Copenhagen is one of a growing number of European cities prioritising climate change action.
For local governments, councils and city administrations across Europe, climate targets encompass retrofitting buildings to make them more energy efficient, or implementing new low-carbon transport, both of which are huge infrastructure challenges. One the biggest hurdles in getting such projects off the ground is raising the initial finance.
Copenhagen’s goal is to become CO2 neutral by 2025. Nearly three-quarters of the emissions reductions the city wants to make involves the production of heat and electricity. While investing in green energy production has been relatively easy because of the support from energy utility companies, raising the funds to make buildings more energy efficient and rolling out electric car infrastructure is proving more difficult. Municipal funds for low-carbon projects are limited, particularly, when the City of Copenhagen must continue to invest in public services like welfare, old people’s homes, and schools.
Klaus Bundgaard, an energy specialist at the City of Copenhagen’s Climate Department, is one of a growing number of city players seeking novel ways to unlock finance for low carbon projects. The Daily Planet caught up with him, following the Climate-KIC Green Finance workshop in the city of Gothenburg in March.
DP: Some cities like Gothenburg have pioneered the use of green bonds for their low carbon projects. What are the green finance options that Copenhagen is looking at?
KB: Green bonds will probably not become that relevant for Copenhagen. [Instead] we already have some kind of bonds within our utility companies. They can invest in energy supply through a government municipal fund called KommuneKredit. However, green bonds can be really interesting when you look into energy efficiency and mobility. They are two areas that we struggle to finance. As far as I understand, most of these investments in energy efficiency with green bonds are for new buildings, while we have a higher focus on creating energy reduction on existing building stock. That’s why we struggle because in the end when we are developing various buildings in Copenhagen they need to live up to the building regulations, which are quite advanced. With the transport sector, we invest [and have funds for] bike lanes, but it’s more in private mobility like electric vehicles and these kinds of things that we struggle with.
DP: What sort of low-carbon projects has Copenhagen been able to finance up until now and how?
KB: [For low carbon energy supply and production] we are working very close together with utility companies who can make investment through the government municipal fund KommuneKredit. Slowly our combined power and heat is being converted to biomass. We are also seeing that the district heating is being expanded. We are doing a project with sea cooling instead of using electricity. That’s also somewhat decent investment our utility companies can do through the municipal fund.
With things like bike lanes, we can actually get the money from the politicians because bike lanes are such important infrastructure of Copenhagen, probably more than the roads. You will always get this kind of money when it’s such an huge part of the infrastructure. Of course we would also sometimes like to get more money for it so we can expand and get more cyclists on bicycles and out of cars. One of the reasons we’re trying to work together with Climate-KIC is to have more focused and innovative thinking on how to finance new projects — that’s why we’re working together on our annual conference so we can actually find some new solutions for how to finance certain initiatives.
DP: What were your key takeaways from the Climate-KIC green finance workshop in Gothenburg?
KB: The thing that was really interesting to hear, that we had also experienced in our municipality, was that when a municipality gets a certain size, then it’s more difficult to speak with different departments. I don’t work closely with our financial department. In fact, I sit in our urban development centre, where all of us are focused on how the city can develop, both mobility wise, and also with climate and climate adaptation and all these kind of things. Of course, we work closely together with other parts of the municipality, but not specifically the financial department.
I think we could have a closer collaboration there because they are quite important when you want to start up new projects and so on. I think that was very interesting with the Gothenburg case. I think there was [just] one level between the departments. It’s because they were meeting, and talking about finance and sustainability, that they created the green bonds. I think this is a great thing for Gothenburg to do.
The city of Copenhagen is currently working with Climate-KIC on the topic of green finance for its annual CPH Climate Solutions conference. Stay tuned for more details.