Cities and Green Growth - · PDF fileAs outlined in the OECD Cities and Green Growth ... the challenges being faced by our societies, ... must foster the innovation that citizens and

Cities and Green Growth

3RD ANNUAL MEETING OF THE OECD URBAN ROUNDTABLE OF MAYORS AND MINISTERS

25 May 2010, OECD Conference Centre, Paris

Contact for the OECD Roundtable of Mayors and Ministers and related documents: Lamia Kamal-Chaoui ([email protected])

THE OECD URBAN ROUNDTABLE OF MAYORS AND MINISTERS

What is the OECD Urban Roundtable of Mayors and Ministers?

The OECD Urban Roundtable of Mayors and Ministers provides the preeminent forum to develop inter-governmental approaches for stronger, more effective urban policy. With participation from mayors, national ministers, former heads of state, and civil society, the Roundtable acknowledges the interdependence among urban policy actors and the metropolitan implications of policies in areas such as transportation, education, and environment.

The Roundtable attracts a wide variety of participants, including National Ministers, business leaders, mayors and regional leaders and civil society groups. Representatives have participated from such institutions as the European Commission, ICLEI, the Inter-American Development Bank, United Cities and Local Governments, UCLA, the World Bank, UN-HABITAT, and the Clinton Climate Initiative. Mayors and regional leaders from such cities as Bogotá, Casablanca, Copenhagen, Helsinki, Jakarta, Lima, Lisbon, Madrid, Milan, Melbourne, Montevideo, Moscow, Paris, Rome, São Paulo, Sarajevo, San Francisco, Singapore, Stockholm, Stuttgart, Tirana, Toronto, Warsaw, and Yokohama have attended, among others.

Though the Roundtable was established in 2007, it builds upon a long tradition of policy dialogue and publications on urban issues at the OECD. Since 1979, OECD member countries have shared their experiences and identified best practices in the development of urban areas across such issues as economic competitiveness, urban governance, local finance, infrastructure, climate change, social cohesion, immigrant integration and distressed areas (www.oecd.org/gov/cities). The Roundtable benefits from the OECD’s extensive experience in helping national governments design urban development policies that balance economic efficiency and environmental sustainability.

What about the Third Annual Meeting? “Cities and Green Growth”–Paris, May 2010

The third annual meeting of the OECD Urban Roundtable of Mayors and Ministers was organised in collaboration with the Club of Madrid and the C40 Cities Climate Leadership Group (which has partnered with the Clinton Climate Initiative). It brought together ministers and mayors, as well as eminent personalities from the Club of Madrid (former Heads of State and of government) and CEOs from large international companies to identify a common policy agenda for cities’ contribution to a global Green Growth Strategy. The Paris Roundtable confirmed the important role cities can play in fostering green growth, as well as the need for national policies to enable, encourage and evaluate the progress of local and regional initiatives. The local and national leaders at the Roundtable helped to strengthen the exchange between national and city-level governments, which will be of primary importance in solidifying economic recovery and tackling global concerns such as climate change (www.oecd.org/urban/2010roundtable).

Previous OECD Urban Roundtable Themes

“Competitive Cities and Climate Change” Roundtable Discussion–Milan, October 2008

The Milan Roundtable assessed the key institutional challenges to multi-level governance on climate change, and how local and national governments and other stakeholders could work together most effectively to implement climate change policy actions at the city level (www.oecd.org/gov/urbandevelopment/milanconference).

“Rethinking the Urban Policy Agenda” Roundtable Discussion–Madrid, March 2007

The Madrid Roundtable helped to set the basis of a new international policy dialogue among city mayors and national government representatives, who examined the future of urban policy in the context of globalisation and the growing challenges for cities (www.oecd.org/gov/urbandevelopment/madridconference).

Contact for the Roundtable

Lamia Kamal-Chaoui Head of the OECD Urban Development Programme [email protected] Tel: +33 1. 45.24.16.73 Fax: +33 1 44.30.63.88 Internet site: http://www.oecd.org/gov/cities Don’t miss the Green Cities Hub: www.oecd.org/greencities

OECD (Organisation for Economic Co-operation and Development)

The Organisation for Economic Co-operation and Development (OECD) is an international organization of 31 countries that accept the principles of representative democracy and free-market economy. The OECD provides the preeminent policy forum where governments compare policy experiences, identify good practice, and coordinate domestic and international policies. It applies its wealth of information to help governments foster prosperity and fight poverty through economic growth and financial stability. It helps ensure the environmental implications of economic and social development are taken into account. Mutual examination by governments plays a pivotal role at the OECD, which facilitates a multilateral review process through which the performance of individual countries is monitored by their peers. Discussions at the OECD level sometimes evolve into negotiations where OECD countries agree on rules of the game for international co-operation which can culminate in formal agreements by countries, for example on combating bribery or the regulation of capital movements. In recent years, the organization has provided a forum for countries to discuss numerous key issues relevant to international negotiations on climate change (e.g. emissions trading schemes, flexibility mechanisms, deforestation incentives, technology diffusion), and a wide range of climate change-related initiatives are underway (www.oecd.org).

Club of Madrid

The Club of Madrid has been a major partner of the OECD Urban Roundtable of Mayors and Ministers since its inception. The Club of Madrid promotes “Leadership for Democracy that Delivers”. It is an independent organization dedicated to strengthening democratic values and leadership around the world to meet political challenges at the local, national, regional and global level. Drawing on the unique experience and resources of its Members – more than 70 democratic former heads of state and government from 50 countries– and in partnership with organizations, governments and individuals that share its goals, the Club of Madrid addresses issues of global concern and provides peer-to-peer counsel, strategic support and technical advice to leaders and institutions working to further democratic development. Former heads of state and government members of the Club of Madrid who have participated in the OECD Urban Roundtable of Mayors and Ministers include: Henrique Cardoso, Former President of Brazil; Kim Campbell, Former Prime Minister of Canada; Ricardo Lagos, Former President of Chile; Esko Aho, Former Prime Minister of Finland; Lionel Jospin, Former Prime Minister of France; Mary Robinson, Former President of Ireland; Lee Hong-Koo, Former Prime Minister of Korea; Joaquim Alberto Chissano, Former President of Mozambique and the African Union; and Petre Roman, Former Prime Minister of Romania (www.clubmadrid.org).

C40 Cities Climate Leadership Group

The C40 is a major partner of the OECD Urban Roundtable of Mayors and Ministers for the 3rd Annual Roundtable on Cities and Green Growth. The C40 is a group of the world's largest cities committed to taking action on climate change. Established in October 2005 by representatives of leading world cities, out of the recognition of the central role cities have to play in tackling climate change, the C40 has partnered with the Clinton Climate Initiative since August 2006. The 40 participating cities are: Addis Ababa, Athens, Bangkok, Beijing, Berlin, Bogotá, Buenos Aires, Cairo, Caracas, Chicago, Delhi, Dhaka, Hanoi, Hong Kong, Houston, Istanbul, Jakarta, Johannesburg, Karachi, Lagos, Lima, London, Los Angeles, Madrid, Melbourne, Mexico City, Moscow, Mumbai, New York, Paris, Philadelphia, Rio de Janeiro, Rome, Sao Paulo, Seoul, Shanghai, Sydney, Toronto, Tokyo, and Warsaw. The 19 affiliate cities are: Amsterdam, Austin, Barcelona, Basel, Changwon, Copenhagen, Curitiba, Heidelberg, Ho Chi Minh City, Milan, New Orleans, Portland, Rotterdam, Salt Lake City, San Francisco, Santiago, Seattle, Stockholm, and Yokohama (www.c40cities.org).

Welcoming Address

“I would like to welcome you to the OECD and to the third Urban Roundtable of Mayors and Ministers.

The OECD Roundtable is an innovative forum to promote inter-governmental joint action on urban policy. It is part of OECD’s commitment to public policy dialogue among different levels of government. This dialogue is essential for effective public service delivery, accountability, and the achievement of economic, social and environmental objectives.

Since COP 15 in December 2009, there has been increased awareness that if we are to tap the potential of green growth, we need to better exploit the synergies between local and central levels of government. Lessons learnt at local level can be used to modify and fine-tune national frameworks to better implement green economy strategies. Likewise, national policy frameworks can empower local governments and

accelerate their policy responses on renewable energy, green-tech R&D, and greening public services.

Your participation in the Urban Roundtable validates OECD’s efforts to support local-national action for green growth. Together, we can help advance analysis and build a shared understanding on the ways in which “green” and “growth” can be not only compatible, but also mutually reinforcing.”

Angel Gurría, Secretary-General of the OECD

“As Chair of the C40 Cities Climate Leadership group I welcome the opportunity that the Organization for Economic Co-operation and Development has presented for mayors and national ministers from around the world to discuss the very vital issue of green growth. As outlined in the OECD Cities and Green Growth discussion paper, we know that cities are the new engines of green growth and that a truly strong economy is built on environmental and social well-being. In Toronto, we’re now using energy efficiency retrofits in over 1000 high rise residential buildings to create jobs and drive community revitalisation.

Cities, of course, cannot pursue green growth independently. To realise the maximum benefit, national and sub-national governments need to enact enabling legislation, allow access to resources and fully engage with cities around the shared goal of green growth and prosperity. The 2010 Cities and Green Growth Roundtable is an excellent place to accelerate this much needed discussion and partnership.”

David Miller, Chair of the C40 Cities Climate Leadership Group and Mayor of Toronto

“Because of their proximity to citizens, local authorities are key actors in successfully addressing many of the challenges being faced by our societies, including the fight against climate change and economic recovery. The way cities generate and use energy, plan urban landscapes, design transport and infrastructure and manage waste, has a direct impact on greenhouse gas emissions and climate change, as well as on job creation and economic growth. Put these together and it is easy to understand why cities are essential to fostering a greener economy. Cities, however, cannot act alone. They are part of a complex decision-making chain and a vital link between States and their citizens. They require the support of national authorities to successfully deliver services citizens need and guarantee compliance with national and international commitments. States assume emission reduction obligations that cities will largely be responsible for implementing. Cities

need clear targets, regulatory frameworks and access to the human and financial resources essential for efficient action. Likewise, they must foster the innovation that citizens and the private sector can provide.

The Club of Madrid and the OECD have joined forces to further explore the role of cities in climate action and green growth, identifying and advancing the indispensable partnership between national governments, local authorities and citizens to fight climate change while improving employment opportunities and economic growth. Our societies are clamouring for leadership to meet this challenge. Let us think out of the box and identify ways to effectively deliver on commitments and respond to the needs of citizens in this 21st century.”

Wim Kok, Former Prime Minister from the Netherlands and President of the Club of Madrid

AGENDA

3RD ANNUAL MEETING OF THE OECD URBAN ROUNDTABLE OF MAYORS AND MINISTERS

“CITIES AND GREEN GROWTH”

25 May 2010 OECD Conference Centre, Paris, France

The global recession and continued concern over climate change have called into question the ability of the current model for economic growth to foster long-term prosperity. Green growth has emerged as a new paradigm that promotes economic development while reducing greenhouse emissions and pollution, minimising waste and inefficient use of natural resources, and maintaining biodiversity. The OECD is currently developing a global Green Growth Strategy that will identify policies and approaches that can shift production and consumption towards a clean, low-carbon and sustainable economy. Cities play an increasingly important role in meeting this challenge. The world’s urban population has surpassed the symbolic 50% threshold, and within the next decade, there will be nearly 500 cities of more than a million people, including several ‘megacities’ with populations exceeding 20 million. In addition, cities have strengthened their role as drivers of innovation and entrepreneurship that account for a disproportionately strong share of a country’s GDP per capita.

As stressed by the OECD Secretary-General, Angel Gurría, at the Copenhagen Climate Summit for Mayors in December 2009:

“Last June, Ministers of Economy, Finance, Trade and Foreign Affairs from 34 countries met at the OECD to adopt a Declaration on Green Growth. They agreed to develop frameworks for economic growth that would minimise environmental deterioration and enhance quality of life. Mayors have a key role to play in fostering green growth. Cities and regions can take the lead on long-term, locally tailored eco-innovation by encouraging private investment in energy-saving solutions.”

The 2010 Urban Roundtable will build upon previous debates to explore strategies to stimulate urban green growth and investment. Despite progress made, serious challenges remain. Cities, in cooperation with regional and national governments, need to develop integrated strategies that support the growth of the new green sectors, through, inter alia, incentives and regulatory changes, while managing possible adjustment costs due to evolving economic conditions at the regional, national and international levels. The 2010 Urban Roundtable will allow major stakeholders to debate and discuss current best practices and identify knowledge gaps in urban green growth strategies.

The Urban Roundtable will contribute to the ongoing discussion on the OECD Green Growth Strategy. Participants to the Urban Roundtable will also be invited to the OECD Annual Forum - Road to recovery: innovation, jobs, green growth - on 26-27 May which is open to a wider public audience and media.

The third meeting of the Urban Roundtable will be held at the OECD Conference Centre, 2 rue André Pascal, 75016, Paris. It will take place in a closed-door session, by invitation only.

8:00 – 9:00 Coffee and Pastry Reception

9:00 – 11:00 Opening Debate: Why are cities at the core of the Green Growth agenda? (Room CC12)

Welcome Address

Angel Gurría, OECD Secretary General;

David Miller, Mayor of Toronto and Chair of the C40;

Esko Aho, Executive Vice-President of Nokia Corporation and Former Prime Minister of Finland, Club of Madrid

Debate

Chairperson: Angel Gurría, OECD Secretary General

Against the backdrop of the most severe financial, economic and environmental crisis in decades, participants will discuss the key role of cities in driving economic recovery as the core of a development model that could reconcile economic, environmental and social objectives. Generating growth with pro-environmental goods and services is a backbone of this new development model, and the OECD has been mandated by Ministers of Economy, Finance, Trade and Foreign Affairs of 34 countries to develop a Green Growth Strategy. The magnitude of the traditional tradeoffs between environmental protection and economic growth visible at the national and international scales can be reduced by implementing urban policies that create synergies among efficiency and environmental sustainability objectives and render otherwise opposing policy objectives complementary. Policies to reduce traffic congestion and increase urban density can have a significant effect on carbon emissions levels, as well as public health goals, while allowing the local economy to grow. As social challenges such as unemployment tend to cluster in urban areas, and cities are often faced with the so-called ‘urban paradox’ (high levels of both employment and unemployment rates), a green growth strategy should not only aim at balancing economic and environmental goals, but also at achieving a more equitable society.

• As we emerge from the crisis, why do cities have a key role to play in a green growth agenda?

• What concrete green growth initiatives are more effectively taken on by cities rather than higher levels of government?

• How can cities grow and deliver services more sustainably and equitably in today’s constrained budget environment?

• In what ways can green growth initiatives improve urban amenities and attractiveness?

11:00 – 11:30 Coffee Break

11:30 – 12:30 Policy Dialogues, Part I

Policy Dialogue 1: Creating Green Jobs in Cities: the Potential and the Reality

(Room CC12)

Chairperson: David Miller, Mayor of Toronto and Chair of the C40

How can green growth strategies lead to job creation? Cities can facilitate direct and indirect job creation in green industries through investments in greener infrastructure and greener service provision, technical support for start-ups in the renewable sector and for industrial energy conservation measures, information and incentive programmes targeting private demand for green products and services, and fostering systemic changes in the medium-long term through eco-innovation, co-operation in green research and development (R&D), and green clusters. While considering each of these opportunities, participants will be invited to share policy tools that lead to successful creation of green jobs across their local workforce. The exchange among local, national and private-sector stakeholders will help identify effective approaches for coordinating initiatives among cities, regions and nations. Participants in this policy dialogue will also evaluate how to manage the challenges and opportunities inherent in the transition to a green workforce, given the current pressures on local economies badly hit by the crisis. While most local investments in energy provision, transportation and the built environment are likely to yield efficiency gains and multiplier effects in the medium-long term, their effect on net employment creation in the short run is unclear. The development of a green economy will require skilled and trained people to fill new jobs, which can be more efficiently organized by pooling the resources of educational institutions and industries at the regional level to adapt training systems to evolving business needs.

• What can cities’ past experience with infrastructure investment teach us about the job creation potential of green infrastructure?

• What are the training needs for low-skilled and/or high-skilled green jobs, and what is the role for cities in meeting these needs?

• How can cities stimulate greater consumption of green technologies, especially those that lead to job growth, such as energy efficiency technologies for existing buildings or residential renewable energy generation?

• What best practices can we learn from cities that have used their local comparative advantage to foster green industry clusters?

Policy Dialogue 2: National-Local Implementation and Financing Green Urban Development (Room CC4)

Chairperson: Kim Campbell, Former Prime Minister of Canada, Club of Madrid

Effective green growth strategies at the local level require intergovernmental collaboration. Multi-level governance of urban development policies is therefore particularly critical for promoting green growth. National governments can assist cities to better enable green growth and develop national indicators that measure and evaluate such initiatives. Local governments are needed as partners to implement national green growth policies and design their own policy responses that are tailored to local contexts. This policy dialogue will assess the key institutional challenges to multi-level governance on green growth, and how local and national governments and other stakeholders can work together most effectively to implement green growth policies at the city level. Successfully implementing a green growth strategy will also need innovative and reliable financing mechanisms. Participants will be invited to debate on existing and new mechanisms that could be developed to create synergies between environmental and economic objectives, such as smart fees and taxes, green transfers,

dedicated public funds and new international financial instruments, including carbon finance (e.g. Clean Development Mechanism/Joint Implementation and voluntary carbon markets). Participants will also exchange on public-private partnerships, which could utilise the expertise of private actors to improve the efficiency of green infrastructure.

• What pricing signals on carbon and other environmental goods do cities need in order to make green growth policies cost-effective?

• What national-level policies enhance or undermine city-level green growth and sustainable development efforts?

• How can cities make better use of local taxes, fees and charges to support sustainable development and green growth goals?

• What changes are needed to make existing national and international financing mechanisms more responsive to multi-sectoral urban investment needs?

• What lessons can we draw from cities’ past experiences with public-private partnerships to determine when they are most appropriate for meeting green growth goals?

12:30 – 14:30 Lunch

14:30 – 16:00 Policy Dialogues, Part II

Policy Dialogue 1, continued: Creating Green Jobs in Cities: the Potential and the Reality (Room CC12)

Policy Dialogue 2, continued: Implementing and Financing Green Urban Development (Room CC4)

16:00 – 16:30 Coffee Break

16:30 – 18:00 Defining the Way Forward: Conclusions from Policy Dialogues and Open Debate

(Room CC12)

Reports on findings from the two policy dialogues by the Chairs

Open Debate

Statement by the OECD Secretary General

SUMMARY RECORD OF THE 3RD ANNUAL MEETING

Key Messages

Cities’ growth impacts both environmental quality and national competitiveness: Though cities are the main drivers of national GDP, they are also major energy and resource consumers as well as the main GHG emitters, consuming approximately 60-80% of energy worldwide. However, city densification reduces CO2 emissions per capita, reserving more energy consumption for electricity and transportation. The short-term costs of urban environmental policies are lower than at the national level. As the main centers of innovation, cities can provide the right scale for markets of eco-products and large-scale green infrastructure investment.

Cities have a pivotal role in national and global green growth strategies: Cities and regions promote green growth through an arsenal of innovation tools which need to be pursued simultaneously to unlock policy synergies. Compact cities policies can contribute to green growth and significantly reduce energy consumption. Some such mechanisms include catalyzing research and development to generate green-tech clusters, raising consumer awareness through reductions in green technology prices and education, and supporting green job growth by the improving eco-efficiency of production and training local workers.

Moving towards a low-carbon, more sustainable society will require significant up-front investments: Green financial policy instruments, such as local cap-and-trade and carbon markets, can generate environmentally sustainable economic growth. Greening urban revenue sources, such as congestion charges, road taxes and local energy fees, can fund green infrastructure while yielding positive changes to urban behavior, such as reduced car travel and energy consumption. Private financing opportunities through public private partnerships could bolster urban green growth goals, but they must be transparent and clearly accounted for.

National governments have a key role to play in enhancing cities’ capacity to act on green growth: Bridging the gap between international and local approaches to green growth, national governments can streamline incentives, large-scale infrastructure development and healthy “race-to-the-top” competition through improved knowledge sharing methods and common regulatory frameworks and standards. National provisions for technical assistance and funding for green R&D at the urban and regional level can incite innovation and scaling-up opportunities.

Better monitoring is needed: A common set of urban environmental and economic indicators are needed to compare best practices and measure green jobs and growth. Inconsistent methodologies across cities counteract attempt s to monitor and evaluate progress on green growth. Access to data and analysis by national governments which links local energy use and emissions to local economic performance could better inform decision makers at both urban and national strategies.

In June 2009, when Ministers from 34 countries met at the OECD’s annual ministerial meeting, the effects of the financial crisis were being felt around the world. While a strategy for economic recovery hadn’t yet been developed, everyone agreed that the crisis was an opportunity to address structural issues – especially those related to environmental and social sustainability – and define a new path towards long-term growth. This pivotal gathering concluded with a call to action, the Declaration on Green Growth, which mandated the OECD to develop a Strategy for Green Growth that would lead to “to economic recovery in the short-term, and help to build the environmentally friendly infrastructure required for a green economy in the long-term”. Green growth emerged as a new paradigm that promotes economic development while reducing greenhouse emissions and pollution, minimising waste and inefficient use of natural resources and maintaining biodiversity. Since the Declaration was issued, the OECD has been mobilizing minds and resources to find policy solutions that meet the economic, environmental and social demands of 21st-century societies.

The 3rd annual meeting of the OECD Roundtable for Mayors and Ministers that took place on May 25th is part of that effort, highlighting how urban policies will undoubtedly play a key role in achieving green growth. A few oft-repeated statistics underscore how important cities are to meeting this global economic challenge: over half the world’s population lives in cities today, as much as two-thirds is expected by 2050, and within the next decade, there will be nearly 500 cities of more than a million people, including several ‘megacities’ with populations exceeding 20 million. As key engines of economic growth, job creation and innovation, but also as major contributors to global warming and environmental problems, cities are at the heart of the transition to a green global economy.

The desire to encourage green growth was unanimous among the 21 cities and 34 countries represented at the Roundtable, confirming green growth as a long-term strategy for economic progress that reduces environmental impacts and social inequality of cities. From Dar es Salaam to Yokohama, from Jakarta to Copenhagen, from Paris to Toronto and Rabat, mayors and ministers agreed that their economic well-being was tied to promoting environmental and social protection through economically stimulating activities. Roundtable participants shared challenges related to the global recession and debated the most effective way cities can contribute to recovery while continuing to mitigate and adapt to climate change. Discussions underlined how the financial crisis, coupled with growing concern over climate change, cast doubt on the current model for economic growth as a motor of long-term, sustainable prosperity.

The OECD Roundtable for Mayors and Ministers provides the preeminent forum to develop inter-governmental approaches for stronger, more effective urban policy. With participation from mayors, national ministers, former heads of state, and civil society, the Roundtable acknowledges the interdependence among urban policy actors and the urban implications of policies in areas such as transportation, education, and environment. The OECD regularly partners with major international institutions, city networks and other important forums. It was a great opportunity for the OECD to co-organise the 3rd annual meeting of Mayors and Ministers in collaboration with the Club of Madrid and the C40 Cities Climate Leadership Group.

While the enthusiasm for green growth was clear, the path that will transform the negative environmental and social impacts of growth into drivers of economic progress was less apparent. Still, mayors and ministers agreed that cities can and will play a significant role in this effort. OECD analysis has shown that pursuing greenhouse gas emissions reductions, resource efficiency and waste management at the city-scale is more effective and cost-efficient. As OECD Secretary-General Angel Gurría put it:

“Cities offer clear economic advantages for the pursuit of a green growth strategy. They are magnets for highly skilled people and

advanced firms and they are pressed to develop infrastructure and provide services for waste, water and transport. Mayors have a

mandate in supporting a green economy, and as cities consume two-thirds of the world’s energy, they have an undeniable responsibility to do so. Far too often, local and national debates occur in separate silos and disregard international perspectives. This Urban Roundtable seeks

to identify, and eventually fill these gaps.”

Mr. Angel Gurría, OECD Secretary-General

The Roundtable highlighted the critical moment in economic history we are currently experiencing: cities and national governments are experimenting with green growth approaches but are struggling to identify and build the comprehensive policy framework that will ensure a generational shift in urban outcomes. While further research and analysis is needed to maximize the impact of green growth initiatives on local and national green growth objectives, many lessons can be learned now from previous environmental policies. Transitioning to green growth outcomes will require enhancing and even reorienting previous efforts – an exercise that can be greatly facilitated by highlighting existing best practices in economic, social and environmental policy, and indentifying their shortfalls.

Mr. Angel Gurria, Secretary General to the OECD

Mr. David Miller, Mayor of Toronto, Chair of C40 Cities

David Miller, Mayor of Toronto, Chair of C40 Cities Climate Leadership Group and Co-chair of the 2010 Roundtable emphasised that this is no easy task. He highlighted several challenges lying ahead: national governments need to adapt to the diversity across local landscapes, all governments needs to clarify what a green job is and develop monitoring mechanisms while also focusing on equity issues on.

Esko Aho, former Prime Minister of Finland, Executive Vice President of Nokia, member of the Club of Madrid and Co-chair of the 2010 Roundtable drew on his experience during Finland’s recovery from the 1990s crisis where the government seized the moment and turned economic hardship into an opportunity. He encouraged all governments to do the same. Cities and green growth is about more than density and land use. “The present growth model is being called into question. We need to develop in a different, more sustainable way.” That’s how Gaspar Carlos Zarrías Arevalo, State Secretary for Territorial Cooperation, Spain summarized the challenge the Roundtable was focusing on. Local leaders explained how they are making full use of the urban policy toolkit to advance their green growth agendas. From social housing to closed-loop waste management and community energy generation, mayors are deploying a variety of innovative approaches to

Urban development that demonstrate the synergies possible between

Mr. Esko Aho, Former Prime Minister of Finland,

Executive Vice President of Nokia and Member of the Club of Madrid

the three E’s – economy, environment and equality. What is more, central governments are paying increasing attention to these efforts since their national sectoral policy initiatives materially affect the

Mr. Gaspar Carlos Zarrías Arévalo, Secretariat of State,

Regional Cooperation, Spain

outcomes of regional and national green growth initiatives. Current urban initiatives are an important first step to creating the enabling environment that will make cities engines of green growth in local, regional and national economies.

