WP EN2012-04
Mobilizing cities towards a low-carbon future:
Tambourines, carrots and sticks
Isabel Azevedo, Erik Delarue, Leonardo Meeus
TME WORKING PAPER - Energy and Environment
Last update: March 2012
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Mobilizing cities towards a low‐carbon future: Tambourines, carrots and sticks Isabel Azevedoa,1, Erik Delarueb, Leonardo Meeusa a Florence School of Regulation, Robert Schuman Centre for Advanced Studies, European University Institute, Via Boccaccio 151, Florence, Italy b Mechanical Engineering Department (MECH‐TME), K.U.Leuven, Celestijnenlaan 300A, Heverlee, Belgium Abstract In the transition towards a low‐carbon future in Europe, cities’ actions are of major importance due to prominence of urbanization, both in terms of population as in terms of GHG emissions. So, we need city authorities to act locally, by using their competences as policy makers as well as energy users. However, cities are still not moving as fast as one might expect, indicating the need for additional incentives to prompt local action. Hence, the aim of this paper is then to perform an overview of external incentives that might lever cities to act and to highlight good practices that could be used in future initiatives. This paper first analyses the disincentives that local governments are confronted with, categorizing them in simple market failures, institutional failures and multi‐agent failures. The paper then presents a survey of initiatives at national and EU level to promote local action towards a low‐carbon future; grouping them into tambourines, carrots and sticks. We 1 focus on Austria, Germany, the Netherlands, and Sweden because they are pioneering EU member states regarding energy policies for cities. Keywords Climate change, Local governments, EU energy policy Introduction Within the EU, more than 70% of the population lives in cities (Eurostat, 2009); cities are also responsible for about 70% of the overall primary energy consumption, and this share is expected to increase to 75% by 2030 (IEA, 2008). Thus, taking the EU energy and climate objectives for serious, mobilizing cities to take action locally towards a low carbon future will be an issue of major importance for EU policy (Ostrom, 2009). Moreover, city authorities gather certain regulatory capacities that prompt the local level as an appropriate level for action (Salon et al., 2010). Indeed, cities’ authorities have relevant competences regarding the organization of energy supply and demand in cities. For instance, most municipalities have the responsibility on planning issues (including land‐use planning and management of resources), interfering thus with the main activities in a city and the use of resources (Dodman, 2009). Municipal authorities are also policy makers with strong competences, for instance regarding buildings (e.g. licensing) and the management of public transport. Additionally, they are themselves energy users (e.g. public lighting, municipal fleet, and public buildings), which gives them the opportunity to lead by example. Finally, municipalities are the administrative level that is closer to citizens, favoring the 2 understanding of the local habits and culture, as well as the adaptation of the city to the population needs. Despite the privileged position, cities are not yet fully mobilized towards a low‐carbon future, emphasizing the need to providing external incentives that prompt cities’ actions. Hence, the aim of this paper is to do an overview of initiatives that lever cities to move towards a low‐carbon future, at both EU and member state level. We categorize the initiatives into tambourines (i.e. “soft” policy mechanisms whose main objective is to raise awareness among city authorities on what is expected from them and how they can achieve it), carrots (i.e. enabling city authorities to act, going beyond tambourines) and sticks (i.e. regulating the performance of city authorities and sanctioning the lack of it), inspired by the IEA (2010) cities report. While this report includes case studies of cities on different continents, our contribution focuses on the EU and the pioneering EU member states Austria, Germany, the Netherlands, and Sweden. The paper is structured in three sections. The first section analyses the disincentives that cities authorities are potentially confronted with when taking action, in order to understand which barriers still need to be overcome. The second section illustrates the city authorities’ possible roles in taking action towards a low‐carbon future, by presenting the actions of pioneering cities from the EU member states we focus on in our overview. The third section then provides the overview of national and EU initiatives to mobilize cities. 1. Disincentivestolocalactiontowardslow‐carbonfuture
