Aziza Akhmouch, Head of Cities, Urban Policies and Sustainable Development, OECD and Sally Capp, Lord Mayor of Melbourne, Australia.

Covid-19 and the subsequent shocks – including the energy, food and cost-of-living crises spurred by Russia’s war on Ukraine – have exacerbated longstanding structural challenges in cities, such as inequalities, housing quality and affordability, traffic congestion and climate-damaging practices.

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Cities are deeply affected by climate change and are an essential part of the solution. Cities and regions implement mitigation and adaptation strategies, accounting for 63% of climate-significant public expenditure (1.1% of GDP) and 69% of climate-significant public investment within the OECD member countries. Cities typically oversee critical policy domains that influence climate outcomes, such as land use planning, water, housing, transport and environmental protection.

For this reason, more than 200 cities from across OECD countries, including Melbourne, have already set ambitious pledges to reduce greenhouse gas emissions (GHGs) to achieve net-zero carbon emissions in the coming decades. As the OECD works with mayors who are taking a stand against rising urban inequality, such climate action is prioritised for its co-benefits and high cost of inaction.

Melbourne’s work to invest in greening buildings, food and public spaces has yielded promising results in addressing affordability.

Greening buildings to reduce energy costs

Buildings account for approximately 28% of total final global energy consumption, three-quarters of which could be easily conserved through better insulation, ventilation and delivery systems. Acting on energy-efficiency renovation is therefore expected to both reduce energy poverty and increase energy affordability. In addition, it is estimated that €190 billion have been saved on public health expenditures in Europe by improving indoor air quality through building decarbonisation.

While keeping food on the table, cities can help tackle global hunger, provide decent jobs and reduce carbon emissions, thereby showing a win-win outcome between greening and affordability.

More than 60% of emissions in Melbourne comes from commercial buildings. To reach net-zero emissions by 2040, Melbourne needs to retrofit over 80 buildings per year. This rate will contribute AUD 2.7 billion to the Victorian economy, provide 12,000 jobs and reduce energy costs by around AUD 184 million per year.

Melbourne’s 1,200 Buildings programme (2010-15) supported building owners with energy and water efficiency improvements in 540 existing office buildings in central Melbourne. The CitySwitch programme supports tenants in 19% of all Australian office spaces. In 2021, it saved over AUD 62 million in energy costs and 760,000 tonnes of CO2 through energy efficiency, carbon offsets and renewables.

Finally, the city has proposed new energy efficiency, heat resilience and greening standards for new developments and major refurbishment approvals. These will result in less energy usage, reduced carbon emissions, less waste going to landfill, more efficient water usage and more sustainable transport options, which will benefit owners and occupiers by creating energy-efficient, climate-resilient, comfortable buildings that cost less to run.

The City’s experience highlights that older buildings pass on high energy costs to tenants and that long-term planning and iterative improvements will be needed to ensure that low-cost, healthy spaces are available to all.

OECD analysis confirms that cities and regions have a key role to play to decarbonise buildings through leveraging prerogatives in regulation, public procurement and stakeholder engagement, while addressing multiple governance, capacity and funding gaps. But to accelerate and scale up local action, national governments need to set the right incentives and enabling policy frameworks.

Localising food systems to build resilience

80% of the world’s food is consumed in cities. Localising food resilience programmes into urban development strategies can build sustainability, reduce GHG emissions, address land degradation, improve nutrition and promote affordability.

In 2021, one in three residents of Melbourne experienced food insecurity. To support access to low-cost, fresh, healthy food, unused spaces are being repurposed for food production, as was the case with Melbourne Skyfarm. Through a public-private collaboration and matched-funding grant via the Urban Forest Fund, the City developed a 2,000 m2 rooftop farm in the city’s Docklands precinct. Skyfarm harvested AUD 62,000 of fresh fruit and vegetables for the community in its first 15 months of operation. The project uses low-cost modular wicking beds now available for others to quickly construct functional food gardens on hard surfaces. A study of rooftop potential for similar green roofs across the city showed that this project could be replicated over 1,000 times the square meterage with no constraints.

OECD’s work shows that while keeping food on the table, cities can help tackle global hunger, provide decent jobs and reduce carbon emissions, thereby showing a win-win outcome between greening and affordability.

Growing urban tree cover to cool the city

Extreme heat is the deadliest climate-related cause of death in the US. It is estimated that the consequences of extreme heat in cities will cost $2.4 billion to global GDP by 2030. Temperature increases are projected to reduce working hours by 2.2% and global GDP by $2.4 trillion by 2030, due to the dangerous working conditions caused by extreme heat. The effects of extreme heat are frequently more severe in cities due to the ‘urban heat island’ effect. The poorest neighbourhoods are often the most affected.

In 2010, the City of Melbourne determined that rising temperatures could cause the city to lose 30% of its tree stock over the next ten years and 48% over the next 20 years if no serious actions were taken. To counter these conditions, the City adopted an Urban Forest Strategy that embraces native plants and landscaping. More than 30,000 trees have been planted with an emphasis on low-income areas. More than 80 hectares of asphalt and other underperforming infrastructure have been incrementally converted to wider footpaths, bike lanes and open space. 

OECD’s evidence shows that well-planned, implemented and maintained green amenities and nature-based solutions yield co-benefits for people and the planet, such as increasing carbon storage and contributing to climate adaptation, while also minimising large-scale, costly infrastructure investment needs.

Climate change requires city leaders to prioritise investments that build resilience. These investments also address the affordability crisis facing our cities, and ultimately, our leaders’ climate action will build more equitable and resilient communities – now and in the future.

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