New initiative to accelerate climate change
The new commitment is based on experience from working on major projects in Europe.
- Together with a group of people in the EU project Città scaleabile over the past year, I have been thinking about what needs to be done to make the transition go faster,” says Mikale Edelstam, Environmental Strategy. We have looked at the major projects that have been done, such as the Lighthouse projects. The 48 Lighthouse cities and their 72 follower cities, with a further 515 partners, have done a lot of good things, but they still don't see it impacting the transition to climate neutrality at the pace and scale that is needed.
In connection with Smart City Expo World Congress In Barcelona, the group therefore invited fifteen experts, and conducted a workshop based on Mikael's proposal for a major new funding programme. Participants were from across Europe, representing major banks, investment funds, major cities, institutions and think tanks. Together they discussed how Europe can accelerate a climate transition.
One of the European experts was Peter Kisch from Future by Lund.
- It is important that we increase the pace of the transition in order to achieve climate neutrality. Being able to replicate and scale up solutions is a very important part of this,” says Peter Kisch.
Mikael Edelstam — what do you see as the reason why it doesn't happen anymore?
- We have landed in that the cities' pilot projects are not rigged so that they can be scaled up or replicated in other cities or countries. It is in the systems themselves that when cities do projects, they want to achieve many things at the same time — which can be quality of life, reduced climate emissions, greater equality, better accessibility, civic engagement, new innovations and so on. That's fine, but makes the projects complex. The variety of requirements in different grant calls reinforces this. This makes projects difficult to transfer to other places with different conditions.
Cities also cannot control the actions of companies and households, and they do not have the task of spreading the solutions to other cities — after all, it is for their own citizens who work. Moreover, it does not have the resources, the skills or the habit to work with private investors to finance large-scale climate solutions. All this together makes the Group believe that a new starting point is needed to achieve a large-scale and rapid transition.
- Innovations and innovative solutions are of course important, but are often seen as untested and risky by financiers, and pilot projects do not result in larger investable continuation projects, continues Mikael Edelstam. More mature solutions with proven business models are what can drive the transition.
- An example of mature solutions is that in Sweden we have district heating, but this is not a given in large parts of Europe. Other examples include energy efficiency improvements in buildings, heat pumps or public transport, where there are already solutions that work well. What is required for us to be able to deploy such solutions at a high rate is an injection of substantial investment money.
What Mr Edelstam believes is needed is a new European Investment Fund of an estimated at least €100 billion consisting of public funds which will then be switched up 10 or 15 times with the help of private capital.
- As we see it, this is required to reconfigure European cities with known technology. If we are serious about changing fast, we need a new way of working, a shift of focus from innovations and pilot projects to already mature solutions.
This approach was heard in the expert group, and during the meeting many issues were discussed, such as how to spread the Fund to European cities and how to adapt the Fund to national legislation so that there are no barriers between different countries. The Fund also needs to be structured in such a way that it provides a sufficient return on investment and reduces the risks of investments for private operators.
- I perceived it as the group thought it was an exciting and relevant proposal. There is a great need for investment capital, but you also need to build the capacity of cities to receive money. The largest cities have this capability, but after all, most people in Europe live in smaller cities where there is no capacity to work with it. Therefore, a major support programme is also needed to build capacity and skills to cope with it. Another question was how to structure the fund and make it operate at different levels of risk. It may also be that investors need to help cities develop the projects so they become investable.
What time perspective can we count on?
- Our starting point is to switch Europe's cities to climate neutrality by 2030, but I don't see that as likely with the kind of initiatives we have worked on so far. I hope it can be realistic to have put a spin on our initiative so that we can start to see large-scale urban transformation even before 2030, but at an increased pace thereafter.
In the near future, the group will develop a “speed and scale manifesto” and contact stakeholders to push the issue further. The idea is that this will eventually land with the European Commission and European Investment Bank (EIB) to ensure the arrival of investments.
