Actions and impacts
Key feature 1: Climate actions and their impact assessment
Assessing and visualizing the impacts of climate actions is a core objective of the tool. The tool calculates two types of impacts: climate impacts and economic impacts. Of climate impacts the tool calculates emission reduction and energy savings. Of economic impacts the tool calculates: discounted costs and benefits, cost-effectiveness of emission reduction and return on investment. With the assessment of the various impacts, cities can analyse the effectiveness of different climate actions and when needed prioritize climate actions.
Climate actions are considered as actions that are expected to result in positive climate effect such as climate change mitigation and adaptation advancement. As the tool focuses on influencing city level decision making and financial planning the climate actions implemented directly by the city are of importance. Climate actions to which cities have indirect influence may also be assessed in the tool. An example of an indirect climate action could be energy counselling for private housing to make energy efficiency renovations in the privately owned buildings.
Climate actions implemented by the private sector without direct or indirect link to city level decisions or measures, could be included in the tool to show case the importance of including and supporting the private sector in the city level climate work, but for the time being and in the scope of Climate-4-CAST project, the primary focus will be on the climate actions implemented by the cities.
Defining climate actions in the tool – starting from six default actions
Cities derive climate actions in the tool normally from their local climate action plans and strategies. These may be for example Sustainable Energy and Climate Action Plans (SECAP) or other climate neutrality plans. Each city defines their own set of climate actions to which they focus on. There is no limitation in the number of actions that can be included in the tool, but it is likely that not all climate actions included in the city level action plans can or will be included.
In the first phase, the tool will include six default climate actions that have been chosen to the tool based on their relevance for cities, data availability and previous experiences of impact assessment. As towards the piloting phase the knowledge of climate action specific impact assessment improves, cities start including more actions in the tool.
The six default actions suggested to be included in the first version of tool are:
Change streetlights to LED
Build renewable electricity production (PV)
Energy efficiency renovations in public buildings
Replace oil (or natural gas) heating with geothermal heating
Replace city fleet with electric vehicles
Electrify public transportation
During the co-development process project partners and pilot cities have identified multiple other climate actions that are relevant for the cities.
In the 1st piloting phase, each city should identify the actions they wish to focus on to collect data and seek further knowledge of assessing their specific impacts. For pilot action plans an indicative list of prioritized actions is suggested to be made, so cities know where to start their data collection.
Questions to consider for cities:
Based on your city’s objectives and needs, what kind of climate actions would you prefer to include in the tool?
Where do you derive the climate actions from?
List down the climate actions and prioritise them if needed.
Evaluation of Climate Impacts: calculation model, data collection and possible challenges
The tool aims to analyse and visualise the emissions reductions and energy savings of each climate action. Actions may follow one of two technical implementations: simple actions, which consist of pre-calculated impacts to emission and/or activity factors, energy usage, and/or emissions, applied to the model baseline; or detailed actions, in which energy and/or emissions impacts are calculated by the tool, as a function of investment expenditure on altering stock composition, reducing emission and/or activity factors, etc. Detailed descriptions and examples are provided in the following subsections.
Simple Actions
Climate actions may be included in the tool via simple actions, in which pre-calculated time-series estimates of costs/benefits, reductions in emission and/or activity factors, energy usage, and/or emissions are applied to the model baseline. To implement a simple action, a city must enter (1) baseline estimates of the quantities which the action alters, and (2) estimates of the change to these quantities imposed by the action. For example, an action effecting the procurement of renewable grid electricity may require changes to two quantities: a decrease in the emission factor of electricity, and an increase in the unit cost of electricity. Baseline estimates of these quantities are entered on the “Baseline” tab of the data entry sheet, and the estimated changes in these quantities are entered on the “Simple Action” tab, associated with a new “Procure Renewable Electricity” action. Note that the tool recalculates derived quantities when the action is implemented: emissions, for example, are calculated by multiplying energy usage and emission factors, and are recalculated when emission factors change.
Simple actions may be used when (1) input data are difficult to obtain, and a city wishes to visualize general estimates of action costs/benefits and energy/emissions reductions. In particular, this may be the case for indirect actions: for example, a subject-matter expert may use professional judgement to estimate a certain expenditure on educational materials, concerning the energy savings of building renovations, may result in a certain percentage decrease in residential energy consumption. These estimated impacts may be included in the tool using a simple action: time-series estimates of increased investment expenditure, and decreased energy consumption, may be entered, without the need to explicate the full causal chain between these associated quantities.
Alternatively, simple actions may be used when (2) the city uses an external model to calculate action impacts. Detailed, process-based models may be used to run complex simulations and derive detailed costs/benefits and energy/emissions reductions for certain actions. For example, a spatially explicit, agent-based model may be used to simulate the effects of implementing 15-minute neighbourhoods on urban transportation demand. Such models cannot reasonably be replicated within the tool, and instead, the simulated time-series impacts of these models may be included in the tool using a simple action.
