MCKINSEY REPORT ON URBAN CLIMATE ACTION POSSIBILITIES

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14 november 2017

[4C Note: There is increasing evidence that Trumpian sabotage of measures for climate change mitigation can be compensagted by effective initiatives at the state and municipal level (see the article we posted on November 11). The Dutch Randstad cities (Amsterdam, The Hague, Utrecht and Rotterdam) have launched creative and ambitious transition initiatives that ought to make a considerable difference within a relatively short time frame, even notwithstanding the dreadful performance of the present government on green issues. In particular, it seems likely that the Hemweg coal plant, the major supplier of electric power to the city of Amsterdam, will be shut down soon, with pressure from the city to create a safety net for the employees and pull the plug. Publicity resulting from that move will make it a precendent for closing the country's other coal plants, and hopefully those in Germany and Poland as well. For the complete McKinsey report, of which the following article is a summary, use the links in the original publication]

A strategic approach to climate action in cities—focused acceleration

McKinsey.com, November 14, 2017

Prioritizing efforts in four areas could help cities achieve 90 to 100 percent of the emissions reductions needed by 2030.

There is now widespread recognition in the international community that the commitments made by national governments under the Paris Climate Agreement in 2015 cannot be achieved without concerted action by cities. Fortunately, many mayors have shown strong commitment to tackling climate change and a willingness to collaborate to achieve this goal. C40 Cities, a network of mayors of the world’s megacities committed to addressing climate change, responded to the Paris Agreement by publishing an analysis—Deadline 20201 —of the emissions-reduction pathway their cities would need to achieve to play their part in keeping global average temperature rise within “safe” limits (below 1.5°C). As individual C40 cities now increase the ambition of their climate plans accordingly, our new report, Focused acceleration: A strategic approach to climate action in cities to 2030, takes that work a stage further by analyzing the biggest opportunities for cities to accelerate the reduction of their carbon emissions.

While the technologies and expertise exist to limit the temperature increase to 1.5°C, the challenge is still formidable. With cities already stretched to meet multiple competing priorities, city leaders must determine the critical actions that can change their current emissions trajectory and work proactively with their stakeholders to build and invest in the infrastructure and incentives needed to make significant progress toward those actions. That means prioritizing actions around initiatives that catalyze systemic change. For this report, C40 Cities has partnered with the McKinsey Center for Business and Environment to quantitatively assess the biggest opportunities for emissions reduction and what they will mean for different types of cities around the world.

We started with the more than 450 emissions-reduction actions identified in Deadline 2020 and prioritized 12 opportunities across four action areas that have the greatest potential in most global cities to curb emissions and put cities on a 1.5°C temperature-rise pathway through 2030. Our analysis recommends that cities pursue a strategy of “focused acceleration” within these 12 carbon-reduction opportunities. This recommendation is based on a proven management approach that more progress can be made by concentrating on a small number of high-value opportunities than by spreading efforts over hundreds of potential actions. Success will require cities to find creative ways to tackle operational challenges, including aligning stakeholders, supply chains, procurement practices, and financing.

By implementing a focused-acceleration approach, cities could achieve 90 to 100 percent of their 2030 emissions targets and build the knowledge and foundational capabilities needed to reach net zero carbon by 2050 (exhibit). At the same time, the incremental investment required to achieve 2030 emissions targets is significant: roughly $50 to $200 per metric ton of CO2 equivalent. However, all opportunities provide a positive return on investment in the mid to long term, whether through direct cash flow for investors (for example, in the case of renewables and efficiency improvements) or broader boosts to economic activity in the city (for example, transit-oriented development). For many opportunities, up-front investments are paid back within five to ten years.

This article, an edited extract from the full report, provides a short overview of the four action areas—power, buildings, mobility, and waste management. It also offers a high-level look at how cities may differ in their approach to capturing these opportunities.

Decarbonizing the electricity grid

Cities—and the world—cannot achieve a 1.5°C trajectory for temperature increase without a massive expansion of large-scale renewable power generation, known as “decarbonizing the grid.” While cities may believe they have little influence over the grid mix, in fact, they often represent a major portion of any local electric utility’s customers, potentially giving them significant leverage to shape the emissions profile of the electricity consumed within their metropolitan area. Still, capturing this opportunity will not be easy, and cities cannot do it alone. Utilities and regulators must play a central role in ensuring that the overall mix of renewables is appropriately balanced at a system level and that critical components such as energy storage are in place to ensure grid reliability. Nevertheless, cities have an essential role to play by setting clear decarbonization goals, aggregating demand for renewables, promoting energy efficiency, and shifting more urban energy consumption to electricity (especially in transportation and heating). Through focused acceleration, and close collaboration between utilities and regulators, cities could achieve a grid mix of 50 to 70 percent renewables (specifically, solar and wind, balanced with other zero-emission generation sources such as hydro) by 2030 depending on local resource characteristics and market and regulatory structure. This level would capture 35 to 45 percent of the total emissions reductions needed in that time frame at a cost as low as $40 to $80 per megawatt hour.2

Optimizing energy efficiency in buildings

In buildings around the world, heating and cooling account for 35 to 60 percent of total energy demand and, on average, produce nearly 40 percent of emissions. Again, reducing energy use and emissions from buildings will not be easy; it will require significantly more focused effort than most cities have currently undertaken. However, multiple decades of pilots and success stories suggest that focused acceleration in this space can pay off. Several opportunities based on widely available technologies offer the potential to significantly reduce emissions from buildings. These include raising building standards for new construction, retrofitting building envelopes, upgrading HVAC and water-heating technology, and implementing lighting, appliance, and automation improvements. While cities generally have more influence over this area than they do many others, progress will still require city leaders to work closely with building owners, both residential and commercial; real-estate developers; and building occupants. This action area is particularly important: since building stock tends to turn over only every 30 to 50 years, getting it wrong will lock in emissions, and potential costs, for decades. In contrast, getting it right will reduce energy costs—as well as provide more resilient, comfortable spaces to live, work, and play—for city residents through 2050 and beyond. Focused acceleration in this action area can close 20 to 55 percent of the gap between current emissions trends and 2030 abatement targets, depending on the local climate and population growth of the city, at an average cost of $20 to $100 per metric ton of CO2 equivalent.

Enabling next-generation mobility


City leaders now have access to an unprecedented range of mobility options. Multiple, reinforcing trends in mobility and land-use planning are already transforming the experience of getting around in cities. The key to reducing emissions through these trends is to ensure that all residents have access to a variety of attractive, affordable low-carbon mobility options. The development of complete, compact communities that meet the mobility needs of residents and businesses is foundational to building stronger cities and enabling next-generation mobility. Transit-oriented development implemented today promotes smart densification through better land-use planning and lays the foundation for more multimodal transport and reduced carbon emissions in the long term. Initiatives to encourage walking and cycling within cities’ existing land-use patterns as well as targeted enhancement of mass transit, such as the introduction of bus rapid transit (BRT) on main arteries, can collectively start to lower emissions in the short term. In addition, cities can accelerate emissions reductions by enabling the uptake of next-generation vehicles, which take advantage of new electric, shared, connected, and autonomous technologies, and by optimizing freight transport and delivery. Focused acceleration in this action area can contribute emissions reductions equal to 20 to 45 percent of 2030 targets, depending on urban income levels and population density. In the process, these efforts can increase GDP by reducing congestion and transforming the quality of life for residents by alleviating local air pollution and improving equitable access to mobility options.

Improving waste management

Cities can tackle waste emissions in a resource-effective way by adopting a “highest and best use” approach: first reducing waste upstream; then repurposing as much useful finished product as possible; then recycling, composting, and otherwise recovering materials for use; and, finally, managing disposal to minimize emissions of any remaining organic matter. Methane emissions from waste have 86 times the near-term global-warming potential of carbon dioxide, making it an urgent priority for preventing the worst effects of climate change. And reducing waste has an outsize impact on the full life-cycle emissions of consumption. Innovative models for waste management can help cities rethink their need for traditional collection and disposal infrastructure, and forward-looking cities are already going further and planning the transition to a fully “circular economy,” shifting resource consumption from linear flows to continuous reuse. Depending on the starting point of existing waste-management services, as well as the composition of waste, focused acceleration can achieve up to 10 percent of the emissions reductions needed by 2030, as well as provide numerous benefits to local resource resilience and health.

How different cities can achieve their carbon-reduction targets

To demonstrate the scale of action needed to achieve 100 percent of a city’s emissions-reductions target by 2030 through focused acceleration, we have modeled sample road maps for six illustrative city types. These road maps show where different cities could choose to focus and why, along with the critical enablers needed to achieve zero carbon by 2050. As important, these road maps demonstrate the practical impact of focused acceleration across different types of cities.

For example, a “Large, Middle-Income, Semi-Dense City” could focus on accelerating highly visible initiatives to help residents experience how a low-carbon future looks and feels in everyday life. For such a city, the installation of solar power on municipal and suitable private rooftops as well as at community sites would be good demonstration projects. Policies to bolster population density in select districts, such as transit-oriented development, new BRT routes, and cycling-friendly street design, could increase density by 6 percent and improve average walkability by 2030. The city might also commit to 100 percent of zero-emission buses by 2030, along with electric-vehicle-friendly measures such as low-emission zones that help accelerate electrification of personal and commercial vehicles used on city streets.

In contrast, a “Small, High-Income, Innovator City” has only modest sunlight but abundant wind and hydropower. The city faces cold winters, so heating dominates energy use in commercial and residential buildings. Residents are accustomed to many different modes of transport, and many have already given up their cars. To build on this already strong foundation, the city seeks to create a grid mix of 70 percent centralized renewables by 2030. In mobility, it sets a target of 100 percent zero-emission buses, while promoting car sharing and connected technologies. The city’s efforts also include achieving one or more types of energy-efficiency retrofits in 100 percent of privately owned buildings by 2030.

Whether cities are in the early stages of developing and implementing their carbon-reduction programs or contemplating how to build on their existing robust efforts, these road maps can serve as an illustration of how they might choose to maximize the benefits of carbon-reduction efforts across the 12 priority opportunities identified in this report.

Achieving Deadline 2020 targets will not be easy. Cities will need to ensure that they move beyond quick wins to a focused-acceleration approach in priority areas. Furthermore, cross-sector partnerships will be essential both to successfully capture the opportunities as well as to ensure that city initiatives incorporate system-level considerations, especially in grid decarbonization. The opportunities laid out in this report will generate a wide range of benefits beyond carbon emissions—from reduced congestion, better public health, and greater productivity to improved quality of life and increased resilience. Highlighting the economic and social benefits of jobs, reduced air pollution, improved road safety, and reclaimed commute time can help mayors make the case for investments today in our collective future.

The action areas laid out in this report represent the first phase of carbon-reduction strategies. Cities that build a world-class tool kit to capture these opportunities, including streamlined procurement, access to capital, relationships with other cities to learn from their best-practice experiences, and partnerships with the private sector and government, will be well positioned to tackle the next set of emissions-reduction opportunities. Achieving 2030 target reductions will also lay the foundation to pursue opportunities that take longer to play out—such as densification and land-use planning—but that will be critical in achieving the deeper decarbonization required to meet 2050 targets.

With climate action as a top priority, this report offers a viable way forward for cities of all sizes and means. Progress will require summoning the will, leadership, and commitment to make progress, but having a defined path forward will be a critical advantage.


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