On the streets of Amsterdam last week, major changes were afoot. The first of 1,200 households installed an energy-saving system from IBM (IBM) and Cisco (CSCO) aimed at cutting electricity costs. Others were given fresh access to financing from Dutch banks ING (ING) and Rabobank to buy everything from energy-saving light bulbs to ultra-efficient roof insulation. And on Utrechtsestraat, a major shopping avenue in the center of the Dutch capital, solar-powered panels on local bus stops were installed to transform the road into a "Climate Street" piloting clean technology.

The projects are Amsterdam's first steps toward making its infrastructure more eco-friendly. Other projects are expected to follow soon. They include 300 power hookups around the city to recharge electric cars, solar panels that will be installed on Amsterdam's historic 17th century townhouses, and infrastructure upgrades that will allow households to sell energy they generate from small-scale wind turbines or solar panels back to the city's electricity grid for a profit.

Amsterdam's recent green energy move comes as governments worldwide set aside billions of dollars to create "smart cities" that mix renewable energy projects and stiffer efficiency rules to cut overall carbon dioxide footprints. Other cities have shown interest in the idea, but so far Amsterdam remains the world leader, aiming to complete its first-round investments by 2012. That makes it one of the most ambitious adopters of the smart city concept, which has attracted attention from global policymakers hoping to glean lessons from Amsterdam's green experiment.

More Efficient Households All told, the municipality, energy outfits, and private companies are expected to invest more than 1.1 billion [$1.5 billion] in Amsterdam's smart city programs over the next three years. That includes a 300 million [$420 million] investment by local electricity network operator Alliander in "smart grid" technology that uses network sensors and improved domestic energy monitoring to trim electricity use.

Also part of the plan: up to 200 million [$280 million] to be spent by local housing cooperatives on boosting household energy efficiency, and 300 million from companies including Philips (PHG) and Dutch utility Nuon to be invested in other energy-efficient technology. "We're in the right place at the right time," says Ger Baron, senior project manager at the Amsterdam Innovation Motor [AIM], a public-private joint venture that is overseeing the project.

The focus on cutting cities' emissions could have a big impact on the battle against global warming.