State of Cities Climate Finance Report 2021

The State of Cities Climate Finance Report 2021 was launched by Cities Climate Finance Leadership Initiative in partnership with the World Bank.

Major Findings of the Report

• Private Investments: Annual private finance in Urban climate finance corresponds to 35% of total finance. It was used primarily for the purchase of private electric vehicles and energy efficiency improvements in residential buildings.
• Public Investments: Public sector investment comprises about 22% of total urban climate finance. It invests in sustainable transport and energy efficiency in buildings.
• Investment in urban transport represents 53 per cent of total urban climate finance.
• Building infrastructure and energy efficiency gets the second-highest level of finance at 43 per cent.

Issues in Urban Climate Finance

• Shortage of Funds: There is substantial investment of an average $384 billion annually, flowing to cities for climate action. However, it is far short of investment needs, which is estimated at $4.5 to 5.4 trillion annually.
• Lopsided Funding: Urban climate finance flows are heavily concentrated in Western Europe, North America, East Asia (mainly China).
• Cities in developing countries (excluding China) only get minor investment s despite their rapidly growing urban centers.
• Lack of Investments in Renewable Energy: Relatively low levels of financial flows were committed for utility-scale renewable energy generation.

Possibilities and Prospects

With rapid urbanization there is an urgent need to scale up Urban Climate Finance for enabling cities to tackle climate change.

The world population is expected to grow to 10 billion by 2050, with 68% living in urban areas. There is need to provide adequate climate finances in the developing economies of South Asia and Sub-Saharan Africa.

Climate financing should be diversified to include areas such as Urban forestry, renewable energy, sustainable tourism etc.