Accelerating City Transitions
By: Dark Matter
Tags: Cities, Transitions, Transformation, Climate Change, Systems Thinking

How redesigning the dark matter of city systems can unlock sustainable, democratic urban environments

Madrid is one of 10 European cities DML are working with on EIT-Climate KIC’s Healthy Clean Cities Deep Demonstration [Photo by Alex Vasey on Unsplash]

Looking back and forward on our work in cities

After a year like no other, and faced by what may well be permanent disruptions to their natural rhythms and rituals, cities around the world are grappling with how to navigate their uncertain, post-covid, climate-defined futures. Such transitions have, of course, been long overdue. The entrenched inequality and unsustainable metabolism that have come to define our cities is what drives many to look for ways to transition them towards the sustainable and democratic urban environments we need them to be. On current trends, temperature changes of 3 degrees celsius are more likely than 1.5 or even 2 degrees, exacerbating a series of calamitous, cascading risks in our cities, whether as tangible places or as urban systems. The urgency and the depth of the transitions required to enable more hopeful scenarios means we have to act across a range of systemic levers in order to achieve a democratic, equitable pathway to a liveable future.

Our journey into cities

Over the past 5 years, Dark Matter Labs has found itself involved in several collaborations with such focus — where efforts to transition society in response to technological revolution and climate breakdown look to the city as a critical problem-space and tangible unit of change. From our early work to develop impact movements in Camden, to our experiences with Civic Square and Alternative.Camden, then the development in 2019 of our Micro-Massive urban transition thesis with UNDP and EIT Climate-KIC and our involvement in the latter’s Healthy Clean Cities Deep Demonstration, we’ve cultivated a deeper understanding of the critical role ‘dark matter’ — the invisible structures and infrastructures that shape our systems, from regulation and procurement to contracting and financing mechanisms — must play in driving transitions in cities.

Cities as systems of systems: regulation, tech, participation, and finance

Cities, of course, are anything but one-dimensional. Even a first glance at their impact on climate change reveals that their footprint is much larger than the emissions taking place ‘within the gates.’ Scope 3 emissions in particular are driven by complex global supply chains in which urban politics is nested and entangled. But working with cities is still worthwhile — as long as we recognise that cities form a ‘system of systems’, where several levers of change come together, and can be acted upon — whether at the scale of a city-regional portfolio of interventions, or district-focussed ‘living labs’.

How cities update and in some cases revolutionise their regulatory landscape will determine the speed and depth at which urban environments can transition. Since co-founding the Network of Regulatory Experimentation in partnership with BLOXHUB, Community of Federal Regulators, Dot Everyone, MaRS Solutions Lab, The McConnell Foundation and Waag Society, Dark Matter Labs has continued to explore the promise of a new generation of regulatory sandboxes based in cities, with Montreal and Madrid playing early hosts.

How cities leverage the promise of technology — digital tools & platforms, open data systems and artificial collective intelligence — will in many cases be pivotal in both accelerating change, but also in either by-passing or actively ensuring deeper legitimacy and ownership of transitions amongst those most affected. Seeing deeper civic participation as inherent in regulatory or technological innovation is integral to the future of cities: the promise of new technology and agile regulation moving us to a more sustainable future rings false unless people and communities can truly be part of collaboratively understanding why it is necessary, what opportunities it could hold for them, and how different design principles can drive towards very different outcomes. In this context, Dark Matter Labs and Lucidminds, with support from Nesta, have been developing three use cases for near future ideas where Civic AI can help equip communities with the tools to collectively respond to the climate crisis and achieve the goal of a carbon-neutral society. While such technology scenarios may feel distant, controversies such as around the Sidewalks Toronto proposition shows the urgency of building civic legitimacy around tech-enabled sustainability pathways. In response, we are working with city governments like Amsterdam to explore how to bring collaborative dynamic regulation and tech-enabled renewable energy communities closer to reality, as well as with the Korea Agency for Infrastructure Technology Advancement, tech-enterprises and local citizens in Daegu, South Korea, to develop new frameworks and strategies for combining technology and civic innovation.

