Mayors, Businesses Pick Up the Ball on Climate

C2ES President Bob Perciasepe speaks at a panel discussion with U.S. mayors at Climate Week NYC. Also pictured are Salt Lake City, Utah, Mayor Jackie Biskupski, Des Moines, Iowa, Mayor Frank Cownie and Santa Fe, N.M. .Mayor Javier Gonzales, chairman of the Alliance for a Sustainable Future.

The Paris Agreement sent a strong signal that the nations of the world are ready to address climate change. But, they are not alone. States, cities, and companies have been showing climate leadership, and they can make strong progress in the near term. 

In the absence of federal leadership on climate policy, local governments and businesses are pushing ahead efforts to reduce carbon emissions and spur the transition to a low-carbon future. In a meeting of The US Conference of Mayors (USCM) in June, the 1,400-member Conference pledged to support cities establishing targets of powering their communities with 100 percent clean, renewable energy by 2035. Importantly, the question of how cities across the U.S. will reach such ambitious goals must be answered through a variety of practical solutions.

The full potential of local climate measures has yet to be realized. By working together with businesses and other cities, effective programs can be implemented more economically across the country. In a new nationwide survey by The USCM and C2ES, a third of participating cities revealed they are already working with businesses and other local governments to reduce emissions. And in a set of newly released case studies, we’ve captured how some of these partnerships are advancing climate action in communities around the country:

ENERGY EFFICIENCY

City governments can lead their communities in energy efficiency efforts, and most start with action in their own buildings. Two-thirds of surveyed cities have established efficiency standards for new and existing municipal buildings, and half have policies to promote efficient commercial and residential buildings. Cities are taking a variety of steps to reach all types of building sectors in their communities:

  • Kansas City promotes energy efficiency investments in residential buildings through an innovative PACE loan program. In conjunction with the Missouri Clean Energy District and Renovate America, the HERO program offers Kansas City residents loans to finance home energy efficiency and renewable energy investments. Since its launch in September 2016, the HERO program has approved 650 residential assessment applications and completed 538 projects with homeowners in the city, an estimated value of $5.2 million.
  • The Renew Boston Trust is ensuring that City of Boston buildings are as efficient as possible through an expansive, long-term energy service performance contract with Honeywell. As a first step all city facilities will undergo an energy audit (a step that 2/3 of surveyed cities report routinely pursuing to some degree), which will be followed by a focus on improvements to 38 pilot facilities.
  • While cities are leading efficiency efforts through policy measures, utilities are important partners in successfully cutting energy use. Duke Energy is working in North Carolina with the cities of Charlotte and Asheville to pioneer approaches to cut energy use in commercial buildings and establish a community-wide strategic energy planning process to meet community preferences to avoid additional natural gas generation.  

RENEWABLE ENERGY

The sustainability survey also revealed that cities large and small are supporting renewable energy in their communities, with 65% of responding cities purchasing renewable energy for municipal operations.

The potential impact of cities fully supplying their operations with clean power is tremendous: the aggregate electricity bill of just 74 surveyed cities sums to over $1.4 billion, representing a significant potential investment in the renewable energy industry. While some of these dollars are already going toward renewable electricity purchases, the ambitious renewable energy goals of a broad group of cities points to greater procurement expectations. For example, eighteen of the cities considering entering the renewable electricity market in the next few years spend a combined $123.5 million annually.

The following cities are pioneering programs to advance renewables in their community, providing examples that could be replicated across the nation:

  • Las Vegas powers 100% of its municipal operations with clean energy while greatly reducing electricity costs. The City has pursued energy efficiency projects and installed clean energy systems on municipal buildings. The remaining electrical demand is met by clean energy produced at the Boulder One solar facility, contracted through a simple but innovative Renewable Energy Agreement with utility NV Energy. Through these efforts, the city has reduced its emissions by 90% and cut annual electricity costs from $15 million in 2008 to just $9 million in 2017.
  • A new Santa Fe program aims to jointly address economic disparity and sustainability efforts. The city’s newly established Verde Fund ensures that the benefits of solar energy and energy efficiency reach disadvantaged communities through a unique fund for local non-profits. The inaugural Verde Fund recipients bring solar and energy efficiency technologies to moderate and low-income households, and integrate workforce development into their delivery models.
  • In August 2016 Salt Lake City and Rocky Mountain Power signed a Clean Energy Cooperation Statement pledging to work together to meet the city’s goal of 100 percent renewable energy by 2032. The unique 5-year agreement requires the city and utility to report progress annually. This establishes more frequent check-ins than a typical 25-year franchise agreement, which is commonly held by cities and utilities.

The innovative local programs and policies described represent incremental steps towards an economy that provides Americans affordable and abundant clean energy, energy efficiency, and low-carbon transportation. These collaborative investments and strategies create environmental and financial benefits, and can also address economic and resilience issues that challenge communities.

Cities and businesses are experiencing the impacts of climate change now and want to reduce the risks of even greater harm in the future. That’s why they’re already demonstrating that elements of a low-carbon future are beginning to improve our communities, and there is plenty of room for greater action. Without the certainty and leadership of the federal government, partnerships will become increasingly essential to a successful and swift transition to a low-carbon future. Luckily, more than half of U.S. cities are interested in establishing new collaborations, and appear ready to lead the country toward a sustainable future for us all. 

Cities flex their muscles to improve existing commercial buildings

With up to 70 percent of total global emissions originating within the boundaries of cities, local governments are at the center of the fight against climate change.

One area where local governments are stepping up to meet this challenge is the building sector, which offers a variety of opportunities to reduce energy demand. Local governments have long sought to improve energy performance among new buildings, however, new buildings aren’t replacing older ones at a fast enough rate to put a noticeable dent in commercial building energy use. In response, cities are working to improve the performance of the existing commercial building stock.

The new C2ES brief, Local Climate Action: Cities Tackle Emissions of Commercial Buildings, explores four commercial building policy strategies that leading cities are adopting: energy use benchmarking and disclosure mandates, retro-commissioning, retrofitting, and requirements for building upgrades to meet current codes. The brief offers examples of how these policies are developed, structured, and implemented. We looked at several examples in an earlier blog post.

These policies are showing promise for reducing emissions in cities that adopt them. For example, New York City is pursuing a suite of building actions, including a local law that requires buildings greater than 50,000 square feet to ensure all lighting systems meet current city standards in common areas and non-residential tenant spaces greater than 10,000 square feet by 2025. Those non-residential spaces must also be sub-metered, and energy use disclosed to tenants. The city intends to extend the policy to include buildings between 25,000 and 50,000 square feet. The move is expected to reduce annual emissions by about 60,000 metric tons of carbon dioxide (MtCO2e) and cut energy costs by $35 million annually.

As we reviewed these four policy categories, two conclusions became clear:

  1. Although policies like New York’s retrofitting requirement are not common in U.S. cities, replicating them broadly could provide widespread co-benefits in our communities and possibly contribute measurable greenhouse gas reductions at the national level.
  2. A larger energy transformation is needed to achieve the aggressive community emissions targets cities have set, and that won't happen without stronger collaboration.

While a number of federal programs provide cities with technical assistance and funding, additional support could be provided by U.S. states and businesses in the form of complementary programs, private investment, and active engagement in policy development. We’ve already seen more of this kind of collaboration through initiatives like the City Energy Project. The increasing number of businesses publicly committing to climate goals indicates there are many more opportunities.

In addition, the Clean Power Plan requires states to meaningfully reduce emissions from the power sector. Properly designed, state implementation plans for the Clean Power Plan could incentivize utilities and commercial building operators to improve the performance of the building stock.

If the actions of New York City, Seattle, and others are any indication, local governments have the potential to enact policies that foster climate action. These key players must continue taking bold actions to help create a policy environment across the country that promotes high-performing buildings, no matter when they were built. 

