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Transforming energy use in cities to address the threats of climate change and resource scarcity is a major challenge in urban development. This study takes stock of the state of energy in urban policy and planning and reveals potentials of and constraints to energy-efficient urban development. The relationship between energy and urban structure provides a framework for discussing the role of urban planning to increase energy efficiency in cities by means of three in-depth case studies of medium-sized cities in Northern Europe: Eskilstuna in Sweden, Turku in Finland and Tartu in Estonia. In some ways these cities go ahead when it comes to their national climate and energy policies and aim to establish urban planning as an instrument to regulate and influence the city’s transition in a sustainable way. At the same time, the cities are constantly facing goal conflicts and limitations to their scope of action, which creates dilemmas in their strategic orientation and planning activities (e.g. regional enlargement and increased commuting vs. compact urban development). Finally, considering urban form and spatial structure along with the policy context as well as regional drivers and functional relations is suggested as a suitable approach for addressing the challenges of energy-efficient urban development.

Cities are the main consumers of energy and resources but at the same time are considered as centres for innovation which can provide solutions to unsustainable development. An important concept regarding energy and resource efficiency on the scale of the city and city-region is the compact city. Compact cities and compact urban development are thought to decrease energy and resource demand per capita and increase efficiency. At the same time trade-offs and potential rebound effects of increased resource efficiency question certain achievements of a compact urban structure. This paper reviews aspects of resource and energy efficiency in compact city development in a European context. We conclude that, if the idea of the compact city should have any effect on resource and energy efficiency, accompanying measures have to be implemented, such as e.g. efficient public transport systems to offer alternative travel modes. Also the allocation of efficiency gains due to compact urban development has to be taken into account in order to avoid direct and indirect rebound effects.

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