After centuries of aggressive growth fuelled by fossil fuels, a small group of cities are leading the global drive to net-zero. What lessons can be learned?
Cities are responsible for around 75% of global CO2 emissions. To effectively battle climate change, urban hubs will need to be in the vanguard. A handful of cities are aware of this responsibility, and willingly placed themselves on the front lines in the effort to decarbonise. Across the UK, mainland Europe and the Asia Pacific, this group of metropolitan centres has declared climate emergencies, set ambitious emission reduction targets, and partnered with the private sector on wide-scale decarbonisation projects. The scope and depth of their commitments puts them at the cutting edge of clean urban living. But how have these cities balanced environmental ambition and continued economic growth? Who are the major stakeholders? And what are the major legal hurdles and risks? Our Decarbonising Cities series starts with an overview of these pioneer cities, with our experts and key industry figures sharing their insight on how cities can spearhead the campaign to net zero.
Cities are where the action is, over two-thirds of all emissions in the world are because of activity in cities – they suffer the problem, they cause the problem. So, there's a strong imperative on cities to do something about it."
Lewis McDonald, Herbert Smith Freehills' Global Head of Energy
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Our team of experts are ready to share further insights based on deep understanding of the pressure points across industries and regions. Get in touch to continue the conversation.
Decarbonising Cities Perspectives – Marubeni Europower
Kicking off our Decarbonising Cities series, we sat down with Marubeni Europower chief executive and president Tomoki Nishino to explore how urban hubs can lead the drive to net zero
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Matthew White, Herbert Smith Freehills' Global Head of Planning
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You're seeing cultural and societal factors pushing decarbonisation but also ESG motivations at companies to deliver targets. Those are coming together and have changed the environment dramatically for cities compared to where we were 10 years ago.
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As part of our Decarbonising Cities series, we sat down with TfL Head of Corporate Environment Sam Longman to explore the role of public transport in reaching net zero
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Decarbonising Cities Perspectives – Transport for London
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As part of our Decarbonising Cities series, we sat down with Marubeni Europower chief executive and president Tomoki Nishino to explore how urban hubs can lead the drive to net zero
As part of our Decarbonising Cities series, we sat down with Federated Hermes Infrastructure’s senior vice president Rhianydd Griffith to explore the role of strategic investors in reaching net zero
What key trends have you seen over the last three years in how cities address decarbonisation? There has been a huge move. The best example is Bristol, where the city council launched a tender to run a mass-scale decarbonisation project. It's a case-study in the city taking the steps itself. We expect others will start following a similar path. What cities stand out as the most interesting commercially? Again, Bristol is ahead of others in its thinking. The fact they actually launched a tender of scale, no one else has done it. You're creating a first-of-its-kind. So, how does each contract work in this sort of project? There are lessons to be learned there.
Does TfL look to other cities and transport authorities as good examples? Of course. We're in a metro group called COMET and an international association of public transport called UITP, where I sit on the Sustainable Development Committee and am leading the adaptation working group. We're constantly sharing notes, learning and sharing data. TfL is seen in some respects as a leader. We have an accessible and integrated multimodal transport system seen as the envy of the world. We're leading the way on integrated ticketing, electrification and digital railways. With other cities, we steal from wherever we can! The concept of the 15-minute city in Paris but also some of the Scandinavian countries in their use of active modes [walking, cycling and other forms of people-powered transport]. The Copenhagen Cloudburst Management plan [to tackle extreme rainfall and flood risk] is something we're looking to implement in London. How have you engaged the private sector? We're trying to be much more outward looking and work more closely with industry and original equipment manufacturers. That's how we ended up with the electric double-decker bus. Only five years ago people said we'd never achieve that but we have over 400 now. We have over 800 zero-emission buses in total. That's through working with industry and suppliers. Many of our suppliers are ahead of us in terms of science-based targets and sustainability reporting. We have an innovation directorate tasked with inviting new ideas and partnerships into TfL. What are the major obstacles in cutting carbon emissions? Someone has to pay for this stuff [but] UK local authorities have had their resources cut drastically over the last decade. Unless you have people who can generate a pipeline of projects, you can't present it to the market. So there's this odd situation where we know there's capital out there desperate to invest in this stuff but we don't have capacity to develop it to investment-grade proposals. That's been recognised, and the UK Climate Cities Investment Commission [a specialist working group of councils covering the UK's 12 largest cities] is dealing with that. The public sector tends to only deal in things where it's definitely going to happen because it's risk averse. We need to be proactively developing projects and accept some may not go anywhere. How can public bodies shift the risk-averse culture and appeal to the private sector? We need talent. We need to attract talented people and retain them, and that requires a culture change within organisations. We know, increasingly, people care about this. Young people want to work for organisations that deal with this, and we need to put it front and centre. Unless you have that talent, you won't be able to join up with industry and create solutions. Who are the major stakeholders you encounter and what's their role? We deal with lots of suppliers, with the government, with the Greater London Authority, with people providing thought leadership, with other transport authorities and cities. A recent study highlighted that most climate action is being delivered at the city level through networks such as C40. Central government has a tendency to think in terms of sectors and selected intervention within those. But delivery happens in places, not sectors, and this is particularly true when it comes to our urban centres where the majority of people live and which are key to our future sustainability. We need to take a much stronger place-based approach and that requires collaboration, planning, talent and passion. We need support from government in terms of skills, frameworks, incentives and financial support to develop place-based solutions that build community wealth supported by the private sector. What are the mistakes public bodies such as TfL should look to avoid? To recognise the importance of laying the groundwork. You have to take people with you and need public support for the scale of change required. But there's been a national collective failure on that. We’ve allowed too much space for debate about whether climate change is real and how fast we should go. The discussion should be about all the positive things we get back from living sustainably in health, wellbeing, inclusivity and strong local community systems that are resilient to shocks. Where is – given the scale of this ecological crisis – the cross-party, multi-year campaigning? As organisations we do have the power to push that message, at least at a local level, and that is what we are doing. Central to the Mayor’s Transport Strategy is a positive, well-evidenced and compelling central message around health. Sustainable transport is not an end in itself, the healthy, fair and prosperous city it helps create is. Are there any TfL projects you are particularly proud of? The ultra-low emissions zone (ULEZ) covering all of inner-London. We did so much work to take the public with us. You have to find a way to demonstrate that people's lives will be personally better and we did that through the public health angle. All the evidence we gathered through academics and others to demonstrate children's health was being stunted by poor air quality, it was causing dementia in old people and was taking time off everyone’s life no matter who you were – rich, poor, young or old. We got high public support for that scheme and we now need to do a similar thing with climate change. How is TfL looking to further decarbonise transport? This is set out in the Mayor’s Transport Strategy and TfL’s Corporate Environment Plan. It's about removing fossil fuels, mode shift, improving energy efficiency, electrifying what's left and getting that electricity from renewables. We have done that over the last two decades. We've done it through gradual change, reallocating road space, greening, providing walking and cycling infrastructure and reducing supply of space for private road vehicles through parking charges and limiting parking. A lot of this delivery happens through London boroughs and collaboration with them is key. Local measures are supported by London-wide measures such as the public transport network, ULEZ and congestion charging. We need to continue using all these measures as well as continually exploring new ideas and technology. Ultimately, it’s about packages of measures and there is no silver bullet. It’s a hard slog, but worth it. In terms of TfL’s own operations, most of our emissions come from our bus fleet, and we can get to zero emissions from the fleet by 2030 with the right investment. We're saying 2034 at the moment based on our current financial situation and we're doing that through contracts, by saying you can no longer bring new non-zero emission buses onto the network. The second biggest portion of our operational emissions comes from the electricity to power our rail operations. We are the largest user of electricity in London and have a strategy to switch to fully renewable electricity supply by 2030 using Power Purchase Agreements. We have just gone out to market for the first tranche and it will be followed by successive tranches over the coming years until we hit 100%. What does the future hold for urban centres' decarbonisation efforts? We're at the beginning of a fundamental transition for humanity. There are difficult questions and issues to be discussed and that's beginning to happen. Currently, however, there is an element of ‘carbon tunnel vision’. There's rightly a lot of focus on decarbonisation but there are other things that need to be focused on with as much vigour. There are fundamental limitations on a finite planet, which society has not fully grasped. The need to overhaul our global and local economies to live within planetary boundaries and in harmony with nature will lead to fundamental [societal] change. You'll have cooler cities, quieter cities, greener cities - they will be more resilient through infrastructure and community cohesion. There will be more emphasis on sharing, repurposing, art and culture and you may even reach a point where our collective economic ambition is numbers of people that don't have to work rather than numbers that do. One thing is certain, the future will be very different, and change will happen quicker than we expect.
What have been the main trends you've seen over the years in how urban centres tackle carbon emissions? When it comes to transport, we're in the third phase of planning. The first phase was predict and provide – if people need to move somewhere, you build more capacity. We then moved to considering transport's role in growth – using transport to grow the economy and build more housing. There's still an element of that but now it's more about the role of transport in tackling the ecological emergency. For that, you need to care as much about why people don't travel as why they do. We have the right strategy and, importantly, it was designed to be adaptable. We don't know what the future holds but whatever comes along we need to meet the policy tests around health, safety, economic development and how we build low-carbon green and resilient cities.
What have been the main trends you've seen over the years in how urban centres tackle carbon emissions? When it comes to transport, we're in the third phase of planning. The first phase was predict and provide – if people need to move somewhere, you build more capacity. We then moved to considering transport's role in growth – using transport to grow the economy and build more housing. There's still an element of that but now it's more about the role of transport in tackling the ecological emergency. For that, you need to care as much about why people don't travel as why they do. We have the right strategy and, importantly, it was designed to be adaptable. We don't know what the future holds but whatever comes along we need to meet the policy tests around health, safety, economic development and how we build low-carbon green and resilient cities. Does TfL look to other cities and transport authorities as good examples? Of course. We're in a metro group called COMET and an international association of public transport called UITP, where I sit on the Sustainable Development Committee and am leading the adaptation working group. We're constantly sharing notes, learning and sharing data. TfL is seen in some respects as a leader. We have an accessible and integrated multimodal transport system seen as the envy of the world. We're leading the way on integrated ticketing, electrification and digital railways. With other cities, we steal from wherever we can! The concept of the 15-minute city in Paris but also some of the Scandinavian countries in their use of active modes [walking, cycling and other forms of people-powered transport]. The Copenhagen Cloudburst Management plan [to tackle extreme rainfall and flood risk] is something we're looking to implement in London.
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What Marubeni projects are you particularly proud of? We are currently speaking with a city to provide hydrogen. For this project, we secured a Japanese government fund. The money is to do a demo project of a hydrogen energy management system. There's going to be more of the mismatch between the energy production and consumption, so there will be more demand for energy management systems that work properly. We are now asking the key questions: who is going to consume the hydrogen we produce? Where does the green power come from? Is it solar, onshore wind, or partly grid electricity? If its grid electricity, can you still call it green energy? What are your predictions for how cities will tackle decarbonisation in the coming years and how will the private sector engage with the challenge? We've spoken with a dozen UK cities to understand how they want to decarbonise. A lot don't have a clear idea, but some do. We try work with those cities who have a vision. Cities are wondering what is the best solution for them. If you talk about transportation, is it EV or a fuel cell vehicle? Which one suits better depends on the terrain and size of the city. A lot more cities will try find the answers to these sorts of questions.
What challenges do you encounter? In the context of local investment in decarbonising infrastructure and with the backdrop of an extremely disrupted energy and macro-economic environment, the need is often bitesize, unsubsidised and small scale, which from an investor perspective can bring additional risk. Unless you are a smaller-ticket equity investor, you need to think about aggregating projects across sectors and longer-term partnerships to mitigate that. Our investment model in the UK in the last 10 years has been built on partnerships with developers and other investors, so it doesn’t faze us, but more low cost of capital equity investors are currently focused on big national projects, or large scale single-sector solutions such as more traditional renewables.
One thing is ensuring there's a balanced risk profile. It's a basic concept in project finance: whoever is best placed needs to bear the risk. If the city tries to push too much uncontrollable risk on to developers, then developers will walk away."
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Tomoki Nishino, Marubeni Europower Chief Executive and President
Europe lost its competitive edge against the Chinese in regard to manufacturing solar panels. In digitalisation, it has lost its edge against the US. So, Europe wants to find a new edge in the decarbonisation space, and that is driving development.
How can cities make such projects appealing to the private sector? One thing is ensuring there's a balanced risk profile. It's a basic concept in project finance: whoever is best placed needs to bear the risk. If the city tries to push too much uncontrollable risk on to developers, then developers will walk away. Also, the scope of the work provided to the winning developer is important. Cities take different approaches. Option one would be a holistic project made up of multiple jobs for a developer. Option two is to slice up the projects: one would be developing a renewable power station; project two working on a heat network. But in our view, it's not a good idea to slice up the scope because then nobody takes the initiative to integrate the whole thing. What are common mistakes for cities to avoid? Trying to push unnecessary risk to developers. One example would be if a city has a stranded asset or resource, and forces developers to purchase it. The developer will find that unattractive. A mistake is cities trying to get rid of things they don't want. Where is Japan in terms of decarbonisation? How does it compare to Europe? In general, Japan is behind the UK and European countries in these initiatives. Europe is ahead currently because it's trying to increase its presence globally. But in the renewables sector, Europe lost its competitive edge against the Chinese in regard to manufacturing solar panels. In digitalisation, it has lost its edge against the US. So, Europe wants to find a new edge in the decarbonisation space, and that is driving development. How would you describe Marubeni's strategy? Step one is the low-hanging fruit: hydrogen for transportation, for example. But we want to challenge a more difficult sector like installing heat networks. We are also considering hydrogen for export. Scotland is looking to develop 25 gigawatts of offshore wind, and that's much more than they need. The thinking is Scotland can be an energy hub for exporting energy to continental Europe. Marubeni has experience of shipping liquefied hydrogen from Australia to Japan. We’re working with other Japanese companies as a consortium, one of which is Kawasaki Heavy Industry. They've constructed a hydrogen-carrying heavy ship. We've achieved the transportation of liquefied hydrogen from one country to another. So, we are considering how can we make that commercially viable and do it elsewhere. What does Marubeni want to achieve in Europe? I work in the power division, and our focus is to install renewable assets. For example, we are going to develop 2.6 gigawatts of offshore wind in Scotland by creating a power station. But creating a power station in of itself is not enough. Once you bring green electricity into the grid, the grid suffers because of the mismatch between the generation and demand. That creates a new challenge and opportunity. We have to be the ones to help balance out this demand and generation. As a business, we start from the upper value chain - the generation - into the lower value chain. We are considering, if we are producing hydrogen, how can we be on the other side? We want to create a new energy value chain. It makes sense for us to do that as we are involved in the power generation side. Who are the major stakeholders you encounter on decarbonisation projects? Technology partners are a big one. For example, projects might involve installing new heat networks, so we would need to speak with the heat pump manufacturers. For installing electric vehicle chargers in locations throughout a city, we need to speak with those manufacturers also.
It's a basic concept in project finance: whoever is best placed needs to bear the risk. If the city tries to push too much uncontrollable risk on to developers, then developers will walk away."
What are the major trends you have seen in urban centres' decarbonising efforts in recent years? As an institutional investor in sustainable infrastructure, we're aware there's been a gradual increase in ambition among UK city, local and regional authorities in the last three years. There's still disparity across the country in terms of public sector capacity and resources to deliver, but from our perspective the greater the ambition within a city or region from the outset, the better. We're also seeing an increased willingness from cities and regions to begin partnership conversations with potential investors and developer partners at an earlier stage. This is a positive. The earlier we are involved in a conversation, the more value our experience structuring and funding investments across interconnected sectors is likely to add. We're also seeing the concepts of placemaking and place-based investment gradually being adopted by more mainstream infrastructure and decarbonisation focused investors. We'd like to see more of that. Places don’t recognise asset class boundaries.
So, scale is an important incentive? I would say so. I wonder if for public-sector bodies there's a pressure to produce ‘shovel-ready’ projects. A pressure to say: "This is a fully baked single project, and the investment need is £X million." Actually, what Bristol City Council appears to have done well with its City Leap procurement, was say: "We have an ambitious target, and it applies to the whole city. This is the city profile, the authority land and assets, other public sector land, and private property. Who wants to partner with us across the whole mission?" They also invited partners to propose their own financing. That was not only an accurate reflection of ambition and need, but also at a scale and open enough to allow people to come with their own solutions. Are there any projects you're involved in that you're particularly proud of? A number of investments in our current portfolio are contributing to city or regional decarbonisation. Associated British Ports’ Humber Port is involved in the East Coast Cluster, a collaboration between Northern Endurance Partnership, Net Zero Teesside and Zero Carbon Humber. It's aiming to remove nearly 50% of all UK industrial cluster CO2 emissions. At the Humber, it’s created the two largest roof-mounted solar power facilities in the UK, is installing EV charging points for cars across the port estate, acquiring new cranes and enabling offshore wind industry expansion through investment in a wind blade manufacturing facility in Green Port Hull. Zero Carbon Humber stakeholders are also working to establish a trans-regional pipeline out to the North Sea for low carbon hydrogen and for capturing and storing carbon emissions. What does Federated Hermes Infrastructure look for in prospective decarbonisation projects? Our investors are mainly UK or European pension schemes, many of which are local authority schemes. Their objectives have historically been long-term liability matching and we have been focused on long-term infrastructure generating relatively low risk and stable returns. We were early investors in UK onshore wind and solar and these types of investment are now extremely competitively priced. Our preference when looking at net zero investing and the energy transition today is to invest in climate solutions in a way that isn't wholly reliant on government support, but provides our investors with prudent, selective exposure to emerging sectors, with long-term contracts to underpin revenues and mitigate risk. What risks concern you when considering a project? As with any infrastructure investment, each project will come with its own risks and bespoke diligence needs. We aren’t in the business of taking binary development risk or new technology risk and we will obviously assess counterparty risk, the security of revenue streams and different types of risk on an individual project basis. We have a fairly efficient investment process, with an investment committee that is closely connected to the investment team. So while risks might come up where we go, "that's difficult for us to deal with," it might be we can then create more bespoke solutions. How would you define your strategy? We've always been a primarily UK-focused, sector-agnostic infrastructure investor with core and value-added strategies. We don’t expect to move significantly away from that in the short term, although our private markets platform should facilitate greater integration with our colleagues in the areas of real estate and natural capital. We are members of the Net Zero Asset Managers Alliance and at Federated Hermes, each asset class is setting interim targets around a broader net zero goal. For us the concept of Paris climate accord alignment is really important for our existing portfolio and prospective investments. For our existing portfolio our focus is around businesses setting science-based targets, getting those validated and then investing to achieve them. What are you hoping to achieve over the next three years? We see huge potential for investment in climate solutions and across all areas of the energy transition. We also see real potential to have a local, place-based impact. We think that way partly because of our client base and partly because many of our portfolio companies are already doing just that. I expect our platform over the next three years will have mandates operating at different places on the risk/return spectrum within our investable universe. Where we dedicate most focus in the near term will depend upon the objectives of our clients and their preferences. What climate trends will become significant over the next three years? I am hoping we see more investment in whole-system solutions. Investment across different sectors which connect and are coherent, not just isolated projects that don't talk to each other, done by different people with different objectives. Real co-ordination between both public and private sectors will be needed to achieve that. I also hope for more collaboration across investors in real assets and more willingness from investors to consider emerging sectors, producing the desired de-risking and scale-up effect needed to be repeatable across the economy in the same way onshore wind and solar have been. Finally the momentum of COP 26 has resulted in many investors and businesses setting net zero targets. We expect the focus to shift to whether those entities have credible plans to deliver and hope to be in a position to demonstrate that as a firm.
The earlier we are involved in a conversation, the more value our experience structuring and funding investments across interconnected sectors is likely to add."
Crunch times Though cities are becoming more robust on decarbonisation, there is still a long way to go on the road to net zero. One of the thorniest challenges remains the lack of sufficient insulation in buildings across major cities, particularly in Europe. According to the European Commission, buildings account for 40% of energy consumed within the bloc while 75% of buildings in the region would fail efficiency benchmarks in its revised Energy Performance of Buildings Directive. Tackling the issue will require a renewed push for home insulation, which remains one of the surest short-term methods of cutting energy use. "Home insulation is something that would be very near the top of things that could be done to effectively decarbonise cities," argues White. "Now with the energy crunch and cost-of-living crises, it'd be a win-win if we could deliver that at scale." There is a plethora of reasons insulation has not been pursued more aggressively. In the UK, local authorities are facing stretched budgets; adding a project of scale and cost would be complex given tensions between regional and central government, as yet political will to break the deadlock has been lacking. Moreover, there are obstacles which stymie the private sector from providing solutions, with regulations preventing companies undertaking projects unrelated to their own developments as such initiatives typically go beyond planning permission. There is also a feeling that incentives could be stronger for private companies, particularly in planning, where authorities reach for the stick more often than the carrot. This could include the planning process being streamlined for developers who make decarbonising efforts beyond mandated requirements. "An option would be to enhance incentives in planning policy so that developers who propose more sustainable projects could be permitted a larger floor area, or less height restriction," says Heidi Asten, a Melbourne-based environment, planning and communities partner. Looking ahead Asten forecasts an increasing focus on the embedded carbon footprint of new construction. "We also expect to see more assessment of climate adaptation and mitigation in addition to designing development to reduce emissions during operation. Is this the right thing to build? Is this the right location for it? Is this the right way to build it?” More cities are expected to publish their own emission targets in the coming years as the group of urban centres looking to reach net zero grows. But for now a small group of pioneer cities are charging ahead, leveraging their procurement powers, pulling regulatory levers and partnering with the private sector to deliver. Much of the prospects for global efforts to tackle climate change will depend on their success. As Lewis concludes: "Any responsible city has got to do something about it, and for some, that's exactly what they have been doing."
"Creating sufficient scale to interest the private sector and be significant in terms of carbon reductions is really hard," says McDonald. "But Bristol gives you a great example. They've made something big through a series of small things, they've made an exclusive opportunity." Further north, the traditional oil and gas city of Aberdeen is taking a similar approach. The city has partnered with BP to identify and develop carbon-reducing projects. Most notably, the port of Aberdeen will work with the FTSE 100 oil giant to decarbonise its operations. This includes a pilot project to supply shore power, allowing vessels to turn off engines while in port, as well as targeting a supply of zero or low-carbon power to all vessels in the port. The ultimate goal is hydrogen being used as a clean maritime fuel. But the fledgling partnership has not narrowed its aims to the port alone. BP was also selected as the preferred bidder to form a new hydrogen joint venture with Aberdeen City Council. This would be Scotland’s first scalable hydrogen production facility, incorporating solar power, green hydrogen production and a refuelling facility for public transport. "What Aberdeen is doing is very interesting," says Matthew White, HSF's head of planning. "They're saying, 'We have power not just as a regulatory authority but as a consumer and we'll use that to drive change by adopting hydrogen hubs.' For driving investment, scale is absolutely an incentive." Tomoki Nishino, chief executive of Marubeni Europower, echoes the point, noting: "We feel that decarbonisation projects will be more effective if the cities provide wider scope of work to the developers. While the usual practice is to award the job individually (eg, installing renewable assets, EV chargers, or district heat networks), the important task of city decarbonisation is to integrate each component and provide an efficient energy management solution as a whole." As such Bristol and Aberdeen are exemplary in two ways: firstly, they epitomise how cities are beginning to take the issue seriously; secondly, they demonstrate how the most effective – and financially attractive – means of slashing carbon emissions is to deliver at scale. Tying regulatory authority with economic incentives and procurement is not just a new trend, it is increasingly been held up as the magic formula for the select band of global cities leading on climate change.
Aberdeen is very interesting. They're saying, 'We have power not just as a regulatory authority but as a consumer and we'll use that to drive change.' For driving investment, scale is absolutely an incentive.
Cities are where the action is, they suffer the problem, they cause the problem. There's an imperative on cities to do something about it."
After centuries of aggressive growth fuelled by fossil fuels, a select group of cities are leading the global drive to net-zero. What lessons can be learned?
Economies of scale Four years ago, Bristol city council declared a climate emergency. This unprecedented step culminated in the Bristol Leap Project, a pioneering initiative to make the British city carbon neutral by 2030, a deadline outpacing the UK Government's national net zero target by 20 years. To meet this target, the city is drawing on all its powers to create a unified and exportable package of decarbonisation policies. This saw Bristol choose cleantech integrator and renewable energy asset provider Ameresco and subcontractor Vattenfall Heat UK to deliver solar panels, heat networks, heat pumps and energy efficiency measures at scale throughout the city's 34 wards. The project will also see the providers invest to deliver low-carbon energy infrastructure and support and help residents, community energy groups and businesses in delivering similar solutions. Bristol city authorities forecast the project will attract around £1 billion of inward investment and remove 140,000 tonnes of carbon from the city in the first five years of operation.
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LEWIS McDONALD
C40 steering committee member Targeting net-zero carbon performance on all new buildings by 2030 Landfill Gas Project to harvest methane from landfill sites to generate electricity for households. Will generate 19 megawatts annually
JOHANNESBURG
C40 steering committee member All metropolitan government buildings to be 100% powered by renewable energy by 2030 Increase overall renewable energy use by 30% by 2030 Aiming to introduce at least 300 zero-emission buses by 2030 and develop 150 hydrogen stations An early mover by introducing Tokyo Cap-and-Trade Program, which imposed emission reduction targets on businesses across the industrial sector
TOKYO
Will host the first 'climate positive' Olympic Games in 2032, meaning greenhouse gas reductions will be greater than the event's total emissions Aligned targets with Queensland's ambition to be a zero emissions economy by 2050 with an interim target to reduce emissions by 30% on 2005 levels by 2030 Aiming for 50% renewable energy by 2030
BRISBANE
C40 steering committee member Plans to expand pioneering superblocks initiative to the city centre and extend citizen spaces/car-free spaces by over 23 hectares Aiming to cut per capita levels of CO2-equivalent emissions by 40% compared to 2005 levels Urban Mobility Plan to reduce private car and moped use in the city by extending bike lanes and improving bus routes Master Plan for Barcelona's Trees programme to ensure 40% of tree species within the city are adapted to climate change by being able to withstand droughts and heat
BARCELONA
Partnered with BP to decarbonise Aberdeen port operations Has chosen BP as preferred bidder to form Scotland's first scalable hydrogen hub Introduced a hydrogen bus fleet, decreasing carbon emissions by 84 tonnes per bus annually Target of becoming net zero by 2045.
ABERDEEN
Bristol Leap Project to become a carbon neutral by 2030 Partnership with Ameresco and Vattenfall Heat to develop renewable energy solutions Aiming to remove 140,000 tonnes of carbon from the city within five years Installation of the UK's largest water source heat pump to provide zero-carbon heat
BRISTOL
Aiming high Major cities' decarbonisation strategies at a glance
Matthew White Herbert Smith Freehills' Global Head of Planning
SINCE the industrial revolution, cities have been insatiable drivers of development, innovation and economic growth – they are the relentless engines of modernity. And the more they grow, the more they get. Today 55% of us live in cities, a figure the United Nations forecasts will rise to 68% by 2050. The trend is clear: this is the urban century. It will also be the hottest 100 years on record. With cities responsible for more than 70% of global C02 emissions, according to the World Bank, exactly how disastrous this proves to be will depend largely on how cities develop and respond. After two centuries as irrepressible hubs for human growth, cities now need radically different models if their success – and even existence – is to continue unchallenged. Though change can be wrenching, a sustainable future and economic growth are not mutually exclusive. A handful of cities have recognised they can enact change through the levers of strategic planning, economic incentives, thoughtful procurement and regulatory enforcement. No two are the same, but their initiatives provide some early templates. "Cities are where the action is," says Lewis McDonald, Herbert Smith Freehills' (HSF) global head of energy. "Over two-thirds of all emissions in the world are because of activity in cities – they suffer the problem, they cause the problem. So, there's a strong imperative on cities to do something about it." In the first part of our Decarbonising Cities series, we ask what these pioneers have achieved and what private and public players can take from such successes.
We expect to see more assessment of climate adaptation and mitigation. Is this the right thing to build? Is this the right location? Is this the right way to build it?
Heidi Asten Herbert Smith Freehills, Environment & Planning Partner
Ahead of the curve Elsewhere, cities have pursued different projects but with similar, joined-up approaches. Barcelona, which is one of the 97 mayoral offices comprising the C40 network of cities sharing best practices in tackling urban emissions, has earned admirers for its 'superblocks' initiative. Superblocks are groups of streets where traffic is reduced to almost zero, with the space returned to pedestrians for recreation. A report by the Barcelona Institute for Global Health argued that if the 503 superblocks outlined in the original plan are developed, 667 lives per year could be saved as a result of cutting air pollution by 24%. The city's mayor, Ada Colau, has proposed the scheme will be widened to Barcelona's central district. "Superblocks are interesting," says HSF energy partner and global head of ESG Silke Goldberg. "They are concentrated areas of city living. Integrated into those blocks are traffic limitations, green spaces and recycling centres. Barcelona also has the regional support of the government of Catalonia, which is important." Such is the appeal of superblocks, they will feature in an entirely new city: Saudi Arabia's Neom. The multi-billion dollar project will culminate in a fully carbon-free city, according to its backers. Millions of trees, an "artificial moon" and "floating trains" will supposedly be accompanied by squares of self-sufficient superblocks. Though the feasibility of the project's more ambitious goals have been questioned, Neom has become a poster child for more radical visions of how clean cities could develop through the 21st century. Barcelona's own superblocks programme is modest in comparison but is anchored to the realities of today and what can be achieved in cities with hundreds of years of history as opposed to the new-build approach to mammoth urban planning. Barcelona, like many urban centres, is densely populated and lacking green spaces. Substantive but easily implemented changes such as superblocks achieve economies of scale. London has followed this logic with the continued enlargement of the ultra-low emissions zone, which charges non-compliant vehicles £12.50 when travelling through its boundaries. London's mayor, Sadiq Khan, has indicated the zone may be expanded to all 33 London boroughs by the end of next year. This trend, which creates powerful incentives for the adoption of low and zero-emissions vehicles, will only grow, according to White: "We will move towards fewer cars in cities – it's not sustainable at the moment. We will see areas of cities blocking petrol and diesel cars coming in, creating more viable walkable and cyclable areas." But, even among leading C40 cities, some are ahead of the curve. Tokyo has had forms of mandated emission reductions imposed on energy-intensive industry since 2001. This was later revamped in 2010 through the Tokyo Cap-and-Trade Program, which widened emission reduction targets on businesses across the industrial sector. The Japanese capital also drew up reporting regimes for small and medium-sized entities operating in the city, which make up 60% of total emissions in Tokyo's commercial and industrial sectors. Tokyo remains ambitious today. The city has deployed its Zero-Emission Tokyo Strategy, which identifies 17 major targets to be achieved by 2030. These include making all metropolitan government buildings 100% powered by renewable energy; reducing energy consumption by 38% compared with 2000; the installation of 1.3 gigawatts of solar power generation equipment; and developing 150 hydrogen stations. Johannesburg – along with nine other African capitals – has likewise outlined new targets, such as signing the C40 Clean Air Cities Declaration, with signatories committing to setting air pollution reduction targets that meet or exceed national commitments. The city has also approved a draft policy to introduce green, low-energy buildings to achieve net-zero carbon performance across all new buildings by 2030. Meanwhile, in Australia, Canberra is among the leading cities plotting a path to net zero. The city has committed to being carbon neutral by 2045, with the regional Australian Capital Territory (ACT) Government already wholly powered by renewable electricity. The ACT Government was also the first Australian state executive to invest in a green hydrogen vehicle fleet. Other programmes spearheaded by local government include home rooftop solar and battery storage, smart energy grids, and use of hydrogen technologies across transport and domestic gas networks. Elsewhere, Sydney and Melbourne are also committed signatories to the C40. Initiatives pursued by the cities include improving the efficiency of Sydney's apartment buildings and Melbourne's net zero procurement strategy for its Arden Urban Renewal Precinct Australia has also signalled its intent more widely, with the Brisbane 2032 Olympics billed to be the first 'carbon positive' games ever hosted. In practice, this means the games will aim to absorb or remove more emissions than it produces, with the plans to achieve this already underway. With the May election of the new federal government under the centre-left Australian Labor Party such regional efforts now look set to be further supported by a sustained federal programme to tackle climate change.
It would be the Birmingham Paradise project. The fact we led the Vision for Movement programme meant that we led the lobbying of the city council highway department to change its policy on transport. If we had stuck with Birmingham City Council policy, our site would be covered in car parking, it wouldn't have delivered what it needed. The first phase buildings are now complete, we strove to make sustainable buildings. The next building, which we're about to complete, we've fully electrified. The next building will be another generation forward. What incentives can be provided to developers to ensure decarbonisation is taken further? Making sustainable developments costs a lot more money but it's obviously the right thing to do. There is also increasing demand for sustainability from tenants, public and private. Challenges arrive when it comes to the detail of how to fairly share the cost of ambitious improvements and, for example, what can be fairly stringent public sector requirements. From our perspective, we are conscious that we need to both contribute to the decarbonisation of the UK for the benefit of all stakeholders, but also need to make a sustainable return for our pension scheme beneficiary investors. That's not greed, it’s our duty to them. Are there areas where developers need more reassurance from the public sector? For us, as long-term players, if we're going to invest in an area, we'd like to see there are mechanisms to see that investment pays off. To [encourage] a commitment to a city, the public sector needs to look at the way they engage and partner with investors and long-term players. What are your predictions for how urban centres might start looking at decarbonising over the next three years? From the public sector, what I'd like to see is recognition of the need to choose partners that are serious about long-term sustainability. That is going to be absolutely key. They need long-term plans about how areas are regenerated. You want to see them choosing the right partners, thinking about ambition, strategy and making it deliverable. For the private sector, I'd like to see more understanding about the fact buildings are going to look different and have to be built differently. They will have much longer-term value. There also needs to be a discussion about existing buildings that are not sustainable. You can't just abandon them. There's going to be an interesting debate about how you deal with existing assets without having a detrimental sustainability impact.
What have been the major trends over the last three years in how urban centres tackle climate change? We've seen the acceleration of the operational element of sustainability for a while. The drive around solar energy, wind power, [combined heat and power technology] and renewable power coming into buildings and cities. The big change over the last few years has been the understanding of the impact of embodied carbon [covering all CO2 emissions from producing raw materials]. Cities are looking at how they can decarbonise the embodied carbon element. When you look across the UK, there's a lot of regeneration around the regional cities. How do you do that investment in infrastructure and buildings in a way that doesn't have a negative carbon impact? That's the big shift. What differences do you see between London and regional cities in climate policies? You have to treat London differently to regional cities. London, because of long-term public investment for public transport, is in a very different place to most regional cities. If there is support for the levelling up agenda, it means a lot of cities outside London have a lot of catching up to do on public transport to become more sustainable. Regional cities have never had that sustained level of public investment. But some cities are catching up. London has absolutely succeeded as a world city but, if we're to create a sustainable environmental and economic UK, there needs to be public investment across the rest of the country. What advice do you have for cities looking to take decarbonisation more seriously? We are currently leading the £700m redevelopment of Paradise in Birmingham, aiming to create a new destination. It’s a mixed use commercial and residential project which is also bringing community building, new public squares and streets to the city. It’s ambitious and includes a range of sustainability features but when we started Birmingham was so far behind in its transport policies, and that has such a massive impact on carbon and sustainability. It needed to make a fundamental shift to become a more sustainable city, so our development could be part of a broader solution. We led an initiative with the Business Improvement District, The Vision for Movement, which saw the businesses of the city say: "You need to change the way the city works from a sustainable transport perspective." So we lobbied the city council to shift the way it treats transport. But they need the back up of government funding to make that success happen. Sometimes you have to listen to residents and businesses but think about the long-term future. Don't just think about the generation that's always driven to the office – think about a younger generation who want a sustainable UK. Cities need to make brave decisions and think more strategically about what the right decision is.
What is MEPC's strategy at the moment? We have always been focused on placemaking and creating a sense of community – our projects such as Paradise in Birmingham and Wellington Place in Leeds are a couple of examples – and that will continue. But one of our objectives now is to use our Private Markets Platform at Federated Hermes to increase our level of ambition, co-ordinating more closely with our infrastructure investment colleagues. If the development has the scale, we have real potential to look at the integration with site-wide sustainable infrastructure, as well as infrastructure serving the rest of a city all as one firm. Which developments are you most proud of from a sustainability perspective?
You have to think about the long-term future. Don't just think about the generation that's always driven to the office – think about a younger generation who want a sustainable UK. Cities need to make brave decisions and think more strategically about what the right decision is."
With other cities, we steal from wherever we can! The concept of the 15-minute city in Paris but also some of the Scandinavian countries in their use of active modes [walking, cycling and other forms of people-powered transport]. The Copenhagen Cloudburst Management plan [to tackle extreme rainfall and flood risk] is something we're looking to implement in London. How have you engaged the private sector? We're trying to be much more outward looking and work more closely with industry and original equipment manufacturers. That's how we ended up with the electric double-decker bus. Only five years ago people said we'd never achieve that but we have over 400 now. We have over 800 zero-emission buses in total. That's through working with industry and suppliers. Many of our suppliers are ahead of us in terms of science-based targets and sustainability reporting. We have an innovation directorate tasked with inviting new ideas and partnerships into TfL. What are the major obstacles in cutting carbon emissions? Someone has to pay for this stuff [but] UK local authorities have had their resources cut drastically over the last decade. Unless you have people who can generate a pipeline of projects, you can't present it to the market. So there's this odd situation where we know there's capital out there desperate to invest in this stuff but we don't have capacity to develop it to investment-grade proposals. That's been recognised, and the UK Climate Cities Investment Commission [a specialist working group of councils covering the UK's 12 largest cities] is dealing with that. The public sector tends to only deal in things where it's definitely going to happen because it's risk averse. We need to be proactively developing projects and accept some may not go anywhere. How can public bodies shift the risk-averse culture and appeal to the private sector? We need talent. We need to attract talented people and retain them, and that requires a culture change within organisations. We know, increasingly, people care about this. Young people want to work for organisations that deal with this, and we need to put it front and centre. Unless you have that talent, you won't be able to join up with industry and create solutions. Who are the major stakeholders you encounter and what's their role? We deal with lots of suppliers, with the government, with the Greater London Authority, with people providing thought leadership, with other transport authorities and cities. A recent study highlighted that most climate action is being delivered at the city level through networks such as C40. Central government has a tendency to think in terms of sectors and selected intervention within those. But delivery happens in places, not sectors, and this is particularly true when it comes to our urban centres where the majority of people live and which are key to our future sustainability. We need to take a much stronger place-based approach and that requires collaboration, planning, talent and passion. We need support from government in terms of skills, frameworks, incentives and financial support to develop place-based solutions that build community wealth supported by the private sector. What are the mistakes public bodies such as TfL should look to avoid? To recognise the importance of laying the groundwork. You have to take people with you and need public support for the scale of change required. But there's been a national collective failure on that. We’ve allowed too much space for debate about whether climate change is real and how fast we should go. The discussion should be about all the positive things we get back from living sustainably in health, wellbeing, inclusivity and strong local community systems that are resilient to shocks. Where is – given the scale of this ecological crisis – the cross-party, multi-year campaigning? As organisations we do have the power to push that message, at least at a local level, and that is what we are doing. Central to the Mayor’s Transport Strategy is a positive, well-evidenced and compelling central message around health. Sustainable transport is not an end in itself, the healthy, fair and prosperous city it helps create is. Are there any TfL projects you are particularly proud of? The ultra-low emissions zone (ULEZ) covering all of inner-London. We did so much work to take the public with us. You have to find a way to demonstrate that people's lives will be personally better and we did that through the public health angle. All the evidence we gathered through academics and others to demonstrate children's health was being stunted by poor air quality, it was causing dementia in old people and was taking time off everyone’s life no matter who you were – rich, poor, young or old. We got high public support for that scheme and we now need to do a similar thing with climate change. How is TfL looking to further decarbonise transport? This is set out in the Mayor’s Transport Strategy and TfL’s Corporate Environment Plan. It's about removing fossil fuels, mode shift, improving energy efficiency, electrifying what's left and getting that electricity from renewables. We have done that over the last two decades. We've done it through gradual change, reallocating road space, greening, providing walking and cycling infrastructure and reducing supply of space for private road vehicles through parking charges and limiting parking. A lot of this delivery happens through London boroughs and collaboration with them is key. Local measures are supported by London-wide measures such as the public transport network, ULEZ and congestion charging. We need to continue using all these measures as well as continually exploring new ideas and technology. Ultimately, it’s about packages of measures and there is no silver bullet. It’s a hard slog, but worth it. In terms of TfL’s own operations, most of our emissions come from our bus fleet, and we can get to zero emissions from the fleet by 2030 with the right investment. We're saying 2034 at the moment based on our current financial situation and we're doing that through contracts, by saying you can no longer bring new non-zero emission buses onto the network. The second biggest portion of our operational emissions comes from the electricity to power our rail operations. We are the largest user of electricity in London and have a strategy to switch to fully renewable electricity supply by 2030 using Power Purchase Agreements. We have just gone out to market for the first tranche and it will be followed by successive tranches over the coming years until we hit 100%. What does the future hold for urban centres' decarbonisation efforts? We're at the beginning of a fundamental transition for humanity. There are difficult questions and issues to be discussed and that's beginning to happen. Currently, however, there is an element of ‘carbon tunnel vision’. There's rightly a lot of focus on decarbonisation but there are other things that need to be focused on with as much vigour. There are fundamental limitations on a finite planet, which society has not fully grasped. The need to overhaul our global and local economies to live within planetary boundaries and in harmony with nature will lead to fundamental [societal] change. You'll have cooler cities, quieter cities, greener cities - they will be more resilient through infrastructure and community cohesion. There will be more emphasis on sharing, repurposing, art and culture and you may even reach a point where our collective economic ambition is numbers of people that don't have to work rather than numbers that do. One thing is certain, the future will be very different, and change will happen quicker than we expect.
