Cities are critical for the future of climate action and will play a crucial role in determining whether emissions trajectories align with the objectives set out in the Paris Agreement. The key will be the extent to which cities can access the necessary finance for sustainable infrastructure at the city level. Numerous approaches have been proposed to meet this challenge but policymakers have not yet actively considered the potential of a coordinated response that serves as a financial institution focused on cities.
Existing institutions do not provide sufficient support to ensure that the sustainable infrastructure identified in city climate action plans is financed. To respond to climate change in the relevant timeframe requires a new approach that is based on cities and subnational institutions, rather than nation states, as core recipients.
This working paper frames the financing challenge for cities committed to climate action and provides an initial assessment of possible solutions. Specifically, it explores the potential for an institutional response through a Green Cities Development Bank (GCDB), a new development finance institution lending directly to cities with a focus on urban climate investment needs.