April 2021 Connected Places The Path to Net Zero in Latin American Cities The UK’s Capabilities and Contributions Supported by FCDO and UKRI 2 The Path To Net Zero In Latin American Cities The Path To Net Zero In Latin American Cities 3 Santiago, Chile Context The last five years have seen cities around the world become decisive drivers and venues of innovation in pursuit of net zero and clean growth. Cities are now recognised as the dense concentrations of people, assets and systems where it is possible to enact transformations at scale and achieve essential economic and social outcomes at the same time as targeting climate change. The quest for a green recovery from Covid-19, coinciding with COP26, is adding stimulus to more cities to translate net zero pledges, plans and ambitions into real world action. To know what kinds of interventions are possible and desirable in cities, and the roles the UK can play in trading and enabling them, depends on a deeper grasp of where cities are at and how they can innovate. This report, which combines the findings from the FCDO-supported project “Leveraging UK Expertise on Net Zero in Pacific Alliance Cities” and the Innovate UK-supported webinar “Latin America Net Zero Urban Innovation Challenges and Opportunities”, explores the potential for the UK to support the different paths that cities may go on towards net zero based on their individual starting points, their span of control, and the priorities they now have to address. 4 The Path To Net Zero In Latin American Cities The Path To Net Zero In Latin American Cities 5 The analysis is focused on Latin America strategies tend to be less developed than in • Incumbent businesses, including start- and informed by urban performance data, other systems of cities. There are a growing ups and SMEs, are starting to recognise insights from SMEs and UK export missions, number of capable innovation partners Villavicencio, Colombia their role in leading a net zero transition, and practitioner recommendations in but fewer areas of mature local domestic especially in cities dominated by particular the UK and in the region. It is designed specialisation in sectors that can immediately companies or sectors. The demonstration to complement the rich body of work accelerate to net zero. This presents a lot of capacity and convening power of industrial undertaken by multilateral organisations, opportunity – and urgency - for long-term companies and private infrastructure and city networks and others on Latin American partnership and capacity development. energy providers is especially significant cities, by focusing on what specifically the The interviews and research carried out for in contexts where city governments have UK’s companies, conveners and cities can this work reveal that in a global context, limited influence contribute. Its results help to provide a Latin America’s cities’ net zero journey stands In the next cycle there is a shared recognition broad understanding of the current net zero out in a number of ways: that to achieve scalable net zero impacts, the challenges faced by Latin American cities and • The profound role of natural assets region’s cities need support to better convene, how UK expertise may help to address them. in their wider region, which shapes the collaborate and co-ordinate, especially Latin America is a critical region for possibilities and resources for net zero with business, citizens, academia and civic the world’s net zero ambitions. It is 80% action and climate resilience. Protection, leadership. Services and innovations that build urban, and a continent where unplanned utilisation and smart management of the collaborative capacity within cities, and and underpowered cities have resulted deserts, coasts, wind, forests, wetlands, more people with the skills and influence to in many urgent mitigation imperatives in food basins, and biodiversity – including act as an effective interface, are at the heart of transport, energy and waste. The gateway through improved technologies, services what many cities seek. cities such as São Paulo, Mexico City and and management - are high priorities in More partnership-led institutions and Bogotá continue to lead the charge in terms these nature-rich cities, especially given financial tools are in demand – from municipal of demonstrating what is possible and the high risks of natural and man-made companies to business improvement promoting potential opportunities. At the disasters which result in significant human districts to value capture. Gaps in financing, same time, diversification away from the and economic costs each year benchmarking, real-time management and region’s megacities continues and there is • The urgency to shift to more compact performance monitoring related to net zero more recognition that medium sized cities development. Latin American cities all need to be closed rapidly. The pivot to hold the key to clean growth. are entering a critical cycle where they innovative procurement practices, such as These ‘middleweight’ cities, from Antofagasta need to demonstrate the effects of the