Governing with cities: Europe’s overlooked governance infrastructure

Without recognising cities as strategic partners in its governance architecture, EU climate ambitions risk remaining disconnected from the places where implementation ultimately succeeds or fails: its cities. 

Cities hold two strengths that the EU should recognise and institutionalise. First, cities demonstrate great capacity to deliver outcomes. Second, they are capable of delivering outcomes that directly matter to citizens. These strengths together serve not only as a smart leverage point within the broader machinery of government, but also liberate capacity to pursue other important goals at the national and EU levels. In other words, cities offer strategic infrastructure that has been wildly underutilised for the pursuit of large-scale goals.

The European Commission’s Horizon project on NetZeroCities has now produced growing evidence that cities’ climate ambitions can materialise. Since its launch in 2021, the EU and national governments have had to react to rapidly changing geopolitical and fiscal dynamics, with many national governments effectively deprioritising climate goals while still remaining accountable for this mandate. Simultaneously, cities have continued to invest, innovate, and deliver on climate targets. Across Europe, cities have used their flexibility to move ahead of national and EU timelines by setting more ambitious goals, mobilising local coalitions, and maintaining implementation momentum even as national priorities shifted under political pressure.

This experience is the largest deployment of a mission-based approach to solving the climate crisis to date, and the progress visible in cities demonstrates a new form of collective problem-solving. The Cities Mission has functioned as a natural experiment in European governance. It has shown that, even under increasingly constrained political conditions, a different relationship between European institutions and cities can sustain implementation. More importantly, it has revealed that Europe has already built governing capacity in places that remain largely absent from policy design.

Doubling Europe’s governing capacity 

There are many issues around national and EU-level climate action. Typically, these problems are identified as: issues of implementation, whereby there are far too many steps to achieve desirable targets; issues of coordination, whereby far too many agencies, public bodies, and non-state actors need to be mobilised; and issues of coherence, whereby multiple objectives both create and suffer from fragmentation. These are familiar diagnoses whenever governments attempt to address large-scale societal problems.

Just because a problem is large-scale does not mean it has a large-scale solution. Regardless of competence, several unhelpful traits for problem-solving are evident at the national and EU levels of government: the scale and complexity are simply too high, and there are not many tools and mechanisms that support the speed of both action and learning. National and EU institutions are not failing because they lack ambition. They are confronted with coordination costs that grow alongside the complexity of the problems they are expected to solve. In other words, they are often trapped inside a tragedy of their own institutional form.

There are also contextual limitations that shift the focus away from long-term agendas, towards more immediate needs. For example, the EU worked remarkably well at mobilising defence spending. In a multiplex world that cannot rely on the force of international law, trade, and multilateralism alone, governments must provide protection by increasing defence spending. The AI race simultaneously forces attention towards technological sovereignty and productivity gains that may relieve strained public finances. Regardless of whether one agrees or disagrees with the direction, defence and AI are naturally dominating political agendas, even as climate risks continue to intensify. On one hand, we cannot afford inaction; on the other, political focus shifts with the times.

Governing large-scale transitions from the centre alone becomes increasingly difficult. If implementation is expected to remain effective under these conditions, Europe must pay closer attention to where governing capacity actually exists: its cities.

What the Cities Mission reveals

When problems need to be solved but political space is limited at the EU and national levels, cities are often described as an underestimated and underutilised partner. Their importance, however, is not simply the result of a temporary leadership vacuum. It is the result of the leadership and implementation capacity that cities have been building over decades.

The Cities Mission has made this accumulated capacity visible. Rather than demonstrating that a handful of ambitious cities can outperform others, the Cities Mission has revealed organisational characteristics that make cities particularly effective at governing complex transitions. Cities combine public authority, implementation, partnerships, investment, and proximity to citizens within a single governing arena. Under conditions of complexity, these characteristics reduce the coordination costs of ambitious strategic agendas.

The five EU Missions introduced under the Horizon Europe programme marked a fundamental shift from sector-based policymaking towards integrated, goal-oriented policy coordination at scale. Over the past five years, the Cities Mission has translated that ambition into an operational governance model combining mission-oriented policy with multilevel implementation. Through this experience, cities have demonstrated that they can shape markets, mobilise investment, and coordinate actors around ambitious climate goals.

The following examples are therefore not simply examples of good urban policy. Together, they illustrate how governing through cities can lower the coordination costs that increasingly constrain national and European implementation.

Cities can shape markets

Oslo has demonstrated how cities can use their purchasing power to reshape entire markets. By requiring zero-emission machinery and vehicles on municipal construction sites, the city created predictable demand for electric heavy equipment, encouraging manufacturers to increase production and suppliers to enter the market. Rather than waiting for cleaner technologies to become commercially viable, Oslo used procurement as a strategic tool to accelerate their adoption. 
▶ Signal: By making decisions that are fully within their own authority, cities can influence industrial development.

Gothenburg is using an ongoing innovation programme to push the frontier of fossil-free construction. Hoppet, the city’s innovation framework for climate-neutral building, spans around 30 projects testing new materials and methods to reduce the climate impact of construction. Its first project, a preschool which was completed in 2021, cut climate-related emissions by 62% through smarter material and process choices, demonstrating what’s possible before scaling the approach further. 
▶ Signal: Cities can shape procurement standards over time, creating market demand and actively shaping industrial innovation instead of acting only as consumers. 

