Cities Need Increased Climate Financing, Says New Study

By Tharanga Yakupitiyage Reprint | | Print |

UNITED NATIONS, Dec 7 2015 (IPS) - As a global climate change agreement reaches its final stage at COP21, Secretary-General Ban Ki-moon and international partners have released a new report outlining strategies for climate financing in cities.

The report, The State of City Climate Finance released on 4 Dec, highlights the investment gaps, obstacles and requirements needed for the creation of low-emission, climate-resilient urban infrastructure.

“The global response to the climate challenge must also include robust action by cities,” Ban remarked at launch of the report.

“Climate-smart infrastructure is essential for creating a safer, better future for growing urban populations around the world,” he continued.

According to the Intergovernmental Panel on Climate Change (IPCC), urban areas consume over 70 percent of the world’s energy and are responsible for almost half of all global greenhouse gas emissions.

Cities are also increasingly vulnerable to climate impacts. Over 90 percent of all urban areas are coastal, putting populations at risk of rising sea levels and devastating storms.

During COP21, the African Development Bank noted that some of Africa’s biggest cities are extremely susceptible to climatic events, including Accra, Dar es Salaam and Lagos which alone constitute approximately 24 million residents.

As urbanization and population growth continues to increase at a rapid pace, extreme weather events will take an increasing toll on urban communities.

The World Bank estimates that urban areas will bear more than 80 percent of overall annual global costs of climate change adaptation.

The study, initiated by the Cities Climate Finance Leadership Alliance (CCFLA), found that approximately 93 trillion dollars will be needed to design low-emission, climate-resilient infrastructure globally over the next 15 years.

More than 70 percent of this infrastructure will be in urban areas, costing 4.5 to 5.4 trillion dollars per year.

However, according to the Climate Policy Initiative (CPI), annual global climate flows in 2013 totaled only 331 billion dollars to both non-urban and urban areas, an almost 30 billion dollar decrease from 2012.

The report also noted that cities in developing countries are often unable to access financing for development since existing frameworks for international climate finance primarily focus on the national rather than municipal level.

CCFLA noted the challenge and need for urban climate finance to increase, stating: “Climate finance will not close the infrastructure investment gap alone— indeed, it represents a small part of total financing flows—but it plays a vital catalytic role, and it will need to be scaled in the coming years.”

In the report, the Alliance underscored five measures to mobilize investment for urban infrastructure.

It urges engagement with national governments to develop policies that encourage cities to invest in low-emission, climate-resilient infrastructure and support for cities to adopt frameworks that price climate externalities, such as cap-and-trade mechanisms.

As of September 2015, 23 cities, states and provinces have implemented carbon-pricing instruments including cap-and-trade policies, which help to control and limit greenhouse gas emissions.

For instance, after four years of a cap-and-trade programme in Tokyo, emissions have been reduced by 23 percent.

CCFLA also recommends the strengthening of facilities to develop climate mitigation and adaptation projects; collaboration with local financial institutions to help cities finance climate-smart infrastructure solutions and; the creation of a network of labs to identify innovative financial instruments and funding models.

The Alliance stated that though these proposals will not by themselves overcome the complex challenges that cities face, taken together, they are an important step towards the creation of climate-smart cities that safeguard the health and wellbeing of people.

Secretary-General Ban Ki-moon also urged the global community to reflect on the report’s recommendations, stating: “We have no time to lose. There is no plan B.”

CCFLA is a collation of over 40 banks, national governments and civil society organizations established by the UN Chief at the UN Climate Summit in September 2014.

Alliance members aim to publish the State of City Climate Finance report annually and are currently working on a plan to help translate the study’s recommendations into action.

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