Local authorities can play a key role in the achievement of EU energy and climate targets and, considering the increasing demands on energy policy and the role of cities as centres of 3 consumption and production, its relevance will only increase (Keirstead et al., 2010). This section main focus is to describe the local disincentives that can hamper city authorities to take advantage of such opportunities. We distinguish between: 1) simple market failures, 2) institutional disincentives, and 3) multi‐agent problems. 1.1. Simplemarketfailures
City authorities are confronted with simple market failures from two distinct perspectives: they are confronted with these failures as public actors, i.e. they need to overcome them similarly to other local actors; and simultaneously they are confronted with them as policy makers, i.e. they also have to help local actors to overcome them through policy actions. The most relevant market failures that hamper local governments’ actions include information issues and problems concerning transition costs. In what concerns information, the main failures include the lack of localized information and the lack of public awareness on climate change issues, but also the insufficient qualification of staff personal for complex integrated tasks (Gillingham et al., 2009). These failures apply both at the level of decision makers as at the level of practitioners who must implement the actions. For instance, there is a lack of information regarding the opportunities available for building’s refurbishment (i.e. owners do not know which performance levels they should aim to when refurbishing), as well as a lack of expertise from the construction companies (i.e. they are not able to apply the most efficient solutions). Besides, there is a general lack of awareness from local actors regarding their responsibility on climate change issues, and the potential impact of their actions. Moreover, there are failures regarding transition costs. Indeed, actors are usually averse to high upfront investments that would payback in a longer‐term (Jaffe and Stavins, 1994), 4 which hampers the uptake of energy efficiency measures and renewable energy technologies; evidence from United States cities, e.g., shows that actors typically choose measures that allow recovering the investment no longer than five to ten years (Kousky and Schneider, 2003). Furthermore, within the urban environment, the uptake of certain technologies (as small‐scale renewable energy electricity generation) implies a higher upfront investment, so that the support cost can still be an issue for local governments. Also, it is commonly accepted that an inherent unwillingness to change hampers actors from changing suddenly their habits (or even from replacing their appliances before the end of their lifetime). 1.2. Institutionalfailures
Municipal governments are also confronted with the so‐called institutional failures, which can be grouped into “Not in my term” and “Not my business”. “Not in my term” refers to the constraints to local governments actions that are due to the limited resources available (Bai, 2007). Indeed, local governments have a diversity of priorities, as social issues, public health and ensuring economic growth, amongst other. Therefore, if climate action and sustainability is to be put on the agenda, it will have to compete with these other priorities, as the local resources (both human and financial) are limited (Bulkeley and Betsill, 2005). Moreover, since politicians are concerned over their re‐
election, they tend to think and act on the short‐term; actions and money spent need to demonstrate clear benefits and added value for their voters. So, all these issues combined turn city officials reluctant to go for measures towards a sustainable city, since this transformation might requires a high investment, competing with other actions that are considered to be priorities by local governments and, more importantly, by local voters. This 5 issue is especially relevant for relatively poor member states, where climate change will not become a priority if the citizens suffer from poverty, health problems and high rates of unemployment (Sippel and Jenssen, 2010). Moreover, “Not my business” refers to the constraints that are caused by the lack of expertise or competences from local governments (Bai, 2007). Hence, Mayors are not necessarily energy experts, while climate change and the corresponding wide variety of issues have a cross‐cutting nature. So, it is everything but straightforward to have the required expertise at all the levels. Additionally, competences regarding sustainability might also be limited, since they are subjected to decisions at higher levels of the administrative chain (Bulkeley et al., 2009). Subsequently, actions at the local level are also constrained by their limited regulatory capacities in relevant issues (such as public transport, renewable energy policy, etc). However, in certain specific cases, local climate actions might also be the best way to deal with other local problems or local policy priorities (such as health, employment or economic development).Moreover, reputation and gaining both national and international recognition can be incentives for pioneers, who then would also lead to business opportunities, involving several stakeholders. 1.3. Multi‐agentfailures