Cities can mobilise investment

Bristol has built a financing ecosystem that combines major infrastructure investment with opportunities for citizens to invest directly in the city’s transition. Its long-term public-private partnership aims to mobilise more than £1 billion for energy infrastructure, while complementary mechanisms allow residents to finance local climate projects and participate in the transition. By bringing together public finance, private capital, and citizen investment, the city is demonstrating a broader role as a market organiser rather than simply a project manager.
▶ Signal: Cities have the capacity to mobilise investment at a scale that extends well beyond municipal budgets. 

Gothenburg has pioneered a sustainability-linked loan that ties the municipality’s borrowing costs to the achievement of environmental and social performance targets. Meeting these targets reduces the city’s interest rate, creating a direct financial incentive to deliver measurable outcomes without requiring additional public spending. This approach embeds sustainability into the city’s core financial management rather than treating it as a separate policy agenda. 
▶ Signal: Cities can innovate not only in infrastructure and service delivery, but also in the financial mechanisms that support long-term transformation. 

Cities can coordinate multiple actors

Warsaw is demonstrating how cities can shape energy markets by coordinating demand across multiple municipal organisations. By bringing housing companies and public service providers into a joint renewable electricity purchasing group, the city is creating stronger market signals for clean energy producers while reducing costs through collective procurement. Rather than acting as a single buyer, Warsaw is using its convening power to influence the wider energy system.
▶ Signal: Cities can leverage their purchasing authority to accelerate the transition to renewable energy.

Valencia has created one of the broadest local governance coalitions within the Cities Mission by bringing together more than 150 organisations representing around 20,000 businesses under its Mission Alliance. Through large-scale participatory processes and shared governance structures, the city has sought to embed climate action across public, private, and civic actors. Rather than delivering projects alone, Valencia is building the institutional capacity needed to coordinate long-term transformation across sectors.
▶ Signal: Cities can convene diverse actors around a shared strategic agenda.

Taken together, these cases reveal something more significant than a collection of successful municipal initiatives. They show that cities consistently reduce the coordination costs of ambitious societal agendas. Whether shaping markets, organising investment, or convening diverse actors, cities integrate functions that are often dispersed across multiple institutions at national and European levels. The Cities Mission did not create these capabilities. It revealed and supported them.

Implementation creates knowledge

The implications extend beyond implementation itself. Perhaps even more importantly, implementation is a process of learning. Every procurement decision, financing mechanism, partnership, and citizen engagement process generates practical knowledge about sequencing, institutional bottlenecks, political trade-offs, public acceptance, and the interaction between regulation and investment. This knowledge cannot be generated through policy design alone. It emerges only through the continuous practice of implementation.

This is precisely where cities make a contribution that remains largely absent from European policymaking. Cities do not simply deliver policy. They continuously test assumptions, adapt governance arrangements, and generate evidence about what makes complex transitions possible in practice. In doing so, they produce governance knowledge that should inform future policy rather than remain confined to local implementation.

If Europe is serious about becoming more adaptive under conditions of uncertainty, this implementation knowledge cannot remain downstream. Cities should therefore contribute not only to delivering European policy but also to shaping it. Their role should evolve from implementation partners to co-creators of policy.

Europe has already built a governance infrastructure 

The significance of the Cities Mission extends beyond the achievements of individual cities. Together, Climate City Contracts, Climate Investment Plans, local partnerships, investment pipelines, and collaborative governance mechanisms constitute a governance infrastructure that Europe did not previously possess. By aligning research, regulation, investment, and public policy around shared, time-bound goals, the Mission has demonstrated that multilevel governance can be organised as an operational system rather than simply an aspiration. The Mission’s greatest achievement is therefore not only that it accelerated climate action, but that it tested a governance model at the European scale.

The Cities Mission should be understood as a natural experiment in European governance. It revealed that governing capacity is not distributed evenly across levels of government and that implementation capacity can be deliberately cultivated through multilevel governance. Rather than building new implementation systems for every new priority, Europe can leverage the governance infrastructure it has already created to respond faster, more coherently, and at lower coordination cost.

Climate neutrality was the Mission’s objective, but the governance infrastructure it revealed is applicable wherever Europe must coordinate multiple actors around long-term societal transitions.

The challenge for the next MFF is therefore not to invent a new governance model, but to organise European decision-making around the governing capacity that already exists.

Don’t just devolve — govern where governing capacity exists

The craft of collective problem-solving is exactly about how authority should be distributed across a governance system so that each level contributes what it is uniquely positioned to provide. It is a model of multilevel governance — not centralised authority, nor mere devolution — that allows decisions to be translated into implementation. To put it provocatively, decision-making should be both centralised and decentralised, assigning the right questions to each level of government.  

In the model that has been evolving through the Cities Mission, European institutions set direction, establish regulatory frameworks, and define common priorities. National governments create enabling conditions and maintain democratic accountability. Cities contribute implementation capacity, institutional learning, and governance knowledge generated through practice. Recognising these complementary roles does not diminish the responsibilities of European or national institutions. It strengthens their ability to deliver.

The Cities Mission has shown that cities are more than stakeholders or delivery partners. They constitute part of Europe’s governance infrastructure. If the next Multiannual Financial Framework seeks to improve Europe’s capacity to deliver under increasingly constrained political and fiscal conditions, it should build upon this existing strategic asset. Governing where governing capacity already exists is not simply a better approach to climate policy. It is a stronger model of European governance.

Read the accompanying recommendations for the next MFF to see how this principle can be translated into institutional design.