Engaging subnational government closely in the development of new investment opportunities helps them see the economic value of green growth; secures buy-in from political, business and community leaders; and builds capacity to finance and deliver green investments. National government can play a key role in engaging subnational governments by setting targets, providing incentives and devolving powers.
In the United Kingdom, providing incentives and conditions for private sector success at the city level contributes to transforming the way local leaders drive economic development. In many English cities, local authorities such as Leeds and Birmingham City Councils are using newly devolved powers to find innovative ways of financing the transition to a low carbon economy (see Case 5). UK “City Deals” build on lessons of successful urban policy across the world, including: (a) putting cities at the driving seat of their economic development; (b) partnership and collaboration between government, cities, neighboring authorities, and local business leaders; and (c) providing incentives and conditions for private sector success (UK Government, 2011). In general, subnational governments are well positioned to make investment in cities for high returns as well as multiple economic, social, and environmental benefits, such as retrofitting of existing building stock, energy efficiency and use of renewable energies in buildings, and energy efficient lighting, offers a huge energy saving potential (UNEP, 2009).