U.S. cities are leading the charge in the fight against climate change. The New York Times
NYT
Many U.S. cities have committed to climate targets and adopted diverse strategies to reduce their greenhouse gas (GHG) emissions. For instance, New York is heading toward sourcing all its electricity from renewable resources, and its enactment of Local Law 97 targets the reduction of building-emitted GHGs. Concurrently, Los Angeles has set ambitious targets for counteracting GHG emissions in the transportation sector: a 25% and 100% electric vehicle (EV) adoption rate by 2025 and 2050, respectively.
Challenges remain despite these initiatives. The Brookings Institute emphasizes cities’ need for clear financing sources and strategies in funding decarbonization. Moreover, a study of 48 U.S. cities highlights that cities have been underreporting their carbon dioxide emissions by about 20%, a discrepancy that could undermine their climate change mitigation efforts. To help navigate these issues, leading experts in investment, climate law and energy data provide insights into how leveraging public-private partnerships, aligning climate policies, and standardizing GHG emission accounting methods can support cities in implementing their net-zero goals.
Leveraging Public-Private Partnerships to Finance Sustainable Projects and Technologies
A recent OECD report showed that in 2022, 13 of the top 20 per-capita emissions-producing metropolitan areas were American ones (Chart 1). U.S. cities’ abundant GHG emissions arise mainly from the power, industry, transportation, and building sectors, showcasing the need to accelerate efforts to decarbonize these sectors in order to meet 2030 climate targets.
Chart 1: Per-Capita Emissions in OECD Metropolitan Areas
U.S. cities must make significant investments to effectively reduce their GHG emissions. However, according to a Brookings Institute report on the 50 largest U.S. cities, many are having difficulty funding their decarbonization initiatives, with only 16% of them specifying funding sources or financing strategies in their plans.
Laura Fox, Co-Founder and Managing Partner at Streetlife Ventures and Senior Fellow at MIT Mobility Initiative, says that “cities need to create a policy environment that incentivizes the mobilization of public-private partnerships (PPPs) to fund large-scale decarbonization projects.”
She highlights, for example, that U.S. cities can learn from London, U.K., which implemented an Ultra Low Emission Zone (ULEZ) and reinvested the revenue into the transit system. This strategy created new avenues for micro-mobility and public transit, resulting in a significant shift in transportation habits. In fact, 73.5% of Londoners changed their modes of transportation, with 20% and 17% opting for electric motorcycles/scooters and cycling, respectively. Likewise, a public-private partnership between Denmark’s government and its three leading business associations has enabled over 98% of Copenhagen’s buildings to be heated by carbon-neutral district heating.
Public-private coordination can speed up the process of upgrading U.S. grid infrastructure—which can take a long time—especially when building new power lines across different states. Fox states that different types of allocators can fund new technologies to manage these infrastructure investments more effectively or pool different capital sources to derisk projects.
She points out that “we’re making a big bet to decarbonize buildings and transportation systems based on a clean, stable, and abundant electrical grid and energy supply – unfortunately, none of those things are true in American cities right now. Developing and utilizing new technologies are crucial to address this gap. For example, on the stability side, U.S. utilities are seeing a 500% increase in hard costs related to climate disasters, and the U.S. leads in the number of electricity outages among developed countries. AI-powered resilience models, such as the one developed by Rhizome, can help utilities make complex investment planning decisions to accelerate grid development.”
She adds, “Another tool that cities can deploy is challenge-based procurement. This structure can help cities quickly procure needed new decarbonization technologies with proven results, and reduces the potential for ‘pilot purgatory’ where cities and startups struggle to scale successful deployments. This also creates a virtuous cycle: if more of these novel procurement structures are in place, more private allocators will invest in climate technologies that sell to local governments and have a path to scale, and we’ll be able to decarbonize more urban assets faster, from buildings to water and transportation systems.”
Initiating The Alignment of Municipal, State, and Federal Policies
Many U.S. cities have been leading the way in reducing greenhouse gas (GHG) emissions in recent years. New York City and Washington DC have mandated GHG reduction from buildings. Meanwhile, Kansas City, Missouri, has offered free public transit to advance local transit equity and climate change efforts. Still, many municipalities face hurdles in implementing climate policies due to statutory preemption, whereby a federal or state law overrides a local government’s environmental, energy, transportation, or other initiatives.
For instance, in April 2023, the U.S. Court of Appeals for the Ninth Circuit struck down Berkeley, California’s first-in-the-nation ban on natural gas in new buildings. According to Canary Media, this ruling caused several cities across the Ninth Circuit region, which spans 11 Western states and territories, including California, Oregon, and Washington, to suspend similar policies. The judges ruled that because the federal Energy Policy and Conservation Act’s national efficiency standards for appliances prevent cities and states from setting their own standards, local governments cannot ban infrastructure to prevent the use of fossil-fuel-powered appliances. Columbia University’s research also notes local utilities companies’ successful lobbying efforts (for example, in Eugene, Oregon) in pushing against restrictions on gas hookups in new building construction.