Detailed Actions
Climate actions may also be included in the tool via detailed actions, in which each action’s impacts are calculated by the tool itself. Where simple actions are flexible and unstructured, each simply applying time-series impacts to any baseline model quantity, detailed actions are structured, each requiring specific input data and following a particular causal diagram. Detailed actions, however, allow the city to set action targets, and to specify a maximum annual investment expenditure; this facilitates exploring the emissions, energy, and financial outcomes of different combinations of actions, action targets, and project funding.
Detailed actions follow templates, in which a common logic is applied. For example, of the default actions listed above, Actions 1, 3, 5, and 6 may be implemented using the template illustrated in Figure 2, in which an annual investment is used to change the composition of a stock or inventory of items. In Action 1 (Change Streetlights to LED), the city’s stock of outdoor lighting may be inventoried in several categories (incandescent and LED lamps, for example), and investment expenditure used to replace incandescent lamps with LEDs. The action tracks the item stock (the number of lamps of each lamp type), and provided per-type energy usage, maintenance costs, etc., uses this changing stock to calculate changing emissions, energy usage, and costs/benefits.
Actions following this “stock replacement” template require specific input data. A city must provide:
An estimate of the baseline stock, categorized by relevant types: for example, the numbers of incandescent and LED lamps (Action 1), or ICE and electric buses (Action 6).
The maximum annual investment to be spent replacing items in this stock; this amount is spent in full until the target stock composition is achieved.
The target stock composition: for example, a city may aim to replace all incandescent outdoor lighting with LEDs, or to replace half its ICE transit fleet with electric vehicles.
The cost of a replacement, and the replacement scheme: for example, the price in EUR of replacing a single incandescent lamp with an LED lamp.
Finally, other baseline contextual data, including the energy usage of each item type, energy emission factors and unit costs, and maintenance costs for each item type.
Given these requirements, a city must assess the feasibility of estimating or collecting these detailed quantities. Where only more general estimates are available, a city may opt to use the simple, rather than the detailed, approach, to include these actions in the tool.
An example of estimating the individual impacts of Action 1, Changing streetlight to LED is used in Tampere. Along the project similar calculation models may be provided for other climate action and eventually incorporated in the tool framework.
Possible limitations in calculating impacts and needs for further improvement
The tool is meant for managing all the data involved in calculating emissions projections and action impacts and easily making different projections and scenarios. The actual estimation of the impact of a certain action needs to be done first and is then inserted as input in the tool. The impact should be identified in relation to activity data of the baseline scenario, not emissions directly as described in 4.1.2. For example, investing in LED lights will have an impact on electricity consumption relative to the current situation. Just like all data, the impact is a time trend on a yearly basis and should be assigned to a year when the action takes place, or the impact is realized. The tool will then calculate the climate impact based on that year’s electricity production emissions and reduce the amount of electricity saved from the overall electricity consumption projection if the action is included in chosen scenario.
The limitations to evaluating impacts in the tool are therefore same as in general evaluating the impact caused by an action on activity data. If it is not possible to identify for example how much the overall private car kilometrage is changed due to investing in a walking or cycling path, it is not possible to include it in the tool projections. Since the impact of some climate action is systemic and the emission calculation requires change in activity data, it can be near impossible to identify the impact of some actions. For example, the impact of investing in walking and cycling depends on how it affects the travel time of each of the people using that part of the route but is also impacted by the safety of the environment and suitable bicycle parking at destination. Thus, an individual action doesn’t also have an individual impact. Also, transport habits change very gradually instead of an immediate change that can be identified easily.
The key challenges limiting the inclusion of climate actions in the tool, are thus data availability and lack of reliable science-based knowledge to assess the various impacts of individual climate measures. It is commonly identified that difficulties occur especially in the impacts assessment of emissions reduction of specific climate actions in the transportation sector. It is likely that difficulties might occur with other climate actions as well.
During the piloting phase of the project, the Climate-4-CAST partnership and pilot cities seek to find solutions to overcome some of these challenges and the tool is expected to be expanded with climate measure specific calculation nodes. As each pilot city has resources for data gathering and developing the analysis models of climate-measure-specific impact assessment, it is essential to exchange information between the pilot cities during the piloting phase.
Evaluation of Economic Impacts: calculation models, data collection and possible challenges
Evaluating the economic impacts is important for informed decision-making. Different approaches help understanding the monetary impacts of the actions. Depending on the used method and scope, the assessment can consider not only the direct effects but also the indirect effects as well as long-term impacts. Such evaluation helps in allocating the scarce financial resources effectively and make sustainable solutions also to the future.
