Eero stresses on top-down bottom-up strategy in policy making

Climate-related issues have come to the forefront with more than 70 countries, including China, the United States of America, the European Union and India having set a target of net-zero emissions. But the progress of these climate action plans has been slowed down due to the advent of Covid-19 pandemic leading to inflation and food crisis followed by fuel and energy crises and inflation caused by the Russia-Ukraine conflict. Abhishek Pandey, Editor, Urban Update spoke to Eero Ailio, Adviser at European Commission DG Energy, on a variety of issues specifically related to urban climate actions in different parts of the world, role of the European Commission (EU) in this and also what European countries are doing to tackle the effects of climate change

Recently in COP27, António Guterres, Secretary-General of the United Nations, said that “we are on a highway to hell with a foot on the accelerator”, a very bold statement in terms of urgency of this particular issue. I want to know from you the importance of this issue particularly when there is a war going on, there is an energy security crisis, affordability issue. What is European Commission doing in this regard?

Let me start with a little explanation on just how we operate in the European Union because it’s not always straightforward. The way EU works is that you have three key players, one is the European Commission which is the executive that prepares legislation, ideas and so on. Then we propose that to the European Parliament and the European Council as they are the lawmakers. So, whatever we propose as a draft law for example, we negotiate it with the lawmakers. And these European laws are what I would call framework laws or directives and then these are later sent to the national legislature of each of the 27 countries. Then you have another set of laws, which are regulations, which go directly as they are written and added to some sort of legal libraries of EU countries. So that’s roughly the way it works.
Energy, climate and also environmental policies are the kind of policies where the European Union and the European Commission as the executive has quite a lot of competence, meaning that we initiate the legislation and ideas according to the process I just mentioned. EU has quite a large mandate which makes it very different from any other international organisation. So, back to the topic of energy and climate. So, the European Union, meaning this common part that the Commission represents, and then the individual parts of the member states; if you put that all together, it has a very large economic weight in the world and it’s also the world’s largest financers of development, cooperation or climate finance and so on. We have a development bank, the European Investment Bank which is the world’s largest development bank. Now the commission has adopted the European Green Deal, which is actually a growth strategy from our perspective and that’s a bit of a change from the past, which shows how important climate issues and energy, the biggest sector affecting climate, have become. So now all the policies that the European Commission leads are adjusting or are making sure that those policies all contribute to the climate targets of the EU. And what is the climate target of the EU? We have the ambition to become a climate-neutral group of countries by 2050 and we have also an interim target of 2030.

In crises like Covid-19 or recession, the countries that are not very well developed, climate action becomes a vicious cycle for them. Suppose they are trying to invest in renewable energy, but they are dependent on fossil fuels because they do not have money to pursue new technologies. How do you handle these countries outside Europe because, in GCoM, EU is supporting many cities in their projects through gap funding and other kinds of funding support? How do you look at this particular issue and how this can be resolved?

Of course, there are some limits to what we can do. Those countries are sovereign and they take their own decisions. What we do is we use our development budget and money with which we help the transition outside Europe. So that’s clear. Well, one thing I want to say is that the International Energy Agency (IEA) is following energy markets and they have already said that we are at the stage where renewable energy is the cheapest energy in the world. It’s way cheaper than coal, gas and so on. So, from an economic point of view, it’s clear that you’re better off if you go there and yes, there’s a need for upfront investment and that’s the big hurdle. But after that, operational costs are much lower and then you have all the environmental and health benefits and so on. This is the one thing we are seeing happening. Last year was also the first year when investment in renewables surpassed global investment in fossil fuels.

In regions under the jurisdiction of the European Union and Commission, many countries are also making their climate action plans. They also have their national plans. So how do you blend them? Because, I think mostly they are on the same path, they have similar targets but their approach could be different. Do you have any platform for knowledge sharing with each other on a regular basis?

