More than 600 Canadian municipalities have declared climate emergencies and more than 200 have set greenhouse gas emission targets. Internationally, the climate budget adopted by Oslo, Norway in 2017 is one example of a cutting-edge decarbonization policy initiated by a local government. This instrument, now implemented in many other Norwegian cities, links carbon accounting to the annual financial budget processes.

Canadian local governments are considering similar approaches, but key political dimensions of decarbonization must be considered to advance the debate. By learning from the climate budgets adopted in Norwegian cities, our local governments can put decarbonization and the elimination of fossil fuel use at the centre of their municipal decision-making.

Aligning municipal emission targets with climate actions

In 2017, Oslo implemented its first climate budget to support the city’s goals of reducing emissions by 95 per cent by 2030, compared to 2009 levels. Although the city had already been making efforts to reduce emissions, the climate budget offered a new approach. It consisted of aligning the city’s decarbonization efforts with the financial budget and creating an annual reporting and monitoring process for climate actions. Under this arrangement, municipal departments and agencies are required to evaluate the climate impacts of their operations annually and propose actions that reduce direct and indirect city-wide greenhouse gas emissions.

Essentially, Oslo’s climate budget innovates in two ways.

The first is about mainstreaming decarbonization into decision-making across municipal departments and agencies, even where climate change mitigation has not historically been a central issue. In Oslo, for instance, transportation, construction and waste management contribute about 90 per cent of total emissions, and these sectors have been engaged in the climate budget’s reporting and monitoring process. However, schools, social services and infrastructure maintenance sectors are now also taking action to achieve the city’s climate goals. By creating a system of reporting and accountability linked to existing budgeting processes, decarbonization is becoming integrated into everyday decision-making in the city.

The second innovation is about transparency due to the reporting and monitoring aspects of the climate budget. Fundamentally, Oslo’s climate budget works by establishing emission ceilings that become progressively more stringent over time until the city reaches its 2030 target. With municipal entities engaged in reporting and monitoring their emission reductions or lack thereof annually, Oslo is now putting decarbonization in the spotlight. In the same way that cities aspire to keep their public finances on track and available to the public, the budget offers renewed transparency on climate change mitigation.

As municipal entities seek to remain within annual emission ceilings, Oslo is creating ripe conditions for decarbonization that are not exclusively based on the adoption of new technologies, such as electric cars and heat pumps for buildings. In fact, the engagement of municipal departments and agencies through the climate budget led to the adoption of new laws, regulations and disincentives for the use of fossil fuels. Oslo has also focused on creating new financial and institutional capacities for decarbonization by relying on coalitions with other cities and co-operation with the private sector.

Oslo has also pioneered a new procurement policy that prioritizes suppliers of fossil fuel-free and zero-emission services and products. Under this policy, the city embraced a role pushing the private sector to provide technologies and procedures that did not exist in the market and had to be adapted to comply with the new rules. For instance, when this policy was applied to the construction sector and development sites, electric excavators and other heavy machines had to be swiftly adapted with significant co-operation from construction companies.

Recently, Oslo and other Norwegian cities came together to advocate for changes in national spatial planning laws and regulations. According to these cities, they still face several barriers set by the Planning and Building Act to decarbonization in cities. Among the changes requested by local governments, municipalities want to have the legal authority to introduce zero-emission zones. Other changes requested by cities include making climate goals the leading tasks of transport agencies.

Canadian cities moving forward

Substantial evidence suggests that global climate action has been lagging due to various challenges, including inadequate climate governance, the fossil fuel industry, geopolitics and economic policy – casting doubts on the capacity of countries to deliver on decarbonization pledges. According to Canada’s current nationally determined contribution (NDC), actions taken at our federal level are inconsistent with the Paris Agreement targets.

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City-led climate actions face many of the same challenges. For example, despite the reported decline in emissions in Oslo, the current mitigation efforts proposed under the 2023 climate budget still fall short of the city’s mitigation targets. However, the climate budget has changed how the lack of progress is addressed in the city. Oslo does not need to wait until 2030 to know where stronger actions are needed to achieve its targets. Moreover, since its first implementation, climate budgets have been adopted by other medium-size and small-size Norwegian cities, including Asker, Arendal, Bærum, Bergen, Fredrikstad and Hamar. Much like Oslo, these cities have found a way to mainstream decarbonization into their municipal budgets with different opportunities and challenges for climate action.

Canadian cities can learn from the climate budgets adopted in Norwegian cities and take leadership in local decarbonization. Three possibilities for the budget can be explored to achieve these goals.

Retrofitting Canada’s existing buildings

The push for nimble change in our cities

First, cities in Canada can learn from the climate budget implementation that led to mainstreaming decarbonization in decision-making processes. In the same way that financial conditions are essential to deciding on the everyday functioning of municipalities, decarbonization must occupy the centre of municipal operations in Canada.

Second, actions pioneered by Norwegian cities can serve as a blueprint for Canadian cities. The new Oslo procurement policy, for example, involves a sophisticated arrangement of financial capacities, laws and co-operation with the private sector. In this way, municipal climate budgets can work as an instrument for creating innovative conditions for decarbonization.

Finally, Canadian cities of all sizes must move forward in this task. While Oslo is the pioneer, cities of all sizes and with different financial conditions in Norway are now implementing climate budgets, demonstrating that decarbonization is not only a technological problem that requires financial resources available only in large cities.

All Canadian cities must take note of these possibilities for climate budgets to strengthen their decarbonization efforts.

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Guilherme Baggio
Guilherme Baggio is a research assistant at the Climate Policy & Action Lab in the department of physical and environmental sciences at the University of Toronto. He works on decarbonization in cities.
Laura Tozer
Laura Tozer is an assistant professor of environmental studies in the department of physical and environmental sciences at the University of Toronto. She researches climate change and urban sustainability policy.

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