3. Policy landscape of climate neutrality

This chapter provides a comprehensive overview of the policy landscape surrounding climate neutrality, focusing on European and Nordic frameworks. It discusses major EU initiatives, such as the European Climate Law, the "Fit for 55" package and the Cities Mission, highlighting their goals and impacts, particularly on urban areas. The chapter also examines Nordic countries' ambitious climate targets and their alignment with European policies, emphasising the role of national networks and local associations in supporting municipalities' transitions to climate neutrality.

Climate concerns and the establishment of targets to reduce carbon emissions have been among European goals for more than a decade. Adoption of the Climate Law in 2021 (European Parliament and European Council, 2021) was a milestone in establishing Europe’s legally binding commitment to become the first continent to achieve net-zero CO₂ emissions by 2050. This decision also influenced revision of the EU's interim emissions target for 2030, with the target increased from a 40% to a 55% reduction in emissions compared to the 1990 level. Since then, the EU has updated existing legislation and introduced new laws to achieve that target by 2030. One such effort is the "Fit for 55" legislative package, which encompasses measures such as emission trading regulations, national emission reduction targets, carbon removal in the land use sector and transport emission standards (European Parliament, 2023).

The EU has several key documents and initiatives that steer the reduction of greenhouse gas (GHG) emissions across Europe. These documents and policies include measures specifically relevant to cities, which play a critical role in achieving climate targets due to their high population density and economic activity (see Appendix 1 for an overview of key EU documents on climate neutrality, with an emphasis on those impacting urban areas). Additionally, the European Commission launched the EU Mission for 100 Climate-Neutral and Smart Cities in 2022, reinforcing the heavy interdependency between climate mitigation and urban action. This programme forms part of the five EU Missions under Horizon Europe (2021-2027), which are designed to meet ambitious goals and deliver concrete solutions by 2030 to challenges related to (1) adaptation to climate change, (2) cancer, (3) restoration of oceans and waterways, (4) climate-neutral cities and (5) soil deal for Europe. With a budget of EUR 360 million (2021-2022), the Cities Mission provides support for 100 cities across Europe to become testbeds for innovative solutions, including in the fields of clean mobility, energy efficiency and green urban planning, with the ultimate aim of achieving climate neutrality by 2030.

NetZeroCities is a key component of the Cities Mission. It acts as the Mission Platform, providing tailored support, expertise and services to the selected cities. Managed by a consortium of organisations with the participation of 33 leading city networks, researchers and urban stakeholders from 13 countries, NetZeroCities assists cities in overcoming structural, institutional and cultural barriers to achieving climate neutrality. This includes offering technical assistance, facilitating knowledge exchange and helping cities develop and implement their Climate City Contracts.

CapaCITIES is a noteworthy project funded under the Horizon Europe programme that focuses on building capacities for urban climate neutrality. Operating within the broader context of the Cities Mission, CapaCITIES advances national support for climate-neutral cities and specifically aims to enhance the abilities of cities to plan and implement effective climate actions. This involves providing training, developing tools and fostering collaboration among cities to share best practices and lessons learned.

In summary, the Cities Mission sets the overarching goal of achieving climate-neutral and smart cities by 2030. NetZeroCities acts as the operational arm, delivering direct support and resources to the participating cities. CapaCITIES complements these efforts by strengthening the skills and capabilities of city stakeholders, ensuring they are well-equipped to meet the mission's ambitious objectives.

Other campaigns and initiatives worldwide have been implemented to support climate action at the city level. Text box 1 lists some of them.

Race to Resilience (2021) is a global campaign to boost leadership and help cities to build resilience and adapt to the impacts of climate change. It is a branch of the broader “Race to Zero” network (which was launched in 2020 and is part of the Climate Ambition Alliance: Net Zero 2050). It includes the “Cities Race to Resilience” initiative, under which cities pledge to integrate climate change adaptation and resilience into all aspects of urban planning, ground decision-making in climate knowledge and scientific evidence, take action and periodically report on their progress. Currently, 733 cities worldwide are signatories

Global Covenant of Mayors for Climate and Energy (GCoM) is the largest coalition with over 10,000 cities and local governments committed to climate leadership. Founded in 2016, through the merger of the Compact of Mayors and the EU Covenant of Mayors, the GCoM focuses on a long-term vision of supporting voluntary action to combat climate change. It includes three core initiatives (1) Data4Cities; (2) Innovate4Cities and (3) Invest4Cities, aiming to help cities bridge the gap between ambition and action in their efforts towards climate neutrality.

Cities Climate Leadership Group (C40) is a network of mayors collaborating to lessen GHG emissions in cities and influence the global climate agenda. Numerous C40 cities have signed the “Race to Zero” commitment.

