Asia Pacific Cities Climate Finance Snapshot

Background

Cities are the engines of a country’s economic activity and are where more than half of the world's population (56%) resides1. At the same time, high concentrations of people and infrastructure make them extremely vulnerable to the impacts of climate change. To mitigate these impacts and transition to a low-carbon, resilient future, cities need access to adequate financing. According to the UN, 49 countries in Asia Pacific2 were responsible for more than half of global greenhouse gas (GHG) emissions in 2020. Their current nationally determined contributions (NDC) are projected to result in a 16% increase from 2010 levels, rather than the 45% decrease required by the 1.5°C pathway.3 Therefore, investing in climate action in the region is now more urgent than ever.

In addition, the ‘Global Climate Risk Index 2021’ states that six out of the 10 countries most affected by extreme weather events between 2000 to 2019 are in the Asia Pacific region (Myanmar, Philippines, Bangladesh, Pakistan, Thailand, and Nepal), while the countries most affected in just 2019 also include Japan and India.4 Cities in Asia Pacific most commonly report facing the following climate hazards:

• Extreme heat (24%)
• Heavy precipitation (19%)
• Urban flooding (16%)
• Drought (13%)
• River flooding (11%)

These hazards have both acute and chronic impacts on lives and livelihoods of Asia Pacific cities, negatively affecting human health, agriculture, water supply and multiple other sectors. Addressing these risks requires action from both the public and private sectors, as well as cooperation between local and national governments. Financial investment into the decarbonization and resilience of cities in the region is crucial.

CDP, in partnership with ICLEI, engages with hundreds of local governments on environmental disclosure, helping them to measure and manage GHG emissions, identify climate risks and set emissions reduction targets alongside actions to protect their most vulnerable populations. In 2022, a total of 302 cities in Asia Pacific disclosed through CDP-ICLEI Track. Out of those cities, 79 cities across 16 countries disclosed a total of 201 climate-related projects, while 169 were reported as seeking funding.

This snapshot offers valuable information on the types of projects cities from Asia Pacific are seeking to advance for climate action, key areas for private and public investment, regional, and sectoral needs. Data analyzed as part of this snapshot does not represent the entire investment needed for cities to achieve climate targets.

Key takeaways:

• More than one third (35%) of Asia Pacific cities have set an adaptation goal, while 41% of cities have set an emissions reduction target, with a further 10% planning to introduce one in the next two years. These goals/targets are backed up by more than half (56%) of cities reporting a climate action plan or strategy, and a further 15% currently developing or planning to develop one.
• 33% (56) of the projects disclosed by Asia Pacific cities do not have estimated costs, highlighting the gap faced by cities in the region when it comes to understanding financing needs.
• Southeast Asia was the subregion with the highest number of reported projects (58) among the subregions followed closely by East Asia (54), South Asia (29) and Oceania (28).
• 40% of projects are reported as being at early stages of development (scoping, pre-feasibility/impact assessment, or project feasibility), requiring further technical assistance to advance towards implementation. Almost 70% (47) of these are in South and Southeast Asian cities with all subregional projects seeking funding.
• Renewable energy has the highest financing demand, with total financing needs equal to US$4.6 billion, followed by buildings/energy efficiency and transport.

The data at a glance

This snapshot features data provided by 79 cities located across 16 countries in Asia Pacific with a focus on the 169 projects disclosed as seeking funding.

To view projects disclosed within each Asia Pacific country and subregion, please click on the map below. A pop-up window will open a downloadable spreadsheet with all the projects.

The data below is collected from the self-disclosed responses to CDP-ICLEI Track in 2022. To read individual disclosures from local governments, click here.

Reported projects seeking funding can be categorized into the following:

• Not funded and seeking full funding
• Not funded and seeking partial funding
• Partially funded and seeking additional funding

17% (US$3.2 billion) of disclosed projects are not funded and seeking partial funding, while 22% of projects (US$1.3 billion) are seeking full funding. Projects that are partially funded and seeking additional funding amounting to US$1 billion, or one third of the total proportion.

