While national governments are responsible for designing policies across a range of areas, it is at the local level that many policies ultimately take effect and where their competing demands are integrated. Devolving powers to subnational government can encourage innovation, local leadership, and tailored local initiatives. In addition, transferring decisions on revenues and expenditures to lower administrative levels may result in more efficient resource use adapted to local conditions and with active stakeholder participation.
Regulatory approaches that allow subnational entities to go further than the national regulation can be a powerful tool, as there may be stronger incentives for ambitious action and fewer barriers at the subnational level. In some cases, subnational governments have even implemented regulations stricter than that of their central governments.
The US state of California (Case 2) provides an example where the federal government allowed them to adopt more protective air quality standards than the national standard. Under the Clean Air Act, California has the right to pass auto emissions standards that are tougher than federal ones. This enabled the state government to reflect local needs and innovate. Other states are allowed to adopt California’s standards or federal ones.
Other federal countries such as Germany and China also allow their states to implement their own laws and policies on energy efficiency, but they are less autonomous from federal legislation and the policy framework and therefore have less flexibility. A comparative study of five subnational regions on energy efficiency financing shows that in Guangdong, China, and North Rhine Westphalia, Germany, the provincial governments implement energy efficiency financing policies designed primarily at a national/federal level. On the other hand, California has been active in developing its own energy efficiency financing policies since the 1970s, independently from federal government involvement. In Guangdong and North Rhine Westphalia, state-owned banks directly provide funding for energy efficiency projects, whereas in California, the government tries to promote a well-functioning energy service company (ESCO) market that can arrange for funding from private sector finance providers (Gandhi et al., 2012).
The Jiha Tinou program in Morocco is a good example of a national government devolving authority and resources by using a pilot project framework. This allows subnational governments to have ownership of their renewable energy and energy efficiency development initiatives with the support of the national government (Case 3).
In the UK, city deals have given municipal governments new freedoms and powers to promote growth in ways that draw on their strengths and priorities (Case 4). This reflects a widespread recognition that cities are often the engines of growth. Many of the first cities to participate have used their new powers to promote green economy strategies (Scott, 2012). At the same time, the UK case highlights important roles of national governments in setting the long-term green growth agenda and coordinating across levels of government.
Currently, the state of California leads the US in air quality policy and planning. Key lessons from the California experience include:
1. Interview with Terry Tamminen, previous Secretary of the California Environmental Protection Agency, in November 2013.
2. Interview with La Ronda Bowen, Ombudsman, California Air Resources Board, in November 2013.
The National Agency for the Development of Renewable Energy and Energy Efficiency (ADEREE) launched the Jiha Tinou pilot program in Morocco (2012-2014), with the long-term goal of reducing energy dependence, and increasing the use of renewable energy at the subnational level to contribute to the national energy targets for 2020 (ADEREE, 2012).
Three municipalities were selected via a call for proposals for the pilot program based on criteria such as previous involvement in renewable energy development. The national government’s role, in this case, King Mohamed VI, launched the ‘advanced regionalization’ process in parallel with ‘decentralization reinforcement’. Such initiatives provide a legal framework for transferring resources authority to subnational levels of government, thus allowing regions/territories to have ownership of their renewable energy and energy efficiency development initiatives with the support of the national government. Some key lessons have already emerged from this on-going pilot program3:
3. Interview with Zineb Raji, Communication Expert, ADEREE.
In many UK cities, local authorities are using newly devolved powers to find innovative ways of financing the transition to a low carbon economy. The development of a new low carbon economic strategy in the Leeds City Region was made initially through the publication of a report and an evidence based on the economics of low carbon cities (Gouldson et al, 2012 and 2014). This report suggested that the Leeds City Region spent GBP 5.4 billion a year on energy, but that it could profitably invest GBP 4.9 billion on commercial terms to exploit cost effective low carbon measures with a payback of just over 4 years, while reducing carbon emissions by 36% by 2022, and generating 4,500 jobs. This report has underpinned the creation of a GBP 44 million domestic energy efficiency program to retrofit 12,000 homes, as well as a GBP 66 million low carbon development program. A similar report for Birmingham helped to inform the activities of a new Green Commission (Gouldson et al., 2013). The City Council developed a Carbon Roadmap that seeks to deliver a 60% carbon cut (on 1990 levels) by 2027. A key part of the Roadmap is to support the Birmingham Energy Savers scheme that will invest GBP 100 million in domestic energy efficiency in the coming years.
These innovations are now being diffused to other cities with lessons of good practice being transferred through both formal and informal networks. Key lessons from these cases include: