According to a new report released today, cities and other sub-national bodies can and should take advantage of upcoming investments in urban development and find climate finance solutions to play a major role in tackling climate change.
The report by the Cities Climate Finance Leadership Alliance (CCFLA) and partners looks at subnational and local climate finance activities and pinpoints gaps that require urgent attention to harness subnational and city-level climate responses.
Cities, as population epicentres, account for three-quarters of the world’s energy use and some 70% of the world’s carbon emissions. These figures are likely to increase if no action is taken, with around 60% of people expected to live in urban areas by 2030, according to the United Nations.
Subnational and city actors have shown commitments by submitting pledges to the Non-State Actor Zone for Climate Action (NAZCA) Platform, but they can do much more, the report finds.
“We have a unique window of opportunity, with large investments in infrastructure and housing to be made in the coming years to cater for needs of the growing number of urbanites,” said Martina Otto, who heads UN Environment’s work on Cities and Lifestyles.
Let’s make sure these investments are future-proof: that means low-emission, resource-efficient and resilient.
“Let’s make sure these investments are future-proof: that means low-emission, resource-efficient and resilient. We urgently need the mechanisms in place to bridge potentially higher up-front cost with longer-term savings at all levels.”
Although great efforts are being made to align the financial system with sustainable development, trillions of dollars still need to be mobilized to meet the Sustainable Development Goals (SDGs) and the Paris Agreement, and to overcome the financing barriers at the subnational and city levels.
“We have reached a turning point,” said Carlos de Freitas, Director of Programs of FMDV, which co-hosts the Secretariat of the CCFLA, “showcasing that many actors are working together to provide complementary financial solutions to support the mobilization of climate finance at local and subnational levels. This is where transformative action for climate takes place.
“The next step is about scaling up the promising initiatives, and taking into account the co-benefits of local climate investments in order to better price ‘green capital’. This will foster private investment and expand green capital from billions to trillions.”
“The CCFLA’s ultimate goal is to scale-up the deployment of low-carbon, climate resilient solutions at the sub-national level, and to accelerate investment in them,” said John Tidmarsh, Chief Investment Officer of the R20 Regions of Climate Action and co-host of the CCFLA Secretariat.
“The CCFLA aims to develop a collective and individual awareness of objectives and their enabling factors that will accelerate the value chain of project identification, development and financing. The scoping report is an important early initiative that will help us more rapidly to deliver upon our ambitions.”
The scoping report calls for deeper analysis of the projects and financing currently available at a sub-national level. Having a greater understanding of the best practices currently being implemented will help to overcome barriers and further reduce financial risk. The report finds that major advances need to be made in order to create incentives for investment in local resilience. This in turn will then support local and subnational governments in building fiscal autonomy, integrating and further adopting standards, operational frameworks and measurement tools.
The CCFLA also calls for more training and awareness building initiatives and to further explore derisking instruments and dynamics aiming at reducing the perception of risk, aiming to both empower local and subnational governments to understand the environment and players, and responsible investors to adapt to local needs in order to better catalyze climate finance flows.
The report was developed in partnership with Climate-KIC, FMDV, R20 Regions of Climate Action and UN Environment.
“The mapping seeks to be representative of the variety of initiatives that have been recently developed by the CCFLA members to support the localization of climate finance,” said Victor Gancel, Climate-KIC’s Flagship Programme Manager. “Policy makers, cities, developers, public and private investors need practical information about the growing number of initiatives addressing the funding gap for low carbon urban action. This first mapping serves a dual purpose by engaging practitioners and laying out foundations for a global coordination on the urban climate finance challenge.”