Cities Worldwide Face Alarming Climate Finance Shortfall, Study Reveals at COP28

By Editor


A study released during the sidelines of the COP28 climate talks by the Cities Climate Finance Leadership Alliance (CCFLA) has underscored a severe lack of climate finance reaching cities, particularly in low-income nations. Despite cities bearing the brunt of climate risks and accounting for three-quarters of global emissions, multilateral development banks (MDBs) are falling short in addressing this critical financial gap.

The study, marking the first comprehensive assessment of urban finance from major MDBs, reveals a stark reality: cities receive a mere 1 percent of the necessary climate finance, estimated to be around $5.4 trillion per annum until 2030. Analysis of MDB data from 815 urban climate-related projects between 2015 and 2022 unveiled that only $62 billion, roughly 21 percent of total MDB financing, was allocated to these initiatives.

Despite a worldwide surge in urbanization rates, the study unveils a disproportionate allocation of urban-related climate funds. Regions like sub-Saharan Africa, the Middle East, and North Africa, known for heightened climate vulnerability, received notably meager shares of urban climate finance. Issues such as limited creditworthiness and constrained access to capital markets exacerbate this disparity.

The study implores development banks to augment concessional funding availability, aiming to mitigate investment risks. This strategy aims to catalyze climate-related investments by reducing financial uncertainties, thereby encouraging more substantial contributions towards climate-resilient urban infrastructure.

Addressing the concerning shortfall in climate finance for cities becomes imperative, given their pivotal role in both contributing to global emissions and facing the harshest impacts of climate hazards. The call for action emphasizes the urgent need for a recalibration in financing strategies by MDBs to safeguard cities, particularly in economically vulnerable regions, against the escalating challenges posed by climate change.

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