Research and discussion for citizens and decision makers

Michael Bloomberg

Cities, markets, & the climate

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Representatives from every national government are meeting this week to work toward a global climate agreement, and the location of the conference—Lima, Peru—offers critically important lessons for negotiators.

In the debate over how to address climate change, there is a glaring gap between the levels of carbon reductions the world must achieve to avert the worst consequences of global warming and the levels of reductions that national governments have been willing to make thus far. Bridging that gap will require cities and businesses—the chief drivers of carbon emissions—to play a leading role, and Lima’s experience points the way forward.

Lima recently secured an enhanced credit rating with the help of technical assistance from the World Bank and other agencies. That may not sound like a major advance, but consider: Without the credit rating, borrowing to invest in mass transit was too expensive for Lima’s government. With the credit rating, the city raised $130 million to upgrade its bus rapid transit system. That will significantly reduce carbon pollution from one of the most extensive transportation systems in the world, while also helping to reduce traffic congestion, which saves companies money and improves productivity.

Investing in modern, low-carbon infrastructure is one of the best ways to reduce emissions while also spurring economic growth. Such investments hold enormous benefits for urban residents and businesses, but local governments are often unable to make them because they lack access to the credit markets.

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Lima should be just the beginning. In the developing world alone, cities have about $700 billion in annual demand for sustainable infrastructure projects—such as transportation, energy, waste treatment and water supply. Providing them with access to credit could become one of the most effective ways to fight climate change, drive economic growth and—by reducing pollution—improve public health.

About 70 percent of carbon emissions come from cities, and a recent report found that if the world’s cities took bold yet achievable actions to reduce their emissions, the collective impact would be equal to halving global coal use over the next 40 years. With greater access to credit, those reductions would be far steeper.

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The conference in Lima offers a great opportunity for national leaders to build on that progress. Cities and businesses are natural partners for national governments. After all, most businesses are in cities and most cities are on coastal waters. Both have the incentives to mitigate the worst effects of climate change. And with the right tools, both can help lead the way toward the ultimate goal of a global climate agreement in Paris next year.

Full commentary: Cities and Markets Can Fight Climate Change
Source: Bloomberg.com, December 8, 2014

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