Opportunity is the mother of invention.
—Jane Jacobs1
Thousands of residents of Copenhagen purchased stock in the city’s offshore and onshore wind turbines, providing investment capital that is helping the city reach its goal of becoming carbon neutral by 2025.
Residents of Shanghai bought about sixty-one thousand electric vehicles (EVs) in 2017, attracted by large city financial subsidies—part of a market-growth scenario in which the megacity could have more than 1.5 million electric-vehicle users by 2030.2
The one hundred thousand residents of Boulder are taxing themselves a total of $16.5 million between 2018 and 2020—in addition to $10.4 million they’ve already spent—to support a fight to free the city from an electric utility that won’t increase its renewable energy as quickly as the city needs to reach its ambitious decarbonization goal.3
Residents of Cape Town installed forty-six thousand solar water heaters with help from city government, reducing the amount of coal-based electricity they obtain from the national energy-supply monopoly and saving money. The city also went to court in 2016 to force the South African government to let it purchase renewable energy from independent producers instead of having to depend on the monopoly.4
These four examples could appear in newsfeeds about cities striking a blow for decarbonizing the world’s energy systems: Hundreds of thousands of residents in different cities on different continents all “vote” with their money for renewable energy. Four cities adopt innovative policies and make investments to bolster renewables and even take on big electricity utilities and national governments. But these cities are not just replacing fossil fuels with renewable energy. They are also finding that the switch to renewables creates new ways for them to use a city’s advantages in creating economic wealth.
Copenhagen, Shanghai, and other innovation lab cities are forming new geographical concentrations, or clusters, of businesses for “clean energy,” “smart technology,” and other climate-related products and services by turning themselves into incubators for the development of commercial products and services for expanding global markets. Renewable energy has already reached more than $1.4 trillion in global sales a year, with $200 billion in the US alone.5 Copenhagen’s first offshore wind farm, the forty-megawatt Middelgrunden site, was built by a Danish utility, Ørsted Energy, which has captured about 25 percent of the growing global market for offshore wind power.6 With China’s government investing in its EV sector as a strategic emerging industry, Shanghai has negotiated with Tesla to produce electric cars in its free-trade zone.7 The city was where, in December 2017, Ford Motor Company announced its commitment to produce more EVs for the Chinese market, and its executive chairman said that “China will lead the world in EV development.”8
Cape Town and other cities are producing electricity from local wind and solar installations, funded by public and private investment, instead of importing dirty power from utilities. By localizing energy production, they keep tens of millions of dollars in the city economy, supporting businesses and job creation and reducing residents’ energy bills. In Cape Town, the typical solar water heater can cut a household’s electricity use by about 25 percent.9 In South Africa in 2017, the price of electricity from new solar and wind projects was lower than what the government monopoly charged to supply cities.10
By distributing electricity production and storage among many sites in the city—small and large wind and solar farms, as well as on rooftops—instead of centralizing it in mammoth generating plants, cities are making power generation less susceptible to failure in a storm or other climate disaster and less vulnerable to cyberattacks. In Shanghai and other cities, the growing number of electric vehicles is regarded as a potential new source of renewable energy for the electricity grid that can be tapped while the cars are not in use.
By positioning themselves as leaders in the renewable-energy economy, Boulder, Copenhagen, and other lab cities are enhancing their branding as green and sustainable places where the future is bright—characteristics that appeal to the talented, highly educated, tech-savvy young entrepreneurs and workers who drive business innovation worldwide.
In these ways, cities are changing the role they were given during the reign of the fossil-fuel global economy.
Around 1800, Berlin was “an economic backwater languishing on the edge of western Europe,” describes Alexandra Richie in a history of the city. But within decades, she continues, the city “had become the mightiest industrial capital on the continent.” A new industrial landscape of thousands of firms, founded by “a new breed of Berlin entrepreneur,” grew up in Berlin, producing machinery, pharmaceuticals, alcohol, precision instruments, clothing, and more for global markets. In the 1850s, the biggest private company in Berlin, its main factory as large as a small city, supplied the world with entire railway lines, from tracks to locomotives. A new financial district, Behrenstrasse, grew to meet industry’s enormous need for capital. By 1914, Berlin contained three million more people than a century earlier.11
Berlin’s story typifies the urban economic expansion and transformation initiated by the Industrial Revolution, when new fossil-fueled machinery supercharged capitalist markets, which had been emerging slowly for several hundred years. “The factory became the nucleus of the new urban organism,” says historian Lewis Mumford. “Every other detail of life was subordinate to it.”12 Throughout the nineteenth and twentieth centuries, cities old and new became growing production centers for large-scale industry, with far-flung supply chains and consumers. People flocked into cities from rural areas and across national borders; about half of the residents of all European cities in 1850 had been born outside the places where they lived.13 Cities developed ever-heavier concentrations of factories and workers, and succeeding generations of factory workers became habituated to the conditions of industrial work.14 Factories amassed in cities, and railroads severed cities’ traditional arteries for movement. Horrendous housing conditions arose, as did heavy pollution of air and water, and public health deteriorated, eventually triggering waves of urban reform and government regulation that continue to this day.
Cities played a secondary role in the world’s intensified pursuit of economic wealth by providing entrepreneurs, investors, and corporations with sizable labor markets with diverse skills, numerous consumers with increasing incomes, and public infrastructure for power and transportation. By concentrating production in growing cities, businesses could implement the essentials for success in the new fossil-fuel economy: financial efficiency and control. They forged economies of scale that boosted market dynamics; reduced costs allowed cheaper prices that encouraged more consumption, which permitted further lowering of costs. Companies also instituted the centralized governance and management structures needed to guide increasingly complex business operations and vast capital flows. This city-based corporate approach emerged in the fossil-fuel sector, says Jeremy Rifkin in The Third Industrial Revolution, because it required “top-down command and control systems and massive concentrations of capital to move [fuels] from underground to the end users. . . . The centralized energy infrastructure, in turn, sets the conditions for the rest of the economy, encouraging similar business models across every sector.”15
The advent of skyscrapers in cities demonstrates the modern economy’s need for centralized control. The new towers allowed “hundreds, if not thousands, of people and businesses to be in the same place at the same time,” notes an account of the more recent spread of tall buildings in Asia. “By promoting density, skyscrapers confer a competitive advantage and allow a city to become a beacon of commerce.”16
Cities mattered mostly as settings in which businesses, capital, and markets drove economic growth, supported by national government policies. “The economic importance of place,” explains urban studies professor Richard Florida in The Rise of the Creative Class, was “tied to the efficiency with which companies can make things and do business there.” It was thought, he says, that cities grow “either because they are located on or near transportation routes or because they have endowments of natural resources that encourage firms to locate there.”17 An implication, Florida adds, was that city governments should do everything they could to reduce local taxes and other costs that businesses paid. Cities existed to enable the economic efficiency that businesses and markets wanted.
Ideas about the subordinate economic role of cities have changed, and efforts to decarbonize cities have given impetus to new thinking. In 1984, Jane Jacobs, in Cities and the Wealth of Nations, upended orthodoxy by arguing that wealth creation depends on cities, not nations, and national economies depend on cities. The key to economic growth, Jacobs said, is innovation of goods and services, and this is precisely what happens in productive cities. Other analysts focused subsequently on “human capital” in cities, the concentrations of skilled and talented people that generate innovations with economic value. “Cities are not just containers for smart people,” says Florida, “They are the enabling infrastructure where connections take place, networks are built, and innovative combinations are consummated.”18 The urban concentrations generate new ideas and increase productivity: “The clustering force makes each of us more productive, which in turn makes the places we inhabit more productive, generating great increases in output and wealth.”19
This is especially true in the twenty-first century’s high-tech economy, notes economics journalist Eduardo Porter: “Opportunity in the information era has clustered in dense urban enclaves where high-tech businesses can tap into rich pools of skilled and creative people.”20 Cities with capacities for economic innovation use that advantage to get richer and richer. “Before anywhere else can catch up,” says economic geographer Michael Storper, “San Francisco has already leapt ahead again with new stuff they’ve invented.”21
As the idea that cities are society’s main producers of economic innovation bubbled up, the industrial-age market economy experienced two fundamental disruptions—a shift to renewable energy supply and the widespread use of “smart” information technologies. These changes create huge economic opportunities for innovative cities. Jeremy Rifkin says they amount to a third Industrial Revolution, and he has advised Rotterdam, Rome, The Hague, and other cities and regions, as well as the European Union, to plan for an economic sea change. “The great economic transformations in history occur when new communications technology converges with new energy systems,” he explains. “The new forms of communication become the medium for organizing and managing the more complex civilization made possible by the new sources of energy.” In the nineteenth century’s first Industrial Revolution, Rifkin says, coal-fired steam engines drove industrialization and turned printing, coupled with mass literacy, into the world’s primary communications tool for managing the economy’s complex operations. In the twentieth century, “electrical communication [telephones, radios, televisions] converged with the oil-powered internal combustion engine, giving rise to the Second Industrial Revolution,” which mass-produced the automobile and revved up the global oil industry.