Amy Turner, director of the Cities Climate Law Initiative at Columbia Law School, notes that “in the U.S., each city is governed its own way under the federal system. For example, New York City has a charter that allows it unique power compared with other cities in the New York State”. Consequently, “cities should evaluate various alternative measures based on their unique capacity. For example, they can adopt building-emission standards, whereby building owners can decide how they want to reach those standards. This way, cities can work around the statutory preemption issue, if needed”.
In recent years, a handful of U.S. cities, including Boston, New York, Seattle, and Washington, D.C., have passed building-performance standards to cut emissions. And states like California are implementing ambitious building energy efficiency standards that will push toward electrification and emissions reduction. However, according to Ted Lamm, Senior Research Fellow at UC Berkeley School of Law’s Center for Law, Energy and the Environment, “the challenge of decarbonizing existing buildings remains because many of these standards tend to focus on new construction”.
Under the IRA’s provisions, state lawmakers create green banks as part of the $27 billion Greenhouse Gas
GAS
Both Turner and Lamm highlight the urgent need to achieve net-zero targets. They suggest that federal and state governments can play a crucial role in assisting cities in more efficiently implementing climate change policies.
Turner says, “Since cities tend to emit significant GHG emissions from the building and transport sectors, the federal government is particularly well placed to take the lead on scaling renewables and developing the power infrastructure to bring clean energy to urban centers along with regulating vehicle emissions standards to encourage the mode shift toward zero-emission vehicles”.
Lamm adds that, relative to Berkeley’s Ninth Circuit court case, “Congress could always amend the federal Energy Policy and Conservation Act to expressly state that cities and states can set their own standards for the use of gas in buildings. This would clarify cities’ authority to regulate building infrastructure and help cities implement their climate laws more easily”.
Collaborating to Standardize GHG Emissions Accounting Methods
In 2021, research by Nature Communication and the National Academy of Science brought to light the issue of U.S. urban areas underreporting their GHG emissions. Kevin Gurney, lead author of the former study, discussed the challenges cities encounter due to inaccurate GHG emission data.
He identified the lack of a standardized method for estimating urban emissions as a key obstacle hindering cities’ ability to assess their progress in reducing greenhouse gas (GHG) emissions.
Moreover, he pointed out specific reporting errors, such as not fully accounting for petroleum use when calculating emissions from buildings and the varying methods used by cities to calculate traffic emissions. Gurney advocated for adopting standardized methods for accounting for urban emissions to surmount these shortcomings, underscoring the importance of such methods to accurately track and manage cities’ progress in mitigating GHG emissions.
According to Sunny Sanwar, Founder and CEO at Dynamhex, “Academia, policymakers, corporations, and startups need to collaborate more thoroughly to standardize emissions accounting methods. Often, smaller and medium-sized cities have limited resources. Therefore, creating a standardized method which can be implemented by software solutions to gather and analyze GHG emissions will enable more cities to track their carbon footprints and identify decarbonization opportunities.”
Many American cities lack the GHG emissions data necessary to understand their carbon footprints. Despite identifying long-term goals for GHG emissions reductions, less than one-third (32%) of the U.S.’s 50 largest cities have detailed GHG benchmarks and reporting, often leading to inconsistent timelines and targets (Figure 1). This lack of detailed planning is exemplified by the fact that only 54% of plans aim to achieve net-zero emissions by 2050, putting them out of step with national and international climate goals.
Figure 1: Timelines and Benchmarking Vary Across Different Decarbonization Plans
Indifferent reporting of GHG emissions is also among the obstacles to accurately gathering data. For instance, a new report from Bain & Company found that private companies tend to trail their public counterparts when it comes to reporting greenhouse gas emissions and climate risks, with only 49% of them reporting on Scope 1 and 2 emissions, compared with 88% of public companies. Furthermore, only 29% report on any Scope 3 emissions, as opposed to 70% of the public cohort (Figure 2).
Figure 2: The Private/Public Gap in Emissions Reporting
To bridge this GHG reporting gap, Sanwar states, “Investor or industry-specific disclosure requirements are often compelling incentives for companies to report. The U.S. Securities and Exchange Commission (SEC) is addressing this topic through its mandatory climate disclosure rulemaking. Currently, private companies do not have to report directly, but through the supply chains of public companies, they will indirectly have to think about reporting GHGs. By laying out details around standards, complemented by adequate regulations, private companies would be more incentivized to report their GHG emissions.”
He adds, “In the years ahead, municipal governments should proactively support disclosure requirements and partner with utilities because they often have city-specific centralized data. Additionally, certain GHG emissions, like methane, can often be underreported. As a result, cities would benefit from using augmented technologies and satellite imagery to capture these missing data to understand their GHG emissions.”
