Urban local governments are important players in climate governance, and their roles are evolving. This review traces the changing nexus of Australia’s climate policy, energy policy and energy efficiency imperatives and its repositioning of urban local governments. We characterise the ways urban local governments’ capacities and capabilities are being mobilised in light of a changing multi-level political opportunity structure around energy efficiency. The shifts we observe not only extend local governments’ role in implementing climate change responses but also engage them as partners in conceiving and operationalising new measures, suggesting new ground is being opened in the urban politics of climate governance. A review of the Australian context provides important insights for the new politics of energy in the city as, internationally, energy efficiency is reframed as a climate change issue and the city is repositioned as an important strategic space in energy politics and the governance of energy systems.