In Rifkin’s framing of a third Industrial Revolution, internet-based communications are converging with renewable energy, and this, he says, “will fundamentally change every aspect of the way we work and live.”22 The economy will be characterized by “boutique, high-tech, professional workforces programming and monitoring intelligent technology systems,”23 and education levels required by the renewable-energy sector will increase due to growing digitalization and complexity of its systems.24
This convergence creates the prospect of cities using their advantages—innovation and market power—to shape the next global economy, not just accommodate the market forces that are being unleashed.
In the early 1990s, when a dozen or so pioneering cities, including Copenhagen, Minneapolis, Portland, and Toronto, focused on developing plans to decarbonize themselves, their options for producing and using renewable energy were quite limited. Global energy consumption included a negligible amount of renewables; in 1995, more coal, oil, and gas were used in a single average month than all the wind, geothermal, solar, biomass, and waste power used in the entire year.25 Almost no electric vehicles were available on the automobile market; Toyota’s Prius hybrid was not introduced until 1999. The usefulness of storage batteries for electricity was limited by technical and economic factors. Cities were left mostly with ways to reduce energy consumption: increasing the use of mass transit, bicycles, and carpooling and making buildings more energy efficient.26
Gradually, though, production of renewable energy has grown. Thanks to lowering costs, worldwide installation of renewable capacity—half of it solar—set a record in 2016 by attracting $242 billion in investment. Renewables provided only 10 percent of all energy but were 24 percent of global electricity.27 Even at these modest and insufficient levels, the renewable-energy sector provided nearly ten million jobs internationally, with eight hundred thousand in the US and four million in China.28 A 2016 US government report found more Americans employed in the clean-energy sector than in fossil fuels.29 The world’s expenditure on energy reached $6 trillion in 2010, with a third of the spending on electricity.30 Global energy consumption is projected to continue growing substantially, as is the renewables’ share of the sector. In the next few decades, trillions of dollars could be spent on developing and building renewable production.
Innovation lab cities are intent on boosting the renewable portion of their energy supply. Vancouver’s city council voted unanimously in 2015 to shift the city to 100 percent renewable energy sources, and among other actions, the city is developing district heating systems based on renewables. Stockholm is phasing out its last coal-burning plant, replacing it with a biomass generator that can heat three hundred thousand homes and provide up to 8 percent of the city’s electricity.31 Copenhagen plans to produce more wind energy than its residents consume and to sell the surplus into the nation’s electricity grid. Rio de Janeiro could use rooftop solar installations to produce nearly twice the energy the city needs, says Luciana Nery, the city’s former deputy chief resilience officer.32 Boulder, Cape Town, and Minneapolis are among cities that have fought with investor-owned and national-government utilities to gain more renewable energy.
Dozens of other cities have pledged to shift to all renewables. When President Donald Trump suggested that withdrawing the US from the Paris climate agreement protected the interests of Pittsburgh, a city of 305,000 in a coal-mining region, the city’s mayor rebutted the notion. “Once famous for its steel mills [Pittsburgh] has emerged as a trailblazer in environmental innovation,” declared Bill Peduto. “Pittsburgh will be 100 percent powered by renewable energy by 2035.”33
But there’s more to renewables than changing the sources of energy to reduce GHG emissions. New ideas about expanding the use and altering the design of energy systems are emerging, with implications for cities. The “electrification of everything” envisions that nearly every urban need for energy will be met by electricity produced entirely from renewable sources. This vision greatly expands demand for electricity and builds on the beachhead that electric mobility has established, especially in leading-edge cities—with electric cars, trucks, buses, and trains coming into the mainstream. Full electrification of transportation, according to one analysis, could increase global electricity demand by 56 percent.34 Electricity-transport products already earn billions of dollars worldwide, and their expansion depends on continued development of and investment in electric-charging infrastructure, storage batteries, and other innovations. By 2020, there will be more than twelve million EV charging stations worldwide, up from one million units just six years earlier, according to market forecasts.35 Further propelling a shift to electric mobility and to the once-unimaginable “death of the internal combustion engine,” Norway, France, Germany, and the United Kingdom have announced efforts to phase out fossil-fuel vehicles. China, already the world’s largest maker and buyer of EVs, is heading toward a similar policy.
