Climate change

Cities are under-served by carbon markets, says OECD

 

Paris, 19 April 2011

 

Cities are using two-thirds of world energy and producing two-thirds of energy-related greenhouse gas emissions. So actions to fight climate change should target cities. Carbon markets could help finance some of the necessary low-carbon investments, as highlighted in the Cancún climate conference. But cities are under-served by the current carbon markets.

 

“Carbon markets can be an important new source of finance for urban low-carbon investments. In 2008, carbon markets were valued at over EUR 5 billion, then came the financial crisis but 2009 still recorded a respectable sum of EUR 2 billion”, said Jan Corfee-Morlot, the OECD’s senior climate policy advisor, speaking today at a conference on Cities and Carbon Markets. The event co-organised by the OECD and CDC Climat Recherche, a French think tank, brought together city officials from across France, including from Lyon and Aquitaine.

 

“Businesses around the world have successfully tapped these funds and reduced emissions, but the number of projects involving city governments has been limited,” stressed Alexia Lesseur of CDC Climat, a co-author of a recent OECD report “Cities and Carbon Market Finance”. Urban projects currently account for less than 10% of total. The study reviews how cities can use financing from carbon markets (and the challenges they face), with case studies of 10 urban emission reduction projects in developed and developing countries (Brazil, Colombia, France, Germany, Mexico, New Zealand, Romania, South Africa, Vietnam). The French version of the report is "

 

Cities can reduce greenhouse gas emissions in several ways. Regulating building energy-efficiency, improving public transportation, funding “smart grids”, and improving waste management are some examples. But such low-carbon investments can have high up-front costs. São Paolo, Brazil - working with industry and the national and regional government – built facilities to capture methane from landfills and generate electricity, using carbon markets to cover 100% of the up-front costs. This project not only cuts methane emissions but also reduces the risk of explosions and improves local air quality. The city keeps half of the emissions reduction credits from this project and sells them on carbon markets, generating EUR 27 million in 2007 and 2008.

 

The German State of North Rhine Westphalia receives cash from carbon market credits that cover 5-20% of total costs for a group of projects. The projects, covering 24 heating units in 8 cities, reduce emissions from heating boilers through fuel switching and energy efficiency improvements. This innovative “bundling” of similar small projects demonstrates that it is possible to replicate and scale up this approach in other cities.

 

But the existing carbon market was not designed with urban projects in mind. The OECD study concludes that for urban projects to succeed, they need political will and good policy coordination across city, state and national governments. Partnering with businesses can also help to share project risks and provide financial and technical support. Also important are tangible local benefits—better waste management, odour reduction and lower energy consumption— in addition to the global climate benefits.

 

The study suggests continued development of methodologies for grouping small urban projects together. This could boost the volume of urban emission reductions, and simplify and accelerate the project development and approval process – thereby cutting costs. To maximise city emission reductions in the future, national and city governments should explore together how to better incorporate cities into national climate policies.

 

For a free copy of the full report, in English: “Cities and Carbon Market Finance: Taking Stock of Cities’ Experience with CDM and JI”.  Executive Summary.


En français : “Villes et marchés du carbone : Mécanisme pour un développement propre (MDP) et mise en oeuvre conjointe (MOC) - Bilan de l'expérience des villes”. REVUE de PRESSE.

 

For more information on the OECD work on carbon markets, please visit www.oecd.org/env/cc/carbonmarkets.

For more information on the OECD work on cities, please visit
www.oecd.org/greencities.

 

For further information, journalists are invited to contact: Jan Corfee-Morlot, jan.corfee-morlot@oecd.org or Maria Scolan, maria.scolan@cdcclimat.comInvitation to press conference (in French).

 

Related Documents

 

Cities and Carbon Market Finance - Executive Summary

Cities and Carbon Market Finance: Taking Stock of Cities’ Experience with Clean Development Mechanism (CDM) and Joint Implementation (JI)

Carbon Markets

Cities, Climate Change and Green Growth

OECD Environment Working Papers

 