Participants agreed that an important first step is creating an integrated land-use strategy. Since the 1950s, urbanisation has generated urban sprawl with urban land area in the OECD doubling during this period and growing by a factor of five in the rest of the world. Without better land use policies, the problem will only get worse as suburban areas surrounding metro- regions tend to expand more quickly than city centres: 66 out of the 78 largest OECD cities experience a faster growth of their suburban belt than their urban core over 1995-2005.

Bordeaux, a city of 230 000 at the heart of one of France’s best known wine regions, is proving that integrated land use known policies can combat urban sprawl. Mayor of Bordeaux, Alain Juppé explained his three-step approach: favour the urban core, increase connectivity and seduce urbanites with diverse cultural and commercial amenities in the city. Mayor Juppé’s strategy capitalizes on the construction of the high-speed rail system that will soon connect Bordeaux to other major European hubs like Paris, London, Brussels and Amsterdam. The Communauté Urbaine de Bordeaux, an inter-municipal body that brings together Bordeaux and 26 neighbouring communities, created a long-term strategy to concentrate economic activity to

Mr. Alain Juppé,

Mayor of Bordeaux, France

concentrate economic activity near this transportation hub. A keystone of that strategy is the project Bordeaux Euratlantique which will concentrate office space and cultural amenities in the districts surrounding the high-speed train station. Of course, creating enticing destinations can only enhance cities if people can access them. Major Juppé stressed that “a top priority is to reduce the number of traditional cars on the road”. To increase accessibility without increasing the carbon footprint of the transportation

sector, Bordeaux developed an inter-connected, system that allows people to get around without a car. Visitors, residents, businesses and the environment benefit from the 45 km of tramway that have been built over the last ten years and the city’s bike share program, complete with a network of bicycle paths. Mayor Juppé also pointed out how easy it is to get around a city on non-motorised transport like cycling and walking: the majority of trips in cities are less than a kilometre long. For longer trips, governments can promote sustainable private vehicle use through car-sharing, car-pooling and electric vehicle programs. Going for clean transport and strategically concentrated development in parallel makes it easier to benefit from the synergies between economic, environmental and social objectives that make urban policies cost-effective solutions for green growth. It maximizes urban agglomeration effects which make cities’ more attractive and more competitive.

Mr. Robert Doyle,

Lord Mayor of Melbourne, Australia, and Mr. Ronan Dantec,

Deputy Mayor of Nantes, France

Many other Roundtable participants see their transportation networks as a key to unlocking the economic advantages of agglomeration. In most OECD cities, transportation accounts for about 40% of CO2 emissions. Melbourne’s plan to revitalize the city centre around major streets is a prime example of how transportation infrastructure can contribute to the economic, environmental and social vitality of a city, or as Melbourne Lord Mayor Doyle put it, “great streets make great cities”. Over the next five years, ten of Melbourne’s signature avenues will be transformed into world-class promenades with more quality public space and amenities to attract residents to the city centre. Lord Mayor Doyle’s plan aims to capitalize on Melbourne’s livability – not only an important part of local life but a key asset with which to attract and retain qualified human capital and investment. This also en-

hances the competitive position of the city’s booming financial cluster, a vital source of local employment and a driver of the metropolitan and national economy. Efforts to make “great streets” and concentrate development around them will also help Melbourne welcome the additional 3.5 million people expected by 2050, a doubling of the current population. The city’s research shows that an extra 3.3 million people can be accommodated while saving AUS 110 billion in hard infrastructure costs and affecting only 6% of the city’s land. In Dar es Salaam, Tanzania, a plan to introduce a Bus Rapid Transit (BRT) system will provide a sustainable transportation alternative for the 1.4 m passengers that travel on the 200 000 trips made daily by the city’s minibuses. Dar es Salam Deputy Mayor Silaa explained how the BRT system is also targeting wealthier residents who rely on private cars. In both developed and developing countries, providing efficient, well-connected transport will enable efficient markets and is a key first step for green growth.

Mr. Jerry Silaa

Deputy Mayor of Dar es Salaam Tanzania with Ms Mary Macdonald

Head of Environment and Sustainability Office of the Mayor, Toronto, Canada

Social housing has long suffered from a reputation of poor quality, and been associated with high energy bills. Today, energy-efficient technologies and innovative financing mechanisms are being used so

Ms. Anne Hidalgo First Deputy Mayor of Paris, France

that social housing residents don’t feel excluded from the improved health benefits (e.g. improved indoor air quality) and reduced costs (e.g. lower energy bills) associated with green buildings. First Deputy Mayor of Paris, Anne Hidalgo, is defying naysayers and making good on the promise to build social housing that consumes no more than 50 KWh/m2. Today, some are being built that consume as little as 30kWh/m2. For First Deputy Mayor Hidalgo, this accomplishment is all the more significant because it was achieved despite the financial crisis. As local and national leaders pursue green growth, fiscal austerity could be seen as a competing force. But she underlined that, “we have to reduce the debt while also continuing to develop green growth”.

Sara Topelson, Undersecretary for Urban Development and Territorial Planning in the Ministry for Social Development in Mexico, described a national program for green mortgages which, in 2007, made special mortgages available for social housing equipped with eco-technologies. This program has placed 253,450 green mortgages which have contributed to the reduction of CO2 by 152,070 tons per year. Ms. Topelson informed that in April 2009 the National Housing Commission started the development of a Programmatic Project Methodology for the Housing Sector, which is considered as the first Programmatic Project in Mexico looking for access to the Carbon Bonus Market and will be presented in de COP 16 to be held in Cancun next December 2010, as one of the first Nationally Appropriate Mitigation Action (NAMA) in the housing sector. In Morocco, the national government launched the Villes sans bidonvilles (“Cities without shantytowns”) initiative to improve the quality of social housing in 83 cities.

Ms. Sara Topelson de Grinberg,

Undersecretary for Urban Development, Mexico

Essaid Zniber, Secretary-General of the Moroccan Ministry of Housing, Urban Areas and Spatial Planning described how contractual agreements with cities and private enterprises are used to transform the shantytowns into high-quality social housing. To date, 42 of the 83 cities have been declared “cities without shantytowns”, because the sanitation and environmental conditions now meet the national urban standards. The goal is to achieve the same results in all the 83 cities involved in the program by 2012; to that end, additional resources were recently dedicated to the program.

Ms. Fumiko Hayashi, Mayor of Yokohama, Japan

To build a green economy, we must use less energy and use cleaner energy. As cities consume an estimated 60-80% of global energy output, they are part of the energy problem, but also part of the solution. Over the last decade, programs and policies to encourage efficiency and even pay for renewable energy have been popping up like tulips in springtime. Recently, smart grid technology, which increases the ability to control electricity distribution from renewable sources and manage consumption, has made it possible to take these efforts to a new level. Many cities have been transformed into smart grid laboratories that are testing the technology’s potential to alter consumption patterns and integrate energy from renewable sources to jump-start community energy generation that depends less on national energy grids than traditional distribution methods. Mayor Fumiko Hayashi hopes her city, Yokohama, will serve as a catalyst for wide-scale deployment of smart grid technology in Asia and the world. As part of Japan’s five-year smart

grid project, representing JPN 100 billion of investment, Yokohama has partnered with Accenture, Toshiba, Nissan, Panasonic and Meidensha to create a comprehensive system for monitoring household energy use via a smart grid. Mayor Hayashi expects the development and deployment of Yokohama’s smart grid to be an engine of diverse job growth – from engineers to operators and installers. Urban clean energy initiatives are also creating new business models.

Mr. Makoto Taketoshi

Vice-Minister, Ministry of Land, Infrastructure, Transport and

Tourism, Japan

Makoto Taketoshi, Vice-Minister of Land, Infrastructure, Transport and Tourism for Japan, shared a poignant example: Some office buildings in Tokyo purchase their entire electricity needs from companies operating wind turbines in a region 600 km away. This transaction reduces GHG emissions in Tokyo while supporting the wind industry in rural areas. Vice Minister Taketoshi calls this a “win-win business model” that proves that green growth in urban areas can lead to green growth in rural areas. Increasing urban green space is an obvious way to make cities more green, but less obvious is how it can make cities more efficient, in terms of energy use. The key is to understand the urban heat island effect. Basically, this is the technical term used to describe the difference in average annual temperature between adjacent urban and rural areas, which typically ranges from 3.5 to 4.5°C.

It is attributed to the large amount of concrete, asphalt and heat-producing equipment (e.g. air-conditioners), and, as urbanisation continues, is expected to increase by 1°C per decade (up to a difference of 10°C with large cities). While some might appreciate an extra degree or two, especially in the cooler months, the urban heat island effect also increases energy use (for cooling) and make cities more vulnerable to climate change. The urban heat island effect can also have negative public health effects in urban areas by amplifying the impacts of heat waves. For example, in the 2003 European Heat Wave, a higher percentage of the casualties in France came from urban areas. Increasing green space is one of the simplest ways to reduce the urban heat island effect. This was part of the motivation of the Governor of Jakarta Fauzi Bowo to make green space a priority in Jakarta’s long-term commitment to reduce emissions 30% by 2030. Governor Bowo is striving to increase the open-space ratio (open, green space per inhabitant)

Mr. Fauzi Bowo,

Governor of Jakarta, Indonesia

Mr. Fathallah Oualalou Mayor of Rabat, Morocco

30% by 2013. Given the population density of 13 000 inhabitants/km2, this is no easy task. It will involve rehabilitating and expanding more than 500 hectares of mangroves. And these mangroves pay double dividends: reducing the urban heat island effect and making Jakarta more climate resilient (mangroves provide an important buffer zone for coastal storms and flooding – two of the most dangerous impacts expected from climate change in Jakarta). Rabat is also promoting green space as part of its environmental agenda. With an open-space ration twice the global average (20 km2/inhabitant compared to 10 km2/inhabitant), Mayor of Rabat, Fathallah Oualalou is focusing on protecting existing areas, which have been called the “lungs of the city” because of their capacity to absorb and purify harmful air pollution.

Water, like air, is subject to the vagaries of human activity yet vital to human survival. With technology it can be protected from being

rendered useless to human consumption and made new again. Singapore’s use of NEWater systems is an

interesting example of using technology to work around resource constraints while minimizing urban pollution, in this case wastewater. NEWater is basically waste water that has been made suitable for consumption again via an “advanced dual-membrane (microfiltration and reverse osmosis) and ultraviolet process”. As of 2008, a full 1% of Singapore’s water reservoir was made up of NEWater, while that figure is projected to expand to 2.5% by 2011. To make NEWater in Singapore, the Ministry of Environment and Waster Resources and the Public Utilities Board joined forces and leveraged their respective competencies to make sure the system was safely integrated into existing infrastructure. Innovative systems like Singapore’s prove that resource constraints can be transformed into opportunities, while cities can do more with less and even create jobs. With as much as 50% of the urban population in Asia and Africa already going without water and sanitary services, local leaders in these regions should take note. Overcoming that service gap will be increasingly important since the majority of the expected 6.7 billion urban residents in 2050 will be on those two continents.

Mr. Petr Osvald

Deputy Minister for Regional and Cohesion Policy, Ministry for Regional Development,

Czech Republic, & Mr. Ilmar Reepalu,

Mayor of Malmo, Sweden

Turning municipal waste into money: Malmo is a prime example of using technology to make urban growth green. In Malmo, 96% of municipal waste is reused, or converted into energy – creating significant savings for the city. But Mayor of Malmo, Ilmar Reepalu, is no alchemist. His city turns waste into money with a well-thought-out closed-loop system, anaerobic digesters and a population dedicated to recycling. This is a stark contrast from a decade ago when the dialogue was dominated by the “Not In My BackYard” attitude, or “NIMBY-ism”. Today, organic waste and the impurities in wastewater are valuable raw materials for biogas that powers municipal buses. The program has been so successful that within 2-3 years biogas production is expected to power 100% of municipal bus trips. Transforming municipal waste into an input

For the transportation and energy sectors can create jobs. The advanced technologies involved must be operated and maintained by local employees. The new approach to managing waste – treating it as a valuable resource rather than a toxic expense – illustrates the shift in mindset that characterizes green growth strategies. The success of this waste management system is undoubtedly helped by Malmo’s long-standing efforts to cultivate a sustainable urban system.

Malmo’s success story in rebuilding its economy after the Swedish economic crisis of the 1990s is a poster child for urban green growth enthusiasts – proving that green and growth can go together. Since economic disaster struck, local leaders made full use of the urban policy toolkit to transform Malmo into a hallmark of sustainability and economic vitality. By focusing on sustainable solutions, Malmo’s unemployment went from a high of 22% to 5.5% in ten years representing 40 000 new jobs. During the recovery, public transport use was increased by 300% through improvements to the system; bicycle use was encouraged which today is the preferred commuting method for 40% of Malmo residents. Land-use policies were used to facilitate the conversion of brownfields to housing, offices and schools. The energy supply mix was given a green makeover, including the removal of all coal sources. A geothermal system was installed that collects and stores the summer heat and the winter chill in the aquifer 70 m below ground and then distributes both forms of stored energy to local residents through a district distribution system. Today, Malmo’s reputation as a forerunner among environmental cities has attracted companies to the city. What is more, the reputation has been confirmed by economic and environmental experts. In 2007, Malmo was selected as the most liveable city (with a population up to 750 000) by the International Rewards for Liveable Communities Committee, which includes the UN Environment Programme. In 2010, Malmo was second in the 'European Cities Entrepreneurship Ranking' which is based on a survey of 4 500 business leaders.

Ms. Kim Campbell Former Prime Minister of Canada,

Member of Club of Madrid

An integrated approach to traditional urban policies can contribute to multiple green growth-related objectives. Clearly, cities have the tools, creativity and political will to achieve the ambitious goal of higher growth at lower carbon intensity. A major challenge facing cities today is how to manage the complementarities among these policy instruments. This will demand a dramatic shift towards more integrated policy making and implementation at the urban level. As former Prime Minister of Canada and member of the Club of Madrid, Kim Campbell noted, by appropriately sequencing the implementation of various measures, governments can create an enabling environment for individuals and businesses before imposing restrictions on their behaviour or choices. For instance, providing sustainable transportation options should precede road pricing. If people have easy access to public transit, they are less likely to oppose increased tolls or parking prices. Road pricing schemes can also

provide much-needed funding for green growth initiatives - another significant obstacle to pursuing urban green growth. In the end, cities may have to make tough choices when allocating local resources. As discussed below, long-term results require long-term investments.

Lacking the resources that would be required to completely transform entire cities into inclusive, carbon-neutral beacons of green growth, local leaders are testing the limits of current technology and citizen engagement in eco-cities and eco-neighbourhoods. Singapore’s Minister for National Development Mah Bow Tan shared one example: Tianjin Eco-City, a joint-project by Singapore and China, which covers 34.2 km2 of the Binhai New Area of Tianjin in northeast China. Tianjin Eco-City is expected to serves as a green growth model that will catalyze the construction of resource-efficient, egalitarian, productive cities. Minister Mah stressed that harmonizing environmental sustainability and economic growth requires harnessing the latest technology in a collaborative way and focusing on the long-term potential, as is being done in Tianjin Eco-City. While the project suffered some initial setbacks, recent resource infusions are expected to bring it back on track.

Mr. Mah Bow Tan

Minister for National Development, Singapore

Mr. Yuri Chillán Reyes

Deputy Mayor of Bogota, Colombia

As Deputy Mayor Yuri Chillán Reyes put it, Bogota is also building a ciudad verde (green city) in the Soacha Cundimarca neighbourhood complete with schools, libraries, a hospital, health centres, parks and recreational areas as well as commercial amenities. The USD 144 million investment will house 36 000 families on 327 hectares, including 12 m2 of green space for each of the expected 150 000 inhabitants. All construction will meet high environmental, social and urban standards. Evaluating the success (or failure) of these efforts provides a much-needed opportunity to gain insight into the functioning of green economies on a micro-scale. Participants at the roundtable agreed that comparative analysis and the development of indicators would allow local and national governments around the world to develop best practices that enable the transition to a green economy on a larger scale.

It is crucial to move from launching flagship projects to implementing full-scale green growth strategies. Only by working together can national and local governments breathe life into the green growth model. The efforts described above, however innovative, will remain one-off demonstration projects unless national governments can create an enabling regulatory and legal framework for urban green growth and local authorities can work efficiently with each other and their national counterparts to achieve commonly defined green growth outcomes. Cassam Uteem, former President of Mauritius, member of the Club of Madrid and a former mayor, said “These are good and sound reasons for the OECD Urban Roundtable to bring together Mayors and Ministers.” His experience as a mayor and a president taught him that more co-ordination and consensus is needed between levels of government. They need to sit down together and develop national plans for green growth to be applied nationally, with special attention to cities. President Uteem went so far as to call multilevel governance as “the sine qua none condition for a successful green growth

Mr. Casam Uteem, former President of Mauritius,

The Shared Societies Project co-chair and Member of Club

of Madrid

strategy”. Kim Campbell, former Prime Minister of Canada, expanded that idea, “When it comes to governing for green growth, a central question is ‘Cities and what they can do?” She feels that many of our governance structures are out of date. For example, Vancouver’s governance system evolved in a time when the local economy was dependent on the natural resources located beyond the city limits, mainly forests. Today, the primary source of wealth is the services industry.

There are three main forms of multilevel governance, all of which must be co-ordinated systemically to maximize the impact of green growth initiatives. The first is vertically integration: enhancing co-operation between levels of government (local, regional, and national). Another crucial element is creating the right “bottom-up” signals so that national governments know how effective their “top-down” efforts have been. Lastly, there is horizontal governance, which refers to co-operation among actors on the same level. In all its forms, multilevel governance should also include accountability and reporting regimes that increase the transparency and effectiveness of government. Cost-effectiveness, scale, equity and experimentation are other traits of successful multilevel governance. While the list of buzzwords is long, governments aren’t discouraged. Many cities and countries represented at the Roundtable seem to be eager to reform their governance structures to enable green growth.

Mr. Michel Mercier, Minister of Rural Areas and Spatial Planning,

France

While participants at the Roundtable were discussing cities’ role in green growth at the OECD Headquarters, across the River Seine the French Senate was debating the final details of a comprehensive environmental legislation nicknamed “Grenelle II’. Michel Mercier, French Minister of Rural Areas and Spatial Planning, declared: “This marks a new direction in French regional legislation, which had which had previously focused on rural areas. This reform signifies the government’s recognition that France’s future will be decided, in part, in its cities.” The Grennelle II legislative package is the final step in a three-year effort to assess, define and plan for a sustainable French economy known as the “Grenelle de l’Environnement”. Grenelle II follows on the heels of the Grenelle I Law, which laid out the policy tools, planning horizon and objectives that would allow a sustainable

economy to emerge. Grenelle II’s top-down approach creates a centralised enabling framework that translates the policy objectives in Grenelle I, all of which,

directly impact sustainable urban outlined development: buildings; transport; energy; biodiversity; governance and risk; waste and health. Many of the 248 measures outlined in Grenelle II move cities

towards integrated urban development. While the complexity and diversity of this effort merit further investigation, certain elements reveal how vital local level involvement is for realizing long-term green growth at the national level.

How and what local authorities do was repeatedly assessed while developing Grenelle II’s policies in each of the six areas. In fact, an autonomous working group was created to make sure that local governments’ role was well-defined and actionable. The working group inventoried current practice and made proposals to fill the governance gap. For example, budget approval for communities with over 50 000 in population is tied to their sustainable development reports. To date, this is one of the most comprehensive efforts to integrate sustainable development into national multilevel governance mechanisms. However, keeping a close eye on future developments could reveal some valuable insights.

In all cases, national governance frameworks must be tailored to the local context. Miroslav Hájek, Deputy Minister of Environment, Czech Republic shared the experience of the Czech Republic, where the national government has been trying to create rules that support bottom-up green development initiatives by municipalities and the private sector, such as integrated planning to green public procurement rules.

Governor Bowo of Jakarta also illustrated Indonesia’s diversity which includes 240m communities spread across 33 provinces with thousands of regions and sub-districts. The distance from one end of the country to the other is the same as the distance from the UK to Turkey and covers a diverse geography. It encompasses more than 100

Mr. Miroslav Hájek, Deputy Minister for the Environment,

Czech Republic

local cultures with 300 local dialects and many different religious beliefs. The climate change challenges differ throughout the country as well. In central Kalimantan, the main cause of climate change is deforestation from slash-and-burn practices; in Jakarta the main emissions are from transportation. This shows that local regions need the autonomy to develop and execute climate change policy tailored to the region.

Mr. Cevdet Yilmaz, Minister of State, Turkey

Governments have many governance models to choose from. Turkish Minister of State Cevdet Yilmaz explained how his country is testing national and local tools. For Minister Yilmaz, achieving green growth means developing a broader concept of development - one that takes into account the social and environmental dimensions of economic growth. Minister Yilmaz shared how the Turkish government is encouraging that approach with Ninth Development Plan, a medium-term crisis exit strategy, and a national climate change strategy that was just announced for 2010-2020. Complementing these efforts from the “bottom-up” are the 26 Regional Development Agencies (RDAs) being developed in Turkey. These RDAs are designed to develop local capacity that is essential for implementing national policies and realizing green growth in Turkey’s cities.

Inter-municipal co-operation is particularly important because of the mismatch between city borders and “urban functional areas”, a technical approach to defining urban system based on commuting patterns and economic exchanges which often considers suburbs as inside the city limits. The overlap of energy and transport infrastructure, commuting patterns, etc. requires that city officials tackle challenges hand-in-hand with their neighbours. If they don’t, markets run less efficiently, local businesses and jobs can be lost to other areas. As urbanisation continues, horizontal multilevel governance will be increasingly important. Holland’s Green Heart, an area which covers three provinces and 55 municipalities demonstrates how the need to be – and stay – green can blur geographic and administrative boundaries. The Green Heart is a predominantly rural area in the centre of the Randstad Holland, the Netherland’s most urbanized region which includes the four biggest Dutch cities, Amsterdam, Rotterdam, The Hague and Utrecht. The

Mr. Wim de Gelder, Mayor of Alphen aan de Rijn,

Netherlands

Mayor of Alphen aan de Rijn, Wim de Gelder, described how the Randstad has long benefitted from the natural and agricultural resources of the region– like those in his city, which contribute to maintaining attractiveness and competitiveness. Over the last 50 years, a balance between the urban sprawl stemming from the Randstad and the need to maintain the “greenness” of the Green Heart was maintained through national spatial policies. However, Dutch cities are now encroaching on the “buffer zones” between urban and rural areas set up by the national government. So, the Green Heart’s governments got together and started defining targets for future development and devising plans to achieve them. Despite this progress, some thorny issues remain - like the financial obligation of cities to maintain the green spaces they benefit from. The horizontal governance of the Green Heart can be instructive to every city pursuing green growth (which is hopefully every city!).

Ms. Ana Marie Argilagos, Deputy Assistant Secretary International

and Philanthropic Affairs, Department of Housing and Urban

Development (HUD), United States

At the Roundtable, there was much fanfare for building bridges between government silos that can lead to contradictory or even competing policy initiatives being pursued by the same government. Ana Marie Argilagos, Deputy Assistant Secretary for International and Philanthropic Affairs at the United States Department of Housing and Urban Development (HUD), explained how the recently created HUD Office of Sustainable Housing and Communities was combating the “silo-syndrome” by supporting integrated urban development across the US Administration. Working with the U.S. Department of Transportation (DOT) and the U.S. Environmental Protection Agency (EPA), the HUD launched the Partnership for Sustainable Communities which awards planning grants for integrated economic development, land use and transportation infrastructure. This program also responds to the financial crisis. As Deputy Assistant Secretary Argilagos

described, “HUD has observed that the least sustainable places are suffering the worst outcome of these crises, e.g. Phoenix and Las Vegas, where there is little water and natural infrastructure. They recognize the need to change the way they plan and design their communities.” Through the Partnership, USD 100m of competitive grants is available under the Sustainable Communities Regional Planning Grant Program to support metropolitan and multi-jurisdictional (i.e. functional area) planning efforts that integrate housing, land use, economic and workforce development, transportation and infrastructure investments. The Partnership for Sustainable Communities pushes local governments to think holistically about developing transportation, urban planning and improving the environment. At the national level,

the collaboration between HUD, DOT and the EPA can reveal where sectoral policies may have been at odds before. As with most national grants, recipients are required to report back on progress, providing an important source of “bottom-up” information on the successes and failures in integrated urban development that can feed back into future initiatives in the area. Merely developing this kind of policy can be helpful, as the grant guidelines provide clear indications to local officials on the national government’s understanding of priorities for integrated urban development. Innovative programs like the Partnership for Sustainable Communities are useful models for the types of governance structures required for green growth.