challenge-led procurement approach, can to Arequipa and from Santa Marta to São transport-oriented development, begin underpin efforts to engage start-ups and SMEs, Jose dos Campos, are much less locked in modal shift away from the car, and shift create a more level playing field, and generate to inefficient path dependencies, and have towards effective metropolitan planning. more opportunities for local actors in the the agility to change and eagerness to Electric vehicles play a role in a more agile race to net zero while also providing a specific partner up. A lot of groundwork and piloting urban model, alongside public transport mechanism to match specific local needs to has been done in the last decade to create expansion, multi-modal stations, mobility potential expertise in a transparent way. an environment where long term plans, as a service, and much improved facilities climate plans, and effective financial and incentives for pedestrians and cyclists instruments, are all more customary in supporting active mobility Latin America’s mid-sized cities, although • A communication task with big institutional weaknesses and basic communities is essential in high-division, infrastructure gaps persist. low-trust cities where information flow from As a group, Latin American cities are striking authorities to citizens is often ineffective, in that governance deficits mean that despite and carbon literacy is low. Policies which high levels of awareness, the scope and generate a more participative approach operationalisable ambition of their net zero with citizens should be encouraged 6 The Path To Net Zero In Latin American Cities The Path To Net Zero In Latin American Cities 7 The UK’s potential contribution plan, establish effective localised cost-benefit analysis, unlock green public spaces, as well The UK was the first nation to industrialise as build research partnerships on agendas Contents and urbanise, and among the first to such as circular economy and hydrogen. experience de-industrialisation. As a source Appetite is very high for UK companies’ of solutions and innovations, the UK is integrative expertise and technology, 1. Leveraging UK Expertise to Address Net Zero 6 on a path to becoming a distinctive net zero the capacity building of its experts and Challenges in Latin American Cities market because of its: institutions, and UK cities’ ambitious 1.1 Project summary 8 • World-leading sector-specific capability in leadership in terms of how to decarbonise 1.2 Medium-sized Latin American cities in regional perspective 13 areas essential for financing and building systems and raise the profile of low carbon 1.3 The opportunity to leverage UK expertise in the journey to net zero 25 net zero cities in a more integrated way agendas. • Competitive ‘first mover’ advantage in The UK will itself need to innovate in order 2. Moving Forward and COP26 40 niche technologies and place-based to make the most of its potential to drive innovations that can be scaled globally significant trade and reputational advantage Appendices 42 to city governments and users from its net zero activities abroad and at A – Examples of UK expertise and leadership in the journey to net zero 42 home. Practitioners observe that the UK’s net B – Data sources underpinning the national ‘systems of cities’ 46 • Know-how around systems integration, zero export and scalable expertise potential performance snapshots breaking down siloes, and the regulatory may in future benefit from: and policy adjustments that spur change C – Webinar Summary and Statistics 48 1. A co-ordinated system to alert SMEs to References and endnotes 50 • Leadership in UK cities to promote low non-UK language advertised opportunities, carbon innovation and internationalisation and to support them to respond efficiently despite significant institutional deficits and place fragmentation 2. Ongoing support to UK cities to build capacity and resources to mobilise around UK SMEs have particular expertise in net zero net zero and showcase progress in an niches such as smart streetlighting, lithium- internationally relevant way to overseas ion battery storage, electric vehicle charging decision makers and investors infrastructure and subscription models, and mobile ticketing and payments-as-a-service. 3. More structured support to share Many capabilities that have comparative UK global expertise and to combine advantage in emerging economies are in the different sectors that contribute to the ‘softer’ domains of regulation, behaviour a low-carbon system into a smart incentives, systems engineering and integrated offer integration. UK companies and joint ventures 4. Efforts to design the UK ‘package’ of net can play a leading role in helping cities to zero expertise specifically to complement design and deliver less siloed systems and Authors existing capabilities in cities, and to link overcome pervading fragmentation. to supply and delivery on the ground Dr. Tim Moonen – Co-Founder and Managing Director, The Business of Cities In general, the biggest priority areas Jake Nunley – Head of Research, The Business of Cities 5.