These trends position cities as the economic hubs of an expanding global market for the production and use of electricity and electric products and services. Oslo is perhaps the city furthest along toward creating an all-electric, all-renewables transportation system. The city’s metro, trams, and buses run mostly on hydroelectricity from the national grid. In September 2017, 60 percent of new cars registered in Oslo were fully electric or plug-in hybrids. The city contains twenty-two thousand electric cars, about 7.5 percent of the total private and public fleet, and expects to nearly double that number by 2020, when there will be more than two thousand charging stations.36 London, Portland, San Francisco, and Stockholm have declared their intentions to become EV market leaders, while Shanghai, designated an EV-demonstration city by the national government, registers far more new EVs annually than any city in the world.37 Another potential growth market for electric products is the heating of space and water in residential buildings in the US, which consumes large volumes of natural gas and fuel oil. Boulder, New York City, and Washington, DC, have studied how cities, in collaboration with manufacturers, can get building owners to switch to highly efficient electric heat pumps that draw heat out of the surrounding air.
Even as innovation lab cities support new uses of electricity, the structure of energy production and distribution is changing, with economic implications for cities. When electricity gained traction more than a century ago, utility companies took advantage of economies of scale and created a centralized system of power generation, distribution, and management. Large-scale generation occurred at a small number of facilities a long distance from customers. Now, though, a renewable electricity system with numerous smaller and more geographically dispersed sites for power production—primarily rooftop solar panels and wind turbines—is emerging. Some buildings are producing more renewable energy than they need and selling it into the electricity grid. Electric vehicles can also sell their unneeded energy into the grid. Although it’s not likely that cities will produce all the power they need, they have an important role to play in transforming the electricity grid to 100 percent renewable energy.
The grid itself is being made “intelligent” through the use of information technology and the internet, which enables distributed producers and consumers to sell and buy electricity based on real-time pricing and other considerations.
Eventually, says Rifkin, “hundreds of millions of human beings will be generating their own green energy in their homes, offices, and factories and sharing it with each other across intelligent distributed electricity networks—an intergrid—just like people now create their own information and share it on the Internet.”38 Within cities, microgrids are connecting distributed producers into electricity networks that can meet the needs of entire neighborhoods and hospital and university campuses. In this next-generation information-energy grid, utilities that no longer provide all of the energy may become managers of a system of digitally connected buildings, vehicles, and everything else using electricity.
What began several decades ago as a new question—what could cities do to decarbonize—has turned into a way for cities to make a significant mark on the world’s transitioning economy.
When Mette Søs Lassesen attended meetings that the city of Copenhagen held with local government officials in several US cities a few years ago, the Americans couldn’t figure out why she was there. The sessions were intended to explore the potential for city-to-city collaborations between the Danish and US cities. But Lassesen, a native of Copenhagen, didn’t work for the city. She works for a Danish engineering firm, Ramboll, which is headquartered in Copenhagen and has been aligning its business around the theme of “livable cities,” including energy, mobility, water, buildings, and environmental systems. Lassesen’s job is to help Ramboll’s livable-cities business find traction in the US market. She joined the meetings with American cities to conduct business for her company—and that’s exactly what Copenhagen’s officials wanted her to do.
“New York and Washington, DC, were a little mystified by this approach,” Lassesen reflects. “They’re not used to having the private sector introduced in this way into these city-to-city discussions.” But this is Copenhagen’s way: “When the city engages in these collaborations, they don’t do it just because it’s fun and interesting. It’s because they can bring Danish businesses into the loop.”
Copenhagen routinely establishes and mines its connections to other cities to create opportunities for its local businesses. This economic-development strategy starts back at home. When the city decided in 2011 to become carbon neutral by 2025, says Lassesen, “it realized that the last piece of how to get there was unknown. It was assumed that there would have to be innovation along the way.” The city decided to help grow businesses that produced innovative products and services for addressing climate change. Turning itself into an incubator for these companies became a key part of Copenhagen’s strategy for its future as a global city, according to Lord Mayor Frank Jensen, an economist and former minister in the national government: “We can see that investments in new green solutions go hand in hand with job creation. Investing in the right solutions is also good for the economy.” The city’s role as a “customer for green solutions” creates opportunities for local clean technology and other green businesses, Jensen says. Many of the firms sell their green products and services to other cities: “They use the brand of Copenhagen as a leading green center as a selling point when they go to other cities.” Delegations of green businesses travel to cities in the US and elsewhere to pitch their products and services.