However, in order to fully transition to a green economy, these kinds of initiatives must not remain flagship programs, but rather become the norm. The Mayor of Rabat, Morocco, Fathallah Oualalou, put this challenge in perspective: “As elected representatives, we need to be careful to distinguish between what we’re saying today and the priorities of governments, particularly in Europe. The green economy is important. But, given current debt levels, states need to reduce deficits and this has an impact on cities. OECD needs to demonstrate that there are no tradeoffs between the two objectives and demonstrate the long-term potential for green growth as short-term perspective is grim.. There is work to be done to show that there is no contradiction between green and growth, rather that green is a driver of growth.” Driving that point home, Japan’s Vice-Minister of Land, Infrastructure, Transport and Tourism, Makoto Taketoshi, cited a compelling example of how policies can have unintended consequences for green growth. “A Japanese macroeconomic policy had an unfavourable impact on efforts to cultivate compact cities. Japan’s economy has been stagnating for a long time, leading the government to keep interest rates at zero. These long-term low interest rates encouraged wasteful spending in the private sector. For example, large-scale shopping centres on city outskirts were built, which has a direct impact on urban sustainability and urban life. Regulation was introduced to stop this phenomenon but it was too late as many shopping centres had already been built. Urban issues are complex, but the OECD is the most suitable organisation to tackle this sort of difficult issues. I encourage further discussion on these issues, including compact cities.”

Ms. Susan Osborne Mayor of Boulder, Colorado,

United States

“Bottom-up” feedback goes far beyond reporting on national financing. Mayor Susan Osborne of Boulder, US, explained how her administration is involved in a diverse set of activities. If Mayor Osborne wants to continue to push the envelope and develop innovative policies for green growth, she has to work more often and more closely with other levels of government. Her administrations has been busy lobbying the national government, assisting State officials with drafting legislation and testifying before public utility commissions that manage the electricity, gas and transit infrastructure (often at a regional level). Boulder’s long history of environmental protection has allowed the local government to make full use of more traditional policy tools. A recent example is the 2010 Colorado State Legislature's passage of House Bill 1342 enabling solar gardens. For years, Boulder had been promoting the installation of solar photovoltaic panels on residential roofs with local tax incentives and rebates. But many of the existing roofs are too old or too small to accommodate solar panels. So the city started looking at how individuals could come together to pay for the installation solar panels on

vacant land, an approach that came to be called “solar gardens”. Quickly, a significant roadblock emerged: Prior to the 2010 legislation, there was no legal mechanism for allowing small off-site (i.e. not on rooftops) solar arrays to be built cooperatively, with the generated energy and revenue assigned to property owner investors. So Boulder officials went to work with stage legislators to sew the legislative seeds for solar gardens. The bill was signed by Governor Ritter in Boulder on 5 June 2010. Today, they are on the brink of

“planting” the first solar gardens with a number of neighbourhoods eager to be the first in the state to co-operatively own a solar garden.

A constant challenge in designing “bottom-up” feedback mechanisms is finding the right balance between flexibility (to adapt to the local context) and conformity (to ensure that the diverse data can be compared). Adam Ostry, Chair of the OECD Working Party on Urban Areas, described Canadian experience with striking that balance. When Canada decided to share revenues from the federal gas excise tax with municipalities (CAD 13 billion over 2005-2013), the funds were earmarked for sustainable infrastructure investment, including water and wastewater systems; solid waste management; public transit, roads and bridges; community energy systems; and community capacity building to help communities plan for sustainability. One of the planning tools negotiated by the parties to oversee the use of these funds is called the Integrated Community Sustainability Plan (ICSP). An ICSP can be new or based on the existing plans municipal officials developed to enhance the local economy, ecology, social fabric and culture. This flexible definition allowed Canadian

Mr. Adam Ostry, Chair, OECD Working Party on Territorial Policy in Urban

Areas; and Kim Campbell, Former Prime Minister of Canada,

Member of Club of Madrid

municipal authorities to develop ICSPs that responded to their local needs. It also afforded the Canadian federal government the opportunity to develop a comparative accountability tool with which to evaluate progress toward the achievement of short and long-term urban outcomes of consequence to federal policy objectives identified in the plans. According to initial evaluations, ICSPs are indeed serving both local and national authorities, although more work is needed for public education efforts and to further mobilize the business community – reinforcing the idea that policies, however well crafted, must capture the imagination of civil society and the private sector to maximize their effectiveness “on the ground”.

Funding the future: Invest in Green Growth! The financial crisis has revealed insufficiencies in the traditional growth model and significantly reduced governments’ financial resources to transition to a green economy. The impact on consumers and business has further raised concerns over the unequal distribution of wealth that accompanied recent economic growth. Persistent inequality between and within nations has degraded public confidence in traditional approaches to economic development. Furthermore, growing concern over climate change has led many to draw attention to the ecological impacts of this model. Taken as a whole, these trends opened a window of opportunity to reassess investment priorities in the short and long-term.

The scarcity of financial resources is putting pressure on governments to do more with less. From infrastructure to workforce training, governments at all levels are looking to generate new sources of revenue and use existing funds more efficiently.

Mr. Petr Osvald Deputy Minister,

Regional and Cohesion Policy, Ministry for Regional Development,

Czech Republic

As Petr Osvald, the Czech Deputy Minister for Regional Development underlined, national budgets will recover a year earlier than city budgets, which are more dependent on tax revenues. Ronan Dantec, Deputy Mayor of Nantes, France, and Chair of UCLG Climate Negotiating Group, highlighted another budgetary challenge for urban green growth initiatives: the payback period, i.e. the time it takes to recoup initial investments in a project via the savings it generates. The payback period for green growth projects is usually longer than traditional financing options allow. For example, comprehensive building energy efficiency upgrades, one of the most cost- effective green growth investments, can have a payback period of 20-25 years when the operations and maintenance of the systems are taken into account. The advanced technologies used must be operated and maintained by highly skilled people, with commensurately high salaries.

It has been estimated that to meet the EU’s GHG reduction goals for 2020, it will cost tens of millions of Euros. Greece’s President of the Parliament’s Standing Committee for the Environment, Kostas Kartalis, also recognized that green technology is often more expensive. In Greece, they are trying to find a balance between local and national initiatives. Cities can’t always provide subsidies and incentives. This is an area where the national government can step in and support energy efficiency retrofits. Turkish Minister of State Cevdez Yilmaz also made the link between funding challenges and multilevel governance: “Financial challenges stem from the fact that strategies are defined centrally and implemented locally, often with participation of the private sector”.

Mr. Ronan Dantec, Deputy Mayor of Nantes,

France

Mr. Cevdet Yilmaz, Minister of State,

Turkey

Facing these funding challenges, mayors and ministers raised two questions:

1. How can new public funds be generated for investment in green growth?

2. How can new and existing resource streams be leveraged to maximize green growth?

Green growth can actually be a source of public revenues. By putting a price on undesirable practices – like urban sprawl and private vehicle use – the tax code and municipal charges can push consumers and businesses down the path to green growth. For example, in Toronto, development charges are higher for buildings not near transportation hubs. That makes it more expensive to build and work in places people must take a car to get to. These mechanisms have the added advantage of encouraging green growth while simultaneously generating much-needed public resources.

Mr. Robert Doyle,

Lord Mayor of Melbourne, Australia

Many Roundtable participants supported the idea of a carbon pricing mechanism that allows cities to benefit financially from their GHG emission reduction efforts. As ongoing efforts in this area progress, the potential benefits of city-level participation - e.g. increased cost-effectiveness of measures thanks to the lower tradeoffs between economic growth and environmental protection at the urban level - merit further consideration. Melbourne is already benefitting from this growing industry with a carbon market cluster that focuses on advising companies interacting with Emission Trading Systems (ETS). Melbourne Lord Mayor Doyle explained that the future of this AUD 190 million cluster, and the jobs it brings to Melbourne, are currently threatened by the lack of a national ETS in Australia. While some cities have launched local carbon markets, the majority are dismayed by the potential impact on competitiveness. This is one source of funds for green growth that should be handled at the national and potentially international level.

Another way cities can benefit from carbon markets was shared by Jean-Marc Ayrault, Mayor of Nantes and President of Nantes Métropole (the functional area anchored in the city of Nantes), suggested another way cities could access carbon fund. He, along with a group of his European counterparts, are pushing for an extension of the European carbon finance mechanism to cities, allowing local governments to receive funds for their GHG emission reductions. Governor Bowo of Jakarta also highlighted the potential for cities to participate in the Clean Development Mechanism (CDM), a program created under the Kyoto Protocol. Another area where local governments can flex their green finance muscle is the local tax system. Local tax revenues are not neutral: rates, exemptions and composition all impact the price of certain goods and services for citizens and firms, such as urban transportation options, land development and housing. One of the oldest examples of a green tax comes

Mr. Jean-Marc Ayrault, Mayor of Nantes and President of Nantes Métropole, France

from Boulder. In this historically progressive city, citizens actually voted to increase their taxes in 1968 when they approved an additional sales tax whose revenues would be dedicated to purchasing land on Boulder’s borders to limit sprawl and preserve the aesthetics of the city. To date, this tax has paid for 80 000 acres of green space that completely encircles the city. Local control of the operation and maintenance of transportation infrastructure provides another opportunity to generate revenue by encouraging more sustainable transport. Road-pricing, like Singapore’s 30-year old policy, can discourage personal car use and generate public revenues. Mah Bow Tan, Singapore’s Minister for National Development explained how Singapore paired road-pricing with vehicle quotas to limit the growth of car use to 1-3% per year.

Despite these innovative tools, many local governments have turned to the private sector to finance green growth initiatives. This trend is not without risks; as it develops local and national leaders will benefit from technical expertise and best practices for managing private investment in green growth - even traditional policy areas. Policies to increase the energy efficiency of public buildings are often seen as no-regrets measures. Many cities have spurned growth in the building efficiency sector by funding retrofits in public buildings which creates jobs in the short-term, makes use of existing technology and reduces the operating costs of building. In order to scale-up these initiatives,

Mr. Mah Bow Tan,

Minister for National Development,

Singapore

Mr. Daniel Ács

State Secretary for Regional Development

Slovak Republic

The diversity of urban governance structures and resources means that the role of national governments in financing urban green growth will vary across cities and countries. In the case of Slovakia, where the capital Bratislava (population 1.1 million) is the only major city, national government support can be particularly important for facilitating urban green growth. The use of Joint European Support for Sustainable Investment in City Areas (JESSICA) funds illustrates how national governments can gain access to financial resources for cities. Daniel Acs, State Secretary for Regional Development in Slovak Republic, described how JESSICA funds will be used to accelerate the renovation program of public housing in Slovakia’s cities. Previously, they had been using national financial instruments to get projects going. However, less than 100 000 public housing units were renovated over the last nine years; at this rate, it would take 40 years to renovate the entire public housing stock. Mobilizing JESSICA funds will contribute to a number of Slovakia’s long-term green growth goals, including improved quality of life, reduced energy consumption and CO2 emissions, increased attractiveness and social inclusion.

The European Investment Bank (EIB), represented at the Roundtable by its Vice President Simon Brooks, also provides loans for “frameworks of projects”, another way for smaller cities to gain access to financial resources as Vice-President Simon Brooks explained. “Frameworks of projects” are used for smaller projects whose scale usually doesn’t solicit interest from investment banks; EIB loans have a EUR 25 million minimum. In this model, a large number of similar, small projects are bundled together and financed as a whole, a method that has proven particularly well adapted to energy efficiency and waste-to-energy projects. For the EIB, the government’s involvement reduces their risk. For the government, bundling the projects together affords access to

Mr. Simon Brooks Vice President

European Investment Bank

cities are encouraging the private sector to jump on the band wagon – on their own dime. Melbourne’s Zero Net Emissions Strategy set the goal of retrofitting 70% of commercial buildings to the 4.5 star rating in the green star building rating system. Despite the administration’s support for energy efficiency measures, public funds were not available to finance these projects; the municipal government turned to the banking sector. Melbourne Lord Mayor Doyle described the new loan structure created to allow banks to issue loans to building owners as a municipal charge on the property. Since municipal charges take precedence over mortgages, the risk to banks is extremely low, allowing them to lower the commercial lending rate. By developing a loan structure that meets both the banker’s and the property owner’s financial requirements, Melbourne is encouraging economic activity that is good for the environment and growth: this initiative is expected to generate AUS 2 billion in private sector investment and 800 new green jobs.

Ms. Laurence Tubiana, Director of IDDRI, and

Member of the Club of Madrid GCLA

EIB financing, which is good news considering EIB loaned a total of EUR 79 billion in 2009. “Frameworks of projects” provide much-needed access to capital, while also guaranteeing that a significant number of green growth projects will move forward, increasing the capacity of smaller cities to contribute to green growth.

While Melbourne and Slovakia (through JESSICA) enthusiastically engaged with the private sector to mobilize funds, others are more sceptical. Given the role financial markets played in the lead up to the economic crisis, some groups and individuals are reticent to increase the involvement of the private sector in the economic recovery. Laurence Tubiana, Director of the Institute for Sustainable Development and International Relations (IDDRI) highlighted the contradiction between global competition among cities for attractiveness, which is linked

to sustainability, and the growing role of financial markets in cities, which she believes contradicts the objectives of sustainable development. Although she praised the efforts in transport, energy efficiency and water management, she contends that the growing role of the financial sector in municipal fiscal decision-making, particularly in municipal debt-financing, poses potential risk to the long-term viability of green growth in urban areas. That said given limited resources and contracting budgets, many public officials see private-sector engagement as a necessity.

Mr. Jarosław Kochaniak, Deputy Mayor of Warsaw,

Poland

Jarosław Kochaniak, Deputy Mayor of Warsaw, shared Ms. Tubiana’s concern, but pointed out that Warsaw has legal limits on how much debt they can have on their balance sheets (60% of annual revenue; 15% for debt service). For Warsaw, there would be no investment in public services without private sector involvement. Given these limitations, Warsaw is exploring ways to increase public service provision and green investment by working with the private sector, for instance through public-private partnerships (PPPs). Deputy Mayor Kochaniak warned that for PPPs, “governments must understand the risk for creating natural monopolies, but if done right privatisation can be the best way to move forward.”

Public Private Partnerships are a source of growing interest from local

leaders who are dedicated to creating anappropriate management structure to get more value for their public money. As Warsaw Deputy Mayor Kochaniak

pointed out,the scarcity of resources motivates governments to maximize the value of any investment – in a PPP or otherwise. In addition, the technical nature of many green growth projects require highly specialized knowledge and training that is not always found in the public sector. For example, Copenhagen Lord Mayor Jensen had the pleasure of announcing that part of a privately owned Combined Heat and Power (CHP) plant was rebuild to use biomas instead of coal and now provides a renewable source of heat for 85 000 Copenhagen households. In Morocco, the government has been working with the private sector since 2005 to construct “new cities” under its “Les Villes Nouvelles” initiative. These “new cities” respond to the demand for improved quality of life and social housing. The policy requires that developers conduct environmental impact studies, including soil analysis, and that the new city meets environmental standards

Mr. Frank Jensen Lord Mayor of Copenhagen,

Denmark

for street lighting, water conservation, tree planting (one tree for each housing unit) and electric hot water heaters.

The private sector is striving to offer their technical expertise in an appropriate manner by working with governments “upstream” – when the challenges and obstacles are being identified. Remi Dorval, Executive Vice-President of Vinci, noted that this early involvement allows technical experts to bring their experience to bear in identifying potential obstacles as projects move forward. By creating new forums for public-private dialogue, the private sector can work with public officials in a holistic manner

Mr. Remi Dorval, Executive Vice-President,

Vinci

and gain a better understanding of their needs. Government officials can also delineate clear boundaries and expectations for future collaboration and PPPs. From Vinci’s La Fabrique de la Cité (“Urban Fabric”) to General Electric’s “Sustainable Cities” and GDF Suez’s involvement in the Urban Infrastructure Initiative of the World Business Council on Sustainable Development – all industrial representatives at the Roundtable put forth concrete examples of ways the private sector is striving to respond to the complex issues of urban green growth. Through these programs, companies are working with cities to develop new business models that respond to the complex, intertwined demands in energy efficiency, renewable energy and energy infrastructure, water use and treatment, transportation, etc. This enthusiasm and support from the private sector is welcome. There is, however, no indication that PPPs would be better suited to achieve green growth goals than traditional procurement. Continued analysis of PPP models and governance structures is needed to assist governments in managing their relationships with the private sector for green growth.

The respective roles of the private and public sectors in green growth will evolve over time and vary from place to place. Governments will continually be challenged to support and deploy technologies that advance the transition to a green economy. As efforts in building energy efficiency and waste-to-energy projects show, in certain urban public services current technologies are not yet being maximised to achieve green growth outcomes, while in other public services, like the smart energy generation and distribution grid, technical solutions are still being developed. Sometimes, existing technology can be put to new uses. For example, Siim Kiisler, Minister for Regional Development in Estonia, explained during the meeting how lighting in public areas can be turned controlled by citizens who are passing through simply by sending an SMS. In most cases, cities will need to work with the private sector to maximize the public benefit of technology while encouraging ongoing innovation. Local leaders will need to look past current budget constraints and focus on the long-term potential growth from green innovation and green technology deployment.

Mr. Siim Kiisler, Minister for Regional

Development, Estonia

Previous efforts to reduce urban environmental footprints involved experimentation with advanced technologies that can be particularly constructive in optimizing the impact of these products on green growth. Information and communication technologies (ICT) have already been deployed in numerous cities as they play an enabling role in many green investments like building efficiency, smart grid and road-pricing.

Mr. Bastien Fischer,

Vice President and General Manager, Oracle Tax and

Utilities

According to Bastien Fischer, a Vice President and General Manager at Oracle and member of the Business and Industry Advisory Committee (BIAC) to the OECD, ICT enables progress on green growth in two ways: First, by providing clear information on level of emissions, ecological footprint and environmental exposure, ICT can increase accountability. Second, ICT enhances communication, which can enable consumers to make better, faster choices and develop new forms of citizen engagement. According to Mr. Fischer, the long-term potential of these technologies is enormous, “The convergence of energy and ICT can lead to a new world – the green revolution.” Cities can continue to reap the environmental benefits of these technologies and foster further innovation by reducing barriers to entry and investment to new service providers and reforming the regulatory framework. Current market trends indicate that these investments will pay off and fuel future growth in the green economy. Clara Gaymard, the National Executive for General Electric France had encouraging news on this front: since 2005,

General Electric has been focusing on developing their green products with a goal of EUR 10 billion in sales by 2010. Since the crisis, GE’s green products have shown 20% growth rates, while the others sectors’ growth has been flat.

The prospects of economic growth can actually be improved by providing incentives to innovation and growth. National co-operation is of vital importance in supporting these efforts and ensuring coherence across cities. In Japan, the national government is seizing on these new investment opportunities with a national policy for technological development and green innovation. The policies include a national goal to create a JPN 50 trillion (USD 500 billion) market and 1.4 million new jobs in the green sector by 2020. Vice-Minister of Land, Infrastructure, Transport and Tourism Taketoshi shared some of the difficulties in pursuing this kind of policy. “Not everyone supports the proposed legislation

Ms. Clara Gaymard, National Executive,

General Electric, France

Mr. Fauzi Bowo

Governor of the Province of Jakarta Indonesia; and

Mr. Makoto Taketoshi Vice-Minister of Land, Infrastructure,

Transport and Tourism, Japan

because they say it may have some unfavourable impacts on the Japanese economy. This is an important issue, but we can’t just hold on to the old idea that GHG emissions are a necessary evil for economic growth. Rather, we need to explore new forms of growth that reduce GHG emissions.” Club of Madrid member Esko Aho, Former Prime Minister of Finland and currently the Executive Vice President of Nokia, echoed that sentiment, and highlighted the importance of understanding that social, environmental and private business objectives are complementary. “To create green growth we don’t always need to make new investments with designated funds. In many cases, green growth can be spurred by reducing resources use, energy use.” His experience in the mobile phone industry is illustrative. He said the Club of Rome had estimated that India and China could never fully be connected to telecommunication networks because of absolute limits on the world’s supply of copper.

In the end, however, these countries leapfrogged into the mobile wireless world of networked communications, which had a limited environmental impact when compared to landline development along with significantly improved social benefits and much profit to telecommunications carriers and businesses generally.

Mobilizing civil society for green growth is key. The growing awareness of cities’ contribution to climate change and its solution has spurned the development of numerous networks of cities over the last decade. These networks, like the C40 Cities for Climate Leadership that was a partner of the 2010 OECD Urban Roundtable, can play a contributing role to fostering green growth in cities.

Mr. Esko Aho, Former Prime Minister of Finland,

Executive Vice President of Nokia and Member of the Club of Madrid; and

Mr. Angel Gurría, OECD Secretary-General

Mr. David Millor, Mayor of Toronto,

Chair C40 Cities for Climate Leadership

As Toronto Mayor and C40 Cities for Climate Leadership Chair David Miller explained at the Roundtable, by federating motivated actors, networks of cities can demonstrate leadership, be a catalyst for change and a channel through which cities can showcase and share their best practices. The 15th Conference of the Parties (COP-15) to the UN Framework Convention on Climate Change (UNFCCC) which took place in Copenhagen in December 2009 allowed cities to express their position through their international networks. The Summit of Mayors that was organized in conjunction with COP-15 and in collaboration with C40 and ICLEI- Local Governments for Sustainability brought together 80 cities and regional leaders representing 350 million citizens and almost one-sixth of the global economy to underline their role in mitigating and adapting to climate change.

It made clear that cities are leading the way in developing and deploying solutions, leading some participants to push for a more formalized incorporation of cities into the UNFCCC negotiations. Alain Juppé, Mayor of Bordeaux, cited the Dunkerque Declaration, issued at the conclusion of the 6th European Conference on Sustainable Cities and Town, which demands city-level representation at international negotiations on climate change. Special Representative for Global Intergovernmental Affairs, Reta Jo Lewis, from the United States Department of State, applauded these efforts and recognized the importance of events like the Roundtable. Through her involvement with local officials and the ongoing climate change negotiations, she observed “a sea change among negotiators”. Special Representative Lewis observed that “the nation-to-nation dialogue isn’t enough; it needs to involve cities and institutions. Partnerships with and among sub-nationals are necessary to build capacity nationally and internationally”. Specifically referring to the Roundtable, she said, “This is an excellent

Mr. Alain Juppé, Mayor of Bordeaux, France

Ms. Reta Jo Lewis,

Special Representative, Global Intergovernmental Affairs

Department of State, United States

platform for all of us that work with cities to dialogue on the role they have in creating a cleaner, stronger with economy. Secretary Clinton, as the leading US diplomat, has made international engagement concerning this issue a priority in all of our work because our communities the world over are grappling with the same issues: how to promote sustainable and inclusive economic growth that makes a difference in people’s lives.” Networks of cities can also have an impact on national efforts to foster green growth. As Singapore’s Minister of National Development, Mah Bow Tan put it: “Cities cannot go it alone to solve the problems – must collaborate among and between cities, for example to build green prototypes.”

The Union of Local Authorities in Israel (ULAI) has a special environmental division dedicated to encouraging local authorities to streamline processes, recycle municipal waste, reduce air pollution, protect the climate through cost-effective measures, train staff in environmentally friendly behaviour and continually enforce environmental laws. Mayor Bohbot of Ma’a lot-Tarshiha, Israel who is also the Chair of the ULAI, explained how efforts have enabled the development of best practices adapted to the Israeli context in the absence of national legislation.

For Mayor Bohbot, “protecting the environment is the first step towards green growth, it enables green growth”. In Korea, the central government has adopted a more enabling role and created a network of officials to share experience and develop a co-operative agenda.

Close, regular contact between citizens and local leaders contributes to the effectiveness and relevance of urban green growth strategies. That’s the answer Prime Minister Campbell received when she asked “What has made it work in Korea and Boulder?”

Mr. Shlomo Bohbot

Mayor of Ma’alot-Tarshiha Chairman of the Union of Local

Authorities in Israel (ULAI)

Mr. Chang-Soo Jung Deputy Minister

for Planning and Coordination, Ministry of Land, Transport and

Maritime Affairs, Korea

Korea Chang-Soo Jung, Deputy Minister for Planning and Coordination, Ministry of Land, Transport and Maritime Affairs, specified that his government, in developing their green growth strategy, “is trying to mobilize four partners: central government, local government, citizens and private sector.” For Mayor Osborne, what helps is the fact that Boulder is a small community, with a high level of education and specialised knowledge in climate change. The overall level of awareness on climate issues has made Boulder’s initiatives more successful. They can be a laboratory for the country because it may be easier for them to test innovative ideas. One example is the smart grid, which will be introduced in the city. They will be able to see if Time-of-Day pricing can be a factor in energy consumption in the town.

Mr. Stephane Quéré, SVP at GDF Suez,

Co-Chair , Urban Infrastructure

Iniative, WBCSD

As governments develop these strategies and move towards implementation, engaging citizens in the process can ensure that policies meet local needs and increase their impact, as Mayor Osborne described. This is especially true for initiatives that involve new technology that citizens might not be familiar or changes to infrastructure or the way it’s used. Stéphane Quéré, Senior Vice-President of GDF Suez and Co-Chair of the WBCSD (World Business Council on Sustainable Development) Urban Infrastructure Initiative shared how constant dialogue with individuals living near their large-scale projects contributed to meeting their project goals by garnering social acceptance, and lowering the risks associated with the projects, especially when construction time exceeds the mandate of the politicians that first supported it. Juan Carlos Romero-Hicks, Director General, Mexico’s National Council of Science and Technology emphasised that creating green growth requires long-term planning, which necessarily exceeds the three to six-year time horizon for policy commitments that often reflect election cycles.

Urban green growth is also an opportunity for local and national leaders to address some of the social impacts of the financial crisis. Sandrine Salerno, Mayor of Geneva, stressed that the financial crisis presented three pillars: financial, environmental and social. She highlighted the potential for resistance from vulnerable populations (such as the newly unemployed who are sometimes seen as victims of the financial crisis) on green growth measures that involve increased costs, like road-pricing. Manuel Salgado, the Deputy Mayor of Lisbon, put this issue in the broader context of the now traditional middle-class flight from the urban core. For Mayor Salgado, this phenomenon underscores the importance of the social pillar of sustainable development, which should remain a focus in green growth. As the cost of living in city centres increases, many middle class families are moving to suburbs, exacerbating urban sprawl and reducing tax revenues for municipalities. To counteract this trend, local leaders can promote the social benefits of urban

Ms. Sandrine Salerno, Mayor of Geneva,

Switzerland

Mr. Manuel Salgado,

Deputy Mayor of Lisbon, Portugal

green growth. For example, concentrating development around transportation hubs can decrease travel costs, increase ease of access to employment while eliminating the need for a private vehicle. Communicating to citizens the financial, employment and social benefits of green growth measures can be particularly rewarding during the financial recovery.

