Golden opportunity for city climate finance to be turbocharged across globe

• Demand for finance for climate-related infrastructure projects in cities is rising

• 2,346 projects in 636 cities across 86 countries reported to CDP in 2023

• Reported projects seeking $65 billion in investment to be delivered

• 63% of projects focused on climate mitigation and reducing emissions

• 45% of projects in the Global South

• Government, private sector and financial institutions must step up support

London, 30 November 2023: The opportunity for governments, businesses and financial institutions to invest in climate infrastructure in cities has never been greater or more urgent, according to new data published by CDP – the non-profit which runs the world’s environmental disclosure system for companies, cities, states and regions - at the start of COP28.

Fresh insights in CDP’s Global Snapshot, provided by over 1,000 cities reporting their environmental data through CDP-ICLEI Track in 2023, show that 636 cities in 86 countries disclosed 2,346 climate-related infrastructure projects. These projects, worth $146 billion, are seeking $65 billion worth of investment to be delivered. However, these figures are conservative estimates of the real state of global needs – for example, the UN estimates that by 2030, Global South countries need investments far beyond $2 trillion a year to meet their sustainable development goals and to effectively tackle climate change.

These figures also demonstrate a leap in demand for finance, with a 52% increase in the number of projects reported to CDP-ICLEI Track in 2021 (1,541 projects).

The top sectors for these projects are:

• Buildings and energy efficiency (eg energy-efficient building retrofits) – 482 projects (worth $34 billion)
• Transport (e.g. electric vehicle infrastructure) – 359 projects (worth $31 billion)
• Waste management (eg waste to energy) – 300 projects (worth $8 billion)
• Renewable energy (eg enhanced solar energy) – 277 projects (worth $12 billion)
• Water management (eg enhanced access to drinking water) – 273 projects (worth $30 billion)

Just under half of all reported projects (45%) are in the Global South, with waste management and water management being the top sectors for the region.

Over four fifths of the reported projects (83%) are seeking financing. Of these, 34% of projects are seeking full funding, 21% are seeking partial funding, and 45% are seeking additional funding to already secured funds.

Almost half of all reported projects (48%) are also at the early stages of development, demonstrating the importance of technical assistance for project preparation, financing and implementation. Moreover, two fifths (40%) of reported project costs are worth less than $500,000, highlighting the need to mainstream financial aggregation with the support and backing of national governments.

Nearly two thirds of all reported projects (63%) are focused on climate mitigation and reducing city-wide greenhouse gas emissions, while close to one third (31%) are focused on increasing urban adaptation and resilience to climate change.

Reducing emissions in line with the Paris Agreement requires unprecedented investment - up to $5.4 trillion a year to 2030 - in sustainable and resilient urban infrastructure.

As a starting point to address this, cities should disclose environmental data and climate-related projects to understand risks, opportunities and impacts and provide enhanced transparency and accountability around projects seeking financing and funding.

Due to the high costs of climate-related projects for cities, especially water management projects, coupled with constraints on municipal budgets, a rapid acceleration of support and investment from national governments, the private sector, multilateral development banks and other financial institutions is needed to meet the Paris Agreement’s goals.

To achieve this, CDP wants to see:

1. National governments recognise the need to invest in cities by involving subnational governments in the design and implementation of national climate commitments and integrating subnational projects in NDC (Nationally Determined Contribution) and NAP (National Adaptation Plan) investment plans;
2. The private sector more actively support cities in developing the enabling conditions for private investment and collaborate with public financial institutions to drive finance at scale; and
3. Developed countries meet or exceed their $100 billion-a-year commitment to support developing countries. Public and development financial institutions should facilitate more direct access to climate finance at the sub-national level.

Maia Kutner, CDP Global Director of Cities, States and Regions, said:

“Sustainable and resilient infrastructure is the cornerstone of tangible climate action. Climate infrastructure requires real money tied to real places to be delivered on real dates, but it is an entirely positive investment to create a truly sustainable economy.

“As the world gathers for COP28, our new data shows there is a golden opportunity for national governments, the private sector and financial institutions across the globe to turbocharge their support to cities and invest in this mission critical infrastructure, particularly in the Global South.

“We hope this call to ramp up city climate finance will also drive more cities to report their environmental data in a transparent way. This will encourage the investment they need to take meaningful action and create sustainable urban areas for all.”

Andy Deacon, Co-Managing Director, Global Covenant of Mayors, for Climate and Energy (GCoM), said:

“Local governments have ambitious climate plans but often lack the funding and support to turn plans into action.

“The 2023 CDP Global Snapshot clearly outlines exactly what is needed to turn this funding into a reality: including more capacity-building for cities and subnational governments on financing climate action plans, access to finance, project preparation and related economic and financial models.

“And by having a global pipeline of projects developed by cities and subnational governments and connected to project preparation facilities, we can bridge the subnational climate finance gap through partnerships that increase investment for climate action in cities and subnational governments.”

Examples of climate related projects that cities reported to CDP-ICLEI Track in 2023 include:

• Buildings and energy efficiency: Peñalolén (Chile) is seeking funding to deploy solar panels, solar thermal energy, heat pumps and LED lighting in all municipal schools, with co-benefits for educating the children about sustainability.

• Transport: Santa Fe County (USA) is seeking funding to install 33 electric vehicle chargers in the area, focusing on community centres in rural and tribal lands, affordable housing complexes and disadvantaged communities.

• Waste management: Mbabane (Eswatini) is seeking funding to create a material recovery facility, reducing total landfill waste and creating a supply of recyclable materials, with co-benefits for local employment.

• Renewable energy: Curitiba (Brazil) is seeking funding to install grid-connected solar panels on 4 bus terminals and over a closed landfill site, with an estimated 10-15 MW to be generated, and over 89,000 tons of CO2 reduced, by 2050.

• Water management: Legazpi City (Philippines) is seeking funding to transform an 8 hectare public park into a flood impoundment pond, with the capacity to hold 165,400 cubic metres of water, and to plant flood resistant trees on 30% of the area, potentially sequestering 2.4 tons of emissions.