2. Climate neutrality and cities

The concept of climate neutrality has been interpreted in various ways, with no universally accepted definition. The IPCC (2018) defines climate neutrality as “a state in which human activities result in no net effect on the climate system. Achieving such a state would require balancing of residual emissions with emission (carbon dioxide) removal as well as accounting for regional or local bio geophysical effects of human activities that, for example, affect surface albedo or local climate”. This definition emphasises the need to reduce residual emissions to a level that is in equilibrium with emission removal practices (e.g. carbon sinks, carbon sequestration, carbon capture and storage). It also highlights the role of human activities, both in contributing to the current climate emergency and in alleviating the crisis, focusing on anthropogenic emissions produced and anthropogenic removal processes alike.

Building on the concept of climate neutrality, a climate-neutral city can be described as one that minimises the negative trends of urbanisation while leveraging cities' potential to address climate change. The Global Protocol for Community-Scale Greenhouse Gas Inventories defines a carbon-neutral city as one that has achieved net-zero greenhouse gas emissions – within its defined territory and accounting year – in three areas, namely citywide fuel use, grid-supplied energy and waste treatment (World Resources Institute et al., 2019). The global network ICLEI – Local Governments for Sustainability) defines climate neutrality in the context of local and regional governments as “the targeted reduction of greenhouse gas (GHG) emissions and GHG avoidance in own operations and across the community in all sectors to an absolute net-zero emission level at the latest by 2050” (ICLEI, 2020). The United Nations Economic Commission for Europe (UNECE,2011) states that “Climate neutrality presupposes a change from fragmented sectoral interventions to an interrelated matrix of comprehensive actions integrated at an urban scale.” Wang et al., 2023 define carbon neutrality at the urban scale as a “state in which urban carbon emissions and carbon sequestration are in balance” within a particular territory and accounting year.

In addition to these definitions, several related terms have emerged, such as “low-carbon city”, “zero-carbon city” and “negative-carbon city”, which cover both the implications climate change has for cities as well as the responsibility cities have in combating the climate crisis (Jong et al., 2015). What these definitions and terms have in common is the notion that climate neutrality is inherently dynamic – requiring constant adaptation to evolving circumstances and challenges, as emissions can fluctuate due to economic activities, population growth or changes in energy sources, necessitating constant adjustment to maintain neutrality.

Calculating emissions is a complex endeavour. As mentioned above, climate neutrality has territorial and temporal limitations and can be measured at global, national, regional or local levels and across specific periods (C40 et al., 2019). As measurements are limited to a fixed time frame to determine whether neutrality has been achieved within a given period (typically one year), there is no guarantee that once carbon neutrality has been achieved, the inventory boundary in question will remain climate neutral.

In the GHG and carbon accounting literature, territorial limits for measuring emissions are considered inventory boundaries (World Resources Institute et al., 2019, p. 145). An inventory boundary defines the relevant gases, emission sources, geographical area and time frame, providing clarity on emission origins and guiding actionable or influenceable areas for change (World Resources Institute et al., 2019). In the literature, the inventory boundaries approach is roughly divided into two broader categories: production-based emissions (PBE) and consumption-based emissions (CBE) (Franzen & Mader, 2018). Production-based emissions (PBE) refer to the CO₂ emissions generated within a specific geographical area (e.g. city, region or country), primarily from the combustion of fossil fuels to support urban services. However, the PBE indicator excludes emissions associated with trade and the carbon embedded in goods and services consumed locally but produced elsewhere. By contrast, consumption-based emissions (CBE) refer to the CO₂ emissions tied to the goods and services consumed within a specific geographical area. Unlike PBE, the CBE indicator adjusts for trade by including emissions from imported goods and excluding those from exports. However, it does not account for emissions from land use change and forestry (LUCC).

Climate-warming GHG emissions are classified into three scopes, which were introduced in 2001 as part of the Greenhouse Gas Protocol, a global initiative by the World Resources Institute and the World Business Council for Sustainable Development to standardise the measurement of greenhouse gas emissions (see text box 1).

SCOPE 1 (direct emissions): Refers to direct fuel combustion generated by mobile and stationary sources (e.g. industries, transport, buildings, agriculture and forestry). Direct emissions occur from sources owned or controlled by the reporting entity (city, company etc.)