Regardless of the initiative or group in question, city officials’ engagement with the general public will be adapted to the local context. For instance, in Jakarta a large portion of the population is made up of migrants from rural areas. Governor Bowo is focusing his public education efforts on fostering a stewardship mindset among these citizens as they tend to view nature as abundant and omnipotent rather than something to be cared for. He is also conveying to poor populations that protecting the environment means safeguarding their own future.

Cassam Uteem, former President of Mauritius and Club of Madrid member also emphasized the way governance needs can differ, especially between developed and developing country. “Not long ago, the emphasis was being laid on pro-poor development. Prior to that, almost simultaneously, conditions imposed for foreign development and aid were democracy and rule of law. Many countries from African countries are still struggling with Millennium development Goals (MDGs). It would be most unfair if new, green conditions, without a transition period, were now imposed before granting development aids to those countries.” In this respect, poverty alleviation can be a crucial aspect of green growth strategies for some cities.

In Bordeaux, Mayor Juppé is more concerned with promoting the benefits of living sustainably. “It is important for citizens to realize that green growth creates jobs, and contributes to economic growth, but also a simpler, more enjoyable lifestyle that favours social cohesion and culture,” he said. Helsinki is also focusing on developing a positive attitude towards green growth. Helsinki Deputy Mayor Pekka Sauri explained how they try to combine reliability, sustainability and creativity to convey to residents the importance of green growth. Reliability is about meeting the basic needs

Mr. Casam Uteem, former President

of Mauritius. The shared Societies Project, Co-Chair and Member of the

Club of Madrid

Mr. Pekka Sauri, Deputy Mayor of Helsinki,

Finland

of citizen: trains must come on time, people must be accountable, and they also need security. Sustainability is integrated as a horizontal objective for all policies. Creativity is spurned by fostering an environment where people feel safe enough to fulfil their potential. By embedding green growth in a public discourse that responds directly to citizens’ personal concerns, Deputy Mayor Sauri is building public support for his agenda.

Public awareness campaigns are not the only way to build citizen support for green growth. In both Japan and Korea, national governments are engaging directly with local populations by providing incentives for consumers to use green products and services with eco-point systems. As Chang-Soo Jung, Korean Deputy Minister for Planning and Coordination, Ministry of Land, Transport and Maritime Affairs explained these policies work like frequent-flyer programs. Citizens gain points

for purchasing green products and services. The points can then be used to purchase additional green products and services. Direct incentives like this can contribute to changing popular perceptions about green growth – making it a source of reward not sacrifice. In Yokohama, the launch of a new recycling program provided the opportunity to engage the public in a waste reduction program.

Ms. Fumiko Hayashi,

Mayor of Yokohama, Japan

Rather than focusing on the environmental impact of waste, Yokohama Mayor Hayashi sought to motivate citizens to act by directly involving them in measuring the success of the program. The recycling program led to a 40% reduction in waste generation and a 45% reduction in emissions from incineration. Neighbourhood communities also played a central role in a program to record household energy consumption. This showed an average reduction in CO2 emissions of 5.6% over the previous year. What about jobs in the green economy? Extensive discussion on the notion of “green jobs” occurred during the Roundtable. Mayor Miller of Toronto summarized the central question surrounding green jobs as figuring out how cities can facilitate direct and indirect job creation in green industry. He sees many opportunities in Toronto, including investment in greener infrastructure, greener service support for start-ups in green industries and incentive programs. Geneva Mayor Sandrine Salerno agreed that “cities can play a pioneering role [in job creation] because they have the tools to do so”.

The development of a dynamic, greener economy will, in large part, depend on the availability of skilled and trained people to fill the new jobs, which cities are well placed to facilitate. This helps explain why, in the OECD, many national governments focused the job creation element of their stimulus packages at the local level.

Gaspar Carlos Zarrías Arevalo, State Secretary for Regional Cooperation in Spain, described its country’s Local Investment Fund. It was developed as part of the stimulus package, which featured EUR 5billion being directly allocated to large and medium-sized localities to fund their investments in environmentally and socially sustainable projects. In order to receive the funds, localities must demonstrate that the project will contribute to improving long-term productivity in Spain. The local economic fabric underlies the green development criteria used to identify local companies and policies that can lead to new employment in situ through, for example, renewable energy and sustainable public transport. During the first two months of the project (1 January – 24 February 2010), 13 550 projects were approved according to ILO. By focusing on the growth impacts of green activities, policymakers allow local entrepreneurs and innovators to pursue the green growth solutions they think will be effective and efficient.

Mr. Gaspar Carlos

Zarrías Arevalo, State Secretary for Regional

Cooperation, Spain

Ms. Michèle Pappalardo,

General Commissioner for Sustainable Development,

MEEDDAT, France

Despite the overwhelming support for green growth and the need for green jobs, there is still much disagreement over what constitutes a green job. When asked by Mayor Miller to define green jobs, responses from Roundtable participants varied from any job that reduces the environmental impact of economic activity to any job in a green city. Michele Pappalardo, General Commissioner of Sustainable Development for the French Ministry for Ecology, Energy, Sustainable Development and Spatial Planning, who is responsible for quantifying growth in France’s green jobs, illuminated some of the caveats of this issue: Since public transport is part of the green economy, should bus drivers be considered green jobs? In France, the answer is no, but it’s debatable.Ms. Pappalardo also pointed out that segregating between “green” and “non-green” jobs and industries runs the risk of disenfranchising large portions of the population – contrary to the social cohesion pillar of green growth. She “prefers to create jobs in green cities rather than create green jobs.”

Mr. Fischer, Vice President of Oracle recognized that any industry can contribute to green growth, and cautioned that “we must not segregate between ‘green’ and ‘non-green’ industries”. There was also debate over whether green jobs were necessarily new jobs. As Melbourne Lord Mayor Doyle pointed out, landscape gardeners have existed for centuries; Kostas Kartalis, President of the Standing Committee for the Environment in the Greek Parliament, sometimes a green job is just a re-categorization of an existing job. pointed out that governmentsmust avoid the paradox of high green employment rate, and low employment in non-green jobs. Cevdet Yilmaz, Turkish Minister of State also highlighted the need to consider direct jobs created by investments in green cities but also indirect jobs and externalities that create a more favourable environment for employment. In that sense, services are very important as increasing quality of life at a reasonable cost will play a key role in fostering the green economy. Laurence Tubiana, Director of IDDRI, Member of the Club of Madrid’s Global Leadership for Climate Action, put this in a larger context: “A fundamental question that must be answered is whether green growth is a new sector or a transformation of the whole economy.”

Mr. Kostas Kartalis,

President, Standing Committee for the

Environment, Greek Parliament

Mr. Angel Gurría, OECD Secretary-General; and Mrs. Reta Jo Lewis, Special Representative,

Global Intergovernmental Affairs, Department of State, United States

A clear definition of green jobs is necessary to provide public and private actors with a clear objective. OECD Secretary-General Angel Gurría shared his experience as the Mexican Minister of Finance when a tax incentive for innovationled to a redefining of what constituted an innovative activity. All of a sudden, everything was an innovation because people wanted to benefit from the funds. In this context, Secretary-General Gurría warned against “making everything a green job”. Maximizing the impact of public policies that target green job growth will necessitate a clear definition.

The urban policy toolkit affords many opportunities to foster that balance, e.g. by building an enabling infrastructure, and incentivising green consumption and production. In Copenhagen, Lord Mayor Jensen, explained how the OECD Territorial Review of Copenhagen conducted there had set the stage for their green growth focus, which is already showing signs of progress. For example, Copenhagen proves that green transportation synergizes with job creation, particularly when it comes to cycling. The current title for the world’s best cycling city is coveted by Copenhagen, Malmo and Amsterdam, among other cities. By 2015, Copenhagen aims to lead this pack, increasing the share of people using a bicycle to go to and from their place of work and/or study to 50%. Already, 25% of families with two or more children use specially designed bicycles to transport their children. This innovative design was developed by local entrepreneurs responding to the demand for family-friendly urban transportation. Today, local companies like Nihola are meeting that demand and demonstrating the potential synergy between green and growth: production creates local jobs and exports; widespread use reduces congestion and CO2 emissions while improving local public health. This effort is just one part of the green growth strategy Copenhagen is developing.

Mr. Alain Juppé,

Mayor of Bordeaux, France; and Mr. Frank Jensen,

Lord Mayor of Copenhagen, Denmark

Another example, cited by Wolfgang Petritsch, Austria’s Ambassador to the OECD, is KLiP Wein, Vienna’s climate protection program,which was created in 1999 and includes 241 measures taken over the last ten years accounting for EUR 11 billion of investments in energy, public transit, greening public procurement, waste management, and nature conservation. According to a 2009 evaluation completed by the Austrian Energy Agency, KLiP Wein created 50,000 indirect and direct jobs. In Italy, the Province of Rome is seeking to mimic those results with the Kyoto Action Plan developed in 2008.

Nicolas Zingaretti, President of Rome Province, Italy enumerated the five areas of where the EUR 520 million for funds could be used: water conservation and improving water treatment; alternative energy; separate collection of waste and recycling; sustainable transport and green public procurement. An Italian Ministry of Economics certified report estimated that this plan will create around 20 000 jobs. In particular, PV panels on schools, water distribution work in cities around Rome city have significant job-creation potential. “Initial results are very positive: 600 000 people are participating in the program to collect separated garbage, compared to 29 000 in 2008. To support the expansion, the Province financed 35 collection centres, 4 compost plants, representing EUR 8 million of investment” said Provincial President Zingaretti.

Mr. Nicolas Zingaretti, President of Rome Province,

Italy

Greening the workforce through specialized training and skills development can also help minimize the potentially negative impact of a precise definition of green jobs (i.e. minimizing the possible stigmatization of “non-green” jobs) while increasing public buy-in for green growth initiatives. To do so, the education and workforce training systems need to be adapted to a wide variety of green job skills – both specific “green jobs” and “green issues” in all careers. In the context of fiscal consolidation, governments can seek partnerships with existing institutions with the relevant knowledge to develop programs that prepare workers to contribute to urban green growth – rather than funding these programs directly. Peter Waldorff,

General Secretary of Public Services International, the pre-eminent international labour group and close partner of the Trade Union Advisory Committee (TUAC) to the OECD, pointed to the need for governments to work with labour unions in this effort. Mr. Waldorff suggested that as labour mobility increases and the time employees spend at one job decreases, companies are reducing their investments in worker training since they are less likely to reap the long-term benefits. Trade unions accompany many workers in key sectors for the green economy throughout their careers. Mr. Waldorff explained that this long-term relationship with workers allows labour organizations to identify the new skills needed to prepare the workforce to contribute to the green economy.

Mr. Peter Waldorff, General Secretary of

Public Services International, the pre-eminent international labour group and close

partner of the Trade Union Advisory

Committee (TUAC)

Vinci Executive Vice-President Remi Dorval shared the idea that closer coordination is needed. “Private sector must act in close connection with cities and universities to enable green growth”. For his part, Mr. Kostas Kartalis, the President of the Greek Parliament’s Standing Committee for the Environment called attention to the fact that training needs may not be limited to environmentally oriented industries. While there are specific technical expertises required for deploying and managing green technologies, fully transitioning to a green economy can require the integration of green knowledge and practices into a wide spectrum of professions. Mr. Kartalis provided several examples: certain lawyers will need to understand the implications of new products and practices on existing contract laws, while office workers may require training to make use of these innovations, like the smart grid.

Ms. Ana Marie Argilagos,

Deputy Assistant Secretary International and

Philanthropic Affairs, Department of Housing

and Urban Development (HUD), United States

The 2010 Roundtable allowed local and national leaders to articulate their common agenda and shared challenges in their pursuit of urban green growth outcomes. Prime Minister Campbell summed up some of the day’s main conclusions, as the following: “When groups come together at an international level, it can lead to benchmarks which can, in turn, be helpful when the domestic context proves restrictive.” Mayor Miller also highlighted the need for intergovernmental co-ordination: “All participants assumed the need for national policies and funding that support cities. The details need to be developed. How are policies made flexible enough yet strong enough to have an impact in cities nationwide. Tremendous potential if we can harness this partnership.” Deputy Assistant Secretary for the Office for International and Philanthropic Innovation at the United States Department of Housing and Urban Development, Ana Marie Argilagos, called on the OECD to define and explore normative standards for member countries.

The discussions and debates summarised by the co-chairs of the partnering institutions - OECD, the C40s and the Club of Madrid - clarified four policy messages, which will facilitate future efforts to promote urban green growth:

1. “Urban-based” green growth policy can provide powerful answers for today’s economic crisis. Roundtable participants came to a strong consensus around the conclusion that urban, green and growths are mutually reinforcing: they can complement each other to become an engine of intelligent recovery. City policies that respond to the negative effects of urban agglomeration can address both environmental and growth priorities.

2. Cities and regions are already promoting green growth through an arsenal of innovative policy tools, which must be shared systematically. Since cities consume between 60 and 80% of the world’s total energy output, it is not surprising that the most innovative solutions are designed in metropolises. But Mayor Miller also highlighted the difficult work ahead. “There is a clear need to make these innovations broader to see real benefits to residents in modern employment.”

3. Policy tools alone will not do the trick. Moving towards a low-carbon, more sustainable society will require significant up-front investments. Achieving this goal will require developing new financial instruments to power investments in urban green growth. There is a need, for example, for more local cap-and-trade systems and Clean Development Mechanisms that actually respond to the multi-sectoral reality of urban green growth. We need to move away from financing isolated projects that are disconnected and towards larger urban sustainable growth priorities. We must support our banks that provide innovative financial instruments to finance green start-ups and projects.

4. Making the most of green growth requires bridging the gap between national and city strategies. National governments have a key role to play in enhancing cities’ capacity to act on green growth.

These policy messages move governments one step closer to transforming cities into beacons of green growth by clarifying common ground, identifying where the knowledge gaps lie and areas where governments needs additional support. In particular, participants called on the OECD to identify tools and best practices that to enable local policy makers to assess their green growth initiatives based on the triple metric of job-creation effects, impact on the local environment, and the distribution of benefits. Highlighting the importance of this work, the OECD Secretary-General Angel Gurría concluded the 3rd Roundtable for Mayors and Ministers with the following words:

“We cannot exit the crisis to go back to business as usual. We need to put an end to the false dichotomy between economic growth and environmental sustainability. If our governments fail to act, if we waste this opportunity of learning from each other and we keep delaying the adoption of necessary policies, then GHG emissions will grow by about 52% by 2050, raising global temperatures by up to 2.4 degrees Celsius; by the end of the century these temperatures could rise by 4 to 6 degrees. There might be different estimates of the extent of the environmental, social and economic disaster that this would mean, but most serious thinkers agree that it will be tragic.

We need to continue working hard to develop the necessary tools to measure the co-benefits between environmental and economic policies at the urban scale, particularly in the transportation, building and energy sectors.”

Mr. Angel Gurría,

OECD Secretary-General

Building on the discussions of the Paris Roundtable, the OECD has launched a three-year programme on Cities and Green Growth initiatives, including the development of performance and policy indicators, case studies of cities and a comparative analysis that identifies best practices. The objective of the Programme is to build on previous work by making the analysis of green growth more systematic and pooling existing knowledge of the best policy tools at the urban scale, particularly in the transportation, building and energy sectors. To foster widespread endorsement of the analysis and indicators, each step of the programme development will culminate in a technical workshop of a small network of experts created to provide feedback on work completed and guidance on subsequent steps. The body of work will be published in an OECD Report of Cities and Green Growth, expected to be finalised in 2012/2013. The report will assist both national and local governments evaluate the opportunities for pursuing green growth strategies within cities.

www.oecd.org/urban/2010roundtable Contact: Lamia Kamal-Chaoui, Head of the Urban Development Programme

([email protected])

Closing remarks

Excellencies, Ministers, Mayors, Ladies and Gentlemen:

Congratulations! Once again, the Urban Roundtable of Mayors and Ministers has proved its relevance. Your exchanges and discussions have been like wind turbines for the green growth agenda; your agreements and conclusions are like solar energy to move towards a cleaner global economy.

Your effort, your work, will be extremely useful for the OECD Green Growth Strategy to be released in 2011. But most of all I hope that a great part of these shared experiences and ideas will go back home with you and help you make a difference in greening our cities.

Key policy messages This has been a most productive meeting. From your discussions and debates this morning, as well as from the reports by the excellent co-chairs of the two Policy Dialogues, we have identified a series of key policy messages. Let me highlight four which we consider crucial: 1. The first one is that “urban-based” green growth policy can provide powerful answers for today’s economic crisis. We have reached a strong consensus around the conclusion that URBAN, GREEN AND GROWTH can blend and complement each other to become an engine of intelligent recovery. City policies that respond to the negative effects of urban agglomeration can address both environmental and growth priorities. We have to move as a well coordinated group, in a “Blitzkrieg”, on this track. 2. Secondly, we all have recognized that cities and regions are already promoting green growth through an arsenal of innovative policy tools, which must be shared systematically. Our cities consume between 60 and 80% of the world’s total energy output, so it is not surprising that the most innovative solutions are designed in our metropolis. The variety of these tools is amazing: tools to green public utilities and purchases; to assist local industries in improving eco-efficiency; to train local workers to meet the demand for green job skills; to support research and the development of green-tech clusters that can become drivers of urban green growth over the long term. From the Los Angeles Green-LA Climate Action Plan to Venice’s Port Maghera Fusina hydrogen power station, from Mexico’s Hoy No Circula programme to Toronto’s deep lake water cooling system or the deployment of ICTs in Korean municipalities to enhance energy efficiency, our cities are “green growth laboratories”. We must share this know-how. 3. Thirdly, policy tools on their own will not do the trick. Moving towards a low-carbon, more sustainable society will require significant up-front investments. Our third key message is therefore related to the importance of developing new financial instruments to power investments in urban green growth. We need, for example, more local cap-and-trade systems and Clean Development Mechanisms that actually respond to the multi-sectoral reality of urban green growth. We need to move away from financing isolated projects that are disconnected and towards larger urban sustainable growth priorities. We must support our banks that provide innovative financial instruments to finance green start-ups and projects. 4. A fourth important policy message that derives from our meeting is that if we want to make the most of green growth we need to bridge the gap between national and city strategies. National governments have a key role to play in enhancing cities’ capacity to act on green growth. Urban green growth policies need national price signals and standards, for example. Green growth only makes sense with a price of carbon emissions and a value of environmental quality. This price and this value need to be set at the national level to avoid creating harmful competition among regions. National support is also needed for large-scale urban infrastructure projects, as well as for technical assistance to help cities measure the economic and environmental impact of green growth initiatives. We still have a lot of progress to make. In most of our countries, national plans do not yet account for the urban elements of green growth, or for the contribution of cities’ existing activities, or for the cities’ ability to change patterns of energy usage and consumption. We need better coordination among our different levels of government.

The way forward Looking forward, the future of this planet depends on our capacity to make progress in these and other crucial fields that you have identified here today. If our governments fail to act, if we waste this opportunity of learning from each other and we keep delaying the adoption of necessary policies, then GHG emissions will grow by about 52% by 2050, raising global temperatures by up to 2.4 degrees Celsius; by the end of the century these temperatures could rise by 4 to 6 degrees. There might be different estimates of the extent of the environmental, social and economic disaster that this would mean, but most serious thinkers agree that it will be tragic. So we cannot exit the crisis to go back to business as usual. We need to put an end to the false dichotomy between economic growth and environmental sustainability. We need to continue working hard to develop the necessary tools to measure the co-benefits between environmental and economic policies at the urban scale, particularly in the transportation, building and energy sectors. We need to develop a common set of urban environmental and economic indicators which can facilitate the comparison of best practices and measure green jobs. Currently, each city uses its own methodology, making it impossible to mutually learn what works or not. We need to make the analysis of green growth more systematic and pool our knowledge of the best tools to pursue it. The OECD has already started to include this analysis in the Metropolitan Policy reviews of Venice and Guangdong ─ China’s richest and most populated province. We plan to do the same in the forthcoming review of Johannesburg-Pretoria. We have dedicated attention to the implementation of national green growth policies in urban areas in our forthcoming National Urban Policy Reviews of Korea and Poland. And we will build on your conclusions while moving forward. Your Excellencies, Ladies and Gentlemen: The earth as we know it is vanishing. A great part of that loss is already irreversible. Many of our cities are the most anti-natural creation that we can think of. Let’s bring them back to nature, let’s bring nature back to our cities. It is a colossal task that will demand millions of workers, hefty investments, quantum leaps in innovation, effective and far-looking policies, and a major cultural change towards more responsible living patterns. It is a great challenge, but it is not just about cities and nature; it is also what the global economy needs to take off again. Today we have confirmed that many of the solutions are already there, promoting green growth in a far away city. That’s why you came here today. I thank you all for your commitment. And I invite you to keep in mind the ultimate challenge: how to share this knowledge, our knowledge, among us, but also with the cities of the developing world. Remember that it is there where 80% of the world’s urban dwellers will be living by 2030.1 It’s not that far away, and if we don’t help them to foster green-growth now, then their problems, their mega-problems, will be our problems. Thank you very much. I look forward to meeting you all again at the next OECD Urban Roundtable of Mayors and Ministers.

Angel Gurría, Secretary-General of the OECD

For more information: www.oecd.org/urban/2010roundtable

Cities and Green Growth KEY POINTS

Cities’ growth impacts both environmental quality and national competitiveness.

• Cities are high drivers of national GDP and main centres of innovation and typically feature higher levels of productivity than their country’s average thanks to specialisation.

• Cities are also major energy and resource consumers. In a predominately urban world, cities consume 60-80% of energy worldwide and therefore are responsible for large shares of GHG emissions.

• The urban form matters: the lower the urban density, the more energy is consumed for electricity and transportation. CO2 emissions per capita drop significantly as urban areas densify.

• Cities provide the right scale for markets of eco-products and for large-scale green infrastructure investment.

• Short-term costs of urban environmental policies are lower than at the national level because of the effects of stronger synergies. Local policies to reduce pollution increase attractiveness – a main factor of city competitiveness, especially in economies that are higher up the value chain.

1. As Urban Density Increases, CO2 Emissions from Transport Decrease

Source: OECD Regional Database; IEA (2008), CO2 Emissions from Fuel Combustion, OECD/IEA, Paris.

Cities have a pivotal role in national and global green growth strategies.

2. The Green Growth Diamond for Cities

• Cities and regions are promoting green growth through an arsenal of innovative tools, which need to be pursued simultaneously to unlock policy complementarities:

o Greening public investment and purchasing – in infrastructure, building, transport, communication networks and utilities.

o Supporting greener local industries by improving the eco-efficiency of production, easing the way for green start-ups and training local workers.

o Raising consumer awareness through consumer education and lowering the cost of green technology purchases.

o Catalysing research and the development of the green-tech clusters that will become the engines of cities’ green economic growth over the long term.

• Compact cities policies can contribute to green growth and significantly reduce energy consumption. Successful “compact cities” rely on transportation linkages, mixed land uses, and high-quality urban services. Applying densification policies or congestion charges can have long-term positive effects on the economy due to technological innovation: e.g. high-quality, more-efficient public transport that responds to economic needs and better connects labour with employment, thus increasing firms’ productivity.

Australia

Austria Belgium Denmark

Czech Republic

Canada

Finland

France

Germany Greece

Hungary

Ireland

Italy Japan Korea

Mexico

New Zealand

Norway

Poland

Portugal

Slovak Republic

Turkey

United States

0

1000

2000

3000

4000

5000

6000

7000

0 1000 2000 3000 4000 5000 6000

per c

apit

a tr

ansp

ort

CO2

emis

sion

s in

2006

(k

g CO

2/ p

opul

atio

n)

Urban density in 2005 (population/ km2)

Greening public utilities and purchasing

Raising consumer awareness

Supporting greener industries

Research and innovative applications

Contacts: Lamia Kamal-Chaoui ([email protected]) and Alexis Robert ([email protected])

Moving towards a low-carbon, more sustainable society will require significant up-front investments.

• Acting on green growth in cities requires new financial instruments, such as urban use of carbon markets, local cap-and-trade systems and grants that take environmental sustainability into account.

• Existing urban revenue sources could be “greened”: congestion charges and road taxes can reduce car travel and fund green infrastructure; local energy fees that put a price on wasteful energy use can increase efficiency; and property taxes can stop favouring urban sprawl and start encouraging development in the urban core and around transportation linkages.

• Private financing will be important: public-private partnerships could bolster urban green growth goals but must be transparent and clearly accounted for.

3. Local and regional governments spend nearly as much on the environment as national governments

Source: OECD National Accounts Statistics Database.

National governments have a key role to play in enhancing cities’ capacity to act on green growth.

• There is a need to bridge the gap between national and local approaches to green growth. National plans do not account for the spatial elements of green growth, nor for cities’ existing contribution to green growth. Urban green growth strategies tend be stand-alone, “flagship” green projects that are dependent on short-term political cycles, but long-term sustainable economic growth calls for a systematic, citywide, multi-sectoral approach.

• National governments could green urban finance by re-designing taxes and grants to sub-national governments to correct incentives for unsustainable behaviour and reward cities that create environmental benefits beyond their borders.

• Technical assistance, funding and knowledge-sharing is needed for large-scale infrastructure projects – such as smart grids, high-speed trains, and green R&D – and to help cities measure the economic and environmental impact of green growth initiatives.

• Strong national and international environmental targets and baseline standards are needed to remove policy obstacles, prevent harmful competition among regions and promote incentives for a “race to the top”. Cities also need flexibility to innovate urban-level policy responses that can then be scaled up.