Visual from our Daegu Creative City project with Daegu Technopark

How cities finance their transitions will be crucial in ensuring capital best serves the future, both in terms of what they invest in and how they invest. Dark Matter Labs has been working with partners across North America and Europe to explore how the transition capital embedded in the coming Green Deals can be best deployed. As cities will be significant recipients of transition capital over the coming decade, they must develop new financial instruments that enable long term investment; new mechanisms to capture and share the multiple spillover effects and value flows of a climate investment strategy, like better health and jobs; and new public governance models capable of limiting rent-seeking incentives traditionally structured into investment propositions. In short, we need to re-code capital so it privileges the shared public value of transition investment. Cities are starting to see the significance of the challenge, and our work with the cities of Madrid and Vienna to explore such ‘re-coding’ mechanisms will accelerate in 2021.

What we’ve learned along the way

Needless to say, we’ve learned a few lessons from these encounters with cities and their dark matter. We have a growing appreciation of the need to combine discovery work and creative imagining with the hard graft of enabling change to happen on the ground. We have a deeper sense of the undeniable role cultural competence alongside local leadership and partnerships must play to drive and sustain urban transformation in what are always unique places with powerful and complex identities. In response, our team is even more geographically distributed than it was a year ago; aspiring to be more deeply embedded in the local contexts in which we work. We are explicitly working on what it means in practice to deal with urban systems by both reaching down into neighbourhoods and up into sprawling economic and ecological geographies and supply chains. We recognise the need to mobilise national and regional authorities as much as municipal governments if we are to truly rewrite the DNA of cities and their dynamic flows beyond the traditional city boundaries. Each of these points probably warrants a post in themselves, and over the next months we’ll be sharing in more detail some of our insights from the work in different places.

Why cities — revisited

These experiences and reflections have pushed us to refocus on the why, what and how of city transitions. Of all the problem and opportunity spaces our world has to offer, why do we choose to ‘lean into’ cities?

Aggregate and compound value

Cities are where many of the most complex challenges we face combine into webs of cascading risks and legacy lock-ins. It’s widely acknowledged that cities are a net-contributor to climate breakdown, covering less than two percent of the earth’s surface, but consuming 78% of the world’s energy, producing more than 60% of all carbon emissions and reinforcing the habits, lifestyles and extractive economies most associated with the causes of the climate crisis. And the past year has been a particularly stark reminder that this takes place in the context of chronic and deepening ‘multiple horizon’ emergencies, of growing disparities in wealth and power, and the double edged sword of runaway technological capabilities.

While the scale and entanglement of the problems are enormous, so is the possibility for impact. If we succeed in transitioning cities to a more sustainable and democratic future, the aggregated value of improving the lives of the vast urban populations cities serve is clear. But cities are also particularly powerful hubs of knowledge and collaborative innovation capacity, driven by their innate diversity, their assertive plurality of institutional and non-institutional actors, and their capacity to attract capital. This, together with the soon to be made available ‘once-in-a-generation’ investments, if leveraged well, can shift them from engines of unsustainable growth to catalysts of healthy, green, caring transitions.

The pathways for deploying this capital need to be explored in the full acknowledgement of complexity, uncertainty and entanglement. This also means that we cannot just engage deeply with neighbourhoods and communities, but also have to think widely across (bio)regional and even national economies and ecologies. They provide fertile ground for strategic innovation and new lead markets (e.g. bio-based zero embodied carbon building, nature-based solutions financing, industrial hydrogen) that represent significant compound value and multiplier effects beyond the city’s municipal limits. This, in turn, is critical to overcome the growing political divides and spectre of culture wars between cities and hinterlands where it comes to the winners and losers of transition.

An opportunity to build institutional capacity for deep transitions

More fundamentally, we’re seeing more and more clearly the urgent need to enable the deep institutional shift from incrementalism to transformative change. Cities are expressing that they see the need to accelerate this shift — but it is evident they currently struggle to provide the conditions for this to happen. They want systemic change — but can they change their systems? Siloed organisations; analogue-era regulatory approaches; resistance to policy-making that actively shapes markets; limited capabilities in blended finance and multiple outcome accounting; underdeveloped local innovation ecosystems; and rudimentary infrastructures for collaborating with citizens are just some of the critical institutional capacity gaps present in cities. At the same time, the Deep Demonstration in Healthy Clean Cities has seen emergent progress in many of these fields: from Vienna’s success in bringing together a remarkably large number of departments around its decarbonisation agenda employing ‘ T-shaped’ team members to connect opportunities, to Amsterdam’s dynamic outcome-based regulation aspirations for last-mile logistics, cities are starting to embrace pathways to action that can match the ever-more ambitious target-setting. If we succeed in redesigning the dark matter of city systems, and unlock such fertile institutional ground for creating sustainable, democratic urban environments, we go a long way to accelerating transitions towards rapid decarbonisation and a healthier, more sustainable human thriving.