SCOPE 2 (indirect emissions): Generated by the consumption of electricity or heat grid within a geographical boundary or due to the consumption of grid-supplied heat or cold within a geographical boundary. They occur at the facility where the energy is generated (i.e. they exclude emissions from electricity purchased). Indirect emissions account for at least one-third of global GHG emissions. Lowering electricity demand and shifting energy supply to low-carbon sources present significant opportunities to reduce these emissions.

SCOPE 3 (Indirect value chain emissions): Also termed out-of-boundary emissions, these are associated with other indirect emissions (processing of products, waste management) not included in the indirect emissions account. They occur in the value chain of a reporting entity (city, company), including emissions from both the upstream value chain (from production or extraction of purchased materials) and downstream value chain (resulting from use of the organisation's products or services).

Analogous to Scopes 1, 2 and 3 for emissions above, Lwasa et al. (2022) outline three general frameworks for urban GHG accounting, based on the urban metabolism concept, which traces energy and material flows into, within and out of urban settlements (see Text box 1).

Territorial accounting (TA) focuses solely on direct in-city GHG emissions released into the atmosphere within a selected geographical area (Scope 1). This approach requires less data and is therefore simple to employ. It is best suited for informing policies related to energy consumption and mobility activities within urban boundaries (Lauvaux et al., 2020; Mueller et al., 2021).

Community-wide infrastructure supply chain footprinting (CIF) is more robust than TA as it includes GHG emissions associated with electricity imports and life cycle GHG emissions associated with key infrastructure provisioning activities in cities, serving all homes, businesses and industries (Scopes 1 and 2). This expands both the number of emitting categories and the responsibility for those emissions by including infrastructure-related supply chain emissions. The CIF framework enables individual cities to connect community-wide demand for infrastructure and food with their transboundary production, strategically aligning their net-zero emissions plans with larger-scale net-zero efforts (Ramaswami & Chavez, 2013) 

Consumption-based carbon footprint accounting (CBCF) provides information on the emissions caused by residents and users of certain geographical areas, including cross-border emissions. This category is further divided into:

A comprehensive GHG emission inventory – comprising Scopes 1, 2 and 3 – provides an accurate picture of the actual magnitude of the emissions, which can drive meaningful reductions and help to achieve various GHG-related goals. Scope 3, however, is particularly complex as it concerns emissions released before and after a product is delivered or consumed. Its measurement is crucial to determine who is responsible for the emissions.

A study comparing production and consumption-based emissions across 79 cities in the world (C40, 2018) revealed that, especially for European, North American and Oceanian cities, consumption-based GHG emissions are substantial and significantly higher than production-based GHG emissions. This indicates the need to incorporate transboundary emissions into the emission inventories to inform policies that can effectively reduce GHG emissions. Nevertheless, while cities can directly influence and estimate Scope 1 and 2 emissions, their power over the manufacturing process of an imported product is limited. For example, though requiring substantial investments, cities can transition a thermal plant to a wind or photovoltaic plant and purchase clean energy, but their impact on consumption-based GHG is restricted to using a blend of resource efficiency strategies and consumer-focused policies (e.g. campaigns and public procurements) to foster more sustainable urban lifestyles.

In addition, consumption-based inventories (Scope 3) have uncertain and expansive boundaries that overlap with production-based approaches (Scopes 1 and 2). For example, those in charge of accounting for carbon neutrality must decide whether to include carbon produced, carbon consumed or both produced and consumed by each actor. This can also lead to complications with double counting given that many CO₂ emissions are not merely the byproduct of a single actor, but result from multiple actors engaged in a common process. This issue also arises when determining inventory boundaries given that carbon emissions produced in one territory may be for the benefit of those in another territory. The same fluidity is true of timing as well, particularly when it comes to industrial processes that are completed during one year for use or consumption in the following year.

Considering the challenge of assessing and managing the contribution of urban consumption, which results in greenhouse gas (GHG) emissions outside city boundaries, most of the cities use the Global Protocol for Community-Scale Greenhouse Gas Emission Inventories (GPC) as a guideline tool to estimate their annual GHG emissions. World Resources Institute et al., 2019). The GPC provides principles and rules for calculating emissions consistent with IPCC Guidelines but does not require specific methodologies. Cities collect activity data and emission factors (EFs) based on availability and consistency with their country’s national reported emissions. Since 2014, C40 cities have reported GPC-based GHG emission inventories to the Carbon Disclosure Project (CDP), enabling cross-city emission comparisons, emission mitigation policy assessments and consumption-based carbon footprint estimations (Wiedmann et al., 2020).

Despite the difficulties in calculating emissions, cities are in a strong position to take action advancing climate change mitigation and adaptation. Curbing GHG emissions (mitigation) and reducing climate vulnerabilities (adaptation) are strategies that, if well aligned, can bring several co-benefits (Sharifi, 2021). For example, the insulation of buildings can simultaneously reduce demand for energy (mitigation) while providing better protection from extreme weather (adaptation) (Golubchikov, 2011). Similarly, planting and maintaining forests or green areas can improve the carbon sink potential of cities while also regulating temperature and improving stormwater management (Chen et al., 2022).

Nevertheless, trade-offs with unfavourable consequences may also arise, with mitigation strategies impacting negatively on adaptation measures and vice-versa (Sharifi, 2020). For example, the implementation of a hydroelectric power plant may help to curb GHG emissions as it produces energy from renewable sources, but it may increase competition for water with local communities, jeopardising adaptation (Chen et al., 2022). In fact, mitigation and adaptation serve different purposes, with the former aiming to tackle the causes of climate change (reduce emissions) and the latter aiming to minimise the effects of climate change (reduce vulnerabilities). Their distinct nature requires careful analysis to ensure that co-benefits rather than negative impacts result.

In addition to the positive and negative interrelations between mitigation and adaptation strategies, the systemic nature of cities should not be overlooked. Cities are not isolated entities; they are deeply interconnected across various scales, including regional, national, continental and global levels. Cities are complex systems of interconnected sectors, activities and governance structures and are susceptible to carbon lock-in because of the interrelated dynamics between urban infrastructure, technologies, institutional frameworks and individual and collective behaviours (Lwasa et al., 2022).

As cities do not produce all of the services and goods they need to function within their boundaries and are connected across different scales (locally and globally), mitigation approaches may have cascade effects in urban surroundings and in the functional hinterlands that they are dependent on, such as global impacts through supply chains, resource flows and institutions (Rocha et al., 2018). Similarly, sectoral strategies that optimise resource use (e.g. improving energy efficiency of appliances) or infrastructure efficiency can generate mitigation efforts that span various scales, from households and neighbourhoods to entire districts and city regions, leading cities to reduce emissions both locally and beyond their boundaries (Lwasa et al., 2022). Mitigation efforts undertaken at broader governance levels or in sectors that extend beyond urban boundaries, such as energy and transport, can enhance mitigation outcomes within urban areas.

Besides occurring across different urban systems and being triggered by sectoral initiatives and larger scales of governance, cascade effects also arise from the longest-lasting physical capital of cities (e.g. street networks, buildings, infrastructure), which can be locked in for generations, shaping unsustainable practices and increasing emissions. Cascade effects across multiple sectors (e.g. land use, buildings, transport) must be taken into consideration to inform polices aimed at reducing the climate impact. For example, prevailing low-density urban growth and car dependency require mitigation strategies aimed at overcoming the lock-in to fossil fuel consumption.

In this chapter, we have underscored the pivotal role of cities in the global pursuit of climate neutrality. As many urban areas continue to expand and contribute to climate emissions, they present both significant challenges and unparalleled opportunities for advancing climate goals. The discussion has highlighted the need for cities not only to address their substantial contributions to greenhouse gas emissions but also to act as centres of innovation and leadership in sustainability.

One key reflection is the inherent complexity of achieving climate neutrality in urban contexts. The distinctions between production-based and consumption-based emissions highlight the difficulty of accurately calculating and tackling emissions that extend beyond city boundaries. These challenges emphasise the need for comprehensive frameworks that consider the interconnected nature of cities in their regional and global contexts as well as the trade-offs and synergies between mitigation and adaptation strategies.

The chapter also reflects on the importance of long-term planning to avoid carbon lock-in, with decisions about infrastructure, land use and urban form potentially shaping emission trajectories for generations. The cascade effects of urban policies across sectors and scales reinforce the need for integrated approaches that transcend traditional boundaries to ensure that urban growth is aligned with climate goals.

As critical actors in the climate transition, it is crucial that cities address the complexities of emissions accounting, balance mitigation and adaptation and adopt integrated, forward-looking strategies. In the next chapter, we will explore such strategies at both the European and the Nordic level.