Mayors are key actors in delivering the local action necessary to achieve the targets set in Paris and to ensure global temperature stays within 1.5 degrees above pre-industrial levels. One of the most important steps in meeting this challenge will be building or retrofitting sustainable urban infrastructure, yet cities in the C40 Cities Climate Leadership Group (C40) consistently cite challenges accessing adequate financing to implement these vital projects. The ‘global infrastructure investment gap’ is a serious challenge for cities across the globe – Standard & Poor’s estimates that 57 trillion USD must be invested in global infrastructure between 2014 and 2030 and that if business as usual continues, investment will fall short by 500 billion USD per year.
The most recent C40 Good Practice Guide offers examples from five C40 cities that have implemented the same solution to start closing the ‘financing gap’ – city climate funds. These funds, also known as ‘green banks’ and ‘revolving loan funds,’ are institutions set up to finance projects in a city that reduce emissions or improve climate resilience. When implemented according to the good practices brought together in this guide, these funds can yield significant financial benefits – and substantial emissions reductions.
Through the C40 City Finance Programme, climate funds based in Melbourne, London, New York City, Amsterdam, and Toronto have shared their first-hand experience in operating a fund and highlight strategies they consider instrumental to their success, including:
1) Convening key stakeholders – Sustainable Melbourne Fund
2) Mobilising private investment – London Green Fund
3) Becoming a specialty lender – New York City Energy Efficiency Corporation
4) Setting up project specific funds – Amsterdam Climate & Energy Fund and Sustainability Fund
5) Financing innovative solutions – Toronto Atmospheric Fund
Thanks to the successful deployment of strategies identified in the guide, these funds have collectively supported more than 325 million USD in sustainable projects, primarily in clean energy and energy efficiency. The longest running fund, the Toronto Atmospheric Fund, has reduced energy bills by over 40 million USD and contributed to a city-wide reduction of GHG emissions to 24% below 1990 levels.
C40 encourages others to learn from the challenges and successes of these trailblazing cities. The C40 Cities Good Practice Guide – City Climate Funds provides first-hand accounts from cities participating in the C40 Sustainable Infrastructure Finance Network to help other cities evaluate whether to establish climate funds to help fund their transition to a low-carbon future.