Two ways to help cities finance climate action

The world is increasingly looking to cities to deliver transformative change toward a low-carbon future. Recent studies point to the great carbon reduction potential resting within city limits by cutting building energy use and improving transportation systems. But very real barriers, especially finance, are hindering progress.

Cities need access to dollars to finance both tried-and-true and innovative pilot projects. Nearly 90 percent of local governments consider lack of funding a significant barrier to sustainability efforts in their community, according to a recent survey.

Initiatives are emerging to improve the financial environment. A C40 Cities Climate Leadership Group report released this month characterizes six ways local governments can access dollars: green bonds, city-backed funds, financial institutions/agency finance, equity capital, emissions trading programs, and climate funds.

The first two financing mechanisms are likely familiar to city leaders. Bonds are common tools to catalyze major projects and more local governments are establishing revolving loan funds to promote certain investments. Some of the others may be less understood, and here we take a closer look at two.

Climate Funds

Climate funds are buckets of money to finance clean energy and resilience action. Although commonly used in developing countries, there are a few examples in the United States. The most prominent type are state climate funds that use revenue from programs such as the Regional Greenhouse Gas Initiative (RGGI) in the Northeast and California’s cap-and-trade program to support programs like energy efficiency initiatives run by local governments.

A C2ES webinar on financing resilience featured another type of climate fund in the New Jersey Energy Resilience Bank (ERB). The ERB described its work to enhance distributed energy projects for critical facilities like hospitals and utilities by providing low-interest loans drawn from a $200 million federal disaster recovery fund made available after Hurricane Sandy. For example, the ERB is providing a $4.4 million grant and a $3.1 million loan to finance a 2 MW combined heat and power natural gas system at Saint Peter’s University Hospital. The investment will ensure the hospital maintains power – and continues providing life-saving services –  even if the surrounding electric grid shuts down in future storms.

Emissions Trading Programs

Emissions trading programs are typically created for major emitters and implemented by state and national governments. So how would a city participate here? Well, emissions trading programs accomplish a unique thing, which is to create new monetary value, in the form of credits, for clean energy projects. This would involve projects like solar installations; energy efficiency programs for neighborhoods, commercial buildings, and even water treatment facilities; methane capture projects at landfills; basically, the kinds of projects cities facilitate or even spearhead. The credits awarded to such projects can be sold to the polluters who have to meet certain quotas.

Outside of municipal utilities in California and RGGI states, there are currently no local governments participating in emissions trading programs in the United States. An interesting opportunity on the horizon is the Environmental Protection Agency’s (EPA) proposed Clean Energy Incentive Program (CEIP), which is nestled within the currently stayed Clean Power Plan.

The CEIP is meant to incentivize renewable energy projects and energy efficiency investments in low-income communities by offering tradable credits to project developers. This program could establish a financial incentive that local governments can benefit from directly or indirectly by drawing development dollars and jobs to cities, but whether that happens is up to each state (more on that process here).

Ultimately, for the CEIP to become a funding source that appeals to local governments, a number of challenges will have to addressed. There will need to be:

  • Certainty around Clean Power Plan and the value of credits to minimize the risk associated with the post-project financial incentive,
  • A clear definition of "low-income community,"
  • Certainty around available credits, and  
  • Guidance on attracting CEIP projects.

Besides the six types of finance discussed by the C40 report, there are other financing mechanisms available to cities that intrepid leaders have used to overcome this barrier to action. However, given the competition for government attention and resources, it is no surprise that lack of access to finance results in lower prioritizing of sustainability projects. This is an outcome we cannot afford.

Cities need connection for climate action

In Philadelphia, officials collect energy use data from schools, hospitals, labs and office buildings, using the information to identify energy and cost savings.

Cities can be the leaders and heroes in our climate crisis if we can build the right relationships to empower them.

Whether it’s because their governments can be more responsive, or because they are becoming so interconnected, cities are playing a prominent role on the international stage in galvanizing climate action.

