programs, are policy tools that local governments use to prioritize, forecast, and budget for investments in major capital projects and acquisitions. These major projects can include buildings, such as schools and hospitals, energy generation and distribution systems, water treatment facilities, etc. Capital investment plans are the critical juncture in local governance at which development plans are coupled with funding, and where line departments and agencies must demonstrate the merit of their proposed projects to the local leadership in order to move them from plan to reality. As such, the capital investment planning process presents an opportunity to significantly alter the nature of infrastructure investments in cities.

This paper presents a methodology for capital investment planning that illuminates the local benefits and trade‐offs between carbon reduction and cost of infrastructure choices for local decision‐makers. The methodology aims to illustrate the degree to which planned investments, made individually and collectively, lock the community into future carbon emissions. Organized as minor modifications to commonly used procedures, the methodology is designed to appeal to the pragmatics of local decision‐ making, irrespective of a city’s geographic location or pace of development. For local governments that do not yet have a formal capital investment planning process in place, it presents an opportunity to establish one that already integrates climate considerations. It is up to each local government to determine how much emphasis (weight) they wish to put on climate considerations; the methodology is climate‐informed rather than ensuring to deliver low carbon outcomes.

This paper begins with a brief outline of the current practical and academic expectations for local capital investment planning in an era of climate change. It then analyzes the relevance of current municipal approaches to the challenges created by climate mitigation, noting how capital investment planning processes that do not take climate change into consideration can result in investments that diverge from a low carbon path. This is followed by a suggested set of modifications to facilitate the identification and prioritization of infrastructure choices that meet local objectives and lower the cost, energy demand, and carbon output of development. The result is a procedural model that measures the difference, or “wedge,” in projected emissions between conventional and carbon‐minimizing infrastructure choices.

# **2 Local Investment in an Era of Climate Change**

The gap between the demand and the current level of investments in infrastructure – ports, power plants, pipelines, hospitals, highways, water, sewer, and telecommunications – is estimated to be $1 trillion annually through 2020 (World Economic Forum, 2014, 40). Population growth, unprecedented rates of migration from rural to urban areas, and pre‐existing unmet demand for the essential services that define urbanization are factors that drive estimates of infrastructure need considerably above the current rate of public and private spending. Furthermore, it is estimated that a transition to more environmentally clean infrastructure “would raise this estimate by an additional $200‐$300 million yearly” (World Economic Forum, 2014, 40). Marginal carbon abatement curves, popularized by McKinsey and Co., suggest that several forms of environmentally beneficial infrastructure can provide positive returns on investment. A few forms – alternative settings for environmental controls in buildings, or alternative building codes for new structures, for instance – may even be possible with little or no up‐front capital costs (McKinsey & Co., 2009, 16). Still, the extent and urgency of decarbonization Page | 3