Several other innovation lab cities—Boulder, London, and Vancouver—also position themselves as markets for and incubators of businesses that develop clean-energy solutions for sale elsewhere. Vancouver has become home to one of every five clean-technology companies in Canada, says Mayor Gregor Robertson. “This,” he explains, “is about assembling a center of excellence in how green a city can be, in the same way that Silicon Valley concentrated talent and technology, and all of that technology gets exported around the world.” Vancouver is working with Seattle—just 140 miles and an international border crossing away—to develop a technology-business corridor. In the last decade, the two cities have attracted more than $10 billion in venture-capital investments in technology start-up companies.39 Vancouver also provides clean-tech and smart-city companies with free access to test sites for their innovative products.40
London developed plans for a clean-technology cluster that would link a top technical university with companies operating in a redeveloped district called Old Oak and Park Royal. “Imagine the scene,” promoters gushed: “A eureka moment in a lab in Imperial College is moved to an Imperial White City Incubator. It is rapidly tested and developed to the point where it earns first round finance. It moves from the incubator to a business growth hub in Old Oak, where it draws upon a range of services and is inspired by other related entrepreneurial businesses. Prototypes can be made in the same zone to prove market demand exists. This is the potential of a cluster.”41 In 2017, Mayor Sadiq Khan announced the development of a clean-tech incubator to support one hundred business start-ups.42
Shanghai participates in the development of its nation’s Global Innovation Centers program, established in 2015 by the national government with the involvement of city mayors. The initiative establishes pilot cities for development of high-tech business hubs of local companies in energy, automobiles, health, and other emerging sectors. Shanghai has strong positioning in electric vehicles, renewable-energy technologies, and redesign of electricity grids for distributed production, says Guo Jianli, trained in automotive engineering and environmental policy, now the vice director of the Resource Conservation and Environmental Protection Division of the Shanghai Development and Reform Commission. “But it takes time and the right companies to be an innovation hub.”
Boulder, with a large endowment of scientific laboratories and three thousand climate researchers, sees the energy transition as an economic opportunity. “For those in our community drawn to Boulder’s entrepreneurial spirit,” states the city’s 2017 climate action plan, “creating new approaches to renewable energy generation, storage and management—and being able to test those approaches here in Boulder—are leading to unprecedented business and local job opportunities.”43
For Ramboll’s Lassesen, participating in the Copenhagen delegation’s meetings with US cities, along with other companies from the city, offers a significant opportunity. “When Copenhagen goes into New York, it says, ‘these are the companies we have worked with. Why don’t you talk to them as well,’” she explains. “You can’t get a better recommendation for starting off with a new client.”
Copenhagen’s path to becoming a major exporter of renewable-energy products and services began in the 1970s, when a cartel of oil-producing Arab nations cut off oil shipments to the US and other nations, sparking worldwide shortages and a steep rise in prices. “Denmark learned the hard way that fossil fuels were expensive and we should not rely on them,” says Lassesen. “That’s when the national government started looking at renewables.” In 1979, the first wind turbine was installed in Denmark, and today more than 40 percent of the nation’s electricity supply comes from wind power, much of it produced offshore.44
The city and the nation have often moved in concert to develop green-energy technology companies. In 2009, the Copenhagen Cleantech Cluster formed with twelve partners—energy companies, research institutions, government and nonprofit organizations—and since then has supported more than 126 start-up companies and created more than one thousand jobs. It was the largest cluster project in Europe. The entity became part of a national cluster with more than 170 public and private members.45 In 2015, Danish companies’ wind-power exports earned nearly $9 billion in revenue, making up more than 5 percent of the nation’s exports.46 Denmark’s command of the wind sector keeps growing: In 2017, China announced it would use Danish companies to build a wind farm and would partner with Denmark on the development of a test and demonstration center for offshore wind power.47 In October 2017, the US government signed a deal with the Danish government to expand cooperation on offshore wind power, another boost for Danish companies.48
Copenhagen continues to expand its international connections and the economic sectors it is mining. “The city wants to be a place where companies can come and it’s easy for them to try things out,” says Lassesen. “We’re competing with other cities—in Scandinavia and Europe—to be a ‘first mover’ when it comes to achieving carbon neutrality. We’re showing that it can be done and how it can be done.”