Starting with the groundbreaking Mayors Climate Protection Agreement in 2005, city initiatives like the Compact of Mayors and the Carbon Neutral Cities Alliance are evolving to connect cities with each other to exchange knowledge and achieve economies of scale for new technologies. This month, mayors around the world announced plans to push for investments in climate-friendly urban infrastructure, particularly in developing nations.

But the transformation we need requires more than connecting cities to one another. Cities also need to be connected to other levels of government and to the business community.

Barriers to Action

Two new reports from C40 Cities (Power Behind Paris) (Unlocking Climate Action In Megacities) highlight obstacles stopping cities from enacting transformative climate solutions. First, cities operate within a larger system of governments that affect their ability to act. Second, they rely on businesses to implement solutions to achieve a low-carbon, resilient local economy.

You could look at these as barriers or simple truths, but either way, the fact that cities rely on external entities is important to keep in mind. To combat global climate change, we cannot expect any institution to do it alone.

The C40 reports point to the need for better vertical integration with governments, and stronger collaborative relationships and practices with the private sector.

Examples of Leadership                                                               

Putting this into practice is difficult but achievable.

For example, to achieve its goal to reduce the city’s carbon footprint, Philadelphia had to address energy use in buildings, the city’s largest source of emissions. To establish its energy benchmarking policy, which collects and publicizes energy use for non-residential buildings over 50,000 square feet, the city had to work with local school officials, universities, and commercial real estate companies. The city collects energy use data from schools, hospitals, labs, office buildings and more that can be used to find energy and cost savings.

The city of Phoenix has set a goal to get 15 percent of its electricity from renewable resources by 2025. To reach that goal, it has partnered with the private sector, investors, and the state to finance and develop solar power installations on public and private lands, including the airport, a landfill, and a water treatment plant.

Steps like these can help states implement the Clean Power Plan, and help the U.S. close the gap to reach its emissions-cutting goals under the Paris Agreement. Despite this, cities have been largely outside-looking-in when it comes to serious conversations on designing and implementing state, federal and international climate policy.

An Integrated Approach

How much faster could we tackle our climate and energy challenges if we took a more integrated approach? The potential is great; for every Philadelphia or Phoenix there are a dozen more cities that aspire to achieve similar success.

For these reasons, C2ES is promoting collaborative approaches that result in integrated 'ecosystems' of policies and programs. Our Solutions Forum fosters new relationships among cities, businesses, and states on key issues. We are also helping cities work with local businesses to establish climate resilience plans that leverage both public and private resources.

City-city initiatives are critical to galvanize support for and increase understanding of transformative climate and energy solutions. But putting these solutions into practice will take on-the-ground collaboration with other levels of government and businesses.

Charlotte leads the way toward sustainable cities

Downtown Charlotte, an example of a city collaborating with the business community to become more sustainable.

City leaders have been envisioning more livable cities, with low-impact workplaces, efficient neighborhoods, thriving ecosystems, resilient electricity grids, and more. Today, many are ready to begin turning their vision of a sustainable community into a reality.

In the face of ever-present budget constraints, one strategy is collaborating with the business community. Cities are no stranger to partnerships, for example, on large development projects. But in the sustainability realm, partnerships are focusing more on improving coordination among key stakeholders.

A prime example is unfolding in Charlotte, North Carolina, a financial and energy hub of the South. In Charlotte, like many other cities, local public and private leaders have been working to improve the sustainability of their organizations, but have struggled to overcome challenges such as how to engage individuals and track and measure success.

Through a series of conversations between the CEOs of Duke Energy and Cisco, the Mayor of Charlotte, and the head of Charlotte Center City Partners, a local nonprofit, local leaders realized they shared a common vision and common challenges. The idea for a new nonprofit, Envision Charlotte, was born. It was launched in 2010 with public and private leaders on its board, and the first goal was to help Charlotte’s commercial buildings become the most efficient in the country. A super-efficient urban core would give the city a competitive economic advantage, demonstrate its commitment to sustainability, and promote civic pride.