The world’s cities need trillions more dollars to invest annually to meet urban climate finance needs, new research shows.
The funding gap is most stark in the developing world, particularly in South Asia and Sub-Saharan Africa, a report by the Cities Climate Finance Leadership Alliance and the World Bank said.
According to the research, an average of $384 billion was invested annually on urban climate finance in 2017-2018, compared with the estimated $4.5-5.4 trillion needed to tackle global warming.
The data is particularly stark given that 70 per cent of global emissions come from cities, which seven out of 10 people will call home by 2050.
“The numbers are clear, we are failing to provide cities with adequate finance to address the climate emergency,” said Barbara Buchner, managing director of the Climate Policy Initiative, the secretariat of the Alliance. "It is critical that the entire financial system—public, private, and philanthropic—urgently work together to mobilise city-level climate finance at scale."
Urban climate investments are “heavily concentrated” in China and in the 38 largely high-income nations of the OECD. This contrasts with only small cash flows in the developing world, despite their typically fast growing urban areas.
Figures are not yet available for 2019, but despite an expected increase in funding for that year, the report warns that “investment trends for 2020 and beyond are highly uncertain due to the Covid-19 pandemic."
“On the positive side, development banks have increased their climate commitments, some countries have adopted green recovery packages, and consumer investment in electric vehicles has continued on an upward trend.
“On the negative side, many cities are delaying or reducing non-essential capital expenditures, and, at the national government levels, spending on electric vehicle subsidies has decreased,” it said.
Selwin Hart, a special adviser on climate to UN Secretary General Antonio Guterres, highlighted the contrasting fortunes of the world’s richest and poorest counties.
“Not all countries, and all cities, for that matter, share the same starting point. As developed countries have poured trillions of dollars into their recovery packages, developing countries continue to battle the pandemic and its social and economic consequences”, he said.
Mr Hart said that “cities are the global engines for growth but are also on the frontline of the climate crisis."
“With more than half the world’s population, they consume two thirds of global energy, emit more than 70 per cent of global greenhouse gasses, and face disproportionate exposure to a wide range of climate risks. By mid-century more than 3.3bn urban residents could be at risk from severe climate impacts,” said Mr Hart.
Jurgen Zattler, a senior climate official at Germany’s economic co-operation and development ministry, said most urban climate investments went into mitigation measures, compared with a “small fraction” put towards adaptation.
“This means leaving many cities and their residents rather unprepared for the effects of climate change”, he said.
But Sameh Wahba, an Egyptian national and head of the World Bank’s Urban, Disaster Risk Management, Resilience and Land Global Practice, said he was “optimistic about the resourcefulness” that cities have shown in times of crisis.
“With thoughtful planning, financing and support, cities can play an important role in the recovery from Covid-19 and towards green, resilient and inclusive development.”