Cities unveil time frame for ‘localizing’ climate finance

ANALYSIS | At the recent COP 22 talks, local authorities said they want a framework for accessing international climate-related funding by 2020.

Advocates demonstrate outside of the Marrakech climate talks on 10 November. (Kiara Worth/IISD/www.iisd.ca/climate/cop22/enb/17nov.html)

MARRAKECH, Morocco — When countries gathered last month for nearly two weeks of discussion on the new global accord on climate change, they had intended to focus on how to move forward from agreement to implementation — a “COP of action”, drawing on the formal designation of the meeting as COP 22.

But the surprise U. S. electoral results, announced halfway through the first week, sparked a new moniker: “COP of reaction”. Suddenly, much of the discussion was given over to speculating on how the United States would respond under the administration of Donald Trump — and how the global climate-change community would react.

By the start of the second week, however, confidence had been restored at COP 22, formally the 22nd meeting of the Conference of Parties to the U. N. Framework Convention on Climate Change (other COPs exist under different U. N. accords). Multiple pledges, roadmaps and commitments had been announced, making it clear that action would continue to be taken on climate change — in particular by cities, business and others outside of the ambit of national governments.

The big question, however, has been how to pay for that work. Throughout the two weeks in Marrakech, particular focus was given over to the issue of “localizing” climate finance — to make national and international pots of money for adaptation and mitigation projects increasingly available to local authorities.

[See: COP 21 must encourage climate funding to reach the local level]

In previous rounds of climate talks, discussion on this topic had focused on funding mechanisms that would be controlled by national governments — such as the Global Climate Facility and the Adaptation Fund. But two years ago, the tenor if this conversation changed.

New deadline

The COP 20 negotiations, which took place in Lima in 2014, resulted in what’s known as the Lima-Paris Action Agenda. That document for the first time substantively recognized the climate action of local governments. Negotiators were particularly interested in cities’ potential role in taking quick steps to reduce emissions before 2020, when national governments’ own pledges will kick in.

“The Marrakech Roadmap centres on two key actions. First, participants announced that they would launch a global campaign to push for localizing climate finance in the coming year. And second, they urged the creation of a global “action framework” for localizing climate finance by 2020.”

This was a first step toward local governments’ calls for direct funding streams to spur city-based climate action. Cities have long noted that climate funding allocated to the national level seldom finds its way down to the city level in sufficient quantities. For example, the Overseas Development Institute has noted that only a tenth of climate funding between 2010 and 2014 was allocated by central governments for urban projects.

[See: What did the COP 22 climate talks mean for cities?]

At the same time, projections of rapid urbanization, especially in Asia and Africa, have focused attention on the massive challenge of urban infrastructure funding. Analysts suggest this needs to double from the current USD 3.4 trillion per year to USD 6 trillion annually over the next 15 years, according to a recent report by the New Climate Economy.

Not only does this figure need to be doubled, but it also needs to be channelled toward low-carbon infrastructure in line with the ambitions of the Paris Agreement to keep temperature rise below 2 degrees Celsius. The combination of the urgent need to finance sustainable urban infrastructure and the emerging voice of local governments at climate summits has given new momentum to attempts to localize climate finance.

Among several events on the issue at Marrakech, the Climate Summit for Local and Regional Leaders brought together over a thousand participants representing 780 local and regional governments. It resulted in the “Marrakech Roadmap for Action”, in which local authorities call for a global action framework to localize climate finance.

The roadmap centres on two key actions. First, participants announced that they would launch a global campaign to push for localizing climate finance in the coming year. And second, they urged the creation of a global “action framework” for localizing climate finance by 2020.

A key part of the 2020 plan will be to create a single database, called the Funding and Initiative Navigator, highlighting climate action being taken by cities and other “subnational” actors. There are several databases of local-level climate action operating today, but the new online resource would be unique in its specific aim to increase the visibility of financing opportunities at the local level.

[See: The new urban imperative for secondary cities]

Implementation of the roadmap will be overseen by the Cities Climate Finance Leadership Alliance (CCFLA), a network of some 40 development banks, foundations, city groups and more. In Marrakech, the CCFLA launched a report on “gaps and opportunities” around efforts to localize climate finance.

CCFLA members have launched over 30 initiatives to address the local-level finance gap, according to the report. Some are working with multilateral banks, for instance, to push them to prioritize investments in low-carbon and adaptation projects in cities. Others are examining how to develop city-specific international climate funds, or piloting new financial instruments for cities such as green bonds. Still others are working to bolster capacity among city officials in developing urban projects so they can attract investment.

These initiatives are largely driven from the bottom-up. But the stakeholders interested in pursuing this work go beyond the city networks to include actors from the business sphere such as Citi and Deutsche Bank, as well as multilateral and national development agencies.

National action

These and other efforts by “non-state” actors received keen attention in Marrakech. High-level diplomats were appointed by both this year’s host Morocco and COP 21 host France to shepherd and give additional visibility to the collective efforts of cities, businesses and others.

“The calls to action at Marrakech show that momentum is building for engaging countries in processes that would strengthen local governments’ ability to secure climate financing. While local governments have long been pushing this issue, they have seen little genuine progress.”

One key end result was a strategy called the Marrakech Partnership for Global Climate Action, which charts out how to catalyze and support climate actions among groups, by theme and sector. The partnership stresses the importance of financial flows, technology and capacity-building support for local climate action, as well as the scaling-up of investments in urban infrastructure.

The overarching aim is to collectively bridge the 14-17 gigaton “emissions gap” that scientists say exists between the emissions-reduction actions that national governments have pledged under the Paris Agreement and what is needed to keep global average temperature rise below the dangerous threshold of 2 degrees Celsius. (See here for the latest report from the U. N. Environment Programme on the emissions gap, released at in Marrakech.)

[See: 2018 conference first to put cities at heart of climate science]

These calls to action show that momentum is building for engaging countries in processes that would strengthen local governments’ ability to secure climate financing. While local governments have long been pushing this issue, they have seen little genuine progress. Now, the tone of the Marrakech talks reflects new realization among countries that local authorities can make significant contributions to their national commitments and ambitions — and the need to catalyze action before 2020.

The talks thus indicate movement toward a more defined action agenda supporting cities. Networks of local governments such as ICLEI say they now hope this process will build over the coming year into more structured dialogues with national governments at the global level on how to move forward with concrete action.

As that process gets underway, what will cities be looking for from national governments? The Marrakech Roadmap makes several recommendations for national governments concerning financing.

Perhaps first and foremost, organizers say that national authorities need to strengthen the capacity of local and regional governments to take climate action in the first place. In so doing, governments need to take into account both “vertical” and “horizontal” considerations, they emphasize — strengthening bottom-up information that can serve nations in climate-related decision-making, for instance, as well as a bolstering the top-down transfer of resources to cities and regions.

[See: Fund seeks to strengthen climate action in cities]

The roadmap also calls on national governments to work toward greater integration of local dimensions into the global financial system. That could mean supporting specialized financial intermediation, integrating climate risk, or encouraging bilateral and multilateral development banks to support cities.

Cities also need national governments to facilitate broader and easier access to dedicated international climate funds, such as the Green Fund for Climate and the Global Environment Fund. In this, the roadmap urges governments to support a rebalancing of financing for climate-related adaptation with a new focus on local and regional governments.

Ultimately, local authorities are looking to have made progress on these issues by the time of national governments meet for the next full round of global climate negotiations — that would be COP 23, slated for November in Germany.

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Jennifer Lenhart

Jennifer Lenhart is programme manager for WWF’s Earth Hour City Challenge, which has engaged over 325 cities in some 25 countries. She previously worked at a Seattle-based urban sustainability consulting firm, UN-Habitat in Nairobi, and the City of Malmö Environment Department (Sweden). She also holds a PhD in urban climate governance from Wageningen University (the Netherlands).

Jeet Mistry

Jeet Mistry is part of the core team that manages the Earth Hour City Challenge, WWF’s international project to promote low-carbon development in cities across the globe, and is primarily responsible for policy and partnership development and in providing technical support on urban sustainability issues to the WWF global network of offices. Jeet has over 15 years of work experience in the sustainability field, including within the finance sector on socially responsible investment and also on human rights and development issues in South Asia.

Carina Borgström Hansson

Carina Borgström Hansson is senior advisor on footprint and cities at WWF, where she has worked since 2005. As a member WWF’s international footprint steering group, she has pioneered the development of strategic approaches to reduce humanity’s ecological footprint, including approaching the accelerating destruction of biodiversity and ecosystem services in WWF’s priority places by engaging with drivers far beyond these places, such as urbanization and consumer attitudes and lifestyles. In 2011 she initiated WWF’s international city initiative, with a focus on mobilizing cities in the development of low-carbon urban solutions for attractive, equitable and sustainable lifestyles.