What’s at stake?

Of course, institutional capacity is just one side of the equation. The other is where it takes us. Directionality matters. Intentionality matters. Values matter. So what are we trying to achieve with our work in cities?

At Dark Matter Labs, the aspirations of city transitions is to create a thriving urban everyday life with radically improved standards of civic agency and the opportunity for human flourishing afforded to all, within planetary boundaries, and alongside a regenerated natural realm. We see this manifesting across a range of domains and lived experiences in cities and peri-urban areas.

Visual from our Malmö Example Streets experiment proposition

In the near and now, we aspire for ‘cities-as-commons’ — places where participatory governance of civic assets shape our communities, public spaces and local economy. New institutional tools, such as multiple-level climate contracts and civic endowments for shared infrastructure and innovation investment, are building blocks for this. We see cities as carbon positive urban environments — not just because of decarbonised homes and transport, but also with vast urban nature capable of turning concrete jungles into their very own carbon sinks. We aspire for ‘caring cities’ — places that privilege and properly invest in wellbeing and empathy, but also shared learning and active participation in deep democracy. We see cities as circular and collaborative, where food and (re)construction are part of digitally integrated local value chains capable of building community wealth and local resilience, underpinned by next generation logistics systems and agile regulation that include real-time environmental performance as key metric.

Urban futures like these would mean people having more power over their places, a deeper relationship with nature despite their urban setting, a sharpened consciousness of the materiality of their city, greater security and capacity to focus on the pursuit of equitable human flourishing, and the ability to benefit from the value generated by collective endeavours, all the while preserving and nourishing our shared ecosystems. It is a vision in which cities finally deliver on their promise to each and every one of us.

How might we get there?

As we’re often reminded, it’s not enough to have a clear case for change and a compelling vision for how things can be different. This is particularly true in the uncertain, complex and emergent times in which we live. So if there is no clear linear pathway to unlock such a city transition, how do we proceed?

Our thesis at Dark Matter Labs is that there are a set of key ingredients we must start with.

Strategic risk and future liability

Even though 2020 showed in brutal tangibility what ‘interconnected and cascading risk’ can mean for cities, urban governments and the national equivalents that support them systematically fail to properly account for risk and liability. In too many cities we see ambitious urban strategies for decarbonisation sat in juxtaposition with stable consumption of high embodied carbon materials such as concrete. In too many cities we see aspirations for eliminating poverty alongside extractive development models reliant on housing and land asset bubbles. In too many cities we see ambitions for once-in-a-lifetime deep energy retrofitting investments that are unconnected to other needs and opportunities in neighbourhoods, like reimaging streets, creating digitally enabled local supply chains or building community wealth. In too many cities we see a growing awareness of mental health risk being undercut by an ongoing inability to make long investments into social infrastructure that overcome loneliness and strengthen individual and collective resilience.

To address these disconnects, we’re focussing on building capabilities and mechanisms for understanding and acting on strategic risk. That means assessing risk and liabilities not at a project level, but rather at a whole-place transition level: identifying the extent to which a proposed course of action or set of interventions impacts on the ability of a city to deliver on its vision and mission. In our age of the long emergencies, cities must take steps to address multiple levers of change, connect several domains of vulnerability and opportunity, and unlock new lead markets.

This new relationship with foundational risk and liability at the urban level can have a ripple effect on some crucial practices that define the trajectory of cities, perhaps most profoundly in how we move towards strategic investment portfolios inextricably linked to the transitions we pursue. We are exploring a range of instruments and financial models such as smart and tradable perpetual bonds that can amplify the capacity of public sector and other public interest actors to raise capital for long term multiple outcome interventions; urban-scale carbon sequestration certificates as a pathway to broader ecosystem services investment certification; and a Settlement Risk-Innovation Facility to enable systemic innovations to resolve key liabilities (e.g. urban air pollution) with solutions that can only be proven over time. Alongside similar efforts such as those of the Transformation Capital Initiative, we are bringing together problem owners, solution providers and financiers in new relationships that again are geared towards aligning interests for the long term.

Portfolios of interconnected interventions

As cities make this shift towards more co-beneficiary investment strategies, the necessity of a portfolio of interconnected interventions becomes clear. EIT Climate-KIC’s 2019 strategy document Transition, in Time lays out how, in the context of uncertainty, a portfolio approach is essential to discover options and pathways. What we have seen over the last year and a half working with EIT Climate-KIC and a range of other partners in fifteen cities across Europe is how the portfolio of interventions need to focus both on domain-based and on transversal approaches. The two intertwine to recognise the complex and adaptive nature of systems, but also to generate systems learning and mark out possible transition pathways, rather than seeking to simply validate whether a single point intervention has impact or not.

