The State of Cities Climate Finance Part 1

The report estimates that an average of USD 384 billion was invested annually in urban climate finance during 2017-2018, a figure significantly lower than the estimated annual need of USD 4.5 to 5.4 trillion for low-emission and resilient urban infrastructure. Mitigation efforts, particularly in sustainable transport and green buildings, dominate the landscape, while adaptation finance remains severely underfunded, representing only 9% of tracked project-level data. The analysis highlights a geographic imbalance, with the majority of finance flowing to China and developed economies, while regions like Sub-Saharan Africa and South Asia remain critically underfunded. Key barriers to scaling this finance include low creditworthiness of city governments, a lack of bankable projects, and institutional restrictions on local borrowing.

• Global urban climate finance averaged USD 384 billion annually in 2017-2018, which is orders of magnitude below the estimated annual requirement of USD 4.5 to 5.4 trillion needed to build low-emission and climate-resilient urban infrastructure.
• Urban climate finance is heavily skewed toward mitigation, which accounted for 98% (USD 377 billion) of total estimated flows in 2017-2018, while adaptation finance represented only 9% (USD 6.8 billion) of tracked project-level data.
• Sustainable transport and green buildings are the primary recipients of urban climate finance, together representing the vast majority of estimated flows: transport attracted USD 202 billion (53%) and buildings attracted USD 167 billion (43%).
• There is a stark geographic disparity in finance distribution; the East Asia and Pacific region, driven largely by China, dominated with USD 187 billion, while Sub-Saharan Africa and South Asia received only USD 3 billion and USD 4 billion respectively.
• Private finance actors provided more capital than public actors, investing an annual average of USD 136 billion compared to USD 84 billion from public sources, with domestic private finance (USD 128 billion) being the largest single source.
• City governments face severe institutional and financial barriers to accessing capital, including the fact that 56% of countries forbid local government borrowing and only 16% allow taxation powers.
• Creditworthiness is a major hurdle for cities in emerging economies; only 21% of the 500 largest cities in these economies have investment-grade credit ratings.
• The COVID-19 pandemic exacerbated existing financial challenges for cities, as many faced decreasing revenues from local taxes and service fees while increasing expenditures for healthcare and social protection.
• Equity and debt instruments were the most common financial mechanisms used, each accounting for approximately 42-43% of flows where the instrument was known, with market-rate debt totaling USD 74 billion.

APA

Negreiros, P., Furio, V., Falconer, A., Richmond, M., Yang, K., Jungman, L., Tonkonogy, B., Novikova, A., Pearson, M., & Skinner, I. (2021). The State of Cities Climate Finance Part 1. Climate Policy Initiative. https://www.climatepolicyinitiative.org/wp-content/uploads/2021/06/SCCF_PART1-FINAL-1.pdf

Chicago

Negreiros, Priscilla, Valerie Furio, Angela Falconer, Morgan Richmond, Kristiina Yang, Laura Jungman, Bella Tonkonogy, et al. The State of Cities Climate Finance Part 1. Climate Policy Initiative, 2021. https://www.climatepolicyinitiative.org/wp-content/uploads/2021/06/SCCF_PART1-FINAL-1.pdf.

Wikipedia

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BibTeX

@techreport{negreiros2021state, author = {Negreiros, Priscilla and Furio, Valerie and Falconer, Angela and Richmond, Morgan and Yang, Kristiina and Jungman, Laura and Tonkonogy, Bella and Novikova, Aleksandra and Pearson, Marianne and Skinner, Ian}, title = {{The State of Cities Climate Finance Part 1}}, institution = {Climate Policy Initiative}, year = {2021}, month = jun, url = {https://www.climatepolicyinitiative.org/wp-content/uploads/2021/06/SCCF_PART1-FINAL-1.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }