This article investigates the potential impact of sustainable energy action plans (SEAPs) on local development through a two-step methodology involving participatory planning and quantitative analysis. The first phase relies on a participatory system mapping (PSM) approach and generates a causal structure at the basis of the urban model. In the second phase, we transform the qualitative map into a system dynamic model which evaluates the effect of the SEAP on social, economic and environmental indicators. This methodology was applied to the case of Cascina Municipality (Italy). Through scenario analysis, we show that some indirect feedback can harm the achievement of the 20% emission reduction target. This process allows the local authority and stakeholders to evaluate the impact of emission reduction policies on CO2 emissions and local development, thereby generating collective learning on the systemic implications of the plan. We show that this method can enhance the ambition of emission mitigation efforts by small towns.