The city designated its Nordhavn district, the largest urban development project in Scandinavia, as an EnergyLab site to help businesses develop and show ways that electricity, heating, and energy-efficient buildings and electric transport can be integrated into an “intelligent system.”49 The city also declared itself a “living laboratory” for smart technologies for cities; more than 250 companies are involved and global technology companies—Cisco and Hitachi—have located development capacities in the city.50
Moving into the US market, Copenhagen joined with Aarhus, Denmark’s second-largest city, more than twenty Danish companies, the national government, industry associations, and universities to locate the Danish Cleantech Hub in New York City. The hub’s purpose is “to create visibility of Danish cleantech expertise and increase the speed with which solutions are shared.” At one Hub event, Copenhagen’s mayor was a keynote speaker. At another, Denmark’s prime minister gave the closing speech.
As CEO of the nonprofit Advanced Energy Economy (AEE), Graham Richard worked with hundreds of clean-energy companies, tech start-ups, and global corporations throughout the US to develop a national association for the fast-growing sector. AEE pushed tirelessly for state and national policies favorable to renewable-energy production and issued reports detailing the sector’s impressive job-creation numbers. But it’s not just businesses that can benefit from these developments. Cities, too, have big opportunities in the emerging “clean economy,” says Richard, who served two terms as mayor of a city of 250,000 residents—Fort Wayne, Indiana. The spread of decentralized production of renewable energy coupled with smart technologies is gaining momentum, he says: “This model will be implemented community by community. That means creating local jobs instead of building large power plants way outside of cities. Production will be popping up in populated areas, because that’s where the producers and buyers are.”
Efforts to localize energy production are a new entry in an urban dynamic that Jane Jacobs identified as key to city-based economic development: import replacement. “Cities grow and become economically versatile by replacing goods they once imported with goods they make themselves,” she explained, and this process “often entails adaptations in design, materials or methods of production, and these require innovating and improvising.”51 In nearly any city, replacing fossil fuels with renewable energy puts a potentially large amount of money into play. For instance, in Washington, DC, a city of 680,000, the residents, businesses, and local government spend $1.8 billion a year on oil, natural gas, and coal imported from Russia, Saudi Arabia, Venezuela, Canada, Mexico, and six US states.52 Boulder’s 2017 climate plan pitches energy-import replacement: “Rather than sending over $300 million each year out of our community to pay for fossil fuels we simply burn up, we can reinvest those dollars in energy systems that could last a lifetime or more.”53
This model of localized energy contains three linked elements that innovation lab and other cities are beginning to exploit. It installs “distributed energy resources,” such as rooftop solar panels, for the production and storage of renewable energy. It uses smart information technologies—network-management software and the “Internet of Things,” which is made up of sensors embedded in just about anything and connected to the internet—to link and manage distributed systems. This forms microgrids that can be connected to or separated from the main electricity grid. And it develops an electricity grid made up of networked, distributed resources, such as microgrids, which are the building blocks of a reinvented grid. Where this model has advanced most, energy regulators and policymakers in state and national governments have paved the way by adopting rules that remove barriers and offering financial incentives for investment in small-scale renewable production.
In Australia, of the 1.5 million households that generate their own solar energy, about 275,000 received government-subsidized payments for selling the electricity they generated to the power grid. Some received twice as much as it cost them to produce the electricity.54 In California, more than 250,000 private solar-energy customers are connected to the grid operated by the state’s leading utility, Pacific Gas and Electricity, which also has more than eighty-five thousand electric vehicles registered in its service territory. The utility expects a “dramatic increase” in distributed energy resources by 2025.55 In New York State, it’s estimated that plans for a new “hybrid grid” that uses distributed renewable production and microgrids could generate as much as $8.7 billion in annual revenue for the energy-storage industry alone.56 Top-level utility executives in Europe, says Richard, predict that twenty years from now, electricity systems there will be mostly organized around distributed renewable production “because that’s what their customers want.” In Germany, 6 percent of households produced their own renewable energy in 2014, and many more households intended to do the same, drawn by government financial incentives.57 In the United Kingdom, reports professor of urban and regional political economy Andrew Cumbers, “the emergence of decentralized forms of energy, often linked to new district heat and power schemes, is offering the possibility for cities to meet climate change obligations” and boost energy affordability.58 Distributed production models may also provide local communities with a greater voice in decisions about energy supply and distribution, since they are no longer just passive customers of the utility system.