The divergence of interests between different stakeholders is not a barrier exclusive of actions on the city level; even so, in this specific case, since there are various activities that require the coordination of different actors from different sectors or with different functions within the same sector, the divergence of interests is a frequent obstacle to the sustainability of a city. Without a doubt, the coordination of actions between people with 6 different interests is complex; for local governments, this is extremely challenging since they have to coordinate their actions not only with different users or sectors but also with different policy levels. As made clear before, climate change is a transversal matter to the city structure and governance. However the administration of cities is traditionally divided in sectors that act more or less independently of the others and often are not aware (or do not pay importance to the fact) that their actions are imbedded of energy uses and therefore have consequences in the overall sustainability of a city. Hence, there are some situations where there is no coordination of different departments at the same level of power (e.g., incoherence between the energy and transport departments). Moreover, local governments also need to coordinate their policies with actions at other policy levels. The degree to which a city can implement local climate change relevant policies depends on “a city’s competence and authority to regulate climate‐relevant issue areas” (Alber and Kern, 2008). Local governments may have limited power and responsibility over key issues. For instance, some national policies go against certain local objectives, interfering in the achievement of local targets. So, in order to perform well at the local level, actual cooperation is required between the local government and other policy‐making levels, i.e., assuring that no conflicting signals or incentives are provided. Finally, climate action within the urban environment also involves several infrastructure services providers that might have diverging interests so that coordination is extremely complex. For instance, service providers that can enable a smarter use of energy (through smart metering, smart appliances, etc) and the demand for associated services are often 7 subjected to a regulated framework that discourages them to invest in the required innovative infrastructures (Meeus et al., 2010). 2. Pioneer cities and their actions to move towards a low‐carbon
future
Despite all the disincentives described above, there are still cities that are moving towards a low‐carbon future and that somehow stand out from the mass regarding their local actions. By looking closer at some these cities, we can show their potential role in the achievement of EU energy and climate targets. Hence, in this section we first briefly describe the cities included in the analysis to then provide examples of different actions performed by the selected local governments. 2.1.
Theselectedpioneercities
Currently, it is very difficult to rank cities and their authorities according to climate and energy performance, mainly due to the lack of local and comparable data regarding energy consumption and GHG emissions. Hence, within this section the aim is not to look closer at the best performing cities; instead we look at cities whose local specific actions stand out by showing a willingness to move towards a low‐carbon future. Also, the case‐studies presented here were chosen within the countries included in our national survey. The cities, as well as the rationale to select them, are presented in Table 1. 8 Table 1 – List of the selected cities and the rationale for their selection City / Country Rationale for selection
Main references Güssing / Austria
It was the first city in the European Union to
produce its entire energy demand (electricity,
heating/cooling, transport fuels) out of
renewable resources
IEA (2009)
Freiburg / Germany
City authorities have been moving towards local
sustainability since the 1970s, and this vision is
strongly supported by the citizens.
IEA (2009), City of Freiburg (2011)
Rotterdam / Netherlands
The city intends to become the most
sustainable port city of its kind, reducing by half
their GHG emissions by 2025.
CoM (2011), Jollands et. al
(2009), Climate Office (2011)
Väjxö / Sweden
The city council has unanimously decided in
1996 to become fossil fuel free and the local
government is now acting towards this goal.
IEA (2009), Gustavson et al.
(2006), City of Växjö (2011)
2.2.