• Green growth is impacted by the way carbon emissions and environmental quality are valued. Urban green growth policies would benefit from national price signals and standards – e.g. through carbon taxes or other pricing mechanisms.

Better monitoring of policy impact is needed.

• A common set of urban environmental and economic indicators are needed to compare best practices and measure green jobs and growth. Inconsistent methodologies across cities counteract any attempt to monitor and evaluate progress on green growth.

• An urban green growth strategy should include data generation, market information and analysis of the local economy to better understand how local energy use and emissions relate to economic activity. Access to this information by national governments could inform both urban and national strategies.

National and sub-national expenditures on environmental protection in OECD countries (2005)

© OECD 2010

CITIES AND GREEN GROWTH ISSUES PAPER FOR

THE 2010 OECD URBAN ROUNDTABLE OF MAYORS AND MINISTERS *

As cities emerge from the crisis, there is a need to find means of economic growth that help cities reduce their contributions to climate change and resource use.

City and national leaders are beginning to understand green growth as a means of creating jobs and growth while reducing costs and environmental impact over the long run. The global recession and continued concern over climate change have called into question the ability of the current model for economic growth to foster long-term prosperity. Green growth has emerged as a new paradigm that promotes economic development while reducing greenhouse emissions and pollution, minimising waste and inefficient use of natural resources and maintaining biodiversity. As key engines of economic growth, job creation and innovation, but also as major contributors to global warming and environmental problems, cities play an increasingly important role in meeting this challenge. A green growth agenda reflects an urgency to confront climate change and out-of-control resource use, which are disproportionately affected by urban development.

More than half of the world’s population now lives in cities, a share that is expected to grow to two-thirds by 2050 (UNFPA, 2007; UNHABITAT 2009). As key centres of economic activity and production, cities are also the primary consumers of energy worldwide, (OECD, 2006; OECD, 2008a), consuming an estimated 60-80% of the world’s total energy output (IEA, 2008a). All projections indicate that this trend will continue as urban populations grow, especially as cities in the developing world switch from low-carbon to high-carbon sources of energy. If we continue on the present trajectory, global greenhouse gas emissions will increase by more than 50% by mid-century, causing world temperatures to rise from 1.7 to 2.4 degrees Celsius above pre-industrial levels by 2050, and from 4 to 6 degrees Celsius or more in the long-term (OECD, 2008b). Cities often have large ecological footprints, which place pressure on surrounding ecosystems and contribute to the export of waste by-products to non-urban areas.

With economic growth and the generation of wealth, direct and indirect consumption of energy and materials increase, adding to pressure on water resources, waste disposal, energy and transport (OECD, 2008b), and straining local and national budgets. The growing number of urban pockets with very high population densities and compact centres of leisure and economic activities rely on distant resources to remain sustainable. The ecological footprint – the total area required to provide environmental goods and services for a specific region – is particularly severe in cities (Figure 1). For example, London’s footprint was found to be 125 times the size of the city and twice the land size of Great Britain (Wackernagel, 2006; London Remade, 2007). Urbanisation is associated with higher ecological footprints per capita, primarily because of the high levels of industrial commodity production and the concentration of key consumer markets in urban regions (Jorgenson, 2003).

Figure 1. The ecological footprint is highest in urban areas

Source: www.footprintstandards.org

* This report was prepared by the Regional Policy Development Division of the OECD for the 2010 OECD Roundtable of Mayors and Ministers on Cities and Green Growth, Paris, 25 May 2010: www.oecd.org/urban/2010roundtable. Contact: Lamia [email protected]

© OECD 2010

Cities, especially those located on the coast or near rivers, are especially vulnerable to water-related calamities and the effects of climate change.

An OECD study on 136 port cities shows that 40 million people today are exposed to rising sea levels. The total value of assets exposed in 2005 was estimated at USD 3 000 billion, which corresponded to around 5% of global GDP in 2005. By the 2070s, in a scenario involving higher seal levels and increased storm activity, land subsidence, population growth and urbanisation, the total population exposed could grow over three times, to around 150 million people, and the total asset exposure could reach as much as USD 35 trillion, more than ten times the 2005 figure. This is projected to amount to roughly 9% of projected annual GDP at that time. Abating climate change not only reduces the risk of catastrophic impacts on cities, but also addresses local environmental problems such as poor air and water quality (Nicholls et al., 2008). A new approach is warranted: mayors and national government officials must find ways to successfully leverage green growth in the face of tremendous economic change and growing environmental pressures. Four questions have emerged for national and urban policy makers interested in making the transition to a greener economy

1. How can a green growth strategy contribute to a stronger economy and job creation while reducing greenhouse gas emissions and other environmental impacts?

2. Why should cities have a key role in the new green growth model?

3. How can local governments integrate green growth principles into the web of existing policies on transportation, building, land use, and energy?

4. What financing and coordination mechanisms do cities need to successfully implement green growth policies?

1. How can a green growth strategy contribute to a stronger economy and job creation while reducing cities’ impact on climate change and the environment? Following the recession, a window of opportunity has opened to reconsider sources of long-term, sustainable growth.

The traditional efficiency paradigm is giving way to a richer definition of societal progress, where efficiency, equity and environmental sustainability are closely interrelated. Traditionally, economic efficiency was seen as a goal separate from equity and environmental objectives. Economic policy was basically assigned the role of reaching the efficiency frontier or maximising growth rates. Governmental action addressing equity and environmental objectives was often designed to avoid interference with the search for efficiency. There has been, however, a growing uneasiness with this vision. Driven by the climate change debate, public opinion is increasingly questioning the sustainability of our development model and its replication in the developing world. The persistent and growing development gaps, both across and within nations, also lead to questions about the assumed separation between efficiency and equity objectives, notably in the context of a globalised world (OECD, 2008c; OECD, 2009a).

Green growth aims to become a pillar of short–term economic recovery and a catalyst for sustainable long-term growth.

The economic crisis has provided the opportunity for structuring economic recovery in ways that are more environmentally and socially sustainable. Green growth implies increases in public and private investments and consumption leading to sustainable resource use, lower greenhouse gas emissions, and reduced vulnerability to climate change. Many countries have included an emphasis on green growth in their stimulus packages, putting in place a structure to evaluate policies from an economic efficiency, environmental quality and social equity perspective (OECD, 2010a). The OECD has been mandated by 34 countries to develop a global Green Growth Strategy that defines green growth and the policy responses it offers (Box 1).

© OECD 2010

Box 1. Launching of the OECD Green Growth Strategy

In June 2009, Ministers of Economy, Finance, Trade and Foreign Affairs from 34 countries, including both OECD and non-OECD members, met at the OECD to adopt a Declaration on Green Growth. They agreed to develop frameworks for economic growth that would minimise environmental deterioration and enhance quality of life, and mandated the OECD to develop a Green Growth Strategy, which will be presented in June 2012.

The aim of the Strategy is to provide clear recommendations for how countries can achieve economic growth and development while at the same time moving towards a low-carbon economy, reducing pollution, minimising waste and inefficient use of natural resources and maintaining biodiversity. This entails developing specific tools and policy recommendations across a range of relevant areas from investment and taxes to innovation, trade and employment. The OECD Green Growth Strategy is being prepared through a multi-disciplinary inter-governmental process and is based on the work of the 25 OECD Committees engaged in its development. It will be a fundamental contribution from the OECD to support countries’ transition to greener growth in the coming years. Further information on the Green Growth Strategy is available at: www.oecd.org/greengrowth.

By linking environmental quality to economic growth, green growth represents a generational shift in urban sustainability policies.

The first generation of environmental policies focused on modifying urban activities to reduce their impact on the environment: reducing energy required for moving around the city, and heating and cooling buildings; reducing waste and increasing recycling; reducing water consumption and preserving open space. The second generation of policies, as synthesised in green growth, recognises that environmental policies that do not also support economic growth are not sustainable in the long term. As countries grow richer there is a legitimate aspiration for higher quality and high status goods. Up to now, these goods have tended to have a higher environmental footprint (e.g. bigger cars, larger houses). The great challenge for green growth is precisely how to reconcile individual material welfare and environmental sustainability. Thus, transportation and land-use policies that aim to reduce greenhouse gas emissions and air pollution must also increase the efficiency of movement of labour and goods – connect employees with jobs, manufacturers with retailers, and residents with commercial and leisure activities. Building policies that seek to increase energy efficiency and the use of renewable energies need also to broaden their scope to support the development of local businesses in green technologies and energy services, and the transition to new skills to multiply the effect of green job creation to the wider economy. Policies to reduce and recycle waste have to see non-recyclable waste as a source of energy. There is certainly a potential for job creation associated with green growth, provided that new labour market opportunities are well understood and more thoroughly monitored.

More analysis is needed to enable local policy makers to assess their development plans based on the triple metric of job-creation effects, impact on the local environment, and the distribution of benefits. While most of the local investments in the domains of energy provision, transportation and the built environment are likely to yield efficiency gains and multiplier effects in the medium-term to long-term, their effect on net employment in the short run is not straightforward. Capacity building and information sharing on local green policies is thus of critical importance. Policy-specific estimates of approximate costs and time-horizons of the investments are also needed. The knowledge gap on labour effects and investment costs vs. benefits limits the capacity of sub-national governments to prioritise their interventions and generates uncertainty, slowing down urgent policies and investments.

© OECD 2010

2. Why should cities have a key role in the new green growth model?

National economies are today largely metropolitan and the health and vitality of cities are drivers for any long-term, sustainable economic model.

Cities are the primary consumers of energy worldwide, so an increase in urban energy efficiency and renewable energy use will have far-reaching impact on the switch to green energy.

How cities develop affects national environmental targets. The energy efficiency of urban activities and urban spatial form has an impact on the success of local and national climate change and sustainability goals.

When designed at the urban level, policies to reduce greenhouse gas emissions, resource use and waste are more effective and cost-efficient. Complementarities between environmental and economic growth policies are stronger at the local level, where addressing the negative impacts of urban concentration (e.g. congestion, pollution) can both reduce environmental impacts and increase economic efficiency. Urban policies that reduce energy consumption can be applied without harming economic growth in the long-term, when innovation is taken into account.

Cities foster innovation, which will be crucial for the success of green growth strategies. As drivers of innovation and entrepreneurship, cities account for a disproportionately strong share of a country’s GDP per capita.

© OECD 2010

Cities are the primary consumers of energy worldwide.

Cities are major contributors to CO2 emissions.

Within the next decade, there will be nearly 500 cities of more than a million people, including several ‘megacities’ with populations exceeding 20 million. Cities consume a great majority – between 60 to 80% – of energy production worldwide and account for a roughly equal share of global CO2 emissions (IEA, 2008a). Growing urbanisation will lead to a significant increase in energy use and CO2 emissions, particularly in non-OECD countries in Asia and Africa where urban energy use is likely to shift from CO2-neutral energy sources (biomass and waste) to CO2-intensive energy sources (Jollands in OECD, 2008a).

Energy consumption accounts for the bulk of cities’ climate impact in OECD countries.

Greenhouse gas emissions in OECD cities are increasingly driven by the energy services required for lighting, heating and cooling, appliance use, electronics use, and mobility (Figure 2 presents an example from the U.S). The impact of energy consumption on greenhouse gas emissions depends not just on the amount consumed, but also on the greenhouse gas emissions generated by the energy source, which in turn depend on the mode of energy production. For example, Cape Town has comparatively lower per capita electricity consumption than Geneva, but its consumption has a higher greenhouse gas emissions factor, due to South Africa’s use of coal for 92% of its electricity generation whilst Geneva relies on hydropower. Technology also matters: urban areas relying on inefficient or wasteful energy sources contribute more greenhouse gas emissions than those that consume the same amount from more efficient sources (Kennedy et al., 2009).

Figure 2. Cities' energy sources matter

Carbon emissions produced in predominantly urban areas in the United States by type of activity (2002)

Electricity production,

35%

Road transport, 29%

Industrial, 15%

Residential, 8%

Commercial, 5%

Aircraft, 4%

Non-road transport, 3%

Unknown, 1%

Source: OECD calculations based on data from the Vulcan Project (2009). The Vulcan Project is a NASA/DOE funded effort under the North American Carbon Program (NACP) to quantify North American fossil fuel carbon dioxide (CO2) emissions at space and time scales much finer than has been achieved in the past.

How cities develop affects their national environmental targets.

How cities grow and operate matters for energy and resource demand.

It is not cities, or urbanisation per se, that contribute to greenhouse gas emissions and resource demand, but rather the way in which people move around the city, the sprawling spatial patterns they produce, the way in which people use energy at home, and how buildings are heated that make cities great consumers of energy and polluters. The acceleration of urbanisation since the mid-half of the last century has been accompanied by urban sprawl, with urban land area doubling in the OECD and growing by a factor of five in the rest of the world (Figure 3). In fact, in the vast majority of OECD metro-regions, the suburban belt grows faster than the core – 66 out of the 78 largest OECD cities experienced a faster growth of their suburban belt than their urban core over 1995-2005 (Kamal-Chaoui & Robert (eds.), 2009).

© OECD 2010

Figure 3. Urban sprawl on the rise Trends in urban land expansion

in the world and the OECD

0

100,000

200,000

300,000

400,000

500,000

600,000

1950 1970 1990 2000

Urb

an a

rea

(km

2 )

OECD Rest of the World BRICs

Note: BRIC countries refers to Brazil, Russia, India and China. Source: OECD (2008b), Environmental Outlook to 2030, OECD, Paris.

Efforts to reduce energy use and greenhouse emissions benefit from sustainable urban form, especially density.

While urbanisation is linked to increased carbon emissions, not all urban areas contribute to emissions equally. Urban density and spatial organisation are key factors that influence energy consumption, especially in the transportation and building sectors (Figure 4). As density increases, CO2 emissions from transport go down. Austria’s urban areas are more than four times denser than Australia’s, and generate only 60% of the amount of CO2 emissions per capita that Australia’s urban areas generate. Therefore, while urbanisation levels might bring about an expansion in carbon emissions, these are reduced with higher density. As density increases in urban areas, per capita electricity demand also decreases. For instance, Japan’s urban areas are around five times denser than Canada’s, and the consumption of electricity per person in the former is around 40% that of the latter. If we take countries in the same geographical context with similar heating needs such as Denmark and Finland, the proportions are quite similar. Denmark’s urban areas are denser than Finland’s by a factor of four, and people there only consume around 40% of the electricity consumed by the Finns. Similarly, not all cities in the same country have the same lifestyles nor do they contribute to carbon emissions in the same way. Although the USA is the OECD country with the most flows of carbon emissions, internally cities like Los Angeles are noticeable for the concentration of CO2 emissions (Figure 5). Even smaller cities like Houston produce much more CO2 than New York –the largest city in the country.

© OECD 2010

Figure 4. High density in cities is associated with lower CO2 emissions

High density in cities is associated with lower per capita carbon emissions produced by transport activities

Australia

Austria Belgium Denmark

Czech Republic

Canada

Finland

France

Germany

Hungary

Ireland

Italy Japan Korea

Mexico

New Zealand

Norway

Poland

Portugal

Spain

Slovak Republic

Sweden Switzerland

Turkey

United Kingdom

United States

0

1000

2000

3000

4000

5000

6000

0 1000 2000 3000 4000 5000

per c

apit

a tr

ansp

ort C

O2

emis

sion

s in

2006

(k

g CO

2/ p

opul

atio

n)

Urban density in 2005 (population/ km2)

High density in cities is associated with lower electricity consumption

Australia

Austria Belgium

Denmark Czech Republic

Canada Finland

France Germany

Greece

Hungary

Ireland

Italy

Japan Korea

Mexico

Netherlands

New Zealand

Norway

Poland Portugal

Spain

Slovak Republic

Sweden

Switzerland

Turkey

United Kingdom

United States

0

5000

10000

15000

20000

25000

0 1000 2000 3000 4000 5000

Per c

apit

a el

ectr

icit

y co

nsum

ptio

n in

200

6 (K

Wh

/ po

pula

tion

)

Urban density in 2005 (population / km2)

Notes: Urban density is calculated based on the OECD definition of “predominantly urban” areas. Iceland and Luxemburg were not included in the sample as the OECD Regional Database identifies no predominantly urban (PU) regions in those countries. Source: Calculations based on data from the OECD Regional Database; IEA (2008b) CO2 Emissions from Fuel Combustion, OECD/IEA, Paris; and IEA (2009a) Energy Balances in OECD Countries, OECD/IEA, Paris.

© OECD 2010

Figure 5. Concentration of carbon emissions in the USA

CO2 emissions at county level for 2002

Source: Own calculations based on data from the Vulcan Project (2009) and the OECD typology of regions. The Vulcan Project is a NASA/DOE funded effort under the North American Carbon Program (NACP) to quantify North American fossil fuel carbon dioxide (CO2) emissions at space and time scales much finer than has been achieved in the past.

When urban policies are integrated into national environmental and economic policy goals, the costs of environmental abatement are reduced Increasing urban density and setting congestion charges can reduce energy and resource use without reducing economic growth.

Findings from a general equilibrium model of OECD metropolitan regions demonstrate that urban density policies and congestion charges can reduce the overall cost to the economy of meeting greenhouse gas emissions reduction targets, compared to applying economy-wide policies, such as a carbon tax, alone.1 In this model, carbon emissions are reduced relative to the baseline following the implementation of densification policies2 and congestion charges, a form of road toll of the type already implemented in some metro-regions (London and Stockholm among others).3 This is in line with previous evidence that urban form affects individuals’ travel behaviour and consequently global environmental quality (Grazi et al., 2008). While densification and congestion charges are not the only effective tools to reduce energy demand and carbon emissions, they are important as they do not have a detrimental effect on long-term economic growth, when innovation is taken into account (Figure 6).

© OECD 2010

Figure 6. Densification and congestion charges can generate the conditions for economic growth

Changes in GDP comparing densification and congestion charges vis-à-vis baseline scenario

-0.02%

-0.01%

0.00%

0.01%

0.02%

0.03%

0.04%

0.05%

2000 2010 2020 2030 2040 2050

DS/BS TS/BS

Note: DS refers to Densification Scenario; BS refers to Baseline Scenario; TS refers to Tax Scenario (in turn refer to the application of congestion charges).

Source: Simulations from IMACLIM-R model based on the OECD Metropolitan Database.

Technological innovation can reduce and even offset the economic cost of urban policies to curb carbon emissions.

The discussion on how to address climate change has mainly focused on the economic impact of carbon abatement, which has been evaluated at 1-3% (depending on the discount rate used) of reduction in world GDP (compare Stern, 2007 and OECD, 2009b). However, the OECD (2009b) acknowledges that the perceived trade-off between economic growth and mitigation policies is lower if technology-support policies are considered: first because technology-support policies may help address innovation failures and boost economic growth; second because these policies postpone emission cuts until technologies become available and therefore reduce the impact on economic growth (OECD, 2009b). In other words, the prospects of economic growth can actually be improved by providing incentives to innovation and growth.

Sustainable and equitable spatial growth relies on robust transportation linkages.

With limited budgets, cities now face the challenge of providing transportation infrastructure that meets the needs of a growing economy while reducing pollution, congestion and greenhouse gas emissions, and the challenge of providing land and services to expand their tax base while avoiding the negative economic, environmental and social impacts of sprawl. To meet this challenge, many urban areas are putting the priority on orienting development around public transportation and public services delivery (e.g. Copenhagen’s Finger Plan). In some cases, this takes the form of spatial plans in which cities aim to direct growth around an urban core or a polycentric system of urban core areas. In other cases cities have focused primarily on promoting development that extends outward around public transportation networks, public services and urban amenities,. What these strategies have in common is their goal of support economic growth through means that also reduce consumption of energy and other resources. They can also address social equity concerns, as in seeking to concentrate development around areas of public services and in seeking to better connect existing areas to public transportation, they serve as a way of integrating urban populations at risk of being isolated from local employment and economic activities (Jenks et al., 2008).

© OECD 2010

Improving environmental quality in cities can strengthen their economic attractiveness.

Low pollution levels will increasingly be a factor driving the attractiveness and efficiency of urban areas. In the next two decades, cities that could become more attractive will do so while also curbing local pollution. According to the results of an OECD projection model, and if current trends are sustained, cities can combine higher environmental quality and economic attractiveness. Cities like Ankara, Auckland, Barcelona, Krakow, Lille, Melbourne, Montreal, Monterrey, and Toronto will experience improvements in attractiveness by 2030 while also reducing local pollution. Underlying these results is the fact that technology-support policies can reduce and even offset the economic cost of curbing carbon emissions. Conversely, metro-regions could lose attractiveness if they continue to pollute along current trends, as in the cases of Chicago, Los Angeles, New York, Osaka, Paris, Philadelphia, Seoul and Tokyo. As local pollution is related to attractiveness, and the latter associated to population and firm creation, higher incomes, productivity and wages, then an environmental policy at the local level generates economic growth. In particular, policies to respond to climate change can take the form of removing tax and development disincentives in the urban core, actively pursuing compact spatial form, and increasing mass transit networks and urban amenities in areas targeted for higher-density growth. These issues should be at the heart of the ongoing debate about a green growth strategy.

3. How can governments integrate green growth principles into the web of existing policies?

Synergy between environmental and economic policies emerges at the urban level, particularly in the sectors of transportation, building and energy.

City policies that respond to the negative effects of urban agglomeration address both environmental and economic growth priorities. Congestion, pollution and public services constraints affect not just environmental quality but also the efficiency of cities’ economic activities and their ability to attract firms and skilled workers. Policies that reduce energy and resource consumption and waste, and increase the attractiveness of the urban environment can thus also support urban economic growth. Some urban climate policies should be considered as no-regret policies as they can provide additional co-benefits. These include public health improvements, cost savings and increased efficiency, energy security and infrastructure improvements, and improved urban quality of life. Cities and metropolitan regions are well positioned to develop policy and programmatic solutions that best meet specific geographic, climatic, economic, and cultural conditions. They are equally well placed to develop innovative policy solutions that can be scaled up into regional or national programmes, or to provide a laboratory for national pilot programmes on the urban level.

© OECD 2010

Effective urban green growth and sustainability policies reinforce one another.

For example, land-use zoning policies that allow for higher densities and greater mixing of residential and commercial uses can enhance transportation climate goals by reducing trip distances and frequency while strategic mass transit linkages can attract development and thus promote compact growth (Table 1). Long-term growth plans in a number of OECD metropolitan areas aim to maximise these complementarities (e.g. Paris, New York, London). Within the transportation sector, policies to increase the quality and availability of public transportation, bicycle, and foot travel make policies to discourage or restrict vehicle travel and circulation more politically feasible. For example, congestion fees for driving during peak hours worked well in London because they were combined with improvements in management of the road network and substantial enhancements in bus service. Energy efficiency standards for new buildings are well complemented by projects to retrofit existing buildings with energy efficiency technologies. Waste policies to promote waste-to-energy incineration need to be combined with robust support for recycling programmes to enhance the economic viability of recycling programmes to divert waste from landfills.

Table 1. Synergy in urban policy

Impact → Transportation Renewable energy Waste and water

Land-use Zoning Land-use zoning determines the density, height of buildings, and proportion of undeveloped land on each property.

Segregation of land uses impacts travel di tan es and frequency; tr nsit-oriented development zones encourage use of mass transportation.

Zoning density can constrain on-site renewable energy production but can also increase efficiency of service delivery.

Zoning density can determine the efficacy of delivery of waste, recycling and composting services; and the energy required and efficacy of delivery of water services

Natural Resources Natural resource policies determine which areas are preserved from development and what uses are acceptable on them.

Natural resource policies affect the placement of road and mass transportation infrastructure.

Natural resources endowment makes certain renewable energies possible

Building Building policies, including building codes, affect building materials, construction types, and other physical conditions

Building codes can require the on-site generation of renewable energy.

Building codes can require design and building materials that produce less construction waste.

Note: Policy sectors with no shading demonstrate highest impact. Policy sectors with shading demonstrate lower impact. Policy sectors with diagonal lines demonstrate no impact.

Urban “green growth” strategies hold the promise of a new development path where economic growth and higher environmental quality are complementary.

Multiple policy instruments need to be combined to achieve the ambitious goal of higher growth at lower carbon intensity. The complementarities among these policy instruments demand a dramatic shift towards more integrated policy making at the urban level. More sustained municipal investments in infrastructure that is less carbon-intensive are already in the pipeline and represent a necessary first step. However, supply-side measures alone will not be enough and are unlikely to be sustainable at the current state of prices of green technologies and market demand for low-carbon goods and services. Thus, urban policy makers should pursue an integrated policy package that takes into account how firms adjust to new business opportunities and adjustments in the price of energy, how individuals change their preferences, and how green technologies are developed and diffused in the market.

© OECD 2010

The pillars of urban green growth policies

Urban green growth strategies are more likely to succeed if they account for policy interventions in each four pillars (Figure 7):

Greener public services and purchasing behaviour;

Support for increasing the eco-efficiency of industrial production;

Raising value and consumption of green products and technologies;

Support for research and innovative applications of green technologies.

Figure 7. How to Localise Green Growth: The Green Growth Diamond for Cities

The Green Growth diamond presents conditions of environmentally responsible, economically rewarding and socially responsible urban development plans.

Prioritisation among the different interventions needs to be based on an accurate screening of possible complementarities among the four pillars. In other words, within a well developed strategy, interventions in one domain unlock positive developments in other domains. For example, a large retrofit program for public buildings can be a powerful boost to skilled and semi-skilled employment generation. However, the impact of the program on local employment can be maximised only if well trained workers are locally available. Higher competition among suppliers of retrofit services, as well as innovations that could reduce the cost and the carbon-intensity of these materials is also needed to improve the cost-efficiency of the public retrofit investment. Synergies and possibilities for leverage do exist, and urban policymakers should develop capacities to spot and use them. More knowledge of how the local economy works and a strong capacity to pursue interdepartmental programs are essential prerequisite to seize the employment and growth potentials of the low-carbon transition.