For cities, C40 Cities reports in “Deadline 2020,” distributed production of renewable energy can result in huge reductions in emissions and can be scaled up rapidly by using microgrids. These innovations also contribute to climate resilience, C40 notes: “Local energy production can be less exposed to supply chain risks as fuel is located on-site” as long as it has been designed, constructed, and operated for future climate conditions.59 In 2016, Rio de Janeiro published an energy toolkit for buildings that promoted several advantages of local microgeneration, even though the national electricity grid the city taps into is mostly renewable hydropower. It noted that periods of below-average rainfall reduced the reliability of hydropower.60 The resilience of microgrids is a main reason analysts project that in the US between 2017 and 2022, installed microgrid capacity for renewable production will double.61
This networked-electricity future is in early stages of development in cities—part vision, part plan, part pilots. The number of solar installations on residential buildings in New York City rose to 5,300 in 2016, up from under two hundred in 2011.62 A study for Paris projects that by 2050, almost 20 percent of rooftops in the city will have solar panels. In Hamburg, the publicly owned electric utility has invested in six wind farms within the city’s boundaries.63 Rotterdam’s vision for development includes the use of “an Internet of Things infrastructure in and around every building to monitor and manage energy efficiency” and a building stock of “smart, digital nodes interconnected in vast digital networks.”64 In Berlin, the development of smart passive-energy buildings is also demonstrating the extent to which a building can become a power plant—and what a network of buildings can do. “Connected devices in the past have been poorly designed gadgets for nerdy early adopters but smart-home devices are on the verge of becoming mainstream,” says Björn Grindberg of Climate-KIC, a public-private organization dedicated to a zero-carbon future. “The spreading of smart meters and smart energy management systems can accelerate the German energy transformation,” says Andreas Kraemer, founder and director emeritus of the Berlin think tank Ecologic Institute.65 Oslo’s FutureBuilt program, which develops pilot projects for large GHG reductions, has supported prominent passive-energy buildings—a school, a museum, and a multiuse structure—that use smart technology to manage energy use.66
A scenario developed for Shanghai projected that by 2030, electric vehicles could consume as much as 11 percent of the city’s electricity. Given driving and EV charging habits, this level of demand could substantially increase the evening peak load on the grid, “thus putting pressure on the safety and stability of the power grid.”67 By coordinating when during the day EVs charge their batteries, the study said, the city could reduce peak demand for electricity and generate several benefits: the utility would avoid the cost of procuring power or investing in new generating capacity to meet peak demand and could pass savings on to customers while paying EV owners to participate. The large number of EVs in the city could also serve as a source of clean power for the electric grid while they are not being used, which is about 95 percent of the time. This also could earn money for EV owners, save the utility money, and allow the utility to obtain clean (stored) power instead of generating more power from GHG-emitting sources, says Barbara Finamore, Asia director for the Natural Resources Defense Council’s China program, which cosponsored the 2016 report.68
New climate disasters are producing an opening for distributed, networked electricity systems, notes Richard. For instance, thousands of houses in wildfire-ravaged areas north of San Francisco are being built with resilient microgrid systems instead of just being connected to the main electricity grid. In Puerto Rico, after Hurricane Maria leveled the electricity grid for three million residents, energy regulators in January 2018 opened the door to widespread deployment of microgrids using renewable energy—a potentially faster and cheaper way of restoring service.69
The new energy and digital technologies are making it much easier for new businesses to enter the highly controlled electricity sector. Some companies in Germany now offer to convert communities to a microgrid system independent of utility grids. “You don’t need big utilities anymore,” says the head of a German investment firm that put about $12 million into one of these businesses.70
In 2014, Vancouver competed head-to-head against five comparable global cities—San Francisco, Shanghai, Singapore, Sydney, and Hong Kong—in a study to assess the strength of each city as a brand. A city’s brand is a measurable asset composed of its reputation and image. Brand Finance Canada, a brand-assessment business, interviewed more than 1,100 business leaders, students, and tourists worldwide, as well as residents of certain cities. Its managing director, Edgar Baum, announced the results: Vancouver had the strongest brand of the selected cities—scoring seventy-seven out of one hundred points, with no other city scoring more than sixty-nine points. The city’s strong suit was obvious. “The City of Vancouver brand,” Baum reported, “is associated with the environment, ‘green’ living, and environmental leadership that was discernibly ahead of that of the five other city brands studied.”71 The city trumpets the results on its website: “We are uniquely associated with being clean, green and environmentally sustainable.”72 This branding, says Mayor Robertson, provides Vancouver with an important economic advantage: “Being a green city is a big competitive edge for attracting talent, and with the talent comes private investment.”