Calculation and analysis models
Several different methods can be used to assess the economic impacts. The Climate Action Decision Support Tool (DST) developed in this project focuses especially on three of these:
Return on Investment (ROI): ROI measures the efficiency of an action by comparing the net benefits to the total costs of the action, and it can be expressed as:
Return on Investment = (Total expected benefits of an action - Total expected costs of an action) / Total expected costs of an action x 100 (%).
Cost-Effectiveness Analysis (CEA): Cost-effectiveness is used to compare the costs and outcomes (effects) of different actions. It is commonly expressed as a ratio, where the numerator is the cost associated with achieving the effect, and the denominator is the effect of an action. In the context of climate actions, e.g., solar panel investment, the cost effectiveness can be expressed as:
Cost-effectiveness = Cost of installing and maintaining solar panels / Amount of CO2 emissions reduced by the panels (€/CO2)
The lower the ratio, the more cost-effective the action is, as it generates greater effects with less cost. Cost-effectiveness is important in making informed decisions about resource allocation in climate action planning.
Cost-Benefit Analysis (CBA): Cost-benefit analysis measures the costs and benefits of an action. It compares the total expected costs of an action with the total expected benefits, and in the context, e.g., solar panel investment, the cost-benefit can be expressed as:
Cost-benefit = (Savings on electricity bills + revenue from electricity sales) - (investment cost of panels + maintenance costs) (€).
If the cost-benefit is positive, i.e., the benefits are greater than the costs, the project is a profitable investment. While cost-effectiveness analysis compares the cost of an action with the effect (emission reduction), cost-benefit analysis also monetises the effects, both emission reductions and other benefits (e.g., health benefits).
Data requirements and limitations
Assessing the economic impacts of climate action requires a robust and comprehensive set of data covering the different dimensions of both costs and potential benefits. The figure 2 gives a general overview of the components needed to calculate the costs of the actions and their emission reductions.
The starting point for the calculation is the baseline scenario, i.e., what the current situation is and how it will evolve in time, assuming no changes are made. The emissions and costs (and possibly benefits) of the baseline scenario are compared with the situation in which the action is implemented, and the difference between these two scenarios is the impact of the measure, both in terms of costs and emissions.
The calculation is based on information on the current operational and maintenance costs as well as the investment, operational and maintenance costs of the new action to be implemented. Operating costs are a function of energy prices and energy consumption, which in turn affect the amount of emission reduction. Information on emission factors is needed to assess the emission reduction potential. The investment costs of the implemented action depend on the market situation and the scale of the investment required.
A particular challenge in assessing economic impacts relates to the highly uncertain future price forecast. In addition, calculations must consider the fact that the value of money changes over time: the same amount of money is worth more now than in the future. Therefore, the value of cash flows in future must be converted to the present by discounting using a discount rate.
The calculation of each cost component requires a different amount of information depending on the climate action and can be based on a variety of sources. Some of the information comes from the city, but others may be general information, for example from various national data sources. To calculate the monetary value of the various non-market benefits, information from the literature is likely to be needed and several assumptions will also have to be made when building the calculation model.
Data constraints often pose significant challenges. These can include incomplete data sets, lack of standardisation, delays in data availability and uncertainty in predicting future market conditions and policy changes. The data needed to assess the economic impacts of climate action are large and complex. The calculation always involves assumptions, and it must be balanced between the simplicity of the calculation model and a sufficiently accurate and credible calculation. Given the uncertainty and difficulty of predicting, for example, future price developments, an important feature of the tool is to allow for agile changes in initial values.
Visualisation of climate action data in the tool
In the tool view of climate actions, the users can choose one summary statistic and get a visualisation where all actions are summarised according to that statistic. For example, Figure 3 visualises the return on investment (ROI) calculation for an example action in the tool.
In the marginal abatement cost (MAC) curve, each action is shown as a block where the hight is the cost-effectiveness of the action and the width is the impact of the action on the target year (See Figure 4). The administrator can choose which cost nodes and impact nodes are selected for a visualisation, so it is possible to build several different views, for example, cost-effectiveness can be show for the impact on energy reduction, or greenhouse gas reduction.
In addition to cost-effectiveness analysis, the tool allows a comparison of the cost-benefit of actions. In such calculation, all impacts are considered in monetary terms and, for example, emission reductions can be converted into monetary benefits. Figure 5 shows an example of a cost-benefit visualisation of measures. Figure 6 visualises costs and benefits in more detail than the previous figure and shows more components, such as health impacts. The impact components can also be considered in terms of which group is affected (city organisation, citizens or society). The coverage of the calculation components on the cost-benefit analysis depends on the input data available.
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