Localactionstowardsalow‐carbonfuture
From previous experiences of different European cities, it is clear that local authorities usually have various opportunities to mobilize action towards the local sustainable development, using their competences as planners, policy makers and energy users. In what follows, some examples are presented of city authorities’ capacities to act, based on actions from the four selected cities (Güssing, Freiburg, Rotterdam and Växjö). Güssing In Güssing, the local government has had a key role on the energy and climate achievements of the city, being highly responsible for its energy self‐sufficiency and for the complete abandonment of fossil fuel based energy. Most actions were focused on promoting improvements within the publicly owned activities and goods, i.e. self‐governing actions. The implementation of such actions is relatively simple since it is involving areas in which the 9 municipality can make its own decisions and can control its own consumption (Alber and Kern, 2008). Moreover, the local government used these actions to transmit the good example to other suppliers and consumers; its innovative initiatives have been an attempt to perform a role model that others could then follow. Within the building sector, a mandate was introduced stating that all public buildings in town should stop using fossil fuels; and, simultaneously, the city authority (in partnership with funders, designers and developers) invested in several innovative demonstration plants that use local renewable energy sources to produce electricity. The success of these actions was then diffused through several information and promotion campaigns, raising the awareness of urban actors to the benefits of moving towards local sustainability. For instance, the municipality has developed several information programmes to promote the success of the different plants using renewable energy sources (as biomass and solar), as well as training programmes to educate and prepare qualified staff for further developments. Moreover, after achieving its objective – becoming energy self‐sufficient and abandoning fossil‐fuel based energy – the local government has also been making an effort to promote Güssing successes and to spread the knowledge and experience to other cities. Freiburg Freiburg has been a very active city in what concerns local actions towards low‐carbon for a long time. They have a quite diverse portfolio of actions, covering different areas of the urban environment. 10 In order to improve the energy performance of existing and new buildings, the local government released a mandate establishing stricter building codes than the existing at national level: all houses going under renovation must achieve the zero‐energy housing standard (65 kWh/m2/year), and all the new houses have to meet the passive house standard (15 kWh/m2/year). Additionally, to enable urban actors to follow the mandate, preferential loans were provided for insulation improvements of existing buildings, as well as for efficient energy supply solutions in new buildings, and subsidies were given for the renovation of old and privately owned buildings. Moreover, the city has quite ambitious targets regarding the use of renewable energy sources, and more specifically, the use of solar energy. Hence, the municipality has developed several initiatives that promote the use of solar energy: from mandates stating that new city facilities must consider passive solar designs in the planning, to providing a share of the municipal budget to install solar PV panels in the roof of public buildings. Freiburg authority, in partnership with the regional energy supplier Bandenova, offers rebates to energy customers which are willing to install PV systems. In what concerns transport and mobility, the city government has also used its capacities in order to promote the use of public transport and soft modes of transportation. Indeed, in Freiburg the local government took advantage of its urban planning competences to condition the use of private cars within the city’s historical part. Additionally, the city has been subsidizing the monthly passes of collective modes of transport in order to decrease their cost for people using those regularly, emphasizing the cost‐effectiveness of these modes of transport over the individual ones. Rotterdam 11 The city of Rotterdam is a port city and a large share of its economic activity is related to the harbour and to the industry sector. Even so, the local governments are willing to move towards a sustainable future by decreasing their emissions by 50% by 2025 and improving the citizens’ quality of life. Hence, within the previous years the city has already been promoting several measures targeting households and raising general awareness of the citizens to the importance of climate action by providing information at the local level and setting up subsidy schemes for several actions. Nonetheless, due to the relevance of industry and port activities in the city, the local government also felt the need to promote climate action among the stakeholders. In order to do that, the municipality has been using its competences as coordinator of different services to promote agreements with the industry and large businesses to increase their energy savings. Moreover, the city authority has also been promoting demonstration projects, in order to push industries to follow the example; e.g. currently there is a demonstration project for the exchange of residual heat between the industry and the city, favouring the re‐use of industrial heat. Växjö The city of Växjö, mostly due to the local actions, is one of the cities with the lowest level of CO2 emissions per capita (3.5 tCO2/capita.year). Local government has had a key role for the city’s accomplishment, by providing guidance and the necessary tools to urban actors. Indeed, the municipality believes that information and knowledge are key tools to promote the action of other urban actors, and so developed several guidance programmes: some providing energy advices to building owners, others regarding new buildings’ techniques, and even some teaching citizens to collect energy data in order to help them to improve 12 their consumption patterns. In order to involve more the citizens and to facilitate their collaboration, the city authority also implemented some municipal subsidies in order to enable building owners to refurbish their house and to help citizens to overcome the high upfront costs of electric vehicles. Moreover, the city authority considers it also crucial to lead by example, and so it has imposed stricter rules to their own activities and goods, expecting that other local actors might follow considering it a role model. For instance, in Växjö, the local authority established stricter building codes in order to promote the use of district heating for heating purposes by making compulsory the connection to the district heating network and by not allowing the use of conventional heating systems in public buildings. 3. Initiativestomobilizecitiestowardsalowcarbonfuture
There are several examples of initiatives that provide external incentives for cities to move towards a low‐carbon future. Within this section, we present a survey on different external incentives, at both EU and Member States level. 3.1.
Characterizationofthedifferenttypesofinitiatives
The methodology used in this section to characterize the different initiatives from the survey is based on the IEA report “Cities, Towns and Renewable Energy” (2010). The different initiatives were then grouped according to the type of incentives provided, being distinguished between tambourines, carrots and sticks. The policy mechanisms named as tambourines are “soft” mechanisms, whose main objective is to raise awareness among stakeholders (including city authorities) on what is expected from them and how they can achieve it. Information campaigns as well as educational 13 programs, training and workshops, can be included within this category. Moreover, there are also characterized as tambourines the initiatives that favour the promotion of best‐practices and networking. Carrots, going beyond tambourines, are policy mechanisms that enable different stakeholders to act by providing human and/or financial resources. There are different types of incentives that can be provided to urban actors (in general) and to city authorities, including: loans and guarantees, subsidies and grants, and even prizes. All these instruments have already been applied to promote cities’ authorities actions, some having higher social costs than others. Finally, the policy mechanisms which are named as sticks are about regulating the performance of stakeholders, as well as sanctioning the lack of it. When aiming to promote city authorities’ actions, the variety of such instruments is not very diverse, mainly due to the limited regulatory competences from higher policy levels. Even so, in countries where the local authorities are strongly influenced by the central government there are some examples of such initiatives, including regulations and mandates that impose the achievement of certain objectives. Nonetheless, most sticks at national and/or EU level only define guidelines that must be followed by the local authorities when planning their own strategies, instead of imposing strict regulations and sanctions. 3.2.
EUlevelinitiatives
Currently, there are several EU level initiatives that intend to incentivize city authorities’ actions to move towards a low‐carbon energy future. Within this subsection, a short review of the different initiatives is presented, taking into account their specific opportunities and potential. The different initiatives are classified as tambourines, carrots or sticks. 14 Table 2 – Initiatives to promote local action at the EU level Tambourines Carrots
Sticks JESSICA
CIVITAS
Managenergy
European Green Capital Award
Covenant of Mayors
ELENA
CONCERTO
European Regional Development
Fund
EPBD
Public procurement legislation
Intelligent Energy Europe
Municipal Finance Facility
Tambourines There are many initiatives at the EU level that can be labeled as tambourines. The CIVITAS initiative (2002) is for instance focused on urban transport systems, where the EU is supporting networking among city authorities with also demonstration projects and awards for best practices by city authorities. This is a very dynamic initiative that within the last years has been able to support demonstration projects for different modes of urban transport; it also constitutes an important source of information for most local authorities that are willing to improve the performance of their transport systems. Managenergy (2002) is a similar initiative that focuses on energy efficiency and RES in the urban environment. A significant accomplishment of this initiative was the promotion and development of local energy agencies all over the EU; currently there are over 400 public entities that support local governments to move towards local sustainability. The annual European Green Capital award has a general scope, and serves as an inspiration and promotion of best practices. 15 Finally, the Covenant of Mayors (2009) is one of the most recent initiatives of the EU. The initiative has in common with previous initiatives that it is essentially about networking among city authorities and spreading best practices. The main difference is that it requires a stronger commitment from the city authorities that join. This initiative represents also a big step forward on performance and progress reporting at the local level, since signing implies that the city authority commits to make a Sustainable Energy Action Plan (SEAP) which has a template that needs to be followed and that requires city authorities to perform an energy audit, to set targets, and list a set of actions to reach the targets (CoM, 2010). Signing also implies that city authorities accept to be monitored, having the obligation to report their progress in a regular basis. Currently, more than 3000 cities have signed the agreement and over 900 have developed their Strategic