Seizing the future: Energizing green cities

March 11, 2014

Axel van Trotsenburg, Vice President, East Asia and Pacific Region, World Bank Business World Online and Vietnam News

Cities have always been the engines of economic growth; now they hold the key to a sustainable future. Cities today have a unique opportunity to become global engines of green growth by choosing energy-efficient solutions for their infrastructure needs.

The urban arena is where development challenges and solutions meet. 6.2 billion people—or two-thirds of the world’s population—will be living in cities by 2050. Unfortunately, most of this urban growth will take place in developing countries, where the vast majority of people remain unserved by basic infrastructure services and where they are least able to cope with the uncertainty of climate impacts. Right now in developing countries nearly one billion people are living in slums.

Today, cities account for roughly two-thirds of the world’s overall energy consumption and about 70 percent of global greenhouse gas emissions. This past summer, the concentration of carbon dioxide in the atmosphere passed levels not seen in three million years. Those numbers hold a dire warning—but they also highlight an incredible opportunity.  Cities could define the future with a low-carbon growth path.

 Analysis from the World Bank Group has shown the potential of efficient urban planning—that improving energy efficiency isn’t just good for the environment, it’s also good for economic growth.  The analysis shows that by improving energy efficiency and reducing greenhouse gas emissions, cities not only help the global environment  but they also support local economic development through productivity gains, reduced pollution and more efficient use of resources.  By developing sustainable urban plans targeting energy and emissions, it is possible to cut energy use, improve traffic congestion, reduce emissions and pollution, and ultimately make more livable cities for everyone.

This is not an aspiration. This is a doable reality.  The International Energy Agency (IEA) estimates that improvements in energy efficiency could deliver, by 2020, 72 percent of the reduction in carbon dioxide emissions needed to keep global warming below two degrees.

The Bank Group has been working in cities around the world and has seen many good-practice examples from the US, Europe, Latin America, Africa and Asia. A Bank Group initiative is tackling the planning and finance challenges for 300 low-carbon livable cities over the next four years.  Another Bank Group initiative is targeting 50 cities with assistance to build capacity and identify projects that can improve their energy efficiency.  The Bank Group’s low-carbon lending grew from $1.76 billion in 2007 to $5.93 billion in 2011.  But we have learned that building the green cities of the future is the task of the many—not the few. It is estimated that over $700 billion a year is needed to finance urban infrastructure in low- and middle-income countries.  As cities grow, municipal governments must look beyond traditional public funding to access much larger pools of private savings. 

Coalitions can be built to make it happen. What we are saying to cities that are struggling for a better future is that there are solutions and partnerships in the waiting that range from the local to the national to the international that can make a difference. 

This is the reason why urban programs have become by far the largest active programs the World Bank Group is supporting in the East Asia and Pacific region. From supporting analytical services to making direct investments, the Bank Group is working to make a difference in the urban future. These include our initiative on inclusive green growth for East Asia and Pacific cities—helping cities in the region to carry out diagnostics and multi-sectorial planning following an inclusive green growth framework. The result is a set of priority urban investments that could be financed by the Bank Group or other financing sources.

For example, we are now working with the Government of the Philippines to help modernize key institutions that will realize Metro Manila's vision: "Metro Manila for All—green, connected and resilient”.  In Shanghai, a World Bank group study showed that retrofitting existing building offers the greatest potential to reduce emissions in the city. We provided a US$100 million loan to finance low-carbon investments in buildings in Shanghai. In Da Nang, Vietnam through the Sustainable City Development Project, we are helping to expand access to improved drainage, wastewater collection and treatment services, and public transport development, benefiting 400,000 people.

We expect to further scale up our support and share these experiences.  A combination of learning, willingness to adapt, and determination to execute will make it work—all this requires national partnerships from public sector, private sector and international support.

Statistics tell us that the human future lies in cities.  What we put in place today will define that future.  Urbanization, if managed properly, offers the huge potential for poverty alleviation, prosperity and green growth.  By working together we have the ways and means to make it happen.