Well, the EU is quite simple in the sense that we have structures for that. We have all these platforms, committees and forums, and since we do the legislation together, we meet regularly and discuss climate issues, energy issues and environmental issues. So we have all the time and platform to discuss this and that clearly helps. That also goes for energy security, now with the war. We have gas coordination groups, and electricity coordination groups, we have lots of different places where the experts meet at the political level, including government civil servants, NGOs and civil society organisations. There are many tools for that and then, of course, you have to share data. So, the commission is putting a lot of data on the internet and we put that openly.
That connects a little bit to the global covenant as well. I mean we have several initiatives that we call bottom-up initiatives. There are sub-national entities, particularly for cities regions and also companies, where we sponsor these kinds of initiatives like for instance cities in the context of global covenant commit to certain emission targets, plans, and so on.

Since you spoke about the Global Covenant of Mayors, I just wanted to know what is the role of European Commission in that. For the audience that is listening to this podcast, could you talk a little about GCoM, how it started, and what are its objectives.

Sure. It goes back to what I would call a top-down bottom-up strategy of the European Commission in policymaking. It means that top-down is of course the law-making, all this traditional stuff. But the law is as good as its implementation and to implement something you have to think what can we do about that?

So, one way is indeed that you talk to the cities, which is where the action is actually happening. I mean 70 to 75 per cent of all the legislation is actually implemented at the city level. Without cities, you can’t get anything done, so it is better to talk to them and that’s what we do. That’s why we have initiatives like the Global Covenant of Mayors which actually started in Europe. There is the European Covenant of Mayors. It’s already 13 years old where we started helping cities to try out new possibilities in energy efficiency, heating, renewable energy, urban transport, waste management and things like that. So, helping them [cities] to develop plans, implement them and then monitor them is the bottom-up part.
But you were asking about the history. In 2008, we started the European Covenant of Mayors and it was a success. So we got close to 10,000 cities joining over the years and many cities including cities from Argentina, and New Zealand contacted us to be part of this. So, we had already started preparing for what we call the Global Covenant of Mayors back in 2014-15. Then at the time of the Paris Climate Agreement, Michael Bloomberg had an initiative called the Compact of Mayors similar to the Covenant but already working globally as well. So, we merged those two which is today’s Global Covenant. Since then, the commission has and is currently financing what we call Regional Covenants around the world in Asia, Africa, America, and of course Europe. That means we set up Secretariat and help desks in those countries which help local cities to try out the same methodology but in their own regional context. On top of that, we have set up what we call a Global Secretariat like a Central Secretariat here in Brussels and this Secretariat is bringing together the partners of the Global Covenant.
Then we have city networks and there we have ICLEI, C40, Euro Cities, Energy Cities, Climate Alliance, and so on, and the city networks, which, of course, keep partners in this. We are discussing with them what we can do, concretely, be it about finance, research, regional cooperation, best practice sharing and so on. So we manage this kind of working group and we have global representation from all those regions, including India. Now we are a family of about 11,400 cities or something like that.

When you interact with cities, what kind of demands do they put forward? Do they need technology support, funding or do they need handholding support?

Many kinds of demands come up during our interactions with cities and hand-holding support is certainly one of them. Cities’ primary concern is that they don’t know where to begin. They don’t know where they could find the data of their emission inventory to set the target and later monitor their progress. Another question they ask us is how can we help them in accessing funding. Also, many cities want to be part of the Global Covenant as they become part of an international network, which is also the biggest network in the world. Moreover, when a mayor in the city tries to push forward an idea, for example renewable energy, then he/she faces opposition from others. Then he can refer to this network and say this is what these guys are doing in our neighbouring country which can be done here as well. He/she could say that we are not alone in this, there are actually 11,000 others who are also doing this.

How do you support cities in their existing projects or the projects they want to initiate? Also what kind of funding opportunities are available for them?

