Financial instruments for investing in sustainable cities

This fact sheet analyzes financial instruments for sustainable urban investment in nine Swedish cities. It highlights a significant funding gap for climate neutrality by 2045, noting that while these cities have raised 31.2 billion SEK through 52 green bonds for projects like renewable energy and clean transport, current investment plans are insufficient. The report details municipal funding inflows (taxes, grants, debt) and outflows, and notes that alternative financing like blended finance and crowdfunding are not yet utilized in the studied Swedish context.

• Achieving climate neutrality in nine selected Swedish cities is estimated to require at least 19,271 SEK per capita per year until 2030. If this estimate is expanded to all of Sweden, the total funding needed would be 200 billion SEK per year.
• The nine focus cities have utilized green bonds to raise 31.2 billion SEK through 52 separate issuances. These funds are directed toward projects such as renewable energy generation, clean transportation, green buildings, and pollution control, while specifically excluding investments in nuclear energy and fossil fuels.
• Municipal governments in Sweden receive funding through several channels: taxes, fees, and levies; subsidies and grants (including a national system of equalization for municipalities with lower income generation); debt; and the sale of assets.
• Research grants provide a supplementary funding source for municipal governments, though they typically cover personnel and immaterial assets rather than major capital expenditure. In the last decade, 492 research projects involving the nine focus cities received 1.7 billion SEK from four Swedish research funders.
• Alternative 'off balance sheet' financing methods such as blended finance (public-private co-investment) and crowdfunding are not currently used by the nine Swedish cities studied. Crowdfunding is noted as being used in the Netherlands for cooperatively owned solar panels.
• Current investment plans from municipal governments are insufficient to reach the goal of climate neutral cities by 2045, necessitating new collaborations between municipal governments, private industry, and citizens.

APA

Vanhuyse, F., Piseddu, T., & Arra, V. (2022). Financial instruments for investing in sustainable cities. Stockholm Environment Institute. https://www.sei.org/wp-content/uploads/2022/02/factsheet-financial-instruments-for-sustainable-cities.pdf

Chicago

Vanhuyse, Fedra, Tommaso Piseddu, and Venni Arra. Financial instruments for investing in sustainable cities. Stockholm Environment Institute, 2022. https://www.sei.org/wp-content/uploads/2022/02/factsheet-financial-instruments-for-sustainable-cities.pdf.

Wikipedia

{{cite report |last1=Vanhuyse |first1=Fedra |last2=Piseddu |first2=Tommaso |last3=Arra |first3=Venni |title=Financial instruments for investing in sustainable cities |publisher=Stockholm Environment Institute |date=February 2022 |url=https://www.sei.org/wp-content/uploads/2022/02/factsheet-financial-instruments-for-sustainable-cities.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{vanhuyse2022financial, author = {Vanhuyse, Fedra and Piseddu, Tommaso and Arra, Venni}, title = {{Financial instruments for investing in sustainable cities}}, institution = {Stockholm Environment Institute}, year = {2022}, month = feb, url = {https://www.sei.org/wp-content/uploads/2022/02/factsheet-financial-instruments-for-sustainable-cities.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }