Cities are a key sector for cutting carbon emissions while promoting growth.

There are major opportunities to achieve strong economic growth while also cutting carbon emissions, a new report has found, and cities, land use and energy are the three key sectors to lead the charge.

The New Climate Economy Better Growth, Better Climate report, which has been led by former Mexican President Felipe Calderón, Lord Nicholas Stern and a global commission of business, government and finance leaders, was launched today (Tuesday) ahead of the UN Climate Summit next week.

The report finds that economic growth and climate action are not incompatible, and in fact action on climate change can lead to strong economic growth. Nowhere is this more clear than in cities, where the report says that building better connected, more compact cities based on mass public transport will save over US$3 trillion in investment costs over just the next 15 years. As well as leading to lower emissions, better city design also has the benefits of improving city economic performance and quality of life.

“The New Climate Economy report refutes the idea that we must choose between fighting climate change or growing the world’s economy. That is a false dilemma,” said Mr Calderón, who is also chair of the Global Commission on the Economy and Climate, which released the report.

“Today’s report details compelling evidence on how technological change is driving new opportunities to improve growth, create jobs, boost company profits and spur economic development. The report sends a clear message to government and private sector leaders: we can improve the economy and tackle climate change at the same time.”

Co-chair Lord Nicholas Stern said decisions made now would determine our future economy and climate.

“If we choose low-carbon investment we can generate strong, high-quality growth – not just in the future, but now,” Lord Stern said. “But if we continue down the high-carbon route, climate change will bring severe risks to long-term prosperity.”

Sid Thoo, Association of Building Sustainability Assessors chair, said the report proved the contributions the built environment could make to cutting carbon emissions without negative economic impacts.

“The New Climate Economy Report reiterates what the IPCC also recently indicated – there are numerous ‘low hanging fruit’ opportunities to reduce emissions and optimise energy productivity in the building sector,” Mr Thoo said.

“It is flawed logic to think that improving the environmental performance of our homes and buildings must come at the cost of housing affordability, jobs and economy.

“By taking a holistic, whole of lifecycle view towards the role of building and construction in a low carbon economy, it is beyond doubt that more sustainable homes, cities and buildings will actually create jobs, reduce the cost of living, and stimulate our economy for generations to come.”

The report suggests compact, connected and coordinated urban development can be achieved by:

  • Strengthening strategic planning at the city, regional and national levels, with a focus on improved land use and integrated multi-modal transport infrastructure. These efforts should be supported by regulatory reform to promote higher-density, mixed-use, infill development, and new measures such as efficient parking practices
  • Reforming fuel subsidies and introducing new pricing mechanisms such as road user charges to reduce and eventually eliminate incentives to fossil-fuelled vehicle use. Also consider charges on land conversion and dispersed development, and measures that place a higher price on land than on buildings such as land taxes and development taxes. These reforms can raise revenue to invest in public transport and transit-oriented development
  • Introducing new mechanisms to finance upfront investments in smarter urban infrastructure and new technology. These may include greater use of land value capture mechanisms, municipal bonds, and the creation of dedicated national, regional, or city-level investment platforms to prepare and package investments to attract private-sector capital
  • Building more effective and accountable city-level institutions, including setting up integrated transport and land use authorities

Other major opportunities the report revealed include:

  • Land use: Restoring just 12 per cent of the world’s degraded lands can feed another 200 million people and raise farmers’ incomes by $40 billion a year – and also cut emissions from deforestation
  • Energy: As the price of solar and wind power falls dramatically, over half of new electricity generation over the next 15 years is likely to be from renewable energy, reducing dependence on highly polluting coal
  • Resource efficiency: Phasing out the $600 billion currently spent on subsidies for fossil fuels (compared to $100 billion on renewable energy) will help to improve energy efficiency and make funds available for poverty reduction
  • Infrastructure investment: New financial instruments can cut capital costs for clean energy by up to 20 per cent
  • Innovation: Tripling research and development in low-carbon technologies to at least 0.1 per cent of GDP can drive a new wave of innovation for growth

The report proposes a 10-point Global Action Plan of key recommendations to decision-makers:

  1. Accelerate low-carbon transformation by integrating climate into core economic decision-making processes
  2. Enter into a strong, lasting and equitable international climate agreement
  3. Phase out subsidies for fossil fuels and agricultural inputs, and incentives for urban sprawl
  4. Introduce strong, predictable carbon prices
  5. Substantially reduce capital costs for low-carbon infrastructure investments
  6. Scale up innovation in key low-carbon and climate-resilient technologies
  7. Make connected and compact cities the preferred form of urban development
  8. Stop deforestation of natural forests by 2030
  9. Restore at least 500 million hectares of lost or degraded forests and agricultural lands by 2030
  10. Accelerate the shift away from polluting coal-fired power generation

The authors say that implementation of the policies and investments proposed in this report could deliver up to 90 per cent of carbon emission cuts needed to lower the risk of dangerous climate change.

UN Secretary General Ban Ki Moon has expressed that the report will serve as a core narrative for the Climate Summit happening next week. Prime Minister Tony Abbott will not be joining the 125 world leaders due to attend the summit in New York.

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