EU's Cities Mission can accelerate the development of climate-neutral cities in Sweden

Successful climate change requires the development of new, effective cross-sectoral approaches in cities. At the same time, it requires new forms of collaboration between actors at municipal, regional, national and EU levels. In this development, the EU's Cities Mission effort will play a central role.

Of utmost importance for climate-neutral cities is the development of new structures and processes for “governance” in cities. This is because climate investments cut across different municipal administrations, with many connections to value chains in the business sector. The interaction between cities and national policy is also a necessary prerequisite for success. This, in turn, requires changes in structures and processes for “governance” in national policy and in national authorities. The word governance is used here for the new model in which the municipality leads, controls and implements the climate transition by going beyond what it has direct control over. It collaborates with the business sector, academia, regional and national actors as well as citizens, some of whom have decision-making power over activities within the cities. Public funding for the climate transition is divided between several policy areas and authorities, which makes it difficult to achieve the necessary synergies and pooling of forces. The EU is now making major efforts to ensure that the Union becomes a leader in creating climate-neutral cities. In this context, Fit for 55 in the 2030 Climate Contract is central, and the ongoing process within the EU with the Green Deal will have an impact on Swedish legislation in the coming years.

The role of cities

The importance of cities in climate issues is becoming increasingly prominent. I EU 75 percent of the population lives in cities. Globally, cities account for 65 percent of energy use and 70 percent of global carbon dioxide emissions.This means that their potential and capacity to change is critical for a rapid global transition to be achieved. They need to have high ambitions and innovative power, but above all an ability to change internal governance, coordination and organizations, that is, “governance innovation”.

The role of cities in the climate transition has been recognized by many countries, including Sweden. The EU has initiated research and innovation (R&I) programme targeting cities. One of the most important is Cities Mission, which aims to transform 112 cities into experimental and innovation hubs. These are to be climate neutral as early as 2030. They are to serve as models and show the way for how others can transition in another 20 years, to 2050. One of the starting points for the program is that they apply a so-called mission-oriented approach.This means that different societal actors collaborate towards common ambitious objective. The instrument is based on a combination of top-down priorities and bottom-up initiatives and engagement.

Cities Missions – part of Horisont Europa

The EU's Climate Neutral and Smart Cities programme, or as it is called in short, Cities Mission, is one of the EU's five missions. Missions can be described as strategically targeted R&I initiatives. These focus human and financial resources on important societal challenges that require many collaborative innovative solutions to achieve the necessary system effects, so-called system innovation. The other EU missions are cancer, soil health, food, and healthy oceans, coasts and inland waters. They are all part of the European Framework Programme for research and Innovation Cities Mission, which runs from 2021 to 2027. Cities Mission is considered central to the success of the EU's "Fit-for-55 for a faster climate transition" legislative package.Of the 112 cities within Cities Mission, seven are Swedish, and twelve are located in EU associated countries. In 2021, the EU Commission's Mission Board defined what Cities Mission means. The EU Commission has allocated EUR 163 million for the years 2021–2022 and a further EUR 75 million for 2023. An implementation plan has been drawn up with R&I investments that have a clear focus on climate transition in transport and mobility, energy systems and urban planning.

The European Commission has allocated 163 million euros for the years 2021–2022 and a further 75 million euros for 2023.

Is there a transformative potential in the EU's Cities Mission?

An important question is whether the mission-oriented approach being developed and shaped within the framework of the EU's Cities Mission has potential to transform cities for a faster climate transition. The process is still at an early stage. However, we can note that the EU Commission's implementation plan for Cities Mission expresses a clear ambition to develop an innovative and transformative approach. Below are examples of important elements in the implementation plan that indicate that the EU really wants to enable and drive the climate transition in cities. These are: the needs of cities should form the basis for the transition work, project traps should be avoided through new working methods, climate contracts and project portfolios instead of individual project, and digitalisation.

The mission-oriented approach focuses on needs that individual cities identify when working on climate change. What cities demand will vary depending on size, local conditions, geography and national policy context. Concrete and operational needs analyses require different sectors to work together on transition strategies. Citizens also need to be involved. Needs analyses are important for dialogues between citizens and business on the one hand and actors at regional and national level on the other.

However, organizations and working methods in most cities have limitations and are initially not suitable for transition processes that cut across different sectors and policy areas. The global climate problems are too large and complex to be handled within the cities' traditionally downspout-based and short-term structures. Therefore, one of the most important criteria in Cities Mission is that the mission cities invest in innovations that lead to changes in their organizations and working methods. In order for the research and innovation results to be able to support the cities, they must be integrated into the operations. A major advantage of new working methods could be that the cities can avoid the so-called project trap: that research and development (R&D) investments remain in selected and specific project without spreading into the cities' core operations, organization and ordinary processes.

A typical example of a mission-oriented approach that focuses on the needs of cities is Cities Mission's "climate contract" tool. Cities included in the program sign contracts and build up cooperation with government agencies and other organizations. Central elements are governance and an investment plan for climate action. The contracts are primarily designed at the national level, but 112 cities have, as mentioned, also been selected to participate in the EU program. The goal is for the cities' top political leadership to sign the contracts, and the cities' needs to achieve faster climate transition. The needs will then be met by coordinated support from both the national level and the EU.

Cities Mission's implementation plan also states that cities should work strategically with project portfolios instead of individual project. A project portfolio combines different types of support for research and innovation, both technical and organizational and policy/regulatory. The portfolio approach needs to be based on the cities' objective and be based on system understanding and coordination. Governance and organizational dimensions are central, as are connections between different systems, such as energy, real estate and transportation. To a large extent, it is about breaking fragmentation and instead creating synergies and large system effects. Purposeful collaboration should take place between Cities Mission, under the Directorate for research and Innovation, and Smart Specialization, whose support is financed through the Structural Funds under the Directorate for Regional Development. With project portfolios, the EU also wants to strengthen the effects of investments in research and innovation, by strengthening the conditions for R&I results to be applied and scaled up.

To cope with the climate transition, mission-oriented cities need to leverage digitalization. The Cities Mission cities are to serve as testbeds for climate transition through digital transformation, the so-called twin transition. To facilitate this, the EU has launched the Data Space for Smart Communities program, among other things. By using the program's IT environment, which integrates fragmented data from energy use and production, water and waste supply, traffic information, and more, the cities could increase the pace of the climate transition.

The EU is also currently developing working methods to enable Cities Mission to better interact and achieve synergies with other EU programme within its own Directorate for research and Innovation. The examples below all advocate a mission-oriented working method and are all important for Cities Mission to be implemented. Innovation Communities (KICs) brings together industry, research centres and universities. Mission Plattform is designed to develop national structures and implementation capacity. Other programme are CapaCITIES and the Driving Urban Transitions partnership initiative (DUT). Sweden actively participates in all programme.

Svenska FoI-insatser supports cities that work in a mission-oriented manner

If we turn our attention to Sweden, we can first note that cities and municipalities are included in the basis for the new climate policy action plan. According to the Climate Act, the plan must be submitted to the Riksdag every four years, most recently in 2023. The purpose is to show how Sweden can achieve the climate goals that the Riksdag has decided on. The County Administrative Board in Uppsala County, together with the relevant authorities, has been tasked by the government to produce a basis for how this should be done. Analyses and ten proposals for policy instruments have been presented. The County Administrative Board highlights, among other things, the importance of leadership and collaboration between authorities at both national and local and regional levels. In order for a transition to be implemented, it is also necessary for cities to acquire knowledge that they currently lack and for them to have a well-developed ability to drive change. The County Administrative Board's proposal resonates well with national R&I initiatives that Sweden already has experience with. Since the beginning of the 2010s, several Swedish programme have been based on a mission-oriented approach. This also means that Sweden has good opportunities to be a leading and driving force within Cities Mission. For example, Swedish experts have already participated for several years in the EU Commission's Mission Board.

Swedish experts' proposals for how the missions should be designed.

Below are some important national initiatives. Among the Swedish cities participating in Cities Mission - Helsingborg, Lund, Gävle, Gothenburg, Malmö, Stockholm and Umeå - several have been active in programme that have been focused on the public sector's ability to innovate. The goal has been to drive system innovation to achieve sustainable transformation in cities, and to create new forms of collaboration between municipalities, business and research organizations. For example, Gothenburg, Lund, Malmö and Stockholm have been active since 2013 in Vinnova's initiatives on Innovation platforms for sustainable and attractive cities.The aim was for the cities to become central arenas for the development of innovation capacity and system innovation.

All seven “mission cities” have been active to varying degrees since 2011 within Vinnova’s Challenge-driven innovation programme. The program aimed to strengthen funding from various actors for the various sustainability goals in Agenda 2030. One of the program’s most important challenge areas has been sustainable and smart urban development. The focus has been on the cities’ needs and driven by actors around them. The ambition was to test how innovation can contribute to changing different systems in a real environment. All mission cities, except Gävle, are also actively participating in three ongoing Strategic Innovation Programs (SIP): Viable Cities, Drive Sweden and IoT Sweden, which are jointly funded by the Swedish Energy Agency, Formas and Vinnova. These focus on long-term and system-changing innovation development for sustainability and competitiveness.

So far, 23 Swedish cities and municipalities have prepared and signed Climate Contracts 2030, which involve national contracts with measures and financing plans for climate transition. Seven of the cities also participate in Cities Mission. The Swedish strategic innovation program Viable Cities supports the climate contracted cities in various ways together with six government agencies, including Vinnova. Climate Contracts 2030 is updated annually, with both new commitments from partners and updates on the cities' progress and experiences. Tidigare Vinnovasatsningar has played an important role in the cities developing their needs analyses and commitments for the climate contracts. For example, the working method of starting from the challenges of the municipalities has become a natural starting point. This is particularly clear in the climate contracts' so-called "innovation hubs for climate-neutral municipalities". The working method was already introduced in the Innovation platforms program, which has been running since 2013.

Strategic challenges and opportunities in the future

Participating in the EU program Cities Mission brings a number of benefits, both financial and new development and cooperation opportunities. But the program also requires cities to increase their ambitions. The EU is in the process of deciding on new, stricter policy frameworks in the Fit-for-55 climate package and in the Digitalization Strategy. This will lead to tougher requirements for cities, which will also have an impact on programme such as Cities Mission. This poses challenges for Swedish cities, but compared to cities in many other countries, Swedish cities probably have significant advantages through the capabilities and experience that have been gradually built up. They can also exploit synergies between ongoing national programme, such as Viable Cities, Drive Sweden and IoT Sweden.

The most challenging aspect of the mission work is probably not about technical aspects, but about changing the cities' governance, structures, organization and working methods. The changes must be built into the cities' core activities and driven across the cities' various administrations, which is a major administrative governance challenge. In addition, this governance needs to be done in close collaboration with external actors, especially with the business community that in various ways has a decisive importance for the climate impact in and around the cities. The governance challenges are thus significantly greater than administrative governance. In this context, the concept of governance is used, which encompasses governance in collaboration between several different actors. Climate contracts can in the same context become an important institutional prerequisite for creating new, appropriate models for goal-oriented governance, organization and collaboration, so-called governance innovation. Over 20 Swedish cities and municipalities already have experience with national climate contracts. They receive strategic support and collaboration with regional and national authorities, which increases their opportunities for change. When cities remove and reform significant organizational and regulatory barriers, this can in turn simplify the work of linking R&I funding and other growth policy efforts.