Cities Fit for Climate Change - Advancing urban climate finance

Cities are large emitters of greenhouse gases. At the same time, population density and concentration of built infrastructure often make them highly vulnerable to climate change. Considerable investments are necessary to take appropriate mitigation and adaptation actions. However, cities often have difficulties in accessing finance, particularly from international funds. Low creditworthiness, sovereign upper limits for borrowing from the private sector and complex urban environments are amongst the challenges that complicate urban finance.

On behalf of Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH, adelphi conducted a study on the situation of urban climate finance in the partner countries of the "Cities Fit for Climate Change" project: Chile, India, and South Africa. The two overarching questions of this assignment were how to improve municipal access to funding instruments for climate change-related work; and how to better integrate climate change into local planning mechanisms.

The first part of the study, which was based on an in-depth literature review, described the status quo of climate finance, including relevant funding sources and mechanisms for cities. The second part consisted of three interview-based case studies to illustrate both the current situation and potentials for urban climate financing in Santiago de Chile, Chennai, and Durban. Issues, trends and best practices were identified and translated into challenges and opportunities. As a result, the study illustrated ways for cities and municipalities to obtain funding for climate action.