide a critical mass of potential users for a wide range of IT-based services, which build upon complex physical infrastructure systems (such as roads, rail, cabling and distribution systems buildings). A broadband digital infrastructure can connect people to people, people to city systems and city systems to city systems, allowing cities and their residents to respond to changing circumstances in near real-time. Improved monitoring and measurement of resource flow patterns will allow more informed infrastructural investment decisions21. In addition, smart transport systems are being used to tackle congestion, facilitate road-user charges or supply real-time information on traffic problems – examples include Stockholm’s congestion tax and Singapore’s electronic road pricing. Amsterdam currently trials smart work centres that allow workers to use local office facilities rather than having to commute to their main office22.

From a policy perspective, therefore, this is not only about the construction of the infrastructure for roads, buses and railways; it is also about their pricing and management, regulations applying to the location of homes, the use of cars and the design of cities. It concerns the structure of workplaces and practices affecting conventions for physical attendance. Many, or most of these, involve networks in some shape or form in which the decisions of an individual on where to live, how to move, how to interact and how to commute have powerful effects on others.

Given the growing evidence of a virtuous circle associated with green cities and prosperity, the question arises why not more cities commit to green growth. Firstly, the payback from investment in energy efficiency is not immediate and usually requires an additional up-front investment. Liquidity constraints and limited access to capital may therefore preclude profitable investments. Secondly, the gains from energy efficiency and renewable investment may not have been recognised yet. As fossil fuel and other scarce resources continue to rise in price, and as the policy environment clamps down on waste, this should change. However, even where clear gains have existed in the past, there have been a number of barriers such as split incentives, managerial shortcomings, weak monitoring and a lack of capacity and expertise preventing optimal investment in resource efficiency.

The global low-carbon energy market is expected to triple to US$ 2.2 trillion per annum by 202023 while global investment in renewable energy jumped 32 per cent in 2010, to $211 billion24. A broad range of successful cities will increasingly specialise in higher-end business services, which can include activities such as environmental consulting and intermediating carbon. Clearly, opportunities will vary from city to city in accordance with income levels, policy frameworks, industry compositions and available options for low-carbon transition. Further empirical investigation is required, and this demands the development of a consistent urban database and improved assessments of best practice. Yet this does not mean that cities should wait for perfect information before taking into account the latest understanding of climate change when making long-term planning decisions. How cities develop is part of the climate problem, but it can also be part of the response.

Successful cities will effectively engage citizens in decision making, while enabling local actors in government, business and the community to build a harmonious and creative environment to live and work. Effecting policy action is often easier at the city level where policymakers are closer, physically and culturally, to their citizens than national governments. All cities have opportunities to guide urban planning and prevent the expansion and lock in of high-carbon infrastructure. Fast growing cities are today planning and committing to long-lived urban structures, which afford either unique opportunities or unforeseeable risks, while old established cities will need to think about how to replace and retrofit existing capital and infrastructure.

Cities are complex heterogeneous entities that share some common properties. There is no ‘one size fits all’ solution, but all cities have scope to improve efficiency, make greater use of renewable resources and improve the environment for innovation, with significant economic as well as environmental returns. The investments and strategic decisions made over the next few years will determine where the winners and losers will be in rising to the challenge of a sustainable future.

1 World Bank, Cities and Climate Change: An Urgent Agenda (Washington DC, 2010).

2 D. Hoornweg, L. Sugar, & C. L. Trejos Gomez, ‘Cities and Greenhouse Gas Emissions: Moving Forward’, Environment & Urbanization. Vol. 23. No.1 (2011)

3 T. Litman, ‘Understanding Smart Growth Savings. What We Know About Public Infrastructure and Service Cost Savings, And How They are Misrepresented by Critics, (Victoria, BC, 2009),

4 Sedgely and Elmslie present evidence to show that agglomeration economies far outweighing congestion effects in dense cities. See N. Sedgely and B. Elmslie, ‘The Geographic Concentration of Knowledge: Scale, Agglomeration, and Congestion in Innovation across U.S. States’, International Regional Science Review, Vol. 27, No. 2, pp. 111–37

5 Kamal-Chaoui, Lamia and Alexis Robert (eds.) (2009), “Competitive Cities and Climate Change”, OECD Regional Development Working Papers N° 2, 2009, OECD publishing, pp.16. See also D. Strumsky, J. Lobo and L. Fleming, ‘Metropolitan Patenting, Inventor Agglomeration and Social Networks: A Tale of Two Effects’, (Los Alamos, NM, 2004)

6 Two separate studies conducted for the OECD outline the numerous co-benefits of climate action at the urban level. See also S. Hallegatte, F. Henriet and J. Corfee-Morlot, The Economics of Climate Change Impacts and Policy Benefits at City Scale: A Conceptual Framework (Paris, 2008).
And also J. Bollen, B. Guay, S. Jamet and J. Corfee-Morlot, Co-benefits of Climate change Mitigation Policies: Literature Review and New Results (Paris, 2009)

7 Montezuma R., ‘The Transformation of Bogota, Colombia, 1995-2000: Investing in Citizenship and Urban Mobility’, Global Urban Development magazine, Vol. 1, Issue 1, 2005, p. 6

8 See C. Dora, ‘Health Effects’, Seminar, No. 579, 2007, pp. 26–30. And
C. Dora, ‘Health burden of urban transport: The technical challenge’, Sādhanā, Vol. 32, No. 4, 2007, pp. 285–92.

9 European Commission. (2007). “EU 27 CO2 emissions by sector.” from

10 See ‘The Eddington Transport Study: The case for action: Sir Rod Eddington’s advice to Government’ (December 2006), Executive Summary p. 5, UK Department for Transport,

11 World Bank, Cities on the Move: A World Bank Urban Transport Strategy Review (Washington DC, 2002). Also available on

12 Transport for London: Congestion Charging Central London – Impacts Monitoring: Second Annual Report, April 2004. TfL, London,

13 S. Beevers and D. Carslaw, ‘The impact of congestion charging on vehicle emissions in London’, Atmospheric Environment, No. 39, 2005, pp. 1–5. Also available on cent20chargeper cent20london.pdf

14 A. Mahendra, ‘Vehicle Restrictions in Four Latin American Cities: Is Congestion Pricing Possible?’, Transport Reviews, Vol. 28, No. 1, 2008, pp. 105–33.

15 World Resource Institute (2009). “World Greenhouse Gas Emissions for 2005”

16 San Francisco Solar Power system (2004-2010), (C40 Cities Climate Leadership Group, 2010). Available online at

17 London Array. Available online at

18 C40 Cities Climate Leadership Group. “Best Practices Copenhagen.” 2010 Available online at

19 World Resource Institute (2009). “World Greenhouse Gas Emissions for 2005. Available online at

20 C40 Cities Climate Leadership Group. “Best Practices Buildings.”

21 See D. Hoornweg et al., ‘City Indicators: Now to Nanjing’, (Washington DC, 2007).

22 Connected Urban Development, 2010, available on

23 HSBC (2010): Sizing the climate economy. HSBC Global Research, August. [online]. Available at:

24 UNEP and Bloomberg New Energy Finance (2011): Global Trends in Renewable Energy Investment 2011, available on

Philipp Rode is Executive Director of LSE Cities. Nick Stern is Chairman of the Grantham Research Institute on Climate Change and the Environment, LSE.
Dimitri Zenghelis is Visiting Senior Fellow of the Grantham Research Institute on Climate Change and the Environment, LSE