The State of Cities Climate Finance

The 2021 State of Cities Climate Finance report finds that annual urban climate finance averaged USD 384 billion in 2017/2018, which is significantly lower than the estimated annual need of USD 4.5 to 5.4 trillion. Investment is heavily concentrated in OECD countries and China, with critically low levels in South Asia and Sub-Saharan Africa. The report emphasizes that while cities act as providers of infrastructure and stewards of regulation, their ability to mobilize finance depends on national-level governance, city-level capacity, and the alignment of climate-specific financial instruments. It recommends strengthening municipal finance fundamentals, integrating carbon pricing into capital planning, and utilizing catalytic funding to de-risk private investment in developing economies.

• Annual urban climate finance flows averaged USD 384 billion in 2017/2018, a figure that falls far short of the estimated annual requirement of USD 4.5 to 5.4 trillion.
• Urban climate finance is geographically concentrated in OECD countries and China, leaving developing regions like South Asia and Sub-Saharan Africa with very low investment levels, averaging USD 4 billion and USD 3 billion annually, respectively.
• Mitigation efforts dominate urban climate finance, with low-carbon transport and green buildings accounting for 53% and 44% of total finance, respectively, while adaptation and resilience measures represent only 9% of tracked project-level data.
• Private finance, particularly household spending on electric vehicles and residential energy efficiency, accounted for 35% of total urban climate finance (USD 136 billion), while public sector investment contributed 22% (USD 84 billion).
• The COVID-19 pandemic has strained city finances, reducing local revenues and creating a risk that recovery efforts in rapidly urbanizing areas of Africa and South Asia may lock in high-emission and high-vulnerability development pathways.
• Mobilizing urban climate finance depends on three enabling elements: country-specific governance and fiscal systems, city-specific planning and financing capacity, and climate-specific alignment with financial instruments.

APA

Climate Policy Initiative (2021). The State of Cities Climate Finance. https://www.climatepolicyinitiative.org/publication/the-state-of-cities-climate-finance/

Chicago

Climate Policy Initiative. The State of Cities Climate Finance. 2021. https://www.climatepolicyinitiative.org/publication/the-state-of-cities-climate-finance/.

Wikipedia

{{cite report |author=Climate Policy Initiative |title=The State of Cities Climate Finance |date=30 June 2021 |url=https://www.climatepolicyinitiative.org/publication/the-state-of-cities-climate-finance/ |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{climatepolicyinitiative2021state, author = {{Climate Policy Initiative}}, title = {{The State of Cities Climate Finance}}, institution = {Climate Policy Initiative}, year = {2021}, month = jun, url = {https://www.climatepolicyinitiative.org/publication/the-state-of-cities-climate-finance/}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }