City carbon budgets: Aligning incentives for climate-friendly communities

Local governments can have a large effect on carbon emissions through land use zoning, building codes, transport infrastructure investments, and support for transportation alternatives. Recognizing this, many cities have developed climate action plans, containing a disparate mix of mostly voluntary greenhouse gas emissions reduction proposals. This paper describes an integrated climate policy instrument for local governments: city carbon budgets. We identify and evaluate options for creating an effective and acceptable institutional structure, allocating emission targets to localities, measuring emissions, providing flexibility and incentives to local governments, and assuring compliance. We also discuss the likely costs of such a policy. Our recommended policy structure is based on the principles of effectiveness, equity, efficiency, administrative ease, and political acceptability