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Cash-strapped cities struggle to clean up their climate act

by Megan Rowling | @meganrowling | Thomson Reuters Foundation
Friday, 26 May 2017 17:23 GMT

"Finance remains the biggest barrier," says expert from C40 network of megacities

By Megan Rowling

BARCELONA, May 26 (Thomson Reuters Foundation) - The world's cities cannot take action fast enough to keep global warming within internationally agreed limits because they lack the money to pay for low-carbon infrastructure, experts say.

James Alexander, director of the finance programme at the C40 network of megacities committed to tackling climate change, said its 91 cities would by 2025 have used up their share of the "carbon budget" still available to hold global temperature rise to no more than 1.5 degrees Celsius if they don't reduce emissions more rapidly.

The C40 group is working to "dramatically cut the curve" of planet-warming emissions from cities, which produce more than 70 percent of total global emissions, but they need better access to finance to help them do it, he said.

"Finance remains the biggest barrier," he emphasised at a meeting in Barcelona this week on mobilising investment in clean infrastructure. Lack of cash "is causing these actions not to take place as rapidly as we need".

Development banks and international climate funds should put more focus on cities in the projects they back, he added.

Stephen Hammer, manager for climate policy at the World Bank Group, said bank officials saw cities as a strong growth area and had been trying to identify urban opportunities.

The bank is currently supporting seven urban transport projects, for example, he said. They include the construction of a new metro line in Ecuador's capital, Quito, and the development of a bus rapid transit corridor in Dakar, Senegal.

In 2014, the World Bank provided over $3 billion in urban climate finance and technical assistance, Hammer added.

The European Investment Bank and the European Bank for Reconstruction and Development also have programmes to help cities design projects and find funds for them, their representatives said.

Alexander said C40 is working with the German and U.S. governments on a financing facility for cities to provide technical help, build their skills and enable them to share their knowledge on accessing funding.

For cities in developed countries, one common problem is that often their projects are not large enough to attract big funders, he added.

"There are many, many thousands of small projects that can have a huge impact when aggregated together, but individually are quite a small deal size, and those are the ones that we want to make move," he said.


Frederic Ximeno, ecology commissioner with the Barcelona City Council, said changing the way cities run - such as getting residents to ditch cars for public transport, switching to renewable energy or making buildings more energy efficient - requires action by a lot of people.

Small and medium-sized businesses must also come on board, he said, but companies and communities need support to reduce the risks they face in doing things differently.

Carme Melcion, manager for environmental services with the Barcelona Provincial Council - which groups 311 municipalities, around 70 percent of them with less than 10,000 inhabitants - noted the difficulty of bundling together smaller projects to attract investment due to differences in local regulation.

As many Spanish towns are not permitted to borrow from banks, a lot of the work, such as revamping public lighting to run on clean power, has to be done with public money, she said.

In the case of cities in developing countries, the main challenges in building clean infrastructure include insufficient expertise, staff and resources to turn good ideas into bankable projects, said C40's Alexander.

Many cities must pay high interest rates for credit and are also poor at collecting their own revenue, he said. At the same time, they are unable to count on a stable investment environment and steady flows of funds from national governments, he added.

Francisco Koch, technical director for South Pole Carbon Asset Management, said not enough was being done to invite businesses to work with city authorities on green projects.

"If you send the right signal, the private sector will move very fast," he told the discussion.

Alexander said there was a need to demonstrate to markets the scale of the opportunity for investing in cities.

A 2016 report from consultancy firm Arup and the C40 network estimated that its cities as a group will need average annual investment of over $50 billion up to and beyond 2030, if they are to cut their emissions in line with the 1.5 degree goal.

"If the banks recognise... the huge pipeline of deals that are coming down the track in our cities, we believe they would start changing their focus, building up their expertise, and that would benefit everybody," Alexander said.

(Reporting by Megan Rowling @meganrowling; editing by Laurie Goering. Please credit the Thomson Reuters Foundation, the charitable arm of Thomson Reuters, that covers humanitarian news, climate change, resilience, women's rights, trafficking and property rights. Visit http://news.trust.org/climate)

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