Vancouver is not alone in paying attention to its image. The “Sustainable Sydney 2030” campaign promotes the two-hundred-thousand-resident city’s ambitious goals for becoming “as green, global, and connected as possible” and being “a leader with outstanding environmental performance and new ‘green’ industries driving economic growth.”73 Copenhagen presents itself as a livable, edgy, and responsible city with an emphasis on addressing climate change. The city “is internationally renowned for its innovative approach to the climate and the environment,” states the city’s “Co-Create Copenhagen” publication, in English, with full-page color photos of people enjoying life out of doors. “Copenhagen is one of the world’s most ecological and climate-friendly cities.”74 In Boulder’s climate plan, the mayor and city manager remind residents of their city’s identity as a trailblazer: “This is a critical time for our environment and our community—but it is also an exciting time. Once again, our community is positioned to be a leader.”75
City governments increasingly make “explicit efforts to employ the strategic marketing tactics of companies to ‘brand’ their city as a Global City,” reports Kristin Ljungkvist in The Global City 2.0, as they compete for “attention, influence, markets, investments, businesses, visitors, talents and events.”76 Ultimately, though, cities’ quests for innovative economic capacity focus on talent. “Global cities are magnets for people—particularly those who are ambitious and highly skilled,” observes Richard Florida. “Some three in four residents of fourteen large global cities—London, Paris, Tokyo, Sydney, Shanghai, Beijing, and others—report that they ‘chose’ their city . . . and didn’t just end up there by accident.”77 Trends like this can have a measurable urban impact: between 1990 and 2015, the number of young adults and more-educated and higher-income residents increased in nearly every US city’s downtown and central neighborhoods, according to a University of Virginia report.78
Although cities have promoted their greenness for centuries—building and touting their parks and forests—urban green branding now includes climate actions and energy efficiency.
A city’s look and feel matters to companies competing for talented employees. In 2017, Ford Motor Company’s leadership committed $60 million to upgrade downtown areas around its world headquarters in Dearborn, a city of about one hundred thousand people outside of Detroit. The company has been in the city for nearly a century and has some forty thousand employees there. But like other US-based automobile companies, it is becoming more of a digital technology company focused on electrification, autonomous vehicles, and mobility and has to recruit talented, tech-savvy workers. “Younger generations of workers really want to work closer to where they live,” says Donna Inch, head of Ford’s real estate office. “And to be able to live where they want to work, they really need vibrant downtown areas.” Ford’s ten-year plan focuses on creating a walkable, aesthetically pleasing environment in Dearborn.
When Amazon ignited a 2017 bidding war among North American cities to become the location of its second corporate headquarters, the company emphasized that, in addition to seeking a “friendly business environment,” “optimal fiber connectivity,” and financial inducements, it was looking for a city with “the potential to attract and retain strong technical talent.” It anticipated hiring as many as fifty thousand highly educated employees who would earn an average annual income of $100,000. The company preferred a place with a diverse population and excellent institutions of higher education, its Request for Proposals stated: “We want to invest in a community where our employees will enjoy living, recreational opportunities, educational opportunities, and an overall high quality of life.” Amazon touted its own green brand, noting that at its headquarters in Seattle, the “buildings’ interiors feature salvaged and locally sourced woods, energy-efficient lighting, composting and recycling alternatives as well as public plazas and pockets of green space. . . . We also invest in large solar and wind operations and were the largest corporate purchaser of renewable energy in the U.S. in 2016.”79
Even as cities position themselves to be the innovation drivers of an emerging global clean economy, breathing life into a new urban economics, they recognize that replacing fossil-fuel sources is insufficient to address the global warming crisis. Given political, technological, and financial constraints and uncertainties, a world of 100 percent renewable energy won’t be achieved quickly enough to avoid exceeding the global “carbon budget” for the atmosphere. “People in China think cutting emissions means substituting [old] sources of energy with new ones,” notes Zhu Dajiang, director of Shanghai Tongji University’s Institute of Governance for Sustainable Development. “That’s a major misunderstanding.”80
Cities also prioritize the reduction of their appetite for energy, which could cut the amount of new renewable energy that needs to be produced. But consumption of energy is deeply embedded in the systems and lifestyles of modern cities and the production of prosperity.