The Economic Case for Low Carbon Development in Rapidly Growing Developing World Cities: A case study of Palembang, Indonesia.

Where costs or risks are higher, evidence is lacking or supporting institutions are less developed, policymakers can struggle to make the case for low-carbon investment. This is especially the case in developing world cities where decision-makers struggle to keep up with the pace and scale of change. Focusing on Palembang in Indonesia, this paper considers the economic case for proactive investment in low-carbon development. We find that a rapidly growing industrial city in a developing country can reduce emissions by 24.1% in 2025, relative to business as usual levels, with investments of USD405.6 million that would reduce energy expenditure in the city by USD436.8 million. Emissions from the regional grid could be reduced by 12.2% in 2025, relative to business as usual trends, with investments of USD2.9 billion that would generate annual savings of USD175 million. These estimates understate the savings from reduced expenditure on energy subsidies and energy infrastructure. The compelling economic case for mainstreaming climate mitigation in this developing country city suggests that the constraints on climate action can be political and institutional rather than economic. There is therefore a need for more effective energy governance to drive the transition to a low-carbon economy

Exploring the Economic Case for Early Investment in Climate Change Mitigation in Middle-income Countries: A case study of Johor Bahru, Malaysia

The assumption that climate mitigation can only be afforded at a particular level of income is implicit in global climate negotiations. This suggests that middle-income countries may reach a tipping point in their development process where low-carbon investment becomes more viable. In order to avoid dangerous levels of climate change, this tipping point needs to be brought forward in time: upper-middle-income countries are already responsible for 37.8% of global CO2 emissions. We explore the scope for large-scale investment in climate mitigation in Johor Bahru, a fast-growing industrial city in Malaysia. We find that the city could reduce per capita emissions by 10.0% by 2025, relative to 2014 levels, through cost-effective investments. If the returns could be recovered and reinvested in low-carbon measures, Johor Bahru could reduce per capita emissions by 35.2% by 2025, relative to 2014 levels. This result suggests that the tipping point may be a function of political will and institutional capacity as well as income. This has substantial implications for global climate policy discussions, particularly the opportunities and responsibilities of middle-income countries. If comparable savings can be delivered across cities in middle-income countries, this would equate to a reduction in global emissions of 6.3% with the exploitation of cost-effective options and 11.3% with the exploitation of cost-neutral options. Investing in economically attractive low-carbon measures could also provide cities in middle-income countries with an opportunity to build the political momentum and institutional capacities necessary for deeper decarbonization