Presentation on meeting cities' energy demand made at the World Cities summit held in Singapore on 1-4 June 2014, by William Tompson, Head of the Urban Development Programme, Regional Development Policy Division, OECD. http://www.oecd.org/gov/regional-policy/

1. Meeting Cities’ Energy Demand:
What Governments Can Do
William Tompson
Head of the Urban Development Programme
Regional Development Policy Division, OECD
EU-Asia Dialogue Panel Discussion ‘Meeting the Energy Demand of Cities’
Marina Bay Sands Expo and Convention CenterSingapore, 4 June 2014

2. OECD urban policy expertise
Reviews of metro-regions and national
urban policy to identify opportunities to
address competitiveness, sustainability and
governance challenges
Horizontal analyses targeting, for example,
urban competitiveness, climate change, port cities
and green growth in cities
Policy dialogue on urban issues to
facilitate knowledge exchange and best practices
to inform policymakers’ agendas (Roundtable)
Statistical indicators on urban and
metro-regions – the fundamental tools for
enhancing cross-country comparison and
improving policy evaluation
34 metropolitan
reviews in 20
countries: tailored
studies assessing how a
given metro-area can
boost competitiveness
New series on
national urban
policy that impact
urban development in
a country (completed:
Poland, Korea, Chile;
potential: China, Mexico)
Thematic work
•Green Growth in Cities
•Compact Cities
•Urban Trends and Policies
in OECD Countries
•Cities and Climate Change
•Cities, Climate Change and
Multi-level Governance
•Competitive Cities in the
Global Economy
•Global port cities
OECD Roundtable
of Mayors and
Ministers
Unique global forum
for mayors and
ministers to exchange
best urban policy practices
75 mayors and 47
ministers have
participated in four
Roundtables since 2007
OECD database on
metropolitan
regions and OECD
regional database
The fundamental tools
for enhancing cross-
country comparability
and improving
analysis and
evaluation of policies
204 June 14 Meeting the Energy Demand of Cities

3. 1. A LOOK AT GLOBAL
ENERGY AND
ENVIRONMENTAL TRENDS
304 June 14 Meeting the Energy Demand of Cities

4. 0
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0 1 2 3 4 5 6 7 8 9 10
Population (billions)
WORLD
GDP per capita ('000 USD)
RoWOECD
OECD
RoW
BRIICS
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GDP per capita ('000 USD)
BRIICS
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GDP per capita ('000 USD)
BRIICS
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Population (billions)
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GDP per capita ('000 USD)
RoWOECD
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RoW
BRIICS
WORLD
GDP per capita ('000 USD)
BRIICS
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20
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0 1 2 3 4 5 6 7 8 9 10
Population (billions)
WORLD
GDP per capita ('000 USD)
RoWOECD
OECD
RoW
BRIICS
WORLD
GDP per capita ('000 USD)
BRIICS
0
10
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0 1 2 3 4 5 6 7 8 9 10
Population (billions)WORLD
GDP per capita ('000 USD)
RoWOECD
OECD
RoW
BRIICS
WORLD
GDP per capita ('000 USD)
BRIICS
GDP +124%
GDP +478%
GDP +458%
GDP +295%
Source: OECD / IEA database (2012)
A look at the latest OECD population and
environment projections…
Where are we headed?
404 June 14 Meeting the Energy Demand of Cities

5. The emergence of 3 billion middle-class
consumers will fuel future demand
Global middle class1
Billions of people
ROW
2030
3.23Latin America
4.88
3 billion
Asia-Pacific
North America
Europe
2020
3.25
1.74
2009
1.85
0.53
1 Based on daily consumption per capita ranging from $10 to $100 (in purchasing power parity
terms) SOURCE: OECD (2011), Perspectives on Global Development: Social Cohesion in a
Shifting World.
0.03
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6. Most urban population growth will be in the
developing world
Total urban and rural population: world and OECD countries
6
0
1
2
3
4
5
6
7
2010 2015 2020 2025 2030 2035 2040 2045 2050
Population(billions)
World urban population
OECD urban population
OECD rural population
World rural population
Source: OECD calculations based on date from the UN Population Database (2009)
04 June 14 Meeting the Energy Demand of Cities

7. 04 June 14 Meeting the Energy Demand of Cities 7
Energy demand will continue to grow
World Primary Energy Demand and Related Carbon Emissions by Scenario
Source: IEA (2013), World Energy Outlook 2013

8. 0.0
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1.0
0 50 000 100 000 150 000 200 000 250 000 300 000 350 000
GDP (billions 2010 USD PPP)
WORLD
Emissions intensity
(kg CO2e / 2010 USD PPP)
RoW OECD
OECD
RoW
BRIICS
WORLD
BRIICS
0.0
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0 50 000 100 000 150 000 200 000 250 000 300 000 350 000
GDP (billions 2010 USD PPP)
WORLD
Emissions intensity
(kg CO2e / 2010 USD PPP)
RoW OECD
OECD
RoW
BRIICS
WORLD
BRIICS
0.0
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0 50 000 100 000 150 000 200 000 250 000 300 000 350 000
GDP (billions 2010 USD PPP)
WORLD
Emissions intensity
(kg CO2e / 2010 USD PPP)
RoW OECD
OECD
RoW
BRIICS
WORLD
BRIICS
0.0
0.1
0.2
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1.0
0 50 000 100 000 150 000 200 000 250 000 300 000 350 000
GDP (billions 2010 USD PPP)
WORLD
Emissions intensity
(kg CO2e / 2010 USD PPP)
RoW OECD
OECD
RoW
BRIICS
WORLD
BRIICS
GHG emissions rise even with declining
carbon-intensity of GDP
0.0
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0 50 000 100 000 150 000 200 000 250 000 300 000 350 000
GDP (billions 2010 USD PPP)
WORLD
Emissions intensity
(kg CO2e / 2010 USD PPP)
RoW OECD
OECD
RoW
BRIICS
WORLD
BRIICS
BRIICS GHG
emissions
39 GtCO2e
OECD GHG
emissions
19 GtCO2e
World GHG
emissions
81 GtCO2e
RoW GHG
emissions
22 GtCO2e
RoW GHG
emissions
13 GtCO2e
BRIICS GHG
emissions
19 GtCO2e
OECD GHG
emissions
16 GtCO2e
World GHG
emissions
48 GtCO2e
804 June 14 Meeting the Energy Demand of Cities

9. 04 June 14 Meeting the Energy Demand of Cities 9
The energy mix must change radically if
we are to limit warming to 2 degrees C
Total primary energy supply, 2011 and various future scenarios
Source: IEA (2014), Energy Technology perspectives 2014.
Question: What policies are needed to deliver such change?

10. • Rapid economic growth  rapid urbanisation.
• Rapid motorisation  sprawl.
• Informal settlements: tend to be located in
environmentally fragile areas. Poor construction
quality and infrastructure adds to fragility.
• Industrial structure: cities as industrial centres.
• Location  greater vulnerability to climate
change.
• Resource and capacity constraints.
10
Particular challenges for cities in
Africa, Asia and Latin America
04 June 14 Meeting the Energy Demand of Cities

11. • Climate change impacts must be considered in the contexts of
other risks and challenges, including, inter alia:
1. Unmet resource requirements and bottlenecks to growth.
2. Congestion and lagging service provision giving rise to
social tensions and public health challenges.
3. Poverty, inequality and social exclusion.
4. Governance challenges.
• Concern with equity and well-being means that growth
remains an imperative.
Bottom line: there can be no green without growth in the
emerging economies of the global South. And neither will be
possible without better governance at all levels.
11
Climate change is not the only risk
facing cities
04 June 14 Meeting the Energy Demand of Cities

12. • Urban form lasts, so lock-in effects from
urban policy decisions endure.
• This means that rapidly urbanising
countries have options.
• We are in the midst of what is likely to be
the last great wave of urbanisation.
• The choices we make over the next
decades will last for a very long time.
12
Urbanisation as opportunity
04 June 14 Meeting the Energy Demand of Cities

13. 2. GOVERNMENTS, CITIES
AND ENERGY
1304 June 14 Meeting the Energy Demand of Cities

14. Cities are part of the problem:
• Cities play an outsize role in national growth and the
generation of environmental externalities.
• Past urban development too no account of climate change
risks.
Cities are extremely vulnerable to climate change:
• Worldwide, coastal areas are disproportionately urban – and
more so in the Tropics than elsewhere.
• Complex urban systems are particularly vulnerable to
extreme weather events (the risk of ‘concatenated hazards’).
Cities and the challenge of climate
change
1404 June 14 Meeting the Energy Demand of Cities

15. Cities must be part of the solution:
• Urban policies can lower the abatement
costs of national environmental policy targets.
• Cities are key spenders on infrastructure
relevant to green growth.
• Concentration of people, activity and
infrastructure can also generate economies
of scale, scope or proximity for measures
that address climate change adaptation.
15
Cities and the challenge of climate
change
04 June 14 Meeting the Energy Demand of Cities

16. What policies do we need?
• Make pollution more costly
• Value and price the natural assets and
ecosystem services
• Remove environmentally harmful
subsidies
• Devise effective regulations and standards
• Encourage green innovation
1604 June 14 Meeting the Energy Demand of Cities

17. Changes to:
• Investment policies.
• Regulatory policies.
• Innovation policies.
• Competition policies.
• Mobilisation of the demand side.
04 June 14 Meeting the Energy Demand of Cities 17
What does this imply?

