City Climate Finance Gap Fund Launches to Support Climate-smart Urban Development
NEW YORK CITY, NY (September 23, 2020) – Today, the City Climate Finance Gap Fund (“The Gap Fund”) was launched jointly by ministers and directors of the Governments of Germany and Luxembourg together with the World Bank, European Investment Bank, and Global Covenant of Mayors. It paves the way for low-carbon, resilient, and livable cities in developing and emerging economies by unlocking infrastructure investment at scale.
The Gap Fund will support city and local governments facing barriers to financing for climate-smart projects. Filling a gap in available project support, the Gap Fund offers technical and advisory services to assist local leaders in prioritizing and preparing climate-smart investments and programs at an early stage, with the goal of accelerating preparation, enhancing quality, and ensuring they are bankable.
With a target capitalization of at least €100 million, the Gap Fund will accelerate investments supporting cities in developing and emerging economies, as they determine goals and objectives for low-carbon and well-planned urbanization. The Gap Fund investment is aiming to unlock at least €4 billion of final investment in climate-smart projects and urban climate innovation.
Cities are on the frontlines of the climate emergency and currently account for around 70 percent of global CO2 emissions. Urban centers’ share of emissions is expected to grow as 2.5 billion people migrate from rural to urban areas by 2050. Before the COVID-19 pandemic struck, it was estimated that more than $93 trillion in sustainable infrastructure investment was needed by 2030 to meet climate goals. As cities strive to recover from the economic impacts of COVID-19, investments in clean energy, climate-resilient water and sanitation, and urban regeneration projects will play an important role in eliminating pollution, improving local food systems, and creating green jobs. They will also lead to cleaner, healthier, and more equitable communities – conditions that can help prevent future pandemics.
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. This hurdle is frequently overlooked by national and international support – a challenge the Gap Fund will seek to overcome.
The Gap Fund is an initiative of the governments of Germany and Luxembourg together with the Global Covenant of Mayors for Climate and Energy (GCOM), in partnership with several other key players in the climate finance arena (including C40, ICLEI - Local Governments for Sustainability, and Cities Climate Finance Leadership Alliance). It will be implemented by the World Bank and the European Investment Bank. The Gap Fund was announced at the UN Climate Action Summit 2019 as a key initiative of LUCI, the Leadership for Urban Climate Investment, which promotes financing for ambitious urban climate action until 2025. Core donors to the Gap Fund are Germany (45 million Euro - including 25 million Euro from the Ministry for the Environment, Nature Conservation and Nuclear Safety, and 20 million Euro from the Ministry for Economic Cooperation and Development) and Luxembourg (10 million Euro).
“There can be no return to business as usual. Our recovery from the COVID-19 crisis must be the opportunity to rebuild better, in particular with respect to the climate and environment. We must also ensure that this recovery leaves no one behind, supporting livelihoods and communities,” said EIB President Werner Hoyer. “The Gap Fund will help cities in developing countries to implement their transformative climate projects. This is a tangible example of how the EIB’s partnership with governments, local authorities and the World Bank can support the global shift towards a climate-neutral economy and the achievement of the Sustainable Development Goals. The Gap Fund will play an important role in this endeavour, and I encourage cities to share their ideas and apply for support.”
"What cities do today will forever shape our climate tomorrow,” said Mari Pangestu, World Bank Managing Director for Development Policy and Partnerships. “Cities in developing countries urgently need resources to realize their climate ambitions. Through the Gap Fund, the World Bank is supporting low-carbon, resilient, inclusive, healthy, creative, and sustainable communities for all.”
“Cities are key actors for addressing both the climate and COVID-19 crises”, said Svenja Schulze, the German Federal Environment Minister, “but they can only fulfill their role with support by national governments. We have co-developed the City Climate Finance Gap Fund with both city networks and finance institutions to ensure that the Gap Fund indeed fills the gap to unlock ambitious investment for meeting climate and COVID-19 recovery targets at scale.”
“Cities lead the way to the Paris climate goals” said Norbert Barthle, Parliamentary State Secretary of the Germany’s Federal Ministry of Economic Cooperation and Development. “The climate-neutral and resilient cities of tomorrow are being built today and it’s our responsibility to lend a hand. Through the Gap Fund, cities are enabled to lay the foundation stone for sustainable infrastructure and ambitious climate action from day one, thus mobilising urgently needed investments to achieve their climate targets and drive a green recovery.”
"Urban areas are game changers in the fight against global warming", said Carole Dieschbourg, Luxembourg's Minister for the Environment, Climate and Sustainable Development. "I'm confident that the City Climate Finance Gap Fund will make a big difference for cities and local authorities on their journey to lower greenhouse gas emissions and climate resilient development, which is one of the key objectives of the Paris Agreement. The Gap Fund is the best example of a multilateral partnership that builds on the respective strengths of all relevant actors at the different levels of governance."
“Cities have led us forward in the fight against climate change — and as city leaders work to respond to the impacts of the COVID-19 pandemic, they have a real opportunity to spark a greener, more sustainable recovery. Launching the City Climate Finance Gap Fund is a key step to support their efforts,” said Michael R. Bloomberg, Co-Chair of the Global Covenant of Mayors for Climate & Energy. “The fund helps cities commit to actions that take on climate change, and we encourage more partners from the public and private sectors to step forward and help them do even more.”
“Cities are important arenas for finding and implementing solutions for the climate crisis,” said Frans Timmermans, Co-Chair of the Global Covenant of Mayors. “To tackle climate change, we must invest in local solutions and urban infrastructure that can accelerate the transition to a clean economy. The Gap Fund will assist cities across the world to turn plans to reduce emissions and eliminate pollution into reality for their citizens.”
“Cities are the hub of the global green recovery,” said Mayor of Chefchaouen, Morocco, Mohamed Sefiani. “Mayors are united in their vision for a green and just recovery – one that rebuilds our communities and economies to be stronger and more resilient than ever before. However, even without a pandemic to contend with, cities in the Global South face complex challenges with limited resources. The Gap Fund responds this critical need, empowering cities like Chefchaouen to live up to their climate goals, while also supporting greater resilience, liveability, and health within our communities.”
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