Greening public utilities and purchasing

Raising consumer awareness

Supporting greener industries

Research and innovative applications

© OECD 2010

First pillar: Greening public utilities and public purchasing Cities can directly promote the demand for green products and services through their purchasing choices and their management of existing and new infrastructure.

Over 2008-10, the stimulus packages in several OECD countries have injected resources that could drive higher investments to reduce the carbon footprint of cities. Examples of employment-intensive investments include: pipeline support infrastructure to transport natural gas or biofuels, promotion of grid interconnection schemes that support renewable power generation and modal shifts to public transportation in urban areas. These initiatives generate employment and improve the overall efficiency of the urban system, yielding further economic gains in the medium-long term. Whether these investments will have a tangible effect on the carbon footprint of cities depends on the political willingness and technical capacity to attribute more weight to green considerations in project selection.

City governments can use their large purchasing power and market engagement to bring new technologies on the market.

Several experiences show that sustainability concerns can be successfully integrated in urban procurement practices through innovative tools evaluating the environmental impacts of the products or services delivered (e.g. life cycle costing4), and through institutional solutions. The city of Helsinki established a Procurement Centre, charged with developing operational models for managing markets through systematic dialogue with businesses. The centre is defining environmental criteria for different product groups and coordinating training programs to raise awareness among procurers. In recent years, several local governments in OECD and non-OECD countries have already invested in renewable energy, resource-saving, recycling activities and green area management in order to spur job creation (IEA, 2009b). Within the variety of these public investments for green growth, four essential areas can be identified: housing and construction sector; transportation and information and communication technology (ICT); renewable energy; and recycling and pollution control.

Lowering the carbon footprint of the building sector Large-scale building retrofit programs represent the most obvious option for a shovel-ready, green investment to re-employ displaced workers or create new jobs.

Jobs can be created immediately, with no new plans, environmental impact statements, or land acquisition, to repair or replace deteriorated assets. Further, the technology to reduce energy consumption in buildings already exists and simply needs to be deployed. While regional and city governments may be tempted to focus on standards for new construction projects as the primary means for reducing energy demand from buildings, retrofitting the existing stock is a more labour-intensive activity with greater short-term impact on building energy demand. Current practice in retrofit programs makes possible a considerable reduction in building maintenance costs and in the repair and replacement of worn-out elements. Finally, retrofitting public-owned residential complexes has the important complementary benefit of increasing the market value of dwellings, making residential areas more attractive.

© OECD 2010

Cities can deploy building retrofit programmes directly on publicly-owned building stock or facilitate them in privately-owned buildings.

New York City’s “Greener, Greater Buildings Plan” is expected to create 17,800 construction-related jobs in energy auditing, retro-commissioning, upgrading lighting, and maintaining equipment (City of New York, 2009). The city of Freiburg, Germany, allocated a budget of EUR 2M to the renovation of the city’s old and historical buildings. This includes the non-intrusive, strategic installation of 180 solar PV panels on the tiled roof of the old City Hall. Berlin pioneered a model of enabling retrofitting of privately owned buildings by energy system companies (ESCOs), whose energy efficiency investments are gradually paid back by the building owners through the reduction in energy costs they realise. The Berlin Energy Agency provides technical assistance to local building owners who form "Energy Savings Partnerships" to issue tenders to the ESCOs, with the goal of achieving annual 26% savings in energy costs (C40 Climate Leadership Group, 2007). Cape Town launched an ambitious programme, the Kuyasa Energy Efficiency Project, in which the city retrofits existing houses in low-income neighbourhoods with solar water heaters, insulates ceilings and supplies energy-efficient light bulbs (OECD, 2008d).

How to capitalise on investments in transportation and ICT for green growth

Cities can improve their environmental effectiveness and attract new firms and jobs through combined investments in transportation networks and ICT.

Efficient intra-urban mobility is crucial to realising the economic advantages of agglomeration - that is, cities that are more connected and more compact. There are important complementarities between ICT and transportation investments. Both respond to the need of improving connections between people and businesses, reducing costs of commuting and information transfers. ICT innovations, when applied to public transportation systems, can improve service quality and thus ridership more cost-effectively than large-scale capital investments.

Siting development around public transportation and public services delivery responds to sustainability and job growth priorities.

The “New Mobility” models of transportation, which cities have experimented with in both developed (e.g. Toronto, San Francisco, London) and developing countries (e.g. Cape Town, Chennai, Bangalore), search for better integration of multiple transport modes around hubs that are dynamic centres for service provision. The synergy between transportation and economic activities generates new employment opportunities in entertainment, recreation, dining, banking, commerce, and community services. Integrated urban strategies for sustainable transportation can serve as incubators for green technology innovations, providing a good framework for evaluating the cost and benefits of new technologies with wide industrial applications, such as hybrid engines, hydrogen fuels and sensor networks. For example, the City of Hamburg has sought to support the development of hydrogen-fuel buses by combining its purchasing power with other cities, Barcelona, Berlin, Cologne and London, with the goal of creating demand for 100-150 hydrogen buses (EurActiv, 2009).

Investments in ICT can attract new firms and jobs while contributing to green technological innovation.

The introduction of enabling technologies (ICT and nanotechnologies) can significantly decrease the cost and increase the environmental efficiency of new infrastructure and network investments (OECD, 2009c). There is increasing evidence of the positive effects of ICT on productivity growth (OECD, 2003, Crandall et al., 2006). Regulatory reforms, reducing barriers to entry and investment by new service providers are critical to sustain private investment in broadband and other ICT networks. First-movers in ICT network investments seem to enjoy significant benefits. The Paris suburb of Issy-les-Moulineaux, by providing superior broadband infrastructure, a business-friendly climate and innovative e-services, has managed in less than a decade to radically change its industrial structure, reducing local unemployment to virtually zero (European Commission, 2010).5 Korean municipalities are particularly active in the deployment of ICT technologies as a mean of enhancing energy efficiency of urban infrastructure. The Gangnam-gu district of Seoul, home to corporate headquarters, multinationals and IT venture firms, had adopted a carbon mileage system and is now pioneering innovative service provision via wireless (OECD, forthcoming).

© OECD 2010

Powering cities with renewable energy

Raising the share of renewable energy can lead to job creation.

New investments in renewable technologies are generally more labour-intensive than investments to expand fossil fuel-based energy generation. A distinction here is needed between large scale, centralised renewable energy utilities, and small scale, decentralised utilities. The latter, distributed solar Photo-voltaic (PV) in particular, have higher labour intensity as a result of the fragmentation (number of systems required to achieve the needed capacity) and of the labour-intensive installations. Installing a large 100 MW solar PV array in the desert requires significantly less labour than installing 100 MW of 4 kW residential rooftop PV systems (i.e., 25 000 systems). There are also significant differences across renewable technologies, in particular concerning labour demands for maintenance and operation of the facilities. Kammen et al. (2006) estimate that installing 1 MWa of wind turbine capacity creates an estimated 0.7-2.9 times as much permanent employment vis-à-vis a comparable natural gas combined cycle (NGCC) power plant; installing 1 MWa of rooftop solar PV creates an estimated 7.8 times more employment than a NGCC power plant.

Local governments that generate energy or electricity through public power utilities can increase the share of renewable energy they produce.

For example, Los Angeles’ GreenLA Climate Action Plan sets targets for the Los Angeles Department of Water and Power (LADWP) to increase its renewable fuel sources to 20% by the end of 2010 and to 35% by 2020, in part by developing four new renewable energy projects. In Venice, the Port Marghera Fusina power station, opened in 2009, becoming the world’s first industrial-scale, 16 megawatt, hydrogen-fuelled power station. It generates enough electricity to meet the needs of 20 000 households each year and avoids the emissions equivalent of 17 000 tons of carbon dioxide that are typically emitted when using coal-fired plants (OECD, 2010b). Cities and regions that are not municipal power producers can still use their regulatory authority to remove obstacles to local renewable energy production and district heating, and their self-

© OECD 2010

governing authority to purchase renewable energy for city or regional operations (IEA, 2009b). Copenhagen’s exemplary use of district heating, which provides 97% of the city’s total heating needs, is supported by regulations requiring connections in areas served by the system (OECD, 2009d). The City of Toronto, Canada, has enabled the creation of a district cooling system by establishing a corporation that has connected most of the major downtown office buildings to a deep lake water cooling system and which has resulted in a significant decrease in electricity demand for air conditioning (OECD, 2009e).

The renewable energy industry has already reached a noteworthy size and is growing. In 2003, there were approximately 200 000 renewable energy jobs in the EU (European Commission, 2004).

Worldwide, 600 000 people are employed in the solar thermal industry, 300 000 in the wind power industry, and 170 000 in the solar photovoltaic sector, with half of these jobs located in emerging and developing economies (UNEP, 2008). While the majority of jobs in the fossil fuel industry are in fuel processing, a relatively capital intensive activity, the majority of jobs created in the renewable energy industry are in manufacturing and construction. In all renewable energy sectors, costs have fallen dramatically due to improved technologies. However, renewables are not yet cost-effective compared to conventional energy sources, as they require more inputs – both in terms of capital and labour – for a given amount of output. Renewable installations are in fact more short-lived (on average 25 years versus 40 years for coal and gas), and have a lower capacity factor (operating on average 25% of the time, with respect to about 80% of fossil fuel plants). Again, there are large differences in costs across technologies. To summarise: distributed generation is currently more expensive than centralised generation, residential PV is more expensive than commercial PV, PV is more expensive than solar thermal, solar is more expensive than wind, and onshore wind can be cheaper than natural gas (Figure 8).

Figure 8. Renewable energy generation cost differences

Note: NGCC is combined cycle natural gas and central CSP is concentrating solar power.

Source: Levelised costs are early 2009 estimates based on Kahrl, F., W. Tao, and D. Roland-Holst (2009), “Municipal Climate Policies: Scope, Economics, and Institutions”, Center for Energy, Resources, and Economic Sustainability, University of California at Berkeley.

© OECD 2010

Powerful policy tools can be created at the local level to promote renewable energy development.

Fixed price systems (“feed-in tariffs”) have played a decisive role in attracting wind energy investment in European regions. Through feed-in tariffs, producers of renewable energy feed solar electricity into the public grid, receiving a premium tariff per generated kWh reflecting the benefits of renewable electricity compared to electricity generated from fossil fuels or nuclear power. A provision for a "feed-in tariff" is included in the ambitious Los Angeles’ plan to move the city's energy grid toward renewable energy sources. The feed-in tariff encourages residents to install solar energy systems that are connected to the city's power grid, so that they sell solar energy to public utility suppliers. The overall plan would require ratepayers to pay 2.7 cents more per kilowatt hour of electricity consumed, with 0.7 cents of that — a so-called carbon surcharge — going to the city's Renewable Energy and Efficiency Trust. Feed-in-tariffs operates over a fixed period of time, reducing uncertainty in anticipated revenues.6

Utility green pricing programs, relying on voluntary contributions from customers are another instrument to support higher levels of local investment in renewable energy.

Participating customers in green pricing programs typically agree to pay a premium on their electric bill to cover the incremental cost, for the utility, of providing additional renewable energy. The number of these programs has increased steadily in recent years: to date, more than 750 utilities in the US offer a green pricing option. Green pricing programs involving voluntary contributions from private citizens and from corporations are proliferating in many other OECD countries. In Europe, green power purchasing and utility green pricing have existed since the late 1990s, and have achieved good results in particular in the Netherlands, Finland, Germany, Switzerland, and the United Kingdom. In Japan, there were an estimated 60 000 green power consumer-participants by early 2005. Green power in Japan initially developed through voluntary community organisations, like the Seikatsu Club Hokkaido.

Employment losses in the energy transition are a policy concern with the implementation of feed-in tariff or renewable energy standards.

Jobs can be lost in carbon-intensive sectors directly affected by regulations and standards (e.g., in decommissioned fuel and coal power plants) or in other sectors along the value chain. For example, contraction in demands for coal-fired power generation will lead to upstream job losses in the mining industry. But perhaps even greater are the fears that energy price increases might lead to i) industry downsizing due to adjustment costs, and ii) relocation of foot-loose industries. The evidence of sizable negative effects associated to both mechanisms is however weak. Recent research by Mansur and Kahn (forthcoming) shows that rising energy prices will not play an important role in shifting the geographic patterns of where manufacturing clusters.

© OECD 2010

Investments in recycling can have important impacts on job creation and urban redevelopment

Recycling drives environmental friendly employment creation in cities.7

In the recycling sector, private companies are taking the lead in launching new investments and up-scaling existing ones, the role of city governments being more one of improving the business environment (through public procurement schemes, initial grants for factory facilities, collection schemes for recycled materials, deposit-refund systems and land-use regulations). The example of Kitakyushu City is illustrative of the tremendous employment opportunities that strategic waste management and recycling can open in a globalised economy (Box 2). Enabling investments in energy recycling can expedite the regeneration of brownfields.

Eco-industrial parks are a notable example of how innovative industrial land-use planning can create synergies between employment and environmental outcomes. At the heart of these eco-park initiatives is the argument that local industrial network can mimic natural ecosystems, shifting from the current wasteful linear model of production to a circular model, where wastes are converted into new inputs and energy cascaded through the local industrial network (Gibbs, 2008). Kalundborg in Denmark is the most well known example of the economic gains that can be achieved by connecting waste and energy exchanges in an eco-industrial park. The diverse firms in the eco-park of Kalundborg utilise each other’s surplus heat and waste products, with annual estimated savings of USD 12-15 million. Several other eco-industrial parks have

Box 2. Strategic urban economic policy in the recycling sector, Kitakyushu City's example

The recycling sector yields great potentials of employment creation and re-employment of displaced workers, in particular in cities with an industrial history. Kitakyushu City, Japan, once the capital of steel and chemical industries, overcame severe pollution and sought out the growth potential in the recycling sector. Kitakyushu City has now many recycling companies, which handle sludge and waste materials produced as by-products of industrial production processes. Kitakyushu City launched the Eco-Town project in 1997. In attracting recycling companies, local government emphasised the cheap and vast land available away from residential districts, abundant industrial water from the ocean, subsidies for factory facilities, accumulated human capitals and manufacturing sectors, and clustering of related recycling companies. Local government also facilitated companies’ establishment in Eco-town through one-stop support services. As of 2008, 26 companies and 17 research institutions were in operation, employing 1 352 people (see the graph for Japan below).

According to the public opinion survey of 2007, an increasing number of citizens at Kitakyushu city recognise the recycling sector as one that contributes to environment, partly due to the government’s effort for public involvement. Residents’ support of the recycling industry is a big attraction for a sector that is often exposed to an attitude of “not in my back yard”.

Globalisation is opening new windows of opportunity for Kitakyushu City. For example, China has gradually increased the need for recycling due to serious water contamination and inappropriate waste disposal. Kitakyushu City has begun environmental co-operation with Chinese cities, including Dalian City since the 1990s, Quingtao City since 2007 and Tianjin City since 2008. Kitakyushu International Technology Cooperation Association (KITA), a public training institution for environment policies and technologies, has taught over 5 000 people from 130 countries from 1980-2008. The City aims to link environmental co-operation with development of environmental business. In this way, Kitakyushu city’s environment strategy is deeply embedded in the economic growth strategy. Source: Kamal-Chaoui in (2008a) Competitive Cities and Climate Change: OECD Conference Proceedings, Milan, Italy, October 9-10, 2008, OECD, Paris; Bank of Japan, Kitakyushu subsidiary (2008), “Recycling Industry in Kitakyushu City”, http://www3.boj.or.jp/kitakyushu/sonota/kitarecycle.pdf, accessed 2 October, 2009; OECD (2009f), OECD Territorial Reviews: Trans-border Urban Cooperation in the Pan Yellow Sea Region, OECD, Paris.

followed this successful model (e.g. Styrian recycling network in Austria, Rotterdam Harbour and Industrial Complex in the Netherlands, Londonderry industrial park in New Hampshire, and Guigang Eco-Industrial Park in China). Japan’s Eco-Town program is an example of a large-scale public program to seeking to maximise business and resource-savings opportunities generated by the proximity of industrial and urban areas. It launched 61 innovative recycling projects, which successfully contributed to raising industrial productivity and generating employment, both to improve environmental amenities (Van Berkel et al, 2008). Among the instruments used to nurture the eco-parks are tax exemptions, offered to companies locating on land owned by or near a power plant that pursue activities of energy cascading, co-generation and utilisation of plant by-products for energy generation.

© OECD 2010

Second Pillar: Supporting greener industries Making industrial production more environmentally sensitive and more efficient is a three-tiered effort.

First, it involves the application of economic and regulatory instruments to reduce resource use and waste per unit of output and to widen the application of greener technologies. Second, skill shortages and local skills transitions need to be addressed. Third, it requires the stimulation of markets for new, emerging “green industries”, leading to the creation of more and more “green jobs”. Local governments can be very effective in greening production by developing one-stop business services to enable businesses to reach conservation goals, support green industry start-ups and facilitate training tailored to local labour market needs.

Local or regional one-stop-shop agencies for business support should acquire specialised skills in order to advise firms on the most cost-effective ways of reducing emissions.

Their role would consist mainly in enabling businesses to reach conservation goals at lower costs, for example through sustainability audits. They might also engage in demonstration projects for new equipment, in partnerships with manufacturers and academia (OECD, 2009g). In Canada, programmes such as the Eco-Efficiency Partnership in British Columbia, the Eco-Efficiency Centre in Nova Scotia and the EnviroClub of Quebec are good examples of approaches to improving simultaneously the environmental performance and the competitiveness of local Small and Medium Enterprises (SMEs). The “Chicago Industrial Rebuild Program” assists facilities in securing financing to implement recommended improvements. An interest free loan is available to participants who purchase “green” or renewable power. Nearly half of the metal casting industry in Chicago participated in the city-funded assessments. If all recommendations are implemented, it is estimated to generate over USD 5 million in cost savings, 10-25% in energy savings and reduce air pollution by 1 000 US tons per year.8

Fledgling green industry firms and start-ups can benefit greatly from city support services, such as industry incubators.

The green economy is a vast mosaic of differentiated products and services, requiring very diverse labour and capital inputs to produce and services to measure, prevent, limit environmental risk and minimise pollution and resource use (ECOTEC, 2002). City governments can improve the business environment, through initial grants for factory facilities, land-use regulations and one-stop services to reduce unnecessary red tape for green industry start-ups (e.g., Los Angeles). Cities’ support for new green industries can extend to support for eco-industrial parks, where greater eco-efficiency can be a source of business opportunities for firms, which can realise profits by exchanging waste and energy.

The development of a dynamic, greener economy will be crucially dependent on the availability of skilled and trained people to fill the new jobs, which cities are well placed to facilitate.

The Renewables 2007 Global Status Report (REN21, 2007) estimated that the number of jobs from renewable energy manufacturing, operations, and maintenance exceeded 2.4 million in 2006, including some 1.1 million for biofuels production. According to the REN21 Global Report for 2009, jobs from renewable energy continued to expand rapidly during 2008 (REN21, 2009). As business evolve during the green transition, demands are placed on education institutions and training systems to adapt. The rising demand for low-carbon products will require the simultaneous development of very diverse skills. For example, demand for low emission residential estates will require developers knowing the building materials with low-embedded energy use, engineers and designers able to embed energy efficient products in the building, manual workers with the technical capability to install and maintain these products, and salespeople able to promote such estates in the market.

Skill creation for the new “green jobs” can be more efficiently organised by pooling learning resources of education institutions and industries at the regional level.

The essential challenge will be to anticipate what the employment effects and labour reallocation across industries will imply in terms of future skill needs and possible absorption of laid-off workers. Extensive retraining will be necessary, as there will be significant changes in the profiles, tasks and work methods assigned to workers in traditional occupations (e.g. plumbers, electricians, metal workers, and construction workers) (Table 2). In the absence of well-developed frameworks to undertake such analysis at the national

© OECD 2010

level, regional institutions, such as regional and municipal departments or task forces, universities and vocational institutions, business associations and trade unions are better positioned to assess labour effects of the green transition and provide training tailored to local labour market needs (e.g., Oakland Apollo Alliance, USA).

Table 2. Green firms and green jobs

Category Sectors Examples of Jobs

Renewable Energy - Hydroelectric - Solar PV - Solar thermal - Geothermal - Wind - Bio-energy - Combined Heat and Power (CHP)

- Energy Engineers - Electrician and plumbers installing the systems - Mechanics building the infrastructure - Renewable energy plant operators

Transportation Efficiency - Urban Public transport - Railways

- Public transport drivers and employees - Bus retrofitters - Builders of rail networks

Green Manufacturing, Construction and Product Design

- Retrofitting - Energy efficient buildings’ materials - Domestic and office equipment and appliances - LED (light emitting diodes) - Cleaner coal technologies - Biodegradable products - Hybrid vehicles

- Engineers and scientists working on energy efficiency improvements (efficient lighting, smart metering, low energy monitors…) - Chemists developing environmentally friendly packaging, cleaning products and sprays - Employees of firms producing green building materials (alternative cement, recycled wood…)

Waste and Pollution Mitigation

- Mobile and stationary air pollution source controls - Water conservation and reuse - Pulp and paper recycling - Aluminium recycling -Electronic recycling

- Workers employed for renewing water infrastructure - Hazardous material removal workers

Environmental Analysis, Training and Consulting

- Landscape - Building maintenance and contracting - Public administration - Specialised consulting and marketing - Green Venture capital and other financial services

- Energy contractors - Specialised consultants - Trainers - Marketing - Green-civil engineers - NGOs

Source: Adapted from UNEP (2009) “Green Jobs: Towards Decent Work in a Sustainable, Low-Carbon World”, www.ilo.org/integration/themes/greenjobs/index.htm.

Third Pillar: Raising the value and consumption of green products and technologies

The large scale deployment of low-carbon technologies will depend not only on advanced scientific research but on how fast firms and people learn to appreciate their added value.

Behavioural changes are thus as important as end-of-pipe solutions. These changes and learning processes happen at the local level. Better understanding what drives the demand for low-carbon goods and what are the main resistances behind slow adoption of new technologies is thus of critical importance. Cities in OECD and in some non-OECD countries are increasingly raising local awareness through consumer education programmes, eco-standards and eco-labelling, and best-practice demonstration sites. It makes sense to develop and implement these programs locally, as local and targeted information is more effective to raise demand (OECD, 2008e). While these initiatives have yet to be rigorously assessed, it is increasingly clear that systemic changes in consumption habits are critical for raising market penetration of green goods and services.

© OECD 2010

Local and regional government can go a long way to increasing local green consumption by financing arrangements reducing the upfront cost hurdles and unit costs of distributed energy technologies.

Marginal price incentives can shift preferences of more sensitive consumers. Direct observation and imitation by other consumers can then lead to wider market penetration. The City of Berkeley’s Financing Initiative for Renewable and Solar Technology (FIRST) programme reduces cost hurdles by providing loans to homeowners to purchase and install solar photovoltaic systems at interest rates and payback periods similar to those for home mortgages. Borrowers repay the city through an additional, transferrable tax added to their annual property taxes. The California Public Utilities Commission (CPUC) developed a state-wide Solar Hot Water incentive program. The proposed incentive amount for residential SWH systems is expected to be about USD 1 500 per system on average. Effective programmes to facilitate and reduce the cost of green investments often involve multilevel governance coordination between national, regional and local governments (Box 3) (Corfee-Morlot et al., 2009; IEA, 2009c).

Box 3. A new multilevel approach to green growth: Local-national government building efficiency programmes

The Crown Energy Efficiency Loan, in New Zealand, is a financial instrument to assist central and local government agencies to implement energy efficiency projects. It complements the 2007 National Energy Efficiency and Conservation Strategy, which required 10% improvement in in-house energy efficiency in central and local government over five years. Local authorities and other publicly agencies borrow funds from the government and repaid over 5 years; ideally, loan repayments are structured such that the energy cost savings exceed the cost of the loan repayments. The Crown Energy Efficiency Loans finance energy efficiency measures previously recommended by audits carried out by independent energy experts, and are allocated based on the project’s cost effectiveness, projected CO2 emission reductions, contribution to renewable energy, potential for replication by public and private sectors, and co-benefits. As of June 2008, loans exceeding USD 23 million have been granted to 230 projects to achieve estimated cost savings of USD 60 million and reductions in CO2 emissions of nearly 23 000 tonnes per year – the equivalent of taking 6 500 cars off New Zealand roads.

The Low Income Retrofitting Project in Greece is an initiative of the national government in cooperation with municipalities to improve energy efficiency in homes built before the 1980s for families with incomes of less than EUR 60,000 a year. The national government works with national associations of private businesses and the local community (municipalities and private business) to identify and inform low- income households about this project. The project focuses on increasing energy and cost savings through projects to increase the energy efficiency of insulation, windows, and heating, and to install solar collectors and cool roofs. The Ministry of Development created an agreement with national business associations to freeze the costs of these services for two years. The programme is evaluated through an “auto-verification” scheme in which the associations must evaluate whether their industry members are implementing technologies that meet the national standards – which can result in a conflict of interest.

Upper Austria’s Regional Market for Third-Party Financing (TPF) links municipal and private energy efficiency projects with financing in order to remove the barrier of high upfront investment costs. This programme originally linked municipalities with investors interested in financing energy efficiency renovations in public buildings, and was later expanded to link building, lighting and renewable energy projects in the public and private sectors with energy financing. TPF projects look to Energy Service Companies (ESCOs), which guarantee that energy costs will be reduced by a certain percentage after energy improvements are made, to provide pre-financing energy-conservation schemes. ESCOs are responsible for financing energy-saving measures as well as implementation, operation and maintenance, and subsequent energy savings are then used to cover investment costs over an agreed pay-back period (typically 10 to 15 years). Out of eleven participating ESCOs, two are publicly owned; the rest are private. Municipalities enter TPF projects on a voluntary basis and are responsible for collecting all relevant data prior to setting up the project. Depending on the status of the owner, the regional government may fund the upfront investment costs for energy performance contracts up to 12% in the case of private owners, and up to 20% for municipalities. The upper limit in both cases set at EUR 100,000 per project. Funding comes on top of other State (Upper-Austria) subsidies. The budget comes from the broader climate change programme of Upper Austria.