The Global Covenant helps these cities in getting started and also in streamlining their work. On the funding part, the most concrete thing that we have is the city gap fund. Under the city gap fund, cities of the global south can apply for funding for the development of their financial concepts, like preparation of their early project cycle. For instance, if you have an idea about what you want to do in your city but you don’t know how to write it into a language a banker would listen to. This seems to be the biggest need of the cities at the moment.
On top of that, we are in touch with other financers as well to see if we could persuade them to get more funding for cities. Cities that are part of the GCoM network will be ahead of other cities in this as they already have a plan, they are organised and know what they have to do. But it is clear that right now we don’t have the capacity to finance the infrastructure development. For that, we would need the local financers, development banks and other private financers.

So far, what major challenges you have faced in dealing with cities in Europe and outside?

Global Covenant, in this partnership mode, practically started in 2017. One of the biggest challenges, in the beginning, was to merge two initiatives, along with method of working of these two initiatives. We also engaged in understanding if there is a link between the national energy goals and nationally determined contributions under the Paris agreement and all of these administrative issues. We also created a joint common reporting framework which was quite a feat in itself and we’ve been implementing this. We are getting feedback from cities regarding this but some of them are saying that this is a bit too complicated for them. So, we started working to simplify this framework and we’re about to publish a simplified version of that. We are creating an easier level for cities, that are not so advanced, and there would be another level for big, advanced and well-resourced cities.
Another thing like I said, is data. Usually Central or National Governments have the data, but it’s not always available with the cities and that is another challenge. So, we’re looking at technology for instance can we use space technology, machine learning etc.

What is the vision of the Global Covenant of Mayors for next five to ten years? How do you see it playing an important role, because in many countries, the decisions are taken at the national level and not at city level?

One of our objectives is to develop what we call multi-level governance. What it means is that we would need to connect cities and regions to the work that is being done at the central government level. So that NDCs and all other climate goals would be realistic. With this we will make sure that our targets are rooted in reality and they are achievable. We also use the word vertical integration for this and we are working towards achievement of this.
Earlier there was a comment about the COP27 which was held in Egypt last year. For the first time there was a session in COP where ministers and mayors were sitting together to discuss how they plan to achieve their climate and energy goals.
In Europe, we’ve taken quite a big step. Cities have a right, etched in law, to be involved in setting up national level energy and climate plans, which generally every EU country has formulated. All these laws put together could be called EUs response to the climate commitments that we pledged under the Paris agreement. But, of course, this is not the case in many other countries. We are looking for these kinds of solutions around the world so that we can strengthen the voice of the cities. We would like to see that in the future, in the COPs and other similar structures, cities have greater role to play.

There are some tangible goals like SDG targets, the Paris climate goals and net zero emission goals outlined by countries. Like India has pledged to become net zero by 2070. Do you have similar targets in mind for cities under GCOM and also for other cities?

Under GCoM, cities have their own target, and the benchmark for those targets is usually the Nationally Determined Contribution (NDC) of that country. We start from the premise that is in line with the NDC’s of a country, GCoM cities have to do the same or rather better than that. So we are looking for cities who want to be like front runners in this sense.

Now I want to listen from you some of the good examples from Europe where you think the city has done really well since you are representing the European Commission, especially under GCOM?

Well, there are many examples, but I think most interesting one is the city of Leuven in Belgium. It’s a relatively small city, with around 80,000-90,000 inhabitants. The city has been very successful in launching a climate program which is durable, meaning a program that will last beyond the electoral cycles of the city. That’s what we need to do because decarbonising a city is a long-term project. Leuven has actually set up a kind of special purpose vehicle or a company whose target is to manage the energy transition of the city. This company consists of state stakeholders or shareholders, but it also have representatives from academia, universities, NGOs, business associations and various other key stakeholders. They together decide the policy targets, whether it’s about urban transport or green areas or waste management and also how this transition will go.
It takes a lot of courage for the city because in a way you are giving away a little bit of your decision-making power since cities does not have a veto in these kind of meetings. So you have to give something in order to get something. But the great thing is that this way you can create a coalition, which is strong, it’s supported by everyone and it actually works. So I think that’s probably one of the best.