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, leaving developing regions like Sub-Saharan Africa and South Asia severely underfunded. The report emphasizes a critical gap in adaptation and resilience finance, which accounts for less than 10% of urban climate finance. To bridge this gap, the report recommends strengthening municipal finance capacities, aligning city and national climate policies, and utilizing innovative financial instruments like blended finance and green procurement.

• Annual urban climate finance flows averaged USD 384 billion in 2017/2018, a figure that remains far below the estimated annual requirement of USD 4.5 to 5.4 trillion.
• Urban climate finance is geographically skewed toward OECD nations and China, with critically low investment in rapidly urbanizing developing regions; Sub-Saharan Africa and South Asia received annual averages of only USD 3 billion and USD 4 billion, respectively.
• There is a significant imbalance between mitigation and adaptation funding, with adaptation and resilience measures representing only 9% of tracked project-level urban climate finance.
• Private finance, particularly household spending on electric vehicles and residential energy efficiency, accounted for 35% of total urban climate finance, averaging USD 136 billion annually in 2017/2018.
• The urban buildings and transport sectors are the primary recipients of climate finance, together accounting for approximately 97% of the total estimated urban climate finance (USD 167 billion and USD 202 billion respectively).
• The COVID-19 pandemic has strained city finances by reducing local revenue and increasing social spending, creating a risk that recovery efforts may lock in high-emission and high-vulnerability development pathways, particularly in Africa and South Asia.

APA

Climate Policy Initiative (2021). The State of Cities Climate Finance. https://www.climatepolicyinitiative.org/wp-content/uploads/2021/06/2021-State-of-Cities-Finance-Executive-Summary.pdf

Chicago

Climate Policy Initiative. The State of Cities Climate Finance. 2021. https://www.climatepolicyinitiative.org/wp-content/uploads/2021/06/2021-State-of-Cities-Finance-Executive-Summary.pdf.

Wikipedia

{{cite report |author=Climate Policy Initiative |title=The State of Cities Climate Finance |date=June 2021 |url=https://www.climatepolicyinitiative.org/wp-content/uploads/2021/06/2021-State-of-Cities-Finance-Executive-Summary.pdf |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/wp-content/uploads/2021/06/2021-State-of-Cities-Finance-Executive-Summary.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }