Empowering Cities for a Net Zero Future

Unlocking resilient, smart, sustainable urban energy systems
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In this report

Climate action in cities is essential for achieving ambitious net-zero emissions goals. Cities account for more than 50% of the global population, 80% of global GDP, two-thirds of global energy consumption and more than 70% of annual global carbon emissions. These factors are expected to grow significantly in the coming decades: it is anticipated that by 2050 more than 70% of the world’s population will live in cities, resulting in massive growth in demand for urban energy infrastructure.

Smart cities represent an important opportunity to reduce energy consumption while meeting service demand, improving grid stability and improving the quality of life for all. Next-generation energy systems leverage big data and digital technologies to collect and analyse data in real time and manage city services more efficiently. These solutions are transforming the energy landscape by creating new synergies to reduce emissions, improve energy efficiency and enhance resilience.

Local governments are in a unique position to deliver on the net-zero emissions agenda. In this report we illustrate the wide range of opportunities, challenges and policy solutions that can help city-level governments capture the significant value in efficient and smart digital energy systems, no matter their unique context. Our focus is on ways national governments can help cities overcome barriers to progress and accelerate clean energy transitions using digitalisation.
Executive Summary

More than 50% of the world’s population currently lives in cities, and that figure is expected to increase to almost 70% by 2050. Cities generate around 70% of global carbon dioxide (CO2) emissions. As societies recover from the Covid-19 pandemic, CO2 rates are rebounding rapidly. The increase in global energy-related CO2 in 2021 is expected to be the second-largest in recorded history. Cities are a global economic engine, responsible for 80% of global GDP, and represent a major opportunity to accelerate progress towards ambitious climate goals.

These factors make the decarbonisation of cities a global priority and of special significance to achieving national commitments and objectives. 

People in G20 countries living in cities with more than 300,000 inhabitants, 1950-2035

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Today’s constantly evolving technology landscape creates new sources of rich data on air quality, energy consumption, geospatial information and traffic patterns, and new tools to manage that data. They can help cities make smarter, better-informed decisions, especially on issues relating to sustainable urban planning and operations. Synthesising these new streams of information can help improve the operation and efficiency of energy systems and address challenges of equity and reliability, assuming that concerns over data access, privacy and security can be effectively managed. Digital solutions and systems can be particularly powerful in cities, where the high-density environment creates economies of scale, minimising the need for new infrastructure and creating new opportunities. Digitalisation can also help de-risk and encourage private investment in clean energy projects, creating new business opportunities and revenue streams, enabling innovative financing mechanisms and improving risk perception.

Increasing generation from distributed renewables, reducing the use of fossil fuel resources, and the electrification of transport and heating all require a broad portfolio of flexibility options, posing new challenges but also creating new opportunities for the management of energy infrastructure. National and local governments, together, are well placed to implement a broad range of innovative policy, financing and technological solutions that will support inclusive, flexible and resilient net-zero energy transitions in cities. 

Digital solutions in buildings, such as smart sensors and controls for thermostats and lighting, can help consumers use energy more efficiently and unleash behavioural and lifestyle changes that lead to sustainable energy use. Countries cannot meet their climate targets without optimising building energy efficiency and energy demand; city-level action is imperative. Buildings equipped with new technologies can provide flexibility to support power system decarbonisation, security and resilience. 

Digital technologies are transforming the mobility landscape by improving energy efficiency, facilitating shifts to active and shared transport modes, improving the convenience and reliability of public transport and more. The electrification of transport and proliferation of electric vehicles (EVs) could enable greater integration of variable renewables via flexibility services such as smart charging and vehicle-to-grid (V2G) services. Time-of-use strategies can shift around 60% of the power generation capacity needed to charge EVs away from peak loading.

National, regional and local governments, as well as citizen-led initiatives, have an important role to play in incentivising and accelerating digitally enabled urban energy transitions. They can provide financial incentives, resources, policy tools and learning opportunities to help cities fund and implement their smart city initiatives. It is important that national and local activities are co‑ordinated to make the best use of resources and that national efforts focus on tasks that cannot be done at a more local level. Our analysis for this report has led us to develop six high-level recommendations for national policy makers:

1.    Design inclusive policies and programmes with people at their core.

2.    Build capacity across digitalisation and energy.

3.    Ensure timely, robust, transparent access to data.

4.    Ensure the availability of finance and promote financial innovation.

5.    Promote the development and uptake of international standards and benchmarks.

6.    Create opportunities for sharing and learning.

Local governments are in a unique position to deliver on the net-zero agenda. Strengthening co‑operation between local, regional and national governments can help meet shared objectives while advancing progress on equitable energy transitions. This report illustrates the wide range of opportunities, challenges and policy solutions that can help different levels of government capture the significant value of efficient, smart, digital energy systems, no matter their unique context.

Supported by

  • This report was developed with the support of the Italian G20 Presidency and the IEA Clean Energy Transitions Programme.