Projects seeking full funding are mostly from cities in South and Southeast Asia. These include a 4 MW solar park in Rajkot City, India and waste-to-energy facilities in Davao City, Philippines. The largest total cost of projects reported in these subregions comes from India (US$534 million), Indonesia (US$449 million) and the Philippines (US$110 million).5

Renewable energy is the largest sector for all funding requirement categories, with projects that are seeking funding amounting to US$1.3 billion. Water management is another significant sector where cities are seeking full funding equivalent to US$622 million.

Projects in the renewable energy sector make up the largest number of reported projects as well as total cost at US$4.6 billion, or 46%, of total project costs from 32 projects in 28 cities. The second largest sector by project cost is land-use at US$758 million, or 8%, of total project costs.6 The water management sector with a total project cost of US$686 million consists of 16 projects from 16 cities across Asia Pacific. The transportation sector makes up US$146 million in project cost consisting of 28 projects from 21 cities.

The size of projects reported covers a vast range, from less than US$100,000 to more than US$100 million. The highest number of projects (30) are reported as being between US$1-5 million. Small-scale projects (below US$1 million) are mostly related to project planning and scoping. Physical projects, such as those related to infrastructure, facilities and systems, are mostly greater than US$1 million, ranging from small and medium-scale solar PV projects to large-scale infrastructure projects, such as water management, renewable energy facilities and transportation infrastructure.

Examples of large-scale projects exceeding US$100 million include offshore wind power generation infrastructure (total project cost: US$3.1 billion) and a stormwater drainage network in Tiruchirappalli City, India (total project cost: US$503 million).

When disclosing climate-related projects, cities can attribute the development stage from scoping and pre-feasibility through to implementation and post-implementation stages. The total cost for projects under preparation7 amount to US$9.4 billion.

67 projects have been reported as being in the implementation phase, representing US$1.4 billion, or 14% of total project costs. These projects are mostly located in East Asia across diverse sectors ranging from waste management to renewable energy to green buildings/energy efficiency. Meanwhile, 40% of reported projects are in early-stage development with a total cost of US$5.4 billion. Almost half of these projects are from cities in Southeast Asia.

Asia Pacific cities’ energy mix for electricity consumption is largely fossil fuel based, with most cities sourcing energy from coal and gas. Interestingly, solar and hydropower are the next most common sources of electricity (whilst usually a small portion of the mix), in line with a growing shift towards renewables in the region.

Stationary energy is responsible for around 70% of reported GHG emissions from Asia Pacific cities, while 83 cities (24%) have set at least one target related to renewable energy/electricity. Targets include increasing installed capacity of renewable energy/electricity, increasing the proportion of electricity consumed from renewable sources, or increasing the generation of renewable electricity. In order to achieve these, financial investment is needed to build the necessary infrastructure.

In 2022, 28 cities reported renewable energy projects collectively valued at US$4.6 billion and seeking almost US$1.4 billion in investment. Almost two thirds of these projects are in the early stages of development, while 11% have progressed to project structuring and transaction preparation stages. On the other hand, 36% of renewable energy projects have been reported as being at implementation or post-implementation stages, although none are fully funded.

The majority of these more advanced projects are in East Asia, such as a public-private partnership for a public facilities solar plant in Goyang City, South Korea. Early-stage projects seeking funding are mainly based in South and Southeast Asia, such as the implementation of an 18 megawatt floating solar photovoltaic (FSPV) system at Periyakulam Lake in Coimbatore City, India.

Explore the map below to view renewable energy projects across Asia Pacific reported via CDP-ICLEI Track in 2022.

Transport is a significant contributor to GHG emissions, accounting for approximately 25% of energy-related CO₂ emissions globally 8, with the transport sector’s share in total fossil fuel CO₂ emissions in Asia at 11.3%9.

Cities in Asia Pacific reported 169 actions related to the transportation sector, making up 22% of the total reported climate mitigation actions in the region. These range from planning and strategies, such as the Integrated Transportation Strategy in New Plymouth, New Zealand whereby the city is aiming to reduce Vehicle Kilometres Travelled (VKT) by 20% by 2035, to an intra-city underground subway in Makati City, Philippines developed through a public-private partnership. The latter is estimated to lead to 270,000 fewer cars in the city and a reduction of 2.3 million tonnes of CO₂ annually by 2048.