Despite differences in the Nordic countries’ affiliation with the European Union – with Denmark, Finland and Sweden being EU members while Norway and Iceland are integrated with the EU through the European Economic Area (EEA) – all the Nordic countries support the European policies for tackling climate change by reducing GHG emissions. Indeed, some Nordic countries have ambitions of becoming frontrunners in the transition to a carbon-neutral future and have set goals exceeding the European goal of achieving a 55% decrease in emissions by 2030 (see Table 1).

The national goals also reflect the Nordic Region’s declarations and ambitions for climate neutrality as expressed by the Nordic Council of Ministers (NCM). Following the Katowice Climate Change Conference (Cop 24), the NCM launched a Declaration for Climate and Environment (Nordic Council of Ministers, 2018), stating that all countries, in line with the Paris Agreement, had set bold emission reduction goals for 2030 and were establishing visions for 2050. In the following year, with its Declaration on Nordic Carbon Neutrality (Nordic Council of Ministers, 2019), the NCM reiterated its commitment to pursuing carbon neutrality and delivering solutions with impacts on global emissions. Such objectives were further restated in the “Nordic commitment for the climate agenda” (Nordic Council of Ministers, 2019), with carbon neutrality and climate adaptation being crucial objectives in the vision of becoming the most sustainable and integrated region in the world by 2030 (Nordic Council of Ministers, 2020). Table 1 lists the Nordic countries’ climate goals and the authorities responsible for their implementation.

*Carbon neutrality: CO₂ emissions are offset by natural sinks in its own territory
**Climate neutrality: GHG emissions are offset by natural sinks in its own territory

The strong political commitment, backed by robust climate policies and ambitious targets, and coupled with long-standing commitment to international climate agreements, is undoubtedly a key strength of the Nordic countries’ pursuit of decarbonisation. The abundance of renewable energy also places the Nordic Region in a strong position, with Iceland making use of geothermal resources, Norway deriving most of its electricity from hydropower and Denmark

Denmark – Countries and Regions – IEA

being a global leader in wind energy, with the highest share of wind in its total primary energy consumption and electricity among all IEA countries (Nordic Energy Research, 2021). However, the cold climate results in higher energy demand for heating in winter, leading to increased energy consumption.

Despite technological innovation and investments in clean technologies such as carbon capture and storage (CCS), green hydrogen and electrification and advanced waste-to-energy systems and circular economy models, the Nordic Region is home to resource-intensive industries like forestry and mining as well as oil and gas (notably in Norway), which have significant environmental impacts, making it a challenge to balance economic benefits with emission reduction targets. Trade-offs with global supply chains, including high imports of goods with large carbon footprints, also offset domestic progress (Nordic Council of Ministers, 2024). In addition, the pressure to ensure that exports such as Norwegian oil and gas align with global decarbonisation goals also presents a struggle (Korsnes et al., 2023). Difficulties in decarbonising long-distance transport – particularly aviation and shipping, which are important in Nordic countries with dispersed populations and export-driven economies – and the dependence on fossil fuels in heavy transport sectors also hamper the countries’ progress towards climate neutrality (Sovacool et al., 2018).

The networks of municipal associations perform an important role in guiding Nordic municipalities towards climate neutrality in the various countries. These associations represent local governments at national level and provide support for local development in a range of ways. Table 2 lists and describes the associations in each country.

Equally important in supporting municipalities’ mission to decarbonise their administrations and territories are national networks, which also contribute to the progress towards a fossil fuel-free future in cities (see Table 3).

With the exception of Norway and Iceland, the Nordic countries rely on support from national networks to accelerate climate action in cities. Viable Cities is a frontrunner in that effort. It involves 23 municipalities, which collectively represent 40% of the Swedish population. The programme began in 2017 and was a source of inspiration for the European mission, particularly NetZeroCities, which provides tailored support, expertise and services to several European cities.

HINKU in Finland involves nearly 100 Finnish municipalities and five regions committed to achieving an 80% reduction in GHG emissions by 2030, taking the level of emissions in 2007 as the baseline. The partnership with the Finnish Environment Institute (SYKE) coordinates and facilitates the calculation of annual GHG emission inventories for the participating municipalities, supporting public relations and assisting access external research funding.

In Denmark, DK2020 has progressively supported Danish municipalities in developing and implementing their climate plans. In 2019, 20 municipalities participated in the pilot project, the majority of which completed their climate action plans in the following year. DK2020 subsequently provided support to the remaining 75 municipalities. Currently, all Danish municipalities have developed their climate action plans.