Source: IEA (2009c), Innovations in Multi-Level Governance for Energy Efficiency: Sharing experience with multi-level governance to enhance energy efficiency, OECD/IEA, Paris.

© OECD 2010

Municipal programmes investing in information and communication technologies (ICT) can significantly lower the information asymmetries that often lead to energy overuse.

An example is the provision of new smart metres that display and record real-time energy consumption data and analyse electricity demand patterns to encourage changes in energy usage, which can be a key tool in city energy conservation awareness-raising campaigns. Recent research at the MIT Portugal Program has shown that smart metres produced energy savings of up to 20% for households in Lisbon. City-level demonstration projects, even of a limited scale, have been very effective. A multi-year survey in the city of Blacktown, Australia, shows that awareness of the Blacktown Solar City project grew to 44% two years after its initiation. Of the people surveyed, 91% had switched to energy-saving light bulbs, 73% had chosen an appliance because of its energy rating, 42% had installed insulation to reduce energy use, 30% had signed up for green electricity and 5% had installed solar panels during the two years of the project’s implementation.9 This demonstrates the potential impact of government information campaigns, coupled with wide technology deployment (e.g. roll-out of smart metres), on local and regional green spending and energy efficiency.

Pillar 4. Supporting research and innovative applications of green technologies Eco-innovation is the most important determinant of sustained growth of the green sector and of efficiency improvements in resource use of firms and consumers.

Cities and regions can catalyze green innovation by increasing and improving the targeting of R&D funds. There is also the potential for municipalities to strengthen the development and deployment of low-carbon and environmental technologies through networking platform for eco-innovation, in partnership with private sector researchers and universities. One relevant example is represented by Knowledge Transfer Networks (KTNs) initiated by regional development agencies in the UK. KTNs bring together diverse organisations and provide activities and initiatives that promote the exchange of knowledge and the stimulation of innovation. A major review of the KTNs in the UK showed that 75% of business respondents rated KTN services as effective; 50% developed new R&D and commercial relationships with people met through these networks; and 25% made a change to their innovative activities as a result of their engagement within KTN (OECD, 2010c).

Clean-tech projects have continued to attract capital, even during the 2008-2009 economic crisis.

Deloitte’s 2009 survey on Global Trends in Venture Capital reports that 63% of surveyed venture capitalists anticipate an increase in their investment in clean-tech, the highest percentage among all sectors considered. In this regard, centralised systems incur the risk of being too far removed from the market place, and thus unable to link scientific and technical R&D with commercial technology development. To the contrary, systems organised around urban or regional networks can better address commercialisation challenges and early stage capital constraints for business start-ups. In support of this hypothesis, it is interesting to note that the few highly successful examples of green clusters are in countries such as Finland (e.g. the Lahti green tech-cluster), or France (pole de competitivité TENERRDIS) which are taking concrete steps to “regionalise” innovation systems, through decentralised funding schemes and empowerment of regional authorities. Multi-level and multi-agency policy coordination is needed to put in place hard technology infrastructures, like science parks, that can encourage new private investments in R&D for eco-innovation.

Government support could have a role to further “direct” innovation towards zero or low-carbon technologies.

The market for some of the most novel low-carbon solutions is still comparatively small, thus their growth potential might be hampered by commercialisation constraints. Technological change in energy efficiency might thus be biased in favor of relatively large enterprises, in carbon-intensive sectors, that can afford financing costly research and problem solving services. Innovation that “builds on the shoulders of giants” might delay the market penetration of immature “backstop technologies” – those that are zero-emission and not dependent on constrained resources. As shown by Acemoglu et al. (2009), delaying intervention not only leads to further deterioration of the environment, it allows dirty innovation to continue to outpace clean innovation, widening the gap between dirty and clean technology.

© OECD 2010

Targeted public financing can increase small and medium-sized firms’ demand for energy efficiency services.

SMEs are generally much less likely to embark on environmental improvement programmes than larger companies (Zutshi & Sohal, 2004). Many have not established indicator systems owing to a lack of resources such as finance, personnel, time and technical knowledge as well as motivation and awareness. So the dilemma is how to translate this higher need for energy efficiency services in higher demand for these services, given current resource constraints. Targeted innovation vouchers, which provide financing for university-industry collaborations, might do the trick. An innovation voucher is delivered to firms to financing specific innovations. They can enable new SMEs in green industries to collaborate with public research institutions by submitting technical

Box 4. Eco-Innovation Clusters

Much of the eco-innovation is concentrated in space and occurs in “green clusters”. Clusters specialised in eco-innovation are not yet common as in other industries, despite very promising market commercialisation opportunities. Some relevant examples can however be identified. The Lahti Cleantech cluster in Finland encouraged innovation and development of environmental technologies by bringing together small and large enterprises, educational organisations and regional authorities. As a result, 20 new clean-tech companies have set up in the Lahti region and the project has attracted more than EUR 30 million in total investment. In the Rhône-Alpes Region of France, regional and national investments in R&D were instrumental to the development of the Tenerrdis competitiveness cluster, which is promoting scientific collaboration to develop clean technologies applied to construction, transport and energy production. Tenerddis brings together 185 stakeholders, who developed, over 2005-2008, 226 R&D projects, for a total of EUR 440 million of investments, of which EUR 200 million came from public funding.

Source: Kamal-Chaoui, L. and A. Robert (eds.) (2009), “Competitive Cities and Climate Change”, OECD Publications, Paris, www.oecd.org/dataoecd/30/36/44232251.pdf. ; Cooke, P. (2008), “Green Clusters: Green Innovation & Jacobian Cluster Mutation”, International Journal of Innovation and Regional Development.

problems to be solved.10 These vouchers can be effective at promoting the transfer of knowledge between the research and the business community, and also speed the pathway to commercialisation of experimental research in energy efficiency.

Partnerships between government and academia have proven fruitful in the set-up of eco-innovation clusters.

These clusters successfully merge excellence in education, frontier research in environmental technologies, and job creation through spin-offs, venture capital and integration of enterprises. Clusters mobilise specialised knowledge and resources and organise them in a functioning system. Within the cluster, proximity and complementarities generate the critical mass to sustain industrial development in novel and risky fields. Commercially successful regional poles in bio or nano-technology show that each cluster has a distinctive genesis process which is deeply rooted on local industrial histories or scientific and technical leaderships. It is thus hard to design effective policy packages that can replicate ex-novo the most effective innovation ecosystems. However, public policy can accelerate their development, by directed R&D, enabling infrastructure, and institutional platforms for collaboration (Box 4).

© OECD 2010

Developing monitoring and evaluation tools to measure progress on green growth

An urban green growth strategy should invest in data generation, market information and analysis of the local economy.

More systematic data collection and data integration are needed to better know how the local economy uses energy, generates greenhouse gas emissions. Analysis of these data should focus on understanding how local energy use and emissions are related to economic activity. Prioritisation of expenditures is easier and more efficient when it is grounded on a solid analysis of the baseline situation. This baseline picture should be the result of an accurate monitoring of markets, local industry and innovation strengths, consumers’ expectations, and of the national regulatory framework (the evolution of carbon pricing in particular). Benchmarking the current green job activity and the growth scenarios to other cities can also facilitate the identification of achievable targets and enabling policies. Given the wide heterogeneity in carbon emission factors, industrial and innovation capacities, and market demand within countries, the baseline assessments and the selection of targets must be undertaken locally, case by case. However, cities and agencies can effectively share common or standardised tools that optimise data collection across localities, help defining the relevant geographic scale for measurements, list meaningful and quantifiable indicators such that they are comparable across locations, regions and nationally (Corfee-Morlot in OECD, 2008a; Corfee-Morlot, 2009).

Indicators should be designed to capture expected progress in terms of abatement, cost-effectiveness, net job creation, and equity, for each policy instrument.

While extensive work has been undertaken on sustainability indicators, there has still been no consistent effort to monitor and evaluate urban policies under the double metric of “environment” and “income/productivity” effects. Such a set of integrated indicators could send a cleaner and more effective message to policy makers. For instance, if transportation objectives are only thought in greenhouse gas emission terms, other desired attributes of a smart transportation system – quality of service, affordability, accessibility, social costs – may get short shrift (Kahrl et al, 2009). Inter-municipal cooperation should address the shortage of usable tool-kits helping municipalities to set the goals, action, evaluation, and reporting of municipal green growth strategies (Box 5). Finally, more knowledge sharing is needed to move towards an optimal design of pilot projects for green growth. Demonstration projects can not only guide project selection and scaling, but also raise public awareness and political support for the strategy.

Box 5. Monitoring the transition to low-carbon cities in the Netherlands

The transition to low-carbon cities requires strong strategic and management capacities. A good example is the “transition management approach” adopted by the government of the Netherlands. This approach sets a long-term vision, which constitutes a framework for formulating future policy objectives and transitional pathways. Interim targets and short-term policies are derived by back-casting from the long-term objectives.

The Energy Transition Programme first identified seven priority themes (bio-based raw materials, sustainable mobility, chain efficiency, new gas, sustainable electricity, energy in the built environment, and “greenhouse as energy source”) for the transition to a sustainable energy system, based on a multi-stakeholder consultation process and scenario studies. For each theme, representatives from industry, academia, NGOs and the government worked together and proposed several paths and experiments. The Energy Transition Task Force, consisting of leading stakeholders, has been working to identify favorable opportunities and specify what needs to be done by the government, by the universities and the other partners to exploit them. Some of the selected transition experiments are currently under way. The transition management approach is expected to enable the government to organise its policy around a cluster of options, without choosing specific solutions, while giving an overall policy direction to the market. It also provides opportunities for the government to facilitate networks and coalitions among actors in the transition paths as well as to build mutual trust with stakeholders by sharing common goals. Source: OECD (2010c), “Eco-Innovation in Industry Enabling Green Growth”, OECD, Paris.

© OECD 2010

Cities need pricing signals on carbon and other environmental goods to make green-growth policies cost-effective

Urban green growth policies must be embedded in supportive national frameworks with policies and price signals.

For instance, carbon taxes, and climate change levies, are almost always introduced at the national level, as they would distort competition between regions. One of the exceptions is the carbon tax introduced in the City of Boulder (Colorado, USA) which is low enough not to have a negative impact on the city’s attractiveness for citizens and companies. While it is a source of funding for city investment and supports local capacity to act on green initiatives, it is arguably not high enough to have a substantial impact on reducing carbon emissions as the behavioural effects of such a small increase in the price of energy will be marginal even if price elasticities were to be high. In order for the carbon tax to have a real impact on reduction of carbon emissions, it would in many countries have to increase the price of carbon significantly, especially since price elasticity is relatively low in the short term. To avoid distortions to competitiveness, supra-national co-ordination might be necessary.

Cities could be compensated by national governments for investments that produce environmental goods enjoyed beyond the metropolitan region.

This compensation, for example via a government grant, internalises the positive externalities of these goods that cannot be subject to regular pricing mechanisms. It could also take into account that some of these local territories, for example in greenbelts or national parks, have fewer possibilities to construct or attract economic activities and thus to increase local tax revenues. Insertion of ecological criteria in government grants has been introduced in Brazil and Portugal, as well as some German states such as Saarland. Common measurement tools are needed to permit national governments to make comparable assessment of funding decisions.

© OECD 2010

4. What financing and co-ordination mechanisms do cities need to successfully implement green growth policies?

Taxes and local pricing instruments can be leveraged to meet green growth and sustainable development priorities

Taxation is a powerful instrument in creating green growth.

It has a clear impact on economic growth or employment growth, by the extent to which it taxes for example economic activity or labour. At the same time, it has environmental impacts defined by the way in which it taxes resources, pollution and economic inputs that are to a more or lesser extent clean (labour, investments, etc.). Over the last decades, many governments in OECD countries have made substantial efforts to “green” their taxation systems. They have introduced environmental taxes, such as carbon taxes (e.g. Sweden since 1991), climate change levies (e.g. United Kingdom since 2001) and other similar fiscal instruments aimed at stimulating environmental sustainability. Some countries, such as the Netherlands, have made greening of their tax system an explicit policy goal, and introduced comprehensive reform of the tax system. This green taxation has in many instances created a double dividend: a greener economy, but also more employment growth, as the green taxation reforms have in many cases shifted taxation from labour to polluting activities.

Local taxation should be considered a key tool for achieving green growth objectives, rather than just a revenue source.

Attention by policy-makers and researchers has been mostly focused on greening taxation at the national rather than the sub-national level. However, like national taxation, local revenue sources are not neutral: revenue sources, rates, exemptions and composition all impact the price of certain goods and services for citizens and firms, such as urban transportation options, land development and housing. As citizens and firms are in most cases price elastic (at least to a certain extent), these price-related mechanism will be able to influence the behaviour of citizens and firms. A key challenge for sustainable urban finance is thus to combine revenue-raising capacity with the introduction of fiscal incentives that stimulate sustainable development and green growth. There is room for greening sub-national taxes, especially those that have a large impact on the main economic sectors that are essential to green growth: sustainable public transport; sustainable building; brownfield development; energy efficiency.

Transportation fees for sustainable public transport Local fees and taxes can greatly influence the development of sustainable urban transport through discouraging car use and stimulating public transport.

Fiscal disincentives for car use will be more effective when alternative traffic solutions, such as public transport, are in place, which is why some metropolitan areas use these types of revenues to finance public transit.

Cities in the OECD have overall limited taxing powers to reduce car use.

Car users are in many cases not charged for their use of the road network, non-residential parking is free in many cities, and personal income tax regulation often favours automobile use over transit, as the costs of owning, operating and parking a car are in many cases deductible for firms and individuals, whereas transit benefits for employees are not. Companies in OECD countries often provide subsidies (frequently stimulated by fiscal arrangements) to their employees for their individual motorised transport and free company parking, rather than for public transportation. In many non-OECD countries, such as India, Indonesia and Egypt, fuel subsidies provide further disincentives for the reduction of car use. They are usually provided by central governments, but mostly benefit the urban population in these countries. Some cities and regions have introduced motor vehicle or fuel taxes, although this remains a predominantly national tax in most OECD countries (Figure 9). In Canada, for example, excise taxes on gasoline and diesel are collected by both federal and provincial governments, as well as by some select metropolitan regions (Montreal and Vancouver), with combined excise taxes up to 30.5 ¢/L in Vancouver. Similar effects on fuel consumption could be attained by a pay-as-you drive insurance, although such schemes have not been introduced yet (Parry, 2005).

© OECD 2010

Figure 9. Fuel taxes: little room for local and state involvement

Note: Tax revenues as share of total government revenues (central and local), including petroleum excise taxes. Source: OECD Revenue Statistics Database.

While overall taxing powers to reduce car use are limited, congestion charges and parking fees are underutilised.

Congestion charges, as introduced in Singapore, Stockholm and London, have lead to the reduction of traffic volumes, shifts in transit modal shares and reduction of congestion responsible for a considerable part of greenhouse gas emissions. In some cases, the receipts from the congestion charge are used to finance urban public transport; this is the case in London. Alternative effective measures, mostly used in the United States, are high occupancy toll (HOT) lanes. HOT lanes make use of the infrastructure provided by high occupancy vehicle (HOV) lanes introduced in many OECD countries. HOV lanes are highway lanes on which only vehicles with a minimum number of occupants (usually two or three) are allowed to drive, in order to promote car pools. Parking fees and taxes are price-elastic, and there is ample evidence that they are effective in reducing car trips and decreasing the car share in the modal split. Parking fees could be differentiated in order to make them even more effective. A parking surcharge might be levied on drivers who arrived at parking garages during the morning peak hours, and spatially differentiated parking fees could rival time-differentiated congestion fees (Arnott et al, 1991). The cost per minute associated with meter parking is however nominal in most cities, although some cities (such as Los Angeles) make use of congestion pricing for parking.

Value-capture taxes can fund robust public transport systems.

Public transport is stimulated in almost all cases by public subsidies; there are hardly any cities that run public transport systems exclusively funded by tickets or other private funding sources. Public transport is thus developed in cities that have found fiscal resources to fund metropolitan transit. A local tax that is frequently used to finance public transportation is the value capture tax. The base for a value capture tax is an increase in property values arising from public infrastructure development. This increased value results from the increased desirability of the location, better access, and the potential for higher rents, increased resale value and higher-density development. Value capture taxes can be imposed or can take the form of a negotiated agreement; they may be levied as an ongoing annual charge or as a one-time tax. Value capture taxes have been used to finance transport infrastructure in cities as different as Hong Kong, Miami, Milan and Bogotá. A value capture tax can only be applied when the property value increase can be unambiguously attributed to infrastructure investment. Value capture taxes are less useful when property taxes are assessed on a yearly or regular basis, since the annual assessment captures any increases in the property value that might result from public infrastructure investment; this does however not take place in most OECD countries.

© OECD 2010

Fiscal incentives and property taxes for sustainable building

Local property taxes often discourage compact city development and promote low-density development, the primary source of local tax revenue in many OECD cities, which is sometimes skewed in favour of single family houses.

Multifamily rental housing in the United States, for example, bears an effective tax rate (tax divided by property value) that is considerably higher than the rate for single-family owner-occupied housing: at least 18% in 2001 (Goodman, 2006). The higher tax rate for apartments observed in the national totals holds for 10 of the 12 states that are identified in the Residential Finance Survey data. One of the explanations is the explicit policy of sub-national jurisdictions to tax apartments more heavily than single family houses: apartments are often classified as commercial real estate rather than as housing and many local governments tax commercial property at a higher rate than residential real estate. Implemented like this, the residential property tax promotes low-density development and disproportionally burdens lower-value properties.

Some cities have introduced property tax reform to favour compact development.

Through differential taxation, a special area tax can be applied on suburban properties or use a set of cascading taxes that gradually increase as one moves away from the city centre towards the periphery. A relatively simple form of such a tax might be a higher standard property rate for suburban inhabitants or preferential rates for multiple dwellings. Although the introduction of such a tax could be politically difficult to implement, there are cities that have introduced a tax along these lines. The City of Austin, USA has for example introduced a special transportation levy on all city utility bills, based on the estimated average number of daily trips made by individuals residing in different types of property. The levy averages USD 30-40 per year for a typical household, but differentiation takes place according to housing type (Litman, 2009). Depending on local circumstances, such a tax could have social consequences if lower-income groups have difficulties finding affordable housing in city centres and are dependent on car use, which might already be taxed in other ways.

Brownfield development to reduce the urban environmental footprint

Brownfield development could be stimulated by pricing the costs of sprawl and congestion into greenfield development.

Brownfield or infill development in many OECD metropolitan regions usually offers few benefits to developers. It also takes more time to complete, and so occurs less frequently unless specifically stipulated by local governments. Suburban municipalities have thus actively pursued the development of previously undeveloped land, or greenfields. Because suburban municipalities typically have a greater supply of greenfields, they can be more attractive to developers and can benefit from the revenues and revenue bases brought in by greenfield development. Most property tax systems tax land and structures on the land at the same rate, so they provide limited incentives to develop undeveloped land within cities. Distortions created by the property tax may result in the inefficient spatial expansion of cities, which makes the tax one possible cause of urban sprawl (Brueckner & Kim, 2003). Sprawl is stimulated when it is more beneficial for developers or other actors to develop on undeveloped land outside of cities rather than within cities. Placing proportionally higher taxes on land than on built structures would make it more costly to hold on to vacant or underutilised, centrally located sites. Reducing the tax burdens on development and redevelopment of urban land could facilitate revitalisation and the replacement of obsolete buildings in older central cities. More compact development can be stimulated by introducing a form of land taxation such as a split-rate property tax. The key characteristics of such a tax, applied in Sydney, Hong Kong, the U.S. cities of Pittsburgh and Harrisburg and other cities within OECD countries such as Denmark and Finland, is that land value is taxed more heavily than the buildings on the land, thereby providing an incentive to develop it. This is in contrast to the conventional equal-rate system that applies the same tax rate to land and to build structures on it.

© OECD 2010

Local energy fees to increase efficiency

Energy-efficiency clusters could be stimulated by mechanisms, such as fees and charges, that put a price on high energy use.

These could be effective instruments to signal the higher cost of internalising environmental externalities. Fees and charges are ideal for funding local services where specific beneficiaries can be identified and non-payers excluded, such as in energy. Fees are particularly effective when they recover full costs and when fees are paid according to individual or household use, as these give residents incentives for more efficient use of resources. In addition, charging households for their energy consumption (and not the average household’s consumption in a city) might stimulate them to invest in energy efficiency measures, such as isolation and energy renovation measures.

Electricity fees are used to a varied extent in cities throughout OECD countries, and are most effective where individual consumption is priced by unit.

In several cities, the costs of urban utilities are not (completely) covered by user fees. In this case utilities, such as electricity, are cross-subsidised by local tax resources. Sometimes, cities apply preferential tariffs for large industrial energy users in order to attract manufacturing and other employment. Even when urban utility fees exist, they are in many cases not differentiated to households: households might pay an average price based on total energy consumption in a city, quarter or apartment block. In that case the behavioural effects of fees are limited, as the financial benefits of reduced consumption for a household are marginal. In order for fees to be efficient, they will have to price the number of units consumed by the different consumers. Such a scheme requires equipment in houses and apartments (such as individual energy meters) which is lacking in many cities.

Some form of national regulation might be needed in order for cities to play their role.

This could take the form of mandatory cost coverage for public utilities, in order to avoid that energy costs (and increases in energy costs) get hidden in a larger local tax revenues pool. Central governments could also make sure that inter-city competition will not lead to a downward race of preferential electricity tariffs for large industrial users. Although many cities have formulated energy reduction targets, the costs of investments in individual electricity meters – which will not bring them financial benefits – might constrain them from installing them. National regulation or investment subsidies might help local public utilities to introduce these equipments required for unit-pricing.

© OECD 2010

New financial instruments are needed to support urban sustainability and green growth programmes

Cities are responsible for large parts of government expenditure, including expenditures that could impact green growth objectives, such as environmental protection, transport and buildings.

Local governments in many OECD countries are responsible for amounts of public spending on environmental protection (which includes waste management, waste water management, pollution abatement, protection of biodiversity and landscapes, and R&D on environmental protection) that are almost similar to that of their respective national governments (OECD, 2009h). Transportation is in many OECD countries a shared responsibility, with local governments taking care of local infrastructure, regional governments for regional infrastructure and national governments for national infrastructure. Similar shared responsibilities can also be found with respect to the built environment and land use. Debates on environmental federalism have shown that local governments can play an important role in environmental policies, especially when they are able to internalise externalities. As local governments often lack the revenue streams needed to build green infrastructures, measures to stimulate green growth might put additional pressure on city budgets and increase the need for additional resources and reform of national and international mechanisms, most notably carbon markets.

A variety of financial instruments have been developed to create a market for carbon emissions and carbon offsets, some of which are open for cities to use as a revenue source.

Cap-and-trade mechanisms have been put in place in different countries (including parts of the United States), at the European level (EU Emissions Trading Scheme) and at the global level, following the Kyoto Treaty. In addition, voluntary carbon markets have been developed in which carbon offsets are traded. Cities are part of some of these mechanisms (such as the Chicago Climate Change Exchange), and have in some cases set up some cap-and-trade mechanisms themselves (Los Angeles, Chicago, Santiago, and most recently (2010) in metropolitan Tokyo). Certain cities, such as London, have explicitly defined emissions trading as a business opportunity that would increase their metropolitan competitiveness (City of London, 2006). Cities could earn revenues from the two mechanisms that the Kyoto protocol put in place to create carbon offsets, the Clean Development Mechanism (CDM)11 for developing countries (non-Annex 1 countries) and Joint Implementation (JI) for developed countries (Annex 1 countries), both certified and issued by the UNFCCC.12 In addition to this, voluntary carbon markets have been created that are unconnected to an emissions cap. In these voluntary markets, carbon offsets are verified by another carbon market standard, twelve of which are currently operational. Carbon offset markets have been promoted as an important part of the solution to the climate crisis because of their economic and environmental efficiency. Their cost-effectiveness allows for lower caps or voluntary commitments and the potential to deliver sustainable co-benefits as a by-product through technology transfer and capacity building.

Urban usage of these instruments has been marginal so far.

Of the 1224 CDM projects currently registered, only a limited number have been urban projects. There have been two urban transportation projects: the Bogotá bus rapid transit, TransMilenio, and the Delhi subway regenerative breaking system. A similar marginal number of CDM projects (0.57%) and generated certified emission reductions (CERs) by 2012 (0.16%) deal with energy efficiency in the urban building sector (Fenhann, 2010), such as in Khayelitsha (South Africa). In addition, some projects are implemented in other urban sectors, such as electricity and solid waste (Chandigargh, India and Urimqi, China). JI projects have also been applied in a limited number of metropolitan regions (North Rhine-Westphalia in Germany and Rhône-Alpes in France). Carbon offsets realised by urban projects in the voluntary market are equally marginal: projects have been implemented or prepared in Sao Paolo, Timisoara, Lille and Newcastle (Kamal-Chaoui and Robert (eds.) 2009, Clapp, 2010).

© OECD 2010

Marginal urban use of carbon markets to raise revenue for greenhouse gas emissions-reduction projects can partly be explained by high measurement costs to prove the additionality of projects.