18. • National policies affect urban development
 National legislation establishes the ground rules for cities.
 National governments intervene directly in a large
number of policy domains that affect cities – yet explicit
national urban policies are often narrowly
conceived.
 Inter-municipal co-ordination needs support from above.
 Urban challenges need to be addressed at the level of city
systems.
• Competitiveness, environmental challenges and inclusive
growth all require a multi-level approach.
Policy coherence across levels of
government requires national leadership
04 June 14 18Meeting the Energy Demand of Cities

19. • National environmental policies often reduce the returns to
action by cities: carbon pricing, fossil fuel subsidies, etc.
• Fiscal and financial frameworks often contradict sectoral policies.
 Example: property taxes and urban sprawl.
 Example: financial regulation and infrastructure investment.
 Example: rules governing the use of transfers.
• Land-use, economic development and transport planning are
often segregated.
 Example: congestion charges and parking fees.
 Example: outdated and fragmented planning frameworks.
• Transversal policy challenges are often reframed to “fit” sectoral
policy templates.
 Example: accessibility is redefined as mobility.
04 June 14 Meeting the Energy Demand of Cities 19
Policy coherence is often lacking

20. Make existing
revenue sources
greener
Tap new
sources of
finance
Ensure policy
alignment across
levels of
government
Financing green cities: The Chicago Proposal
2004 June 14 Meeting the Energy Demand of Cities

21. Make existing
revenue sources
greener
Tap new
sources of
finance
Ensure policy
alignment across
levels of
government
• National policies are key
• Remove barriers to local government action
• A holistic approach is necessary
• Keep the policy package simple
Financing green cities: The Chicago Proposal
2104 June 14 Meeting the Energy Demand of Cities

22. Tap new
sources of
finance
Ensure policy
alignment across
levels of
government
• The overriding aim is to internalise externalities
• Road-pricing policies can help reduce traffic and pollution
• Transport-related revenue sources require coherent planning
• Fees for water and waste services should be more
responsive to actual resource use
• Where appropriate, intergovernmental grants should take into
account environmental objectives
Make existing
revenue sources
greener
Financing green cities: The Chicago Proposal
2204 June 14 Meeting the Energy Demand of Cities

23. Ensure policy
alignment across
levels of
government
• Carbon finance should be more accessible to cities
• Infrastructure needs related to new development should be
internalised in the financing of development projects
• National-local cooperation is essential to developing access
to new forms of green finance
Make existing
revenue sources
greener
Tap new
sources of
finance
Financing green cities: The Chicago Proposal
2304 June 14 Meeting the Energy Demand of Cities

24. 24
What are the barriers to institutional
investment in green infrastructure?
• Weak, uncertain or counterproductive
environmental, energy and climate policies
• Regulatory policies with unintended
consequences
• A lack of suitable financial vehicles with
attributes sought by institutional investors
• A shortage of objective information and data
to assess transactions and underlying risks
Meeting the Energy Demand of Cities
04 June 14

25. Ensure a stable and integrated policy environment
Address market failures (incl. lack of carbon pricing)
Provide a national infrastructure road map
Facilitate the development of appropriate
financing vehicles or de-risking instruments
Promote public-private dialogue on green
investments
Promote market transparency and improve data on
infrastructure investment
Reduce the transaction costs of green investment
Weak & uncertain
environmental,
energy and climate
policies
Regulatory
policies with
unintended
consequences
Lack of
information and
data to assess
transactions and
underlying risks
Lack of suitable
financial vehicles
04 June 14 Meeting the Energy Demand of Cities 25
Mobilising investment in green
infrastructure

26. Meeting the Energy Demand of Cities 26
The OECD Policy Guidance for Investment in
Clean Energy Infrastructure
Policy areas Questions/issues for policy makers
consideration
1. Investment policy • Non-discrimination of foreign versus
domestic investors
• Intellectual property rights
• Contract enforcement
2. Investment
promotion and
facilitation
• Removing fossil fuels subsidies and
pricing carbon
• Long term policy goals
• Policy incentives for investment
• Licensing
• Policy coherence and coordinationy
3. Competition policy • Electricity market structure
• Non discrimination in access to finance
• Competition authorityp y
4. Financial sector
development
• Facilitate access to finance
• Specific financial tools and instruments
• Strengthening domestic financial
markets
5. Public governance • Regulatory quality of the electricity
market
• Multi-level governance
04 June 14

27. THANK YOU FOR YOUR
ATTENTION.
27
www.oecd.org/greencities
04 June 14 Meeting the Energy Demand of Cities