Energy Action Plan (SEAP), where they present their strategy to achieve over 20% CO2 emissions’ reduction by 2020. Carrots Despite the relatively strong commitment that follows from signing the Covenant of Mayors, close to three thousand Mayors have signed so that this initiative is already larger than its predecessors. This can be partly explained by the carrots (i.e. referred to as supporting structures in the context of the Covenant) that are exclusively available for city authorities that join, which include two dedicated programs designed by the European Investment Bank called ELENA and JESSICA (EIB, 2011). The Joint European Support for Sustainable Investment in City Areas (JESSICA) provides loans and guarantees (refundable) for the implementation stage of the action plan. The European Local Energy Assistance (ELENA) supports the implementation of the action plan by subsidizing part of the investment, and by providing technical expertise to city authorities to find financing elsewhere. 16 Besides the above, there are various funding schemes at the EU level that are also available to city authorities or urban actors in cities that did not join the Covenant. They include initiatives such as Intelligent Energy Europe Program (IEE, 2011), Municipal Finance Facility (for new Member States), European Regional Development Fund (ERDF, 2010), CONCERTO (2004), etc. Sticks City authorities cannot be directly regulated at the EU level, as in many Member States they cannot even be regulated at the national level. Nonetheless, there are some policies at the EU level that can indirectly impose relatively strong regulations on city authorities, such as minimum standards for public buildings (EU, 2010) and public procurement (EC, 2004a, 2004b, 2008). 3.3.
Nationalinitiatives
To perform the overview of national incentives to cities’ actions, we focus on four different Member States: Austria, Germany, the Netherlands and Sweden. All these Member States have implemented innovative policies to incentivize city authorities to act towards a low‐
carbon future; within these policies there are good examples of the three types of policy mechanisms, i.e. tambourines, carrots and sticks. Table 3 – Initiatives to promote local action at the national level Tambourines Carrots
Heizspiegel (Germany)
Third-Party Financing (Austria)
European Energy Award
(Switzerland and Germany)
Klimaatconvenant (Netherlands)
Sticks Urban Planning regulation
(Germany)
LIP (Sweden)
Wettbewerb Kommunaler
17 Klimaschutz (Germany)
KLIMP (Sweden)
Tambourines Within the selected countries, several countries have promoted the development of information centers and/or campaigns that offer independent and free energy efficiency advice to urban actors, both individuals and companies. In Germany for instance, the government developed an information program specifically dedicated to residential buildings, Heizspiegel. This initiative has been important not only to overcome some of the market failures within the building sector, but also to lever the coordination of different policy levels (since urban actors are informed about the buildings‐related policies at different levels) (Jollands et al., 2009). National governments can also give incentives to city authorities by promoting the best‐
practices with awards. For instance, the European Energy Award (EEA), resulting from the collaboration between Switzerland and Germany, is a certification and quality management scheme for city authorities CO2 emissions’ estimates. Here the city authorities are awarded according to the degree of implementation of possible improvement measures. Nowadays, there are several city authorities from different countries that became members of the EEA (EEA, 2011). Moreover, the German government also initiated another competition, Wettbewerb Kommunaler Klimaschutz,that rewards the most innovative cities in relevant climate actions. These cities are innovative in the sense that they use competition to mobilize municipalities to take action, promoting at the same time the diffusion of best practices. The participants, 18 winners or not, have reported a significant amount of emissions’ reduction; it is estimated that the submitted projects are responsible for a reduction of about 580 thousand tons of CO2 emissions per year (Jollands et al., 2009). Carrots There are several examples of national policies that aim on enabling local governments to act, by providing financial support or human resources. Nonetheless, the initiatives differ significantly from country to country. In Sweden the government has implemented large‐scale state‐funded investment programs that give grants to local environmental initiatives, LIP (1998‐2002) and KLIMP (2003‐2008). Both programs are a combination of unconditional subsidies and rewards linked to output, since the grants are given to the municipalities that present the best strategies (according to the quality of their climate strategy, distribution of knowledge, and planning of follow‐up work and evaluation) (OECD, 2009). This initiative is innovative in the sense that it relies on the willingness and capacity of different local actors (including city authorities, locally based economic actors and citizens), promoting the coordination among them (Baker and Eckerberg, 2007). The competitive design of this initiative counteracted the cooperation between municipalities but, at the same time, it worked as an incentive to develop strong proposals and clear strategic plans. Though ambitious, most proposals lacked innovation during the first phase of the program, which according to experts resulted from the fact that subsidies were not enough to cover the risk. Currently, the financed projects are expected to reduce annual GHG emissions by over 1 million ton of CO2 equivalent (Granberg and Elander, 2007). 19 Alternatively, the Dutch government opted by providing human resources, developing a more centralized approach (Gupta et al., 2007). Klimaatconvenant is a framework for cooperation between the national government and provinces and municipalities, where the participating cities are subjected to an energy audit and subsequent strategy which is fully developed by an independent entity. The identification of the local targets and the activities to be done by a third‐party is quite pioneering; plus, this policy promotes an integrated approach, involving various actors from different policy levels and also private companies. The CO2 emission reduction due to the first phase of this program is estimated to be around 900 thousand tons (Jollands et al., 2009). In Austria, the government also developed a policy involving third‐parties, but in this case to provide financial support. Third‐Party Financing is a program created by the regional government of Upper Austria to link municipal energy efficiency projects with financing, in order to overcome the barrier of upfront investment costs (Jollands et al., 2009). The innovation of this program lays in the creation of a standardized procedure for energy performance contracts that can be applied to all participating municipalities and ESCOs. Sticks Even if it is possible in most Member States to implement strict regulation for cities’ climate performance, it is clear from our survey that in general national governments opt by only defining planning guidelines at the national level. However there are few exceptions; in Germany for instance, the central government created a regulation requiring local authorities to create urban plans regarding land use and buildings, and the regulation even specifies the plans’ required contents (Deangelo, 1998). 20 Conclusion A combination of simple market failures, institutional failures and multi‐agent failures explains why cities are not yet fully mobilized towards a low carbon future. However, there are several successful experiences with initiatives at national and EU level to promote action at the local level. A combination of instruments has typically been used with a focus on tambourines and carrots types of instruments, rather than sticks. This can be partly explained by the lack of authority of higher policy levels over energy and climate issues at the local level. In our overview of existing instruments, we found the Covenant of Mayors as one of the most noteworthy tambourine type of instrument. Indeed, despite the demanding requirements on information gathering and progress reporting (considering that it is a voluntary agreement), the Covenant has been able to gradually mobilize more and more cities to take action. Moreover, this is an EU level initiative that promotes an integrated approach, and its reporting rules are a significant step towards the diffusion of best‐practices and a future benchmark of cities’ performance. We also found that there is a rich experience with carrot type of instruments at national level. The Swedish initiative is an interesting example of how an element of competition among cities can be introduced in the allocation of public funding based on actions they propose. The Austrian and Dutch experience provide interesting examples of an alternative approach that can be followed at national level to support city actions. Instead of relying on cities to propose projects and compete for public funding, here, the national level has given support to third parties (ESCOs or independent energy auditors) to assist cities in the design and implementation of energy action plans. 21 Acknowledgements The research for this paper has been partly conducted in the framework of the EU FP7 funded project THINK. 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