This additionality criterion is part of the Kyoto protocol to ensure that the mechanisms result in additional carbon reductions and are not used to finance activities that would otherwise also have taken place. Several mitigation efforts in cities are however notably difficult to measure, because emissions are diffuse, costly to identify and to aggregate into calculations of total emissions. CDM challenges that are particularly problematic for the urban transport sector are the definition of project boundaries, complex up-stream and down-stream leakages, the establishment of a reliable baseline, and the implementation of a reliable monitoring methodology. There are similar challenges for using CDM in the urban building sector: fragmentation and complexity of construction projects, as well as small scale and disperse emission points making the registry and the “measurable, reportable and verifiable” procedures (MRV) costly and time-consuming under the current CDM framework. Some “soft” measures taken in cities, such as optimised architecture design for passive heating or cooling, are not quantifiable in terms of greenhouse gas mitigation and thus not recognised and credited in the project provision (Cheng et al., 2008). Additional barriers include devolution of national authority, lack of expertise with these instruments at local level, lack of measurement instruments and expertise, costs and risks associated with project approval by UNFCCC and implementation (Clapp, 2010).

The possibilities for cities to use existing carbon finance instruments could be increased.

City tools for measurement and monitoring (including standard inventories), as well as expert support from national government and private sector, could facilitate market access and streamline project preparation, lowering transaction costs. If international climate negotiations were to mention transport and buildings as key areas to reduce greenhouse gas emissions, this would provide a rationale to involve urban areas. In order to keep transaction costs down and to take systems dimensions of urban problems into account, these actions should take the form of broad programmes rather than specific projects. Funding from CDM, as it is currently designed, could help to reduce public transport fares, thus increasing transit usage, and also help to finance inter-modality infrastructures, thereby facilitating modal shifts. Other CDM opportunities for the urban sector would be to explore the easily attainable targets on greenhouse gas sources related to urban transportation planning, such as urban forestry, street lighting, waste energy used for transportation purposes, etc. City involvement in CDM might require broadening the project-based approach of CDM, for instance to include a sectoral crediting mechanism beyond 2012. In addition, there is a need to develop carbon emission inventories that are harmonised across cities (Corfee-Morlot et al., 2009). The C40 Large Cities Climate Leadership group has partnered with the Government of Switzerland, ECOS and the World Bank on a program called Carbon Finance Capacity Building as a precursor for cities being given access to new sources of funding currently targeted at national governments.

In addition, national governments could green urban finance by re-designing sub-national taxes and grants to sub-national governments.

Re-design of sub-national taxation could include property tax reform, in order to correct for biases towards unsustainable behaviour. In addition, governments could design grants that take environmental indicators into account in case of jurisdictional spillovers. A comprehensive greening of urban finance would also increase the coherence between urban finance and urban planning frameworks to enhance urban sustainability and to contain unlimited urban growth.

© OECD 2010

Public-private partnerships can bolster urban green growth goals under certain conditions

The use of PPPs to achieve green growth goals by cities has been growing over the last decades.

PPPs can be defined as contracts between a government and a private company, under which the private company finances and builds an infrastructure asset, subsequently maintains the asset and, in many cases, operates some element of a public service while using the asset. In return for these activities, the company is paid over a number of years for the construction costs and service operation, either through user charges, public payments or a combination of both. Cities in many OECD countries are responsible for the provision infrastructure for which PPPs are mostly used, such as transport infrastructure (which accounts for 47% of all PPPs planned and funded in the world since 1985) and to a slightly lesser extent water (30%) and buildings (21%) (OECD, 2010). The use of PPPs is particularly growing in cities with heavy investments in infrastructure, for example in cities in China where PPPs have recently been introduced to finance wastewater infrastructure (in Beijing and Guangzhou) and solid waste management projects (e.g. in Shenzhen and other cities in the Guangdong province). Other examples include Korea, France and the UK.

PPPs can potentially stimulate sustainable investments by private actors.

PPPs can, in the right circumstances, provide better value for money, such as lower prices, than traditional infrastructure procurement (which leaves the building of infrastructure to the private sector, but not the maintenance and operation of it) by sharing risks in innovative ways. PPPs could encourage private (as well as public) actors to take a more long-term view on spending by relating maintenance spending more closely to capital investment. As such, PPPs might stimulate energy efficiency in public buildings as the private operator would benefit from the efficiency gains due to its investment in energy efficiency.

The use of PPPs can be problematic given that they are in many instances absent from government balance sheets.

The private party in a PPP can carry a number of the risks and thus be obliged to record the PPP on its balance sheet. Only the annual PPP-agreement payments are on the government budget. In order to circumvent national or supra-national deficit and debt rules, cities thus might not be interested in assessing a project on its merits, but only on whether it can be done as a PPP. This approach undermines value for money and long-term fiscal sustainability. Some countries have tried to limit this problem by imposing more strict accounting rules, ensuring a mandated value-for-money process, and imposing a maximum amount of transparency about the deal when it is struck. Some central governments are worried that regional and local governments are using PPPs to get around the fiscal rules set by the centre, resulting in a huge unacknowledged stock of liabilities that central government might suddenly have to take over.

There is, however, no indication that PPPs would be better suited to achieve green growth goals than traditional procurement.

Although it might create better value for money in some instances, it crucially depends on the fulfilment of certain criteria. The private sector is not always more efficient in operating certain public services: e.g., a study of cities with different types of bus operators found that the most efficient cities were equally likely to be public or private (Pina & Torres, 2006). In addition, PPPs require certain skills – for example in negotiating and the capacity to comprehend long-term capital budgeting - that most public sector officials at the city-level do not have. This might explain the existence of cases, such as the waste water treatment plant in Zagreb, where very little risk has been transferred at great cost to the taxpayer (CEE Bankwatch Network, 2008). Several OECD countries have created PPP units at the central government level to build this public capacity, but similar initiatives at the city- or regional level are hardly existent. Even if PPP contracts would appear to have been well negotiated by city officials, they sometimes choose to (or feel obliged to choose to) to bail out the private operator if its assessment of risks proved to be too optimistic, as was the case with the public bicycle rental scheme of the City of Paris (see Box 6).

© OECD 2010

Box 6. PPPs to fund public bicycle rental schemes: the case of Vélib’ in Paris

As part of its strategy to reduce car use, the city of Paris undertook a policy to promote the bicycle as an alternative means of public transport for short distances in Paris. After an open call for tender in 2007, the city of Paris awarded the private company JC Decaux the concession to build, maintain and operate this system for a 10-year period. The investment and operational costs of the bike rental system are born by the private company, in exchange for a right on 50% of the total surface of city billboards (which generated € 57 million in 2008). Total investment costs for the system was around € 110 million; additional Vélib’-infrastructure is financed by the City of Paris (estimated to be € 8 million per year). Revenue generated by Vélib’, through user payments and subscriptions, goes to the city of Paris (€ 15 million in 2008), but the private company can earn additional revenue when its operational activity reaches a very high level of quality as determined by six criteria. In order to run the system, 400 employees were hired by JC Decaux. The public bicycle rental system was inaugurated in July 2007 with 10,600 self-service bicycles available at 750 stations, which grew into 24,000 bicycles and 1,751 stations in June 2009. The Vélib’-system has been conceived as a success: the average number of trips reached 76,660 per day in 2008 and bicycle use in the city has increased. The model proved to be a profitable operation for the city, but not for JC Decaux as it underestimated the costs for repairing and replacing damaged bicycles and was responsible for bearing this risk. In order to avoid bankruptcy of JC Decaux and subsequent halt to their operations, the city of Paris felt obliged to re-negotiate the contract and provide more favourable terms for JC Decaux. No analysis of whether this agreement still is better value for money than if it was completely run by municipal workers has been initiated. Source: Largentaye, H. de (2010), “Velib’: a case of successful co-operation between the City of Paris and the private sector in the framework of a sustainable development strategy”, Presentation for OECD 3rd Annual Meeting on Public Private Partnerships, 13 April 2010.

Multilevel governance and co-ordination enhances the implementation of green growth policies

Green growth involves a paradigm shift in the way economic development policies are conceived at national, regional, and local levels and in the way these policies link to the business sector and civic organisations.

Urban green growth and sustainability initiatives both affect and are affected by economy-wide fiscal policies and national sectoral policies (particularly transportation, building, labour, innovation and education policy). National-level policies can undermine urban level green growth policies if potential policy obstacles are not identified and addressed (Corfee-Morlot et al., 2009). For this reason, local level initiatives that focus on stand-alone or “flagship” projects without regard to where these projects fit within regional and national policy frameworks risk falling short of their promise.

National governments can play a role in supporting and removing barriers to greater urban governance and enhance cities’ capacity to act on climate change issues.

Key roles include providing funding and technical assistance to cities and regions, such as in Finland and Sweden. Climate mandates in national urban and regional policies, such as in Australia, Austria, Canada, the Czech Republic, France, Germany, Japan, Mexico and the United Kingdom, and in the Korean “Green New Deal”, can advance local climate action. Strong national targets for adaptation and greenhouse gas emissions reductions can help prevent regional competition based on environmental regulations and even promote a “race to the top” through incentives, such as Japan’s “Environment-Friendly Model City” award. It is also important to align national policies to remove perverse incentives and establish positive incentives for green growth (Corfee-Morlot et al., 2009).

© OECD 2010

Collaboration on the metropolitan level among municipalities, regional governments, and the private sector provides challenges and opportunities for implementing green growth strategies.

Regional coordination on green growth is necessary because green growth-relevant functions, defined economic interchanges, flows of materials and energy, and transportation between activities and households in the city’s core area and localities overlap across multiple jurisdictions and public service agencies (Corfee-Morlot et al., 2009). The Climate Protection Agency for the Hanover Region demonstrates the effectiveness of a coordinating body on the metropolitan regional level in accelerating the shift to green technologies. Composed of the City of Hanover, the Hanover Region, 20 surrounding municipalities, the local public utility company and public transport operator, and private sector shareholders, the agency promotes energy efficiency and the use of renewable technologies. Its initiatives have resulted in increased energy efficiency of local enterprises and existing buildings, and have increased the use of solar, wind, and combined heat and power (CHP) energy (Potthoff in OECD, 2010d). In London, the creation of the Greater London Authority in 2000 resulted in the formation of the London Energy Partnership, through which the Mayor of London was able to promote the use of on-site renewable energy generation and district-based CHP generation (Bulkeley & Schroeder, 2008; Corfee-Morlot et al., 2009).

© OECD 2010

Notes

1. More precisely, this modelling exercise has been carried out by employing the spatialised version of the IMACLIM-R CGE framework (Crassous et al., 2006). IMACLIM-R allows simulating the interactions between changes in energy consumption, carbon emissions and economic growth, given a set of policies and other exogenous factors. Special thanks are given to Fabio Grazi and Henri Waisman (CIRED) for modelling work with IMACLIM-R and the urban module that incorporates the OECD metropolitan database.

2. Densification indicates policies that increase the number of people per square kilometre in a given urban area. These include restrictive policies, which actively pursue densification such as through green belt policies, and enabling policies, which allow activity to be drawn to the, core such as public transportation systems or the elimination of distortions in the market such as taxes for deconcentration.

3. Such a road toll reduces average rather than marginal commuting costs by car (see Henderson, 1974 for the underlying economics of road pricing mechanisms).

4. Life cycle costing (LCC) is a structured approach that can be used to produce a spend profile of the product or service over its anticipated life-span. The results of an LCC analysis can be used to assist management in the decision-making process where there is a choice of options. See www.ogc.gov.uk/implementing_plans_introduction_life_cycle_costing_.asp.

5. Today, more than half of the 1 500 companies in Issy are in the ICT sector, including Cisco Systems' European headquarters, Hewlett Packard, Orange Internet, Sybase, Canal+, and Microsoft Europe.

6. See www.sustain.ucla.edu/article.asp?parentid=6024.

7. Although landfilling and incineration involve larger volumes, recycling now generates more revenue of the waste management industry since great economic value is bound up in discarded products and equipment. Worldwide estimates of employment in recycling are not available as we lack reliable estimates from several developing economies where recycling is growing fast. Recent estimates for the United States find that recycling generates revenues of USD 236 billion annually and offers employment to 1.1 million people at 56,000 public and private facilities (UNEP, 2009).

8. See http://mayorsinnovation.org/pdf/IndusRebuildBrochure1.pdf.

9. See the second issue of the Solaris newsletter at www.environment.gov.au/settlements/solarcities/publications/solarise/index.html.

10. An Innovation Vouchers Subsidy Scheme was introduced for the first time by the Dutch Ministry of Economic Affairs and then experimented in several OECD countries. Innovation vouchers were proposed as a key instrument for facilitating university-SME collaborations by Terry Cutler in the report for the Review of the Australian National Innovation System (Cutler & Company Pty Ltd (2008)), In Cutler’s proposal of a voucher program, each voucher would be worth up to USD 15 000 and would be used to fund collaboration between the small firms and a public sector research organisation. The program would link 5 000 firms per year with public research agencies at a cost of USD 50–75 million per year. The voucher programs can be easily scaled-down at the sub-national level, targeted on energy efficiency innovations and applied by municipal departments in charge of innovation and business support.

11. CDM allows developed countries to purchase carbon credits from emission reduction projects in developing countries, and JI from emission projects in other developed countries.

12. Annex 1 countries are Australia, Austria, Belarus, Belgium, Bulgaria, Canada, Croatia, Czech Republic, Denmark, Estonia, European Community, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Italy, Japan, Latvia, Liechtenstein, Lithuania, Luxembourg, Monaco, Netherlands, New Zealand, Norway, Poland, Portugal, Romania, Russian Federation, Slovakia, Slovenia, Spain, Sweden, Switzerland, Turkey, Ukraine, United Kingdom, and United States of America. (http://unfccc.int/parties_and_observers/parties/annex_i/items/2774.php)

© OECD 2010

CITIES AND GREEN GROWTH SCOPING PAPER FOR THE 2010 OECD URBAN ROUNDTABLE OF

MAYORS AND MINISTERS

References

Acemoglu, D., P. Aghion, L. Bursztyn and D. Hemous. (2009), “The environment and directed technological change”, NBER Working Paper, MIT-Harvard, Cambridge, USA.

Arnott, R., A. de Palma and R. Lindsey, (1991), “Does providing information to drivers reduce traffic congestion?”, Transportation Research 25A, 309-318.

Bank of Japan, Kiatkyushu subsidiary (2008), “Recycling Industry in Kitakyushu City”, http://www3.boj.or.jp/kitakyushu/sonota/kitarecycle.pdf, accessed 2 October 2009.

Bowen, A. et al. ( 2009) “An outline of the case for a ‘green’ stimulus”, Policy Brief February 2009, Grantham research institute on Climate Change and the Environment and the Centre for Climate Change Economics and Policy, London, UK

Brueckner, J. and Kim, H. (2003), “Urban sprawl and the property tax”, International Tax and Public Finance, Vol. 10, pp. 5-23, Springer Netherlands.

Bulkeley, Harriet and Heike Schroeder (2008), Governing Climate Change Post-2012: The Role of Global Cities – London, Tyndall Centre for Climate Change Research, Norwich, UK.

C40 Climate Leadership Group (2007), “Case Study: Energy Savings Partnerships”, C40 Climate Leadership Group, London, UK, www.c40cities.org/docs/casestudies/energy/berlin_energy.pdf.

CEE Bankwatch Network (2008), “Never mind the balance sheet: The dangers posed by public-private partnerships in central and eastern Europe”, CEE Bankwatch Network, http://bankwatch.org/documents/never_mind_the_balance_sheet.pdf.

Cheng, C. et al. (2008), The Kyoto Protocol, Clean Development Mechanism, the building and construction sector, UNEP SBCI, Paris, 2008.

City of London (2006), Emissions Trading and the City of London, London.

City of New York (2009), “Transformation to a Green Economy”, City of New York, www.nyc.gov/html/om/pdf/2009/pr465-09_plan.pdf.

Clapp, Christa (2010), “Expanding Carbon Markets: Cities and Access to Carbon Finance” Presentation at OECD Global Carbon Markets Workshop, 19-20 April, 2010, OECD, Paris.

Cooke, Philip (2008), “Regional Innovation Systems, Clean Technology & Jacobian Cluster-Platform Policies”, Regional Science Policy & Practice, Vol. 1, No. 1, pp.23-45, Blackwell Publishing, Oxford, UK.

Corfee-Morlot, J., L. Kamal-Chaoui, M. G. Donovan, I. Cochran, A. Robert and P.J. Teasdale. (2009), “Cities, Climate Change and Multilevel Governance”, Environment Working Papers, OECD, Paris.

Crandall, R., W. Lehr and R. Litan (2007), “The Effects of Broadband Deployment on Output and Employment: A Cross-sectional Analysis of U.S. Data”, Issues in Economic Policy series, The Brookings Institution, Washington, DC.

Crassous, Renaud, Jean-Charles Hourcade, and Olivier Sassi (2006), “Endogenous Structural Change and Climate Targets: Modeling experiments within IMACLIM-R”, The Energy Journal, Special Issue #1, International Association for Energy Economics, pp. 259-276.

© OECD 2010

Cutler & Company Pty Ltd (2008), “Venturous Australia”, www.innovation.gov.au/innovationreview/Documents/NIS_review_Web3.pdf, accessed 25 February, 2010.

ECOTEC, 2002 ECOTEC Ltd. (2002), Analysis of the EU Eco-industries, their employment and export potential, ec.europa.eu/environment/etap/pdfs/main_report.pdf, accessed 10 August, 2009.

EurActiv (2009), “EU to help cities go 'green', buy clean buses” EurActiv, 12 February 2009, www.euractiv.com/en/transport/eu-help-cities-go-green-buy-clean-buses/article-179366, accessed 23 April 2010.

European Commission (2004), 2004 Environment Policy Review, European Commission, Brussels.

European Commission (2010), “Exploring emerging ICT-enabled governance models in European cities” http://is.jrc.es/pages/EAP/documents/EXPGOVSurveyReport22012010_000.pdf.

Goodman, J., (2006), “Houses, Apartments and the Incidence of Property Taxes”, Housing Policy Debate, Vol. 17, pp. 1-26.

Grazi, Fabio, Jeroen van den Bergh and Jos van Ommeren (2008), “An Empirical Analysis of Urban Form, Transport, and Global Warming”, The Energy Journal, Vol. 29, No. 4, pp. 97-122.

Fenhann, J. (2010), “Overview of the CDM pipeline” (Excel file), UNEP Risø Centre, http://cdmpipeline.org/publications/CDMpipeline.xlsx, accessed 27 April 2010.

Henderson, Vernon (1974), “Road congestion. A reconsideration of pricing theory”, Journal of Urban Economics, Vol. 1, No. 3, pp. 346–365.

IEA (2008a) World Energy Outlook 2008, OECD/IEA, Paris.

IEA (2008b), CO2 Emissions from Fuel Combustion, OECD/IEA, Paris.

IEA (2009a) Energy Balances in OECD Countries, OECD/IEA, Paris.

IEA (2009b), Cities and Towns and Renewable Energy -YIMFY: Yes In My Front Yard, 4 August, 2009, OECD/IEA, Paris.

IEA (2009c) Innovations in Multi-Level Governance for Energy Efficiency: Sharing experience with multi-level governance to enhance energy efficiency, OECD/ IEA, Paris.

Jenks, M., D. Kozak and P. Takkanon, eds. (2008) World Cities and Urban Form: Fragmented, Polycentric, Sustainable?, Routledge, Oxford, UK.

Jorgenson, Andrew K. (2003), “Consumption and Environmental Degradation: A Cross-National Analysis of the Ecological Footprint”, Social Problems, Vol. 50, No. 3, p. 374-395.

Kahrl,F., W. Tao, and D. Roland-Holst (2009), “Municipal Climate Policies: Scope, Economics, and Institutions”, Center for Energy, Resources, and Economic Sustainability, University of California at Berkeley.

Kamal-Chaoui, L. and A. Robert (eds.) (2009), “Competitive Cities and Climate Change”, OECD Publications, Paris, www.oecd.org/dataoecd/30/36/44232251.pdf.

Kammen, D. M., M. Fripp, and K. Kapadia (2006), “Putting Renewables to Work: How Many Jobs can the Clean Energy Industry Generate?” RAEL Report, University of California at Berkeley.

Kennedy, Christopher et al. (2009), “Greenhouse Gas Emissions from Global Cities”, Environmental Science & Technology, Vol. 43, No. 19, American Chemical Society, Washington, US, pp. 7297-7302.

© OECD 2010

Largentaye, H. de (2010),” Velib’: a case of successful co-operation between the City of Paris and the private sector in the framework of a sustainable development strategy”, Presentation for OECD 3rd Annual Meeting on Public Private Partnerships, 13 April 2010.

Litman, T. (2009), Smart Growth Reforms: Changing Planning, Regulatory and Fiscal Practices to Support More Efficient Land Use, Victoria Transport Policy Institute.

London Remade (2007), “The Footprint Project: Reducing London’s Ecological Footprint”, http://londonremade.com/lr_footprinting.asp.

Mansur and Kahn (forthcoming) “Do Energy Price Differentials Influence Where Manufacturing Agglomerates? A Regression Discontinuity Approach”, manuscript.

Nicholls, R. et al. (2008), “Ranking Port Cities with High Exposure and Vulnerability to Climate Extremes,” OECD Environment Working Papers No. 1, OECD, Paris.

OECD (2003), ICT and Economic Growth: Evidence from OECD Countries, Industries and Firms OECD, Paris.

OECD (2006), OECD Territorial Reviews: Competitive Cities in the Global Economy, OECD, Paris.

OECD (2008a) Competitive Cities and Climate Change: OECD Conference Proceedings, Milan, Italy, October 9-10, 2008, OECD, Paris.

OECD (2008b) Environmental Outlook to 2030, OECD, Paris.

OECD (2008c) Growing Unequal, OECD, Paris.

OECD (2008d), OECD Territorial Reviews: Cape Town, South Africa, OECD, Paris.

OECD (2008e), Household Behaviour and the Environment: Reviewing the Evidence, OECD, Paris.

OECD (2009a) Regions at a Glance, OECD, Paris.

OECD (2009b), The Economics of Climate Change Mitigation: Policies and Options for Global Act ion beyond 2012, OECD, Paris.

OECD (2009c), “University inventions and entrepreneurship: a regional perspective”, OECD Directorate for Science, Technology and Industry Working Paper, OECD, Paris.

OECD (2009d), “OECD Territorial Reviews: Copenhagen, Denmark, OECD, Paris.

OECD (2009e), “OECD Territorial Reviews: Toronto, Canada, OECD, Paris.

OECD (2009f), OECD Territorial Reviews: Trans-border Urban Cooperation in the Pan Yellow Sea Region, OECD, Paris.

OECD (2009g), “Enabling the Green Growth: Sustainable Manufacturing and Eco-innovation, Synthesis Report”, OECD, Paris.

OECD (2009h), “SourceOECD National Accounts Statistics”, Volume 2009, www.sourceoecd.org/database/16081188/nataccounts, OECD, Paris.

OECD (2010a) “Interim Report of the Green Growth Strategy: Implementing our commitment for a sustainable future,” OECD, Paris.

OECD (2010b), OECD Territorial Reviews: Venice, Italy, OECD, Paris.

OECD (2010c), “Eco-Innovation in Industry Enabling Green Growth”, OECD, Paris.

© OECD 2010

OECD (2010d), Green Cities: New Approaches to Confronting Climate Change, OECD Workshop Proceedings, 11 June 2009, Las Palmas de Gran Canaria, Spain.

OECD (forthcoming), OECD National Urban Poilcy Reviews: Korea, OECD, Paris.

Parry, I. (2005), “Is Pay-as-You-Drive Insurance a Better Way to Reduce Gasoline than Gasoline Taxes?”, AEA Papers and Prooceedings, Vol. 95, pp. 288-293.

Pina, V. and Torres, L. (2006), Public-private efficiency in the delivery of services of general economic interest: The case of urban transport, Local government studies, Vol. 32, No. 2, pp. 177-198

REN21 (2009) "Renewable Global Status Report 2009", www.ren21.net/pdf/RE_GSR_2009_Update.pdf, accessed 20 April 2010.

REN21 (2007) "Renewable Global Status Report 2007", www.ren21.net/pdf/RE2007_Global_Status_Report.pdf, accessed 20 April 2010.

Ruth, M. and D. Coelho (2007), “Understanding and Managing the Complexity of Urban Systems under Climate Change”, Climate Policy, Vol. 7, pp. 317–336.

Stern, Nicholas (2007), The Stern Review Report, Cambridge University Press, Cambridge, UK.

UNEP (United Nations Environment Programme) (2008), Green Jobs: Towards Decent Work in a Sustainable, Low-Carbon, UNEP, 2008.

UNEP (2009), “Green Jobs: Towards decent work in a sustainable, low-carbon world,” www.ilo.org/wcmsp5/groups/public/---dgreports/---dcomm/documents/publication/wcms_098503.pdf, accessed 20 April 2010.

UNFPA (United Nations Population Fund) (2007), State of World Population 2007: Unleashing the potential of urban growth, UNFPA, New York.

UN-HABITAT (United Nations United Nations Human Settlements Programme (2009), Global Report on Human Settlements 2009: Planning Sustainable Cities: Policy Directions, Earthscan, London.

Wackernagel, M. et al. (2006), “The Ecological Footprint of Cities and Regions: Comparing Resource Availability with Resource Demand”, Environment and Urbanization, Vol. 18, p. 203.

Zutshi, A. and Sohal, A. (2004) Adoption and maintenance of environmental management systems: critical success factors, Management of Environmental Quality, an International Journal, Vol 15, No 4, pp. 399-41.

CITIES AND GREEN GROWTH SCOPING PAPER FOR THE 2010 OECD URBAN ROUNDTABLE OF

MAYORS AND MINISTERS

Photo credits:

© Matt Poske - Fotolia.com © iofoto - Fotolia.com © Gautier Willaume - Fotolia.com © ELEN - Fotolia.com © hassan bensliman - Fotolia.com © eregister - Fotolia.com © jeancliclac - Fotolia.com © msw - Fotolia.com © Lisa F. Young - Fotolia.com