Cities, especially in developing countries, face major obstacles in securing the affordable, large-scale financing they need to take climate action, a report from the Cities Climate Finance Leadership Alliance finds.
Released at the United Nations Climate Change Conference in Paris, the report, The State of City Climate Finance 2015 (68 pages, PDF), identified six barriers that cities around the globe face in securing climate finance — uncertainty over regulatory and tax policies; difficulty in incorporating climate goals into urban infrastructure planning; lack of expertise in developing low-emission, climate-resilient infrastructure projects; insufficient control over infrastructure planning and complex stakeholder coordination; high transaction costs; and a lack of proven funding models at the city and regional level. A coalition of multilateral and nonprofit organizations and financial institutions working to support city leaders and institutions in their efforts to mobilize investment in low-carbon and climate-resilient infrastructure, CCFLA argues that climate action at the city level is critical to mitigating the negative effects of a warming climate, given that urban areas account for more than 70 percent of energy-related CO2 emissions and nearly half of all global greenhouse gas emissions.
To address the barriers to climate finance, CCFLA calls for national governments to adopt policies and incentives that encourage cities to invest in low-emission and climate-resilient infrastructure; support cities in adopting frameworks (such as cap-and-trade mechanisms) that put a price on emissions; and strengthen facilities that support cities in developing investment-worthy climate action projects. Funded in part by the Children's Investment Fund Foundation and the Agence Française de Développement, the report also recommends directing international development finance through local financial institutions and creating a network of labs to develop new financial instruments and funding models.
"Major investment is urgently needed for climate action in cities," said UN Secretary-General Ban Ki-moon, "and the recommendations in this report, if put into place, can help unlock the capital needed. We know these solutions can work — they just need to be scaled up. I urge governments, banks and the international community to act on these practical recommendations."