The total disclosed project cost for the transport sector in Asia Pacific cities is US$146 million with 28 projects, the third highest reported number. Examples of projects seeking full funding include a low carbon zone in Chennai, India to improve pedestrian areas (total project cost: US$17.6 million), and the installation of electric vehicle charging infrastructure in Quezon City, Philippines (total project cost: US$1.8 million).

According to the International Energy Agency, “the buildings and buildings construction sectors combined are responsible for 30% of total global final energy consumption.”10 GHG emissions from buildings in the Asia Pacific region vary across countries, from 1.69 MtCO₂e in New Zealand to 48.16 MtCO₂e in South Korea and up to 160.22 MtCO₂e in India.11 In Southeast Asia, the buildings sector accounts for 23% of final energy use and 24% of energy-related carbon dioxide (CO₂) emissions.12 However, data reported by cities shows that only three cities in India are seeking financing for buildings/energy efficiency projects, such as green building implementation in Tiruchirappalli City, while overall, only 5% of total mitigation actions cities are taking are related to the buildings sector. This indicates there could be significant missed opportunities for optimizing energy efficiency to reduce both emissions and costs in buildings across the region.

The total disclosed project cost for buildings/energy efficiency is US$529 million from 30 projects in 21 cities. By their nature, these projects are mostly smaller scale compared to other infrastructure projects. The reported projects seeking funding amount to US$170.8 million. 30% of energy efficiency/green building projects, equivalent to US$14.5 million are still under development. Most projects are reported as being partially funded and seeking additional funding but at the same time being at implementation or post-implementation stages, such as LED lights in Wollongong, Australia and building retrofitting in Bogor City, Indonesia.

Conclusion

• Cities in Asia Pacific play an important role in climate change, both in mitigation and adaptation. There is a pressing challenge for cities to build climate-resilient infrastructure due to climate risks that they are already facing.
• Cities’ disclosure through CDP-ICLEI Track shows that local authorities are seeking funding to implement climate-related projects, with a total of 169 projects costing almost US$10 billion disclosed.
• Renewable energy is the main sector needing investment in Asia Pacific cities. Other major sectors include land-use, transportation, water and wastewater management. Based on this data, it can be concluded that cities are more focused on mitigation projects. Given various climate risks faced by cities, adaptation projects should be considered as important. More information is needed to analyze the interactions of adaptation actions and resulting co-benefits.
• A financing gap between developed countries and developing countries exists, evident in the number of funded projects being reported in developed countries and the number of projects seeking funding in developing countries. Therefore, there is a need to understand the barriers for developing countries and to address this gap through multi-stakeholder collaboration.
• The role of technical assistance partners as well as financial institutions are important to addressing these issues in Asia Pacific, given their expertise and experience in providing technical assistance and concessional financing for local authorities.

Notes

1. World Bank, October 2022, https://www.worldbank.org/en/topic/urbandevelopment/overview
2. Asia Pacific (APAC) refers to areas/countries that are within the proximity of the Western Pacific Ocean, comprising of South Asia, East Asia, Southeast Asia and Oceania
3. 2022 Review of Climate Ambition in Asia and the Pacific, UNESCAP, November 2022 https://www.unescap.org/kp/2022/2022-review-climate-ambition-asia-and-pacific-raising-ndc-targets-enhanced-nature-based
4. Global Climate Index 2021, Germanwatch, January 2021, https://germanwatch.org/sites/default/files/Global%20Climate%20Risk%20Index%202021_2.pdf
5. It should be noted that the cost of projects seeking partial funding is dominated by a single wind farm project in South Korea with a total project cost of US$3.1 billion, or 98% of the total reported cost
6. Only one land-use project was reported comprised of land rezoning and requisition plans in Taiwan
7. Projects under development prior to its commercial operating date. These projects are typically in project scoping, pre-feasibility, feasibility analysis, structuring, and/ or procurement stage.
8. UN Sustainable Transport Forum, 2021
9. ADB Transport Outlook, 2022
10. International Energy Agency, Buildings Tracking Report, September 2022, https://www.iea.org/reports/buildings
11. Climate Watch. 2022. Washington, DC: World Resources Institute. Available online at: https://www.climatewatchdata.org
12. International Energy Agency, 2020