Does TfL look to other cities and transport authorities as good examples? Of course. We're in a metro group called COMET and an international association of public transport called UITP, where I sit on the Sustainable Development Committee and am leading the adaptation working group. We're constantly sharing notes, learning and sharing data. TfL is seen in some respects as a leader. We have an accessible and integrated multimodal transport system seen as the envy of the world. We're leading the way on integrated ticketing, electrification and digital railways.
We're trying to be much more outward looking and work more closely with industry. That's how we ended up with the electric double-decker bus. Only five years ago people said we'd never achieve that but we have over 400 now."
With Australian cities forging ahead on climate action, hopes are building that federal policymakers are set to join the fray
Other policies that will be key to cutting carbon at major urban hubs include proposals for renewable energy zones, where high potential sites for wind or solar energy can be tapped and then built into the grid infrastructure. Regional authorities in New South Wales, Queensland, Victoria and Tasmania are proposing such schemes, including the NSW Government’s Central-West Orana renewable energy zone. For countries in Asia without the abundant land and renewable resources available in Australia, the delivery of renewable energy will be more challenging. Major projects are in the pipeline to address those challenges. HSF has recently advised bp on Western Australia’s proposed Asian Renewable Energy Hub, which is anticipated to be one of the largest green hydrogen production and export facilities in the world. Lead partner on the WA deal, HSF Head of Energy in Australia Nick Baker says: “There is no question that this is a demonstration of the ambitious steps being taken to realise Australia’s potential as a renewable energy superpower.” In contrast, on Australia's eastern seaboard, the most pressing focus is bolstering the stability of the nation’s electricity grid to support broader environmental aims. “To decarbonise cities, we need a stable energy grid which will unlock a range of decarbonisation opportunities and enable Australia’s energy transition,” notes Baker. Despite such challenges, the feeling is growing that Australia is now repositioning itself for a dramatic shift in energy regulation and environmental policies. Concludes Ryan: "It feels like the dam has broken."
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Carbon has been a very fraught topic in Australia. Two of its major exports are coal and liquefied natural gas – there's a lot of political heat about not losing coal or gas-mining jobs. As a result, very little was done in terms of climate change."
AUSTRALIA is a high-emissions nation in a world fast moving away from carbon. Conversations on tackling climate change in the G20 nation's resource-heavy economy have long been hampered by party politics even as other governments have achieved consensus on implementing robust green policies. David Ryan, Herbert Smith Freehills' (HSF's) global co-head of infrastructure, surveys the landscape: "Carbon has been a very fraught topic in Australia. Two of its major exports are coal and liquefied natural gas – there's a lot of political heat about not losing coal or gas-mining jobs. Parts of Queensland, in particular, are reliant on that sector. As a result, very little has been done in terms of climate change at a federal level over the last ten years." But has that paralysis finally ended? The country's new federal government, led by Prime Minister Anthony Albanese, has promised to end the "climate wars" after winning the federal election in May. In June, incoming Minister for Climate Change and Energy Chris Bowen delivered a speech to the Investor Group on Climate Change dismissing the supposed trade-offs between "the environment or the economy" and "progressive values or conservative ones". The theme that climate and economic goals do not have to conflict was echoed by Minister for Environment and Water Tanya Plibersek in announcing major environmental reforms in July 2022 on release of the 2021 State of the Environment report. Albanese, meanwhile, promised to provide the certainty "businesses have been crying out for" to make long-term commitments to decarbonisation.
David Ryan, Herbert Smith Freehills' Global Co-Head of Infrastructure
Heidi Asten Herbert Smith Freehills' Environment and Planning Partner
It’s becoming expected that developers will demonstrate an active response to climate issues rather than relying on offsets.
Such rhetoric has so far been backed by action. Since taking office, the new federal government has raised Australia’s 2030 emissions reduction target under the Paris Agreement climate accord to 43% below 2005 levels, against the previous target of 26%-28%, a goal requiring dramatic action to achieve. The new government has also promised to increase investment in renewables and electricity networks and is set to introduce an emissions trading scheme next year, nearly a decade after its first attempt to price carbon was repealed. The policy will apply to industrial emitters, according to Bowen, and end "10 years of policy dysfunction" on climate matters. A promised A$20bn fund to "rewire the nation" is another key pledge, given the challenge of modernising Australia's aging grid infrastructure. States lead the way While national conversations on decarbonisation were previously fractious, more progress has been made at the city and regional level. Notes the Sydney-based Ryan: "The states have really stepped up with their own policies over the last decade. So there's a lot that's been done, it just hasn't been done at a federal level." Canberra is increasingly positioning itself as an Asia Pacific hub for renewable energy and cleantech solutions, with 100% of the Australian Capital Territory Government's energy sourced from renewables. The Australian capital is also aiming for net zero emissions by 2045, driven by massive expansion of home rooftop solar and battery storage, smart energy grids, virtual power plants, electric vehicles and hydrogen technologies. Brisbane City Council, meanwhile, has outlined plans to reduce carbon emissions through measures such as landfill gas capture and combustion, energy efficiency and renewable power initiatives. The council itself achieved carbon neutral status as far back as 2016/17, thanks primarily to gas capture at the city's Rochedale landfill and increased renewable energy. Ryan cites action at city level to extend electric vehicle (EV) charging infrastructure as a recent trend to watch, with states increasingly moving to facilitate investment in EV charging infrastructure and electrification of city bus fleets. There have also been regional efforts to increase the efficiency of existing travel networks. For example, HSF this year advised the Victorian Department of Transport on a A$1.85bn project to provide a modern and energy efficient tram service in Melbourne in partnership with Bombardier Transportation Australia. “There's a lot of money in low-carbon development and green funds. In terms of cities, developers are taking into account the embodied carbon in the things they build,” says Melbourne-based environment and planning partner Heidi Asten. “This applies both in paying attention to carbon in the construction supply chain, and also in designing for low-emissions use, including micro-scale renewable energy and storage. It’s becoming expected that developers will demonstrate an active response to climate issues rather than relying on offsets.”
