Six Innovative Funding Methods to Achieve Climate Action and Equity in US Cities

This briefing by RMI outlines six innovative funding mechanisms used by US cities to finance climate mitigation, resilience, and environmental justice, emphasizing the integration of equity to support marginalized communities.

• US cities are implementing various tax-based models to create dedicated revenue streams for climate and equity. These include sales taxes, such as Denver's Ballot Measure 2A which adds a 0.25 percent tax on nonessential items to generate $40 million, and Cincinnati's Issue 7, a 0.8 percent county sales tax increase to support Metro bus services. Other models include retail taxes, like Portland's 1 percent gross receipts tax on large retailers with $1 billion or more in national sales, and fossil fuel production taxes, such as Long Beach's $0.15 per barrel increase.
• Electricity and energy consumption taxes are used to fund climate initiatives while minimizing burdens on low-income residents. Boulder, Colorado, established a carbon tax generating approximately $1.8 million annually, with a structure where industrial customers pay the highest average share ($9,600/year). Albany, California, implemented a 9.5 percent blanket utility service tax via Measure DD, which exempts designated low-income residents.
• Municipalities utilize climate and resilience bonds for large-scale capital projects. Miami's 'Miami Forever Bond' is a $400 million general obligation bond approved in 2017 to address sea level rise and extreme storms, using equity as one of five guiding themes for project selection. Resilience bonds, which involve insurance companies to lower risk costs, are used by the New York Metropolitan Transportation Authority to insure power infrastructure for the metro rail service.
• Effective equitable climate funding requires intentional design, including early community inclusion, transparent fund allocation, and complementary messaging. Examples include Portland's intentional Board selection for the Clean Energy Benefits Fund and Denver's Ballot Measure 2A, which aims to invest 50 percent of dedicated funds directly in communities using a lens of equity and social justice.
• New funding proposals in 2021 continue to refine consumption-based taxes. Portland is considering a Healthy Climate Fee and Clean Air Protection Fee to raise roughly $11 million annually from institutions exceeding emissions thresholds. Denver's proposed "Polluters Must Pay" ordinance would introduce a tiered consumption-based tax on electricity and natural gas that only triggers after customers exceed predefined allowances and exempts low-income customers.

APA

RMI (2021). Six Innovative Funding Methods to Achieve Climate Action and Equity in US Cities. https://rmi.org/resources/six-innovative-funding-methods-to-achieve-climate-action-and-equity-in-us-cities/

Chicago

RMI. Six Innovative Funding Methods to Achieve Climate Action and Equity in US Cities. 2021. https://rmi.org/resources/six-innovative-funding-methods-to-achieve-climate-action-and-equity-in-us-cities/.

Wikipedia

{{cite report |author=RMI |title=Six Innovative Funding Methods to Achieve Climate Action and Equity in US Cities |date=6 May 2021 |url=https://rmi.org/resources/six-innovative-funding-methods-to-achieve-climate-action-and-equity-in-us-cities/ |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{rmi2021six, author = {{RMI}}, title = {{Six Innovative Funding Methods to Achieve Climate Action and Equity in US Cities}}, institution = {RMI}, year = {2021}, month = may, url = {https://rmi.org/resources/six-innovative-funding-methods-to-achieve-climate-action-and-equity-in-us-cities/}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }