Cities are in a curious position when it comes to climate change: they both drive it, and address it. Or at least they have a big potential to do the latter. Urban areas, responsible for over 70% of global carbon emissions due to their high concentration of population and economic activities, are also central to leading game-changing climate solutions. These require robust political commitment and governance structures that prioritize a (truly) sustainable urban development.

One prominent tool in this sense is municipal climate budgeting. Budgeting CO2 equivalent (eq) emissions as one would do in an economic budget makes short-term actions for greenhouse gas reduction a formal part of a city’s financial planning.  A climate budget links the funds allocated to a specific measure with the savings in CO2eq associated with it. By tracking emissions alongside financial metrics, cities can thus clarify and quantify how their spending decisions align with their climate targets. A city’s climate budget is more than an aspirational commitment: it prioritizes CO2 reduction by mobilizing different city departments, quantifying allowable emissions, and facilitating cost allocation for mitigation measures. And most importantly, it’s binding. As Heidi Sørensen, director of the Climate Agency of the City of Oslo, puts it: “The climate budget places climate at the very center of policy-making, and that’s where climate issues belong”. 

The case of Oslo is indeed used as a reference in ‘climate budgeting circles’. In 2017, the Norwegian capital became one of the first cities to launch a formal climate budget – five years earlier, they had started to measure its emissions. The city has achieved since then substantial reductions in CO2eq – more than 90% when it comes to municipal operations like schools, offices, and parks – especially in sectors like construction, public transportation, and building energy use. Examples of practical measures driven by implementing Oslos’s climate budget are stricter environmental criteria in public procurement (like requiring electric machinery in construction sites), supporting electrification in public transit, or introducing congestion charges targeting diesel vehicles. All in all, the city measures its emissions as a company would. ​​Only that, in this case, public policy comes into play—as Ms. Sørensen noted—ensuring accountability, rigor, and transparency in the process. This binding framework has allowed Oslo to maintain continuity in its climate actions over time, despite political changes.

Other regions have followed this example and are experimenting with climate budgeting – see the C40 network’s step-by-step climate budgeting handbook, and its programme on the matter, which includes cities like Barcelona, London, Montreal, and New York. Embedding climate goals within an existing governance structure may well become a pivotal tool to combat climate change for and from cities. As the phrase goes, where there’s a (political) will, there’s a way.