On the sidelines of the COP28 climate talks, a study by the Cities Climate Finance Leadership Alliance ,CCFLA, reveals a stark reality.
Cities, particularly in low-income countries, are grappling with a substantial climate finance deficit. Despite being at the forefront of climate hazards and accounting for three-quarters of global emissions, cities receive a mere 1% of the required climate finance. The staggering estimated gap is as high as $5.4 trillion annually until 2030.
The study, the inaugural examination of urban finance by major multilateral development banks ,MDBs,, sheds light on the inadequacies in financing strategies. From 2015 to 2022, MDBs allocated a mere $62 billion, constituting 21% of total financing, to urban-related climate projects. This disparity persists even as urbanization rates surge worldwide.
Sub-Saharan Africa, the Middle East, and North Africa, regions with heightened climate vulnerability, face an alarming scarcity of urban climate finance. Issues such as creditworthiness and restricted access to capital markets exacerbate the challenges for cities in these areas.
The CCFLA study underscores the urgent need for development banks to recalibrate their approach, advocating for the provision of more concessional funding to mitigate investment risks. As cities grapple with the impacts of climate change, bridging this financing gap becomes paramount to fostering resilience and sustainable urban development on a global scale.