State initiatives against climate change have received a major boost after partners from the developed world launched a Sh12.7 billion fund for supporting cities in developing and emerging economies to go green.
Targeted at low-carbon, resilient and livable cities, the City Climate Finance Gap Fund (The Gap Fund) was launched recently by ministers and directors of the Governments of Germany and Luxembourg together with the World Bank, European Investment Bank (EIB) and Global Covenant of Mayors for Climate and Energy (GCOM)).
Other key players in the fund include C40 cities, ICLEI - Local Governments for Sustainability, and the Cities Climate Finance Leadership Alliance (CCFLA).
The intervention comes as recent research shows that cities are on the brink of a climate emergency as they currently account for around 70 percent of global CO2 emissions. Moreover, urban centers share of emissions is expected to grow as 2.5 billion people migrate from rural to urban areas by 2050.
Fund implementer EIB also notes that before the COVID-19 pandemic struck, it was estimated that more than USD93 trillion in sustainable infrastructure investment was needed by 2030 to meet climate goals.
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Nevertheless, the bank said Gap Fund was here to support city and local governments facing barriers to financing climate-smart projects.
"Climate investment projects are an indispensable opportunity to improve lives of the millions who live in cities around the world. However, cities frequently lack the capacity, finance and support needed for the early stages of project preparation – especially in developing and emerging economies. This leads to impasses where cities cannot move project ideas to late-stage preparation and implementation," notes the institution in a statement.
With a target capitalization of at least Sh12.7 trillion (€100 million), the funds aim to unlock over Sh500 billion (€4 billion) of final investment in climate smart projects and urban climate innovation globally.
"Filling a gap in available project support, the Gap Fund offers technical and advisory services to assist local leaders in prioritising and preparing climate-smart investments and programs at an early stage, with the goal of accelerating preparation, enhancing quality, and ensuring they are bankable," says EIB.
Core donors to the Gap Fund are Germany at Sh5.7 billion and Luxembourg at Sh1.3 billion.
The initiative was first mooted at the UN Climate Action Summit last year by the Leadership for Urban Climate Investment (LUCI) which promotes financing for ambitious urban climate action until 2025.