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Executive Perspectives

EXECUTIVE PERSPECTIVE: Cities face steep climb to 100% renewable energy

Conor Riffle

29 Sep 2015

Reshaping the energy mix in cities presents big challenges for local governments.  But some cities are illuminating the way ahead. 

Every year, our organization, CDP, surveys the world’s cities about climate change. We ask them to report on their greenhouse gas emissions, their electricity mix, and a variety of other sustainability metrics.  This year, our data shows cities quitting fossil fuels and setting aggressive targets to source their energy from non-fossil sources.  But a deeper dive into the data reveals that making the transition away from fossil fuels presents a massive challenge for city governments.

Despite the tremendous progress that is evident across all the data, just 35% of all cities report that they have set a renewable energy target.  Some cities are in the process of developing targets but just not ready to report them yet, like Curitiba and Salvador in Brazil, and Tshwane in South Africa.  But many other cities face obstacles in converting their electricity supplies to clean energy.  It turns out it’s just not that easy for cities to decarbonize their energy supplies.

One of the big challenges for cities is often their lack of control over decisions about energy generation. In many countries, energy utilities are owned by private-sector investors.  The city government is often one of many clients that the utility supplies.  As a result, city governments do not often have a great deal of control over how and where the utility generates its power.  In Karachi, Pakistan’s largest city, responsibility for energy generation lies entirely within K-Electric, the investor-owned utility that supplies the city. Similarly, Lima’s city government reports that the city government has “no power of decision over generation, transmission, or distribution of electrical energy.”

This lack of control can have two major impacts.  The first side effect is that municipalities are subject to the very real commercial realities of private-sector energy power generation.  A local energy utility may opt to build a new coal-fired power plant because the market realities make it a more economical choice.  Moreover, national governments subsidize fossil fuels in places like the US, Russia, and Brazil, further pushing the market away from renewables.  The second side effect is that a city may not have a clear picture of just how dirty or clean their electricity mix is.  Utilities may or may not provide clear data to city governments about the mix of electricity flowing to commercial and residential properties within a city government’s jurisdictional area.  Columbus, Ohio, for instance, reports state-level electricity mix data to CDP because it does not have data for the city itself.  Together, these impacts make it more difficult for cities to lead on decarbonizing their electricity supplies.

So where does this leave cities?  CDP data shows that in spite of these challenges, city governments are still leading the charge to transition their electricity supplies to cleaner energy.  Here is what city governments around the world are doing to lead the charge:

Fighting hard for more influence over electricity generation choices:  Many cities report fighting to obtain more influence over decisions about energy generation.    Boulder, Colorado is exploring the creation of a municipally-owned electric utility, in part due to concerns about the fossil fuel mix available from its current electricity supplier. If successful, the city plans to “evolve its resource portfolio to be 50% or more renewable energy by 2050.” Cape Town is also exploring plans to source more electricity directly from suppliers.  While most of the city’s energy will be purchased from national utility Eskom, the city says that “plans are being developed to encourage the uptake of embedded PV electricity, and for the City to potentially purchase electricity directly from PV and wind farms in the region.”

Cities are also proactively engaging in advocacy at the legislative level.  Denver told CDP that the city has “supported state-wide efforts to increase the Renewable Portfolio Standard for the investor owned utility providing power generation for the city.”  Boston reports working with state regulators, as well as utilities and other municipalities to craft legal structures that help the city reduce its reliance on fossil fuel-based electricity and costs for consumers.

Some US cities have another weapon at their disposal:  Community Choice Aggregation (CCA).  The CCA process helps cities to aggregate demand for non-fossil electricity and use it to negotiate contracts with electricity suppliers.  Oakland, California is participating in a local CCA with the goal to “increase the green power options for local residents.” Oakland’s nearby city Benicia announced its participation in the Marin Clean Energy CCA in early 2015.  Oakland notes that the city also continues to encourage the utility, PG&E, to generate more electricity from clean sources.

Integrating cleaner electricity master planning:  Sydney has set an aggressive goal to generate 30% of its electricity from renewable energy sources by 2030.  The city’s goal was developed carefully over several years and enshrined into the city’s strategy as part of its “Decentralized Energy – Renewable Energy Master Plan.”  This planning process ensures that the whole momentum of the city government is behind the effort.  It also ensures that other activities in the city government support its renewable goal.

Playing the long game: Increasing the share of renewably-generated electricity can be a complicated thing in a city.  The most successful cities are taking the long view, working to slowly and deliberately shift their cities to non-fossil economies.  In Burlington, Vermont—one of the first cities in the US to achieve 100% renewable electricity—work began in 1978.  In that year, voters approved a municipal bond that financed construction of a wood-fuelled generating plant.  The city’s journey to 100% ended just last year when the city approved the purchase of a hydro plant.  Burlington’s long journey is indicative of the long-term commitment needed to evolve a city away from fossil-fuel dependence.

The realities of climate change mean that our major cities must make the shift to renewable energy.  Our data suggests that cities can lead this transition, but it won’t be easy.  State regulators, national governments, utilities and other actors involved in the renewable energy space must work together to ensure that city governments have the freedom to lead.

Conor Riffle is Director, Cities and Product Innovation at CDP

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