Climate Finance in Cities: Where We Stand and the Road Ahead
Accounting for 70% of global CO2 emissions, cities all over the world are facing climate challenges while at the same time being essential for reaching climate goals as well as reducing climate risks. As climate events increase in intensity and occurrence, the need to finance climate action becomes more evident than ever before. The Cities Climate Finance Leadership Alliance also estimates that tackling these issues could create tens of millions of jobs across the globe and generate high gains for economies. However, cities, especially in developing countries, still face high barriers to financing climate action. The COVID-19 pandemic further added obstacles and challenges, making cities rely on inadequate financial instruments and forcing some to reduce climate action. While the investment in climate finance at local level is increasing, it is still insufficient, especially in countries where urban growth is faster.
Against this backdrop, on 30 June 2021 the Alliance launched the 2021 State of Cities Climate Finance Report. Co-written with the World Bank and Atlantic Council’s Adrienne Arsht-Rockefeller Foundation Resilience Center, the report presents a view of global urban climate finance, including sources and destinations, challenges of and solutions to mobilise it, and calls for a systemic, whole-of-economy approach, whereby country, city and climate policies, data and activities are aligned, well-funded and executed at the local level. Specifically, in the first part the report presents a comprehensive framework for analysing and tracking climate finance flows, including approaches and tools that can be used by actors at various levels. In a second part the enabling conditions for bringing climate finance to the local and city level is highlighted. Finally, it offers recommendations for international, national and city officials on how to address the investment gap and its obstacles.
To learn more about the current state of climate finance at subnational level and potential future developments, click here.