Countries list

  • Afghanistan
  • Albania
  • Algeria
  • Andorra
  • Angola
  • Anguilla
  • Antigua and Barbuda
  • Argentina
  • Armenia
  • Aruba
  • Australia
  • Austria
  • Azerbaijan
  • Bahamas
  • Bahrain
  • Bangladesh
  • Barbados
  • Belarus
  • Belgium
  • Belize
  • Benin
  • Bermuda
  • Bhutan
  • Bolivia
  • Bosnia and Herzegovina
  • Botswana
  • Brazil
  • Brunei Darussalam
  • Bulgaria
  • Burkina Faso
  • Burundi
  • Cambodia
  • Cameroon
  • Canada
  • Cape Verde
  • Cayman Islands
  • Central African Republic
  • Chad
  • Chile
  • China (People’s Republic of)
  • Chinese Taipei
  • Colombia
  • Comoros
  • Congo
  • Cook Islands
  • Costa Rica
  • Croatia
  • Cuba
  • Cyprus
  • Czech Republic
  • Côte d'Ivoire
  • Democratic People's Republic of Korea
  • Democratic Republic of the Congo
  • Denmark
  • Djibouti
  • Dominica
  • Dominican Republic
  • Ecuador
  • Egypt
  • El Salvador
  • Equatorial Guinea
  • Eritrea
  • Estonia
  • Ethiopia
  • European Union
  • Faeroe Islands
  • Fiji
  • Finland
  • Former Yugoslav Republic of Macedonia (FYROM)
  • France
  • French Guiana
  • Gabon
  • Gambia
  • Georgia
  • Germany
  • Ghana
  • Gibraltar
  • Greece
  • Greenland
  • Grenada
  • Guatemala
  • Guernsey
  • Guinea
  • Guinea-Bissau
  • Guyana
  • Haiti
  • Honduras
  • Hong Kong, China
  • Hungary
  • Iceland
  • India
  • Indonesia
  • Iraq
  • Ireland
  • Islamic Republic of Iran
  • Isle of Man
  • Israel
  • Italy
  • Jamaica
  • Japan
  • Jersey
  • Jordan
  • Kazakhstan
  • Kenya
  • Kiribati
  • Korea
  • Kuwait
  • Kyrgyzstan
  • Lao People's Democratic Republic
  • Latvia
  • Lebanon
  • Lesotho
  • Liberia
  • Libya
  • Liechtenstein
  • Lithuania
  • Luxembourg
  • Macao (China)
  • Madagascar
  • Malawi
  • Malaysia
  • Maldives
  • Mali
  • Malta
  • Marshall Islands
  • Mauritania
  • Mauritius
  • Mayotte
  • Mexico
  • Micronesia (Federated States of)
  • Moldova
  • Monaco
  • Mongolia
  • Montenegro
  • Montserrat
  • Morocco
  • Mozambique
  • Myanmar
  • Namibia
  • Nauru
  • Nepal
  • Netherlands
  • Netherlands Antilles
  • New Zealand
  • Nicaragua
  • Niger
  • Nigeria
  • Niue
  • Norway
  • Oman
  • Pakistan
  • Palau
  • Palestinian Administered Areas
  • Panama
  • Papua New Guinea
  • Paraguay
  • Peru
  • Philippines
  • Poland
  • Portugal
  • Puerto Rico
  • Qatar
  • Romania
  • Russian Federation
  • Rwanda
  • Saint Helena
  • Saint Kitts and Nevis
  • Saint Lucia
  • Saint Vincent and the Grenadines
  • Samoa
  • San Marino
  • Sao Tome and Principe
  • Saudi Arabia
  • Senegal
  • Serbia
  • Serbia and Montenegro (pre-June 2006)
  • Seychelles
  • Sierra Leone
  • Singapore
  • Slovak Republic
  • Slovenia
  • Solomon Islands
  • Somalia
  • South Africa
  • South Sudan
  • Spain
  • Sri Lanka
  • Sudan
  • Suriname
  • Swaziland
  • Sweden
  • Switzerland
  • Syrian Arab Republic
  • Tajikistan
  • Tanzania
  • Thailand
  • Timor-Leste
  • Togo
  • Tokelau
  • Tonga
  • Trinidad and Tobago
  • Tunisia
  • Turkey
  • Turkmenistan
  • Turks and Caicos Islands
  • Tuvalu
  • Uganda
  • Ukraine
  • United Arab Emirates
  • United Kingdom
  • United States
  • United States Virgin Islands
  • Uruguay
  • Uzbekistan
  • Vanuatu
  • Venezuela
  • Vietnam
  • Virgin Islands (UK)
  • Wallis and Futuna Islands
  • Western Sahara
  • Yemen
  • Zambia
  • Zimbabwe
  • Topics list