Photo by Sabina Fratila

Proven strategies for municipal authorities to make their cities greener have been laid out in a new resource from the European Bank for Reconstruction and Development (EBRD), containing emissions reduction case studies from around the world.

Besides energy efficiency and buildings, this compendium of tactical and operational policies that fall within municipal control covers urban transport, land planning, water and wastewater, solid waste, across two over-arching areas: governance and financing. 

All policy options outlined can be pursued and implemented within a five-year period, and lead to material impacts within five to ten years. 

The resource is accompanied by a digital tool for specific policies and case studies containing a number of case studies from every continent; including the sole entry from Australia, Melbourne’s Climate Fund.

Some of the building emissions reduction strategies included in the resource are implementing stricter building codes, offering financial incentives to improve standards, establishing agencies to implement changes and reforming public procurement processes.

Using building energy codes

Building energy codes are set by national authorities, but local authorities have significant influence over their implementation at the planning permission stage. 

City officials or accredited professionals have to sign off plans and the finalisation of building works. To capture real carbon savings this requires adequate approval and verification procedures for supervising the construction or major alteration of buildings. 

Frequently these are seen as too expensive but case studies show how the cost of this can be passed on to private building sellers and buyers.

Offering incentives

City authorities can combine tighter building energy codes with financial incentives, as well as certification and labelling to improve consumer awareness and support enforcement. 

Tighter building codes may also be combined with speeding up the permitting process and density or height bonuses if buildings meet particular sustainability criteria. 

For example, Mexico City’s Sustainable Buildings Certification Programme, a voluntary programme with various levels of sustainability performance, offers a number of incentives, including property tax reduction and attractive financial schemes, to cover the cost of building upgrades, as well as expedited processing of construction permitting.

Authorities can also help promote energy efficiency standards by encouraging information-sharing and the mandatory energy labelling of private and public buildings.

It’s possible for them to work with commercial banks to provide financial incentives, so shifting the financial burden from the public to the private sector. 

One example is from Frederikshavn in Denmark, which developed specific soft loans for the energy renovation of housing to meet its climate change targets. A new product was developed by the municipality in agreement with local banks, featuring a longer maturity period and lower interest rates.

Energy services companies

Setting up a municipal energy agency has proven to be a cost-effective way to identify and refurbish public buildings. For example, the Berlin Energy Agency, a public-private partnership, was founded in 1992 and has since launched energy efficiency retrofits in more than 1,300 public buildings and 500 private properties.

If the authority sets up its own energy services company (ESCO) it can undertake energy performance contracting (EPC). This uses the financial savings from energy conservation measures to fund their initial cost, allowing end-users to secure energy-saving investments without drawing on capital or balance sheet payments.

For example the Slovak Republic has made public-sector energy efficiency investments with lower investment costs and higher energy savings by applying EPC instead of the regular public procurement process.

The ESCO stays involved throughout the lifetime of the project, giving them an incentive to reduce energy costs.

EPCs have another advantage: they bridge the financing gap by bringing in private investment. Furthermore, EPC investments can be off-balance-sheet, a way of getting around low public budgets and procurement regulations.

To finance deep building-retrofit projects, Slovenia, for example, has EPC contract durations of 20 years.

Reforming public procurement

Public procurement regulation can be reformed to include lifecycle cost analysis and tenders that use energy efficiency among the selection criteria for contracts, leaving the technical solutions up to the contractor.

The resource even addresses the topic of the split incentives between owners and tenants (where property owners don’t want to invest in energy efficiency if the main beneficiary is the tenant), using the example of the EURONET 50/50 MAX project to show how this challenge can be successfully addressed for public buildings. 

The A$15.6 million Sustainable Melbourne Fund (SMF) allows both tenants and property owners of small and medium-sized enterprises to obtain 100 per cent finance for renewable-energy and energy efficiency projects, with repayments made through council rates.

An agreement is signed by the owner of the building, a financial institution and the city of Melbourne in which the financial institution lends money to the building owner, and the city uses rates and/or taxes to collect the loan repayments and return these funds to the lender. 

The loans are specially designed to include fixed interest rates and repayment periods of up to 20 years, with the charge fixed to the building so it can be passed on to the next owner if the building is sold.

The SMF has directly invested over A$16.9 million in building retrofits, district or neighbourhood innovations, renewable energy systems, software technology and lighting solutions, which has led to GHG reductions of over 245,000 tonnes. 

Other topics

Car-restrictive policies, the promotion of public and active mobility, of cleaner vehicles principles for land use are also covered. 

These include developing compact cities, mixed-use areas and transit-oriented development, green spaces and biodiversity, and using community-based land-use planning.

The European Bank for Reconstruction and Development

The EBRD is an investment bank owned by 69 countries, plus the European Union and the European Investment Bank.

It holds investments in Eastern European/Central Asian/former Soviet bloc/Mediterranean countries across areas such as water supply, wastewater treatment systems, public transport and sustainable energy, with the aim of improving citizens’ lives, and promoting environmentally and socially sound and sustainable development.

Cities that are recipients of investment must agree to abide by a rigorous set of performance standards and targets, which is one of the best collections of publicly available sustainability metrics currently available.

Climate risk assessments and adaptation measures are integrated into its investment operations in order to reduce long-term risk.

The Green Cities Framework

The EBRD’s Green Cities Framework, backed by €1.5 billion, is one of the bank’s largest investment programmes, and presently contains 40 cities.

Member cities develop a Green City Action Plan, beginning with a technical diagnostic study followed by the development and approval of priority investments and policies. This follows a defined Programme Methodology.

David Thorpe is the author of ‘‘One Planet’ Cities: Sustaining Humanity within Planetary Limits and Director of the One Planet Centre Community Interest Company in the UK.

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