Cities provide national governments with an opportunity to accelerate the low-carbon energy transition. Urban areas account for more than two thirds of the world’s final energy consumption. A rapid expansion of electricity supply is needed to meet the aspirations of current and future urban residents, particularly with electrification of cooking, heating and transport. Urban residents, firms and governments are often the first to experiment with new technologies, transforming the production, distribution and consumption of energy.

This paper explores how two megatrends – decentralisation and digitisation – are already restructuring energy markets, and could be harnessed to support decarbonisation (together known as the three Ds). Cities are at the forefront of this effort. Through ten case studies – Adelaide, Austin, Cape Town, Dar es Salaam, Hamburg, Kampala, Kitakyushu, London, New Delhi and Shenzhen – this paper considers the diversity of potential energy transition pathways that are available in cities. It then highlights key considerations for national governments looking to craft cost-effective, low-carbon energy policies, including the importance of building in flexibility, the scale of the potential value shift, the opportunity for new business and regulatory models to emerge, and the importance of collaboration across sectors and levels of government.

This paper was created in partnership with Energy Unlocked, the Overseas Development Institute and the Stockholm Environment Institute.