The stability of every city depends on an uninterrupted supply of energy to power its buildings, transport, digital infrastructure, water supply, commercial and industrial activities. With most cities still relying largely on fossil fuels, this creates a huge carbon footprint: cities consume 78 per cent of the world’s energy and account for more than 60 per cent of its greenhouse gas emissions.1
Cities are under increasing pressure to become carbon neutral, and it is within their power. Local government can, in some cases, be more aggressive in setting sustainable growth priorities than national government. The US state of Rhode Island (the smallest among the 50 states), for example, recently committed to sourcing 100 per cent of its electricity from renewable sources by 2030.2
Cities can play a vital role in shaping the energy transition and building momentum for a net zero economy, says Hazem Galal, global leader for cities and local government at PwC Middle East.
New technology is helping with energy efficiency
Fifty-seven per cent of the world’s population lives in cities; by 2050, this proportion will rise to about 70 per cent3 with the addition of 2.5 billion new city residents.4 The massive growth will have an impact on demand for energy infrastructure. Cities have an advantage over rural areas here: it is easier to distribute energy efficiently in areas of high population density.
Many cities, including London,5 San Diego,6 Tokyo7 and Delhi,8 are embracing microgrids. This form of localised community power network distributes energy based on patterns of supply and demand, and can help to integrate renewable energy by connecting sources such as solar panels to the larger electricity grid.
Cities are also reducing carbon emissions using advanced digital technologies such as smart meters that optimise energy consumption. Digitalisation is particularly advanced in Singapore, where a digital twin of the national power grid is increasing its efficiency by improving the operation and maintenance of power generation assets. It will also support the integration of renewable energy by assessing the impact of new electricity demand, such as the charging of electric vehicles.9
These measures are important steps towards net zero. But the biggest challenge for cities is likely to be decarbonising their heating systems. Many cities — particularly those in colder regions — have strong district heating networks that could integrate low-carbon energy sources on a large scale. But the vast majority are still using fossil fuels.10
Interest is growing in networked heat pumps,11 which replicate the gas grid model but use renewable energy from air, soil or groundwater. In Helsinki, home to the world’s largest heat pump plant, the integrated system both heats and cools — and emits 80 per cent less CO2.12
Legislators tackle the problem of buildings
Buildings, which account for up to 60 per cent of urban carbon emissions,13 are another challenge for cities that are trying to reduce their energy use and emissions. Necessary modifications, such as better insulation, can give them an opportunity to transform energy demand in the long term.
Some cities have introduced legislation that encourages or enforces energy-efficient retrofits of buildings. These policies, such as performance disclosures, benchmarking, auditing and fiscal incentives, are often aimed at tenants as well as building owners.
In Korea, for example, Seoul’s Building Retrofit programme includes a loan scheme for energy-efficient refurbishments, which is open to all building stakeholders. The initiative also offers lower prices for building materials such as high-performance insulated windows and doors.14
New York has taken a firmer approach with its Climate Mobilisation Act, which from 2025 will require all buildings larger than 25,000 sq ft to meet strict emissions standards.15 This kind of legislative intervention can be a powerful way to force change, but city officials can also use urban planning and zoning laws and initiatives to improve conditions for business. These can be particularly useful if they do not have the budget to offer financial incentives.
Getting cities to net zero is a team effort
As major contributors of carbon emissions, cities are on the frontline of climate change. But many are showing how they can contribute to sustainable growth as they pave the way for new low-carbon energy sources and greater energy efficiency.
In order to succeed, they will need to bring together every part of their energy ecosystem: the political leaders and regulators, the power generators, transmission and distribution, the technology start-ups, the financiers, the manufacturers and the consumers.
“As we look at how cities will contribute to the battle against climate change, it’s important that we consider how to implement innovations in energy use,” says Galal. “We must not only be able to pay for it, but also to scale it up, share learnings between cities and work seamlessly with national governments, start-ups and the private sector to change how we use energy in our cities.”
This article is based on a Financial Times round table discussion under Chatham House Rules held in collaboration with PwC.
