20 COM/ENV/EPOC/IEA/SLT(2022)2
3. Deep dive: implementing and scaling up renewable energy use by cities This section identifies and analyses what policies and actions national governments could take to help to scale up the use of renewable energy (RE) electricity by cities.4 It outlines the institutional, regulatory and technical barriers faced by cities and national governments wanting to expand urban RE use, and explores whether and how national policies and measures have allowed cities to overcome these barriers. There is currently limited information on how successful national policies and measures have been in supporting municipal governments with deploying RE projects. Most of the dedicated literature focuses on the action taken by municipal governments to develop and scale-up RE projects, without necessarily illustrating examples on what role national governments, and their national policies, had in the process. Thus, the aim of this section is also to highlight successful examples of how national governments can empower cities to use greater levels of RE, which can in turn contribute to the implementation of NDCs and the global effort to mitigate GHG emissions.
3.1. Implementing and scaling up renewable energy use in cities: Importance, potential and common challenges Cities are important players for climate action and, being “agglomerated economies”,5 they can benefit from economies of scale to implement climate action, but are also seeing increased demand for energy. Cities account for around 80% of global GDP, two-thirds of global energy consumption, and over 70% of annual global GHG emissions (UN, 2019[30]). Currently more than 55% of the global population lives in cities, and this percentage is anticipated to grow to 68% by 2050, with the fastest growth occurring in developing countries in Asia and Africa (UNDESA, 2018[31]) (REN21, 2021[32]). Many global cities are expanding to accommodate growing populations, especially in developing countries, requiring an extension of energy services to new consumers. This trend is creating significant acceleration in demand growth for urban energy infrastructure (IEA, 2021[33]). The main drivers of GHG emissions in cities today relate to energy services required for heating and cooling in buildings, appliance and electronics use, urban lighting and transport of people and goods – all of which can be significantly affected by urban planning. Moreover, electrification of transport and heating as part of the clean energy transition would increase demand for electricity in cities. Most of these effects could result in an increase of overall absolute GHG emissions related to urban activities. Cities’ electricity consumption fundamentally depends on their 4
This section does not analyse national policies and measures needed to contain or reduce the demand of electricity by cities, nor those related to the use of RE electricity in specific urban sub-sectors, such as urban transport, building or heating and cooling. 5
Cities allow companies and people to “enjoy positive externalities from the spatial concentration of economic activities” (UN, 2020[153]). Economists consider this a distinct advantage to benefit from the gains of the economy of scale, where firms can offer lower per unit costs for larger-scale production with reduced transport and transaction costs per unit. As such, cities are often referred to as “agglomeration economies”.
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