Overview of one strategic experiment in Madrid’s Health Clean Cities portfolio of interventions

To start with the transversal: the next generation transition finance capabilities we mention above are just one of the cross-cutting innovation capacities that cities need. Regulatory innovation capacity will be equally essential: updating cities’ regulatory frameworks can not be limited to a one-off fix to include e.g. embodied carbon emissions into their planning systems and public realm specification sheets. Rather, it needs to be a permanent capacity for change that can work with civic and private stakeholders as well as with other public authorities in an on-going, agile and transparent manner to integrate new progress metrics and strategic learnings stemming from accelerated decarbonisation and pollution targets into policy frameworks. As our Legitimacities publication set out, this requires us to build a new set of collaboration settings (‘sandboxes’) and capabilities so that urban regulatory experiments can be created with and co-governed by people from across sectors, rebuilding trust and revealing transition pathways.

And regulatory innovation is just one aspect of a broader transition governance capacity, which is multifaceted and needs active investment at a time where large amounts of recovery capital and transition needs will at local level often meet deeply ingrained scepticism and mistrust of ‘change’ and its winners and losers. It is extremely unlikely that a truly just transition can be forged through the decision-making patterns of the past. Hence we are working to develop a new range of ‘transition’ governance tools and mechanisms, ranging from new contracting architecture for collective action with Leuven2030, to new collaborative governance arrangements with the Orleans Metropole. Our collaboration with Viable Cities and nine Swedish cities to establish Climate City Contracts — an emergent and agile contracting architecture for complex and entangled challenges like the climate emergency — is another example of an alliance of partners working together to reimagine governance.

In a city portfolio, such ‘horizontal’ innovation capabilities meet with a range of ‘vertical’ missions or integrated interventions such as fostering circular economies, at-scale nature-based solutions, and whole-district climate retrofitting (or actually, we’d prefer to call it future-fitting — as it also needs to take stock of shifting working patterns after Covid-19, counter the loneliness epidemic, and build resilience in adapting to a 3+ Celsius scenario of climate extremes). In each of these domains there are interconnected financial, regulatory and broader transition governance questions, alongside technology and data questions. Responding to these entanglements through a portfolio approach can enable cities to become early movers in lead markets that can build new inclusive value and supply chains, attract investment and drive sustainable recovery. While confronting to the managerial orthodoxies of city administrations, this more dynamic approach inevitably gives rise to new and valuable institutional and sector-specific tools such as comfort contracts that can bind together households, energy solutions providers and financiers in a district retrofit; or material registries that can enable the construction and real estate finance sector to embrace circularity, and make decisions based on long-term considerations.

Towards more hopeful urban futures

As we continue down the multiple transition pathways we have embarked on with cities, we are making some strategic bets where we will invest our time and energy over the coming years. We’re working with cities and a range of partners on developing strategic transition portfolios, on place-based proofs of possibility exploring how the full stack of institutional innovations can be brought together, and on particular tools and instruments for next generation governance and finance. Across these three types of work, we increasingly pay attention to how we learn from strategic experiments and build capabilities in the process. We believe that by better structuring the demand for such change, building new functions of governance, and showing tangible demonstrations of new and legitimate transition pathways, we can reorientate our cities’ current trajectories towards more hopeful futures.

This is our emerging thesis on redesigning the dark matter of city systems. It has been built through the support from, and conversations with many of our partners, and we are encouraged by (and immensely grateful for) their trust in together navigating the opportunities for positive change in an uncertain world. Equally, we are keenly aware that our approaches and practices are inevitably incomplete — and we’d like to invite feedback and discussion in order to spot gaps, next opportunities, and blind spots as well as complementary perspectives. It’s not quite true that this shared endeavour is ‘just getting started’ — but given the terrain ahead, that’s often what it feels like. We look forward to exploring the way forward with you.

Written by Joost Beunderman, Tom Beresford, Linnea Rönnquist, Dan Wainwright, Jonathan Lapalme and Eunji Kang in deep acknowledgement of contributions to our work with cities by other DM colleagues, our kin (the 00 ecosystem) and our partners — particularly EIT-Climate KIC, Bankers Without Boundaries, Democratic Society and Material Economics.