The Economics of Low Carbon Cities: Approaches to a City-Scale Mini-Stern Review

What is the most effective and efficient way to decarbonize a city? There are hundreds of low carbon options available and although they present a significant opportunity to reduce energy bills and carbon footprints there is often a lack of reliable information on their performance. The higher levels of risk and uncertainty that emerge as a result can be a major barrier to action, making it hard to develop a political, a business or a social case for investment in low carbon options. This in turn makes it harder to set targets, stimulate investment, target interventions, develop new delivery mechanisms and so on. To address this problem, we describe the approach adopted in a city-scale mini-Stern review that reviews the performance and assesses the scope for the deployment of hundreds of low carbon options at the city scale. The review identifies the business case for major scale investments in low carbon options at the city scale, examining the investment needs and payback periods associated with different levels of decarbonization. The results of a case study from the UK are presented. These highlight the presence of very significant and commercially viable opportunities for decarbonization at the city scale – and the potential economic benefits associated with exploiting these. However, it also highlights the scale of the challenge and the need for innovations in a number of areas if major scale investments are to be secured and delivered. To push the debate forward, the chapter concludes by proposing ten key steps to deliver major scale investments in low carbon cities.