To prepare regions and cities for the transition to a climate-neutral and circular economy, the OECD Centre for Entrepreneurship, SMEs, Regions and Cities (CFE) and the European Commission’s Directorate General for Regional and Urban Policy (DG REGIO) held five high-level expert workshops on “Managing Environmental and Energy Transitions for Regions and Cities”. The workshops gathered academic and policy experts to share today’s frontier thinking and practical examples of regional and local policies to advance these transitions. This report summarises these workshop discussions, building on background papers prepared by academic and policy experts.

The report highlights multiple and diverse pathways for regions and cities to manage the transition to a climate-neutral and circular economy. Many OECD member countries have adopted the target of net-zero GHG emissions by 2050 to contribute to the objectives of the Paris Agreement. The circular economy addresses multiple unsustainable environmental impacts of economic activity. Regions and cities play a central role to drive the transition, including in energy supply, transformation and use; the transformation of mobility systems; and land-use practices. Many well-being gains from transition, such as improved health outcomes, accrue locally, and therefore can further motivate regions and cities to take action. The transition will unevenly affect citizens, regions and sectors. The diversity of conditions and potential impact on people, places, and industrial sectors needs to be acknowledged and incorporated into policy decisions.

Climate change, the loss of biodiversity, and unsustainable material consumption will pose unique challenges to urban and rural areas alike. Urban areas contribute substantially to climate change through their own GHG emissions and their materials consumption, and strongly feel its impact. Rural areas are vulnerable to environmental pressures because of their limited economic diversity, larger shares of vulnerable populations and larger dependence on natural resources in economic activity. The COVID-19 pandemic reveals the importance of preparedness and early, decisive action to mitigate risks to human-well-being and minimise economic costs. This involves systematic transformations of unprecedented depth and breadth. The COVID-19 pandemic illustrates some of the stakes and can galvanise citizens, economic agents and governments at all levels into action.

The workshop findings summarised in this report highlight that preparing regions and cities for the environmental and energy transition requires strong investment decisions, scaling-up and deploying sustainable technologies and practices. Accelerating innovation across electricity, transport, buildings, agriculture and other socio-economic systems is part of the answer. These technological and infrastructure shifts need to occur in the context of transformations in behaviour, knowledge, lifestyles and economic activity. A place-based approach to make sustainable use of local assets is central. The transition challenge for regions and cities becomes even more acute when considering the social justice issues surrounding equity, vulnerability, fairness, and legitimacy – despite the clear social co-benefits, such as displaced pollution and reduced climate change. With environmental and energy transition comes many economic and social opportunities and well-being benefits for regions and cities. However, it also presents risks and trade-offs. Regions and cities will reap the rewards and minimise risks and trade-offs if they promote early action, take a place-based perspective to human well-being and advance with a just transition to climate-neutral and circular economies.

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