Checking In with Initiative Progress

How Far We've Come (as of September 2018)

Investing for Success

TOTAL FUNDING: US$ 3.9 million CO-FINANCE UNLOCKED: US$ 9.7 million COMMITTED INVESTMENT: US$ 215 million PROJECT INVESTMENT REALIZED: US$ 22 million

By the Numbers

CITIES IN INITIATIVE: 36 INITATIVE PARNERS: 45 PROJECTED CO₂ EMISSION REDUCTIONS: 290,000 tCO₂/year

Heating and cooling is vital to human existence. We don’t need these systems for comfort only. They are often a question of survival: regulating temperatures in extreme weather conditions and keeping our vaccines, medicines and food viable for long periods.

But we face a problem. Heating and cooling consumes half of global energy, with exponential growth expected. In 2015, renewable energy accounted for only 10.3 per cent of heating. The dependence on fossil fuels brings obvious climate implications. If want to decarbonize the energy system by 2050 in line with the two-degree Paris Agreement target, we need to act now to sustainably heat and cool our buildings and cities.

The good news is that cities provide the population density, economic activity and intellectual capacity for change at scale. They contain over half of the world’s population, consume over two-thirds of the world’s energy and account for more than 70 per cent of CO₂ emissions. Cities can help meet their energy efficiency, zero energy building and renewable energy objectives by using modern district energy.

Launched in 2014, the District Energy in Cities initiative is a partnership that aims to help cities take advantage of this proven technology. Thirty cities and two cities networks are engaged in the Initiative, which provides capacity support – from mapping and planning to business models and feasibility and donor matching.

What is District Energy?

Attracting Investment for Clean Efficient Heating in Banja Luka

After three years of development, the Initiative’s first pilot project in Banja Luka (Bosnia and Herzegovina) is operational. The 49MW biomass boiler plant, which was added to the existing 35-year-old local district heating network, will reduce carbon dioxide emissions by 90 per cent, amounting to 45,000 tonnes each year.[1] The retrofit is also expected to save up to EUR 900,000 annually as a result of reduced expenditure on fuel oil – money which can be reinvested in local services. There will also be a health benefit to the local population through a significant improvement in air quality, as the upgrade cuts sulphur dioxide emissions by 94 per cent.[2]

“As a city, we are fortunate to have our district heating system – pipes under our streets through which we can deliver on the heating needs of over 22,00 users, citizens and businesses at the lowest cost,” said Igor Radojičić, Mayor of Banja Luka. “The intervention of the District Energy in Cities Initiative and partners enabled us to overcome long-standing barriers to modernizing our district heating system and attract the international investment and expertise needed.”

In Banja Luka, the Initiative worked the European Bank for Reconstruction and Development (EBRD) from the outset to ensure that plans and assessments confirm with the requirement of finance providers. The Initiative also worked with the CTCN, private sector, local stakeholders, and the city authority to build consensus and trust on planned interventions.

Engaging relevant and diverse stakeholders from the beginning proved vital in turning uncertainty on the district heating network’s future into an agreed financing plan and new business model and leading the project to market with a EUR 8.7 million investment loan from the EBRD.

Helping to reduce greenhouse gas emissions and improve air quality in Chile

In 2017, Chile launched a national district energy strategy, with the support of District Energy in Cities, focusing specifically on cities with high-levels of air pollution. So far, 10 cities have joined the Initiative looking for support to address their air quality challenge through district energy. The initiative has supported Temuco, a city of 290,000 inhabitants located about 700 kilometres south of Santiago, in developing a business model for a local district energy system. Temuco’s air quality is the third-worst in Chile, with pollutant concentrations five times higher than World Health Organization standards.[3]

The District Energy in Cities Initiative works with city planners and local governments to gain experience and develop capacity in the tools and expertise needed to incorporate district energy into long-term city plans and neighbourhood design. In its work with Chilean municipalities, District Energy in Cities invited municipalities with similar operational conditions like Vancouver (Canada), Sonderborg (Denmark) and Gothenburg (Sweden) to a knowledge exchange workshop in Chile.

Fulfilling the Initiative’s potential

To scale-up district energy systems worldwide, the Initiative is developing standardized guidance and tools to help cities in the assessment, planning and procurement of projects. The Initiative will also build on existing collaborations with governments to advocate for the inclusion of district energy in national energy plans and so create enabling policy and regulatory frameworks.

Transformations to low-carbon and resilient urban hubs need to be tailored to fit the local context. Project development requires close collaboration between all relevant stakeholders. As cities in emerging markets and developing countries turn to district energy, the Initiative is ready to direct international best practice gained over decades to where it is needed and export lessons learned from pilot projects to neighbouring cities and countries.

Building on the existing work of District Energy in Cities, phase two of the partnership will work to harness the full potential of renewables, which, along with efficiency gains, is crucial to help cities transit to low-carbon models. As an evolution of the work on district energy, UN Environment plans to promote the co-existence of distributed renewables, mini thermal grids and renewable grid integration.

The Initiative has shown that vertical integration across all levels of governance works. It has demonstrated the power of partnership with banks and investors. There is huge potential for roll out across the globe if development banks and international finance institutions create a ‘preparation or readiness fund’ for District Energy projects in cities. By providing technical assistance and building capacity, District Energy in Cities has shown how policymakers, practitioners, researchers and other stakeholders can work together to support cities in developing business models and projects that improve people’s lives without damaging the climate.