Laying a strong foundation

4.1 

Adopt legislation explicitly outlining the roles and powers of different tiers of government – including own-source revenues and access to capital markets. Many local governments struggle because their legal responsibilities and rights are unclear. Many more struggle with unfunded mandates: most African city governments, for example, have less than US$30 to spend per

Johannesburg and Cape Town were two of the first cities in the global South to issue green municipal bonds. This was possible because South Africa’s constitution enshrines the right of municipalities to borrow.

person per year, leaving huge unmet needs for urban infrastructure and services. National governments can codify the roles and rights of subnational governments in law. It is particularly important to clarify the revenue streams available to municipal governments, and the conditions under which they can use debt financing. Clear frameworks to govern fiscal transfers, revenue collection and spending across ties of government can empower local authorities to act on climate change, give confidence to investors and lenders looking to finance sustainable urban infrastructure and offer security to national governments that are ultimately liable for subnational debts. Johannesburg and Cape Town, for example, were two of the first cities in the global South to issue green municipal bonds. This achievement was made possible by the Government of South Africa, which alone on the continent has explicitly and constitutionally enshrined the right of municipalities to borrow while putting in place clear conditions to safeguard the creditworthiness of all levels of government.

4.2 

Strengthen the capacities of built-environment professionals to pursue zero-carbon, climate-resilient development. There is much to learn still about how to achieve net-zero emissions and adapt to climate risks – and do so in ways that maximise the economic and social benefits. National governments can nurture the ecosystem of knowledge and skills that cities will need for this transition. They can ensure that sustainability and inclusion criteria are rigorously included in relevant curricula and industry certification systems, so public education budgets are used to train or re-skill built environmental professionals in emerging urban and climate “best practices”. This should span architects, commercial bankers, engineers, ICT officers, mechanics, surveyors, town planners and more. National governments can also support the dissemination of learning and best practices by facilitating membership of professional associations, city networks, global alliances, federations and citizens’ assemblies. They can also ensure that relevant national datasets (such as censuses and demographic and health surveys) have spatial components and are publicly accessible, which can support built-environment professionals in the public, private and civic sectors to make more informed decisions. A systematic approach to building the knowledge and skills of built environment professionals can help city governments, firms and civil society access the capabilities that they need to pursue ambitious climate action, and support the emergence of community-led efforts and new business models.

Seizing the opportunity

4.3 

Create metropolitan authorities to enable integrated land use and transport planning. Many people who work in a city commute from beyond its official boundaries. In other cases, urban governance is fragmented, undermining efforts to make cities more compact and connected: Dakar, for instance, is divided into 19 municipalities, while Sydney is divided among 29 city councils. In large cities and urban agglomerations, establishing a single transport and land use authority with responsibility for the metropolitan region can enable the development of more coherent strategies that effectively link people to jobs, services and amenities. These land use and transport authorities should hold sufficient power over infrastructure delivery and operations, budget management and land use planning to meaningfully shape urban transport systems, but should also have strong representation by local governments within the metropolitan area. Transport for London is a good example of an integrated authority, with responsibility not only for the public transport within Greater London but also several of the rail lines serving its commuter belt.

4.4 

Authorise and encourage local governments to adopt climate policies and plans that go beyond the ambitions of national policies. In some parts of the world, cities and states are adopting more ambitious building codes, vehicle efficiency standards, road pricing policies and renewable energy targets than their national governments. London’s Ultra-Low Emission Zone, for instance, will drive change throughout the regional vehicle fleet, while Stadtwerke München plans to meet the city’s entire energy demand with renewables by 2025 (see Box 11). National governments can adopt policies that empower local governments to set their own regulations and procurement policies, provided that they aim higher than the national environmental standards. This can support local leadership and innovation and build private-sector capacity to produce climate-compatible goods and services.

Raising the ambition

4.5 

Establish “regulatory sandboxes” for low-carbon innovations in cities. A regulatory sandbox offers a space where novel technologies, systems, processes, business models and institutional arrangements can be tested without the usual constraints. Such spaces can help reduce the cost of experimentation and barriers to entry; they also allow policy-makers to collect evidence on emerging innovations to inform the design of regulation. Appropriate supervision and safeguards are essential: a regulatory sandbox should be regarded as the equivalent of a pharmaceutical clinical trial, but for low-carbon products. Cities offer an ideal scale to pilot many low-carbon innovations (such as new mobility or energy services), so they are a good fit with regulatory sandboxes. The UK launched the world’s first energy regulatory sandbox in 2014. It revealed a suite of energy innovators in local energy, peer-to-peer trading, energy storage, digital platforms and electric vehicles, and helped the national energy regulator navigate the complex mix of industry norms, codes, licenses and fee structures that might inhibit scaling of new low-carbon options.

4.6 

Allocate at least a third of national research and development (R&D) budgets to support cities’ climate priorities by 2030. Reaching net-zero emissions in cities depends on developing and deploying innovations that can fill key data, technology and institutional gaps. Many countries have vast R&D budgets: the US government, for instance, spends over US$140 billion per year in laboratories and universities across the country. Universities in the top 100 metropolitan areas average US$500 million in federal R&D funds. National governments can use these budgets strategically to enhance economic competitiveness by bolstering local entrepreneurs, leveraging private R&D investments and strengthening regional innovation clusters to support the advancement and adoption of technologies, products and processes that accelerate the zero-carbon urban transition. China has demonstrated how effective this strategy can be, as its targeted R&D investments have positioned its cities and firms at the forefront of the electric vehicle revolution: Shenzhen was the first city in the world to electrify its entire public bus fleet (see Box 7). Particular attention should now be paid to harder-to-abate sectors that often serve or locate in cities, such as aviation, trucking, cement and steel.