Access to global climate finance key for cities to battle climate crisis challenges: Kevin Austin

Kevin Austin of the C40 Cities Climate Leadership Group emphasised the need for data, political will, and technical capacity building to support climate action

The climate crisis is real, but do cities, especially those in the developing world, have the wherewithal to gauge its impact, devise actionable strategies, and mobilise funds to finance them? For this, Urban-20 -- an engagement group of city leaders from G20 countries -- has recommended the need to build capacities and accelerate urban climate finance in their communique addressed to the top leadership of the cohort. Kevin Austin, deputy executive director at C40 Cities Climate Leadership Group -- a network of 100 international cities and one of the global conveners of Urban-20 -- spoke to HT about how to turn this agenda into action. Edited excerpts:

Kevin Austin is the deputy executive director at C40 Cities Climate Leadership Group -- a network of 100 international cities and one of the global conveners of Urban-20.

With the focus shifting to localising the sustainability agenda, how do you make city governments understand the nuances of the climate crisis?

We’re going to solve the climate crisis only if we focus on implementation (of climate action) on ground. But there are three major barriers. The first is the ability to get data to identify the problems, to make good decisions, and to be able to use that information to convince the public. The second is the political will. That partly [requires] working with the politicians, so they understand the importance of action, but also working with critical stakeholders, civil society, business, etc. to enable them to support climate actions. The final barrier is the technical and financial capacity building, designing programmes and finding finances.

What kind of finances and technical capacities can be made available on priority to cities in the developing world that need support?

The global investment in urban climate finance totalled just around US$384 billion in 2017-18, which is far below the approximate $2-5 trillion needed annually. Only 9% of tracked project-level data is invested in urban adaptation finance. The level of funding needed goes well beyond the $100 billion in yearly finance commitments pledged by donors. As part of the Urban-20, our key ask is this financing. There are three elements to it.

The first is to disincentivise investments in fossil fuels. The second is to overhaul development finance, which (in turn) has two critical parts -- to set up a project preparation facility to support cities because they must design the project and work out the technical feasibility to get finance, and to support direct lending for cities.

The final element, which is very critical, is to design the loss and damage facility that will provide financial support directly to cities in the global south. It’s the global north -- the richest countries in the world – that have been emitting carbon for centuries, and they’re the ones that must put the money down to directly support the global south, who haven’t contributed to climate change. And that’s the critical element of loss and damage.

What does the loss and damage fund have for cities in the global south?

It’s all very well saying we’re going to create a fund, but it doesn’t make a difference if you don’t put money in.

Globally, more than 50% of the world’s population lives in urban areas. In many cases, this is where some of the most significant impacts of climate change are seen. So, we need to get this fund to urban areas. At COP27 last year, they created a transitional committee to work out (details of) how to operationalise this fund. At COP in Dubai this coming December, we hope they will make proper recommendations.

So again, [the questions are] what’s the scope of the loss and damage fund; does it include cities; what constitutes an unavoidable risk of climate change; who will finance the fund; how much money is going to be in there; is there additional money; how do we make sure that the non-state actors such as private financial institutions, and the multilateral development banks -- which have a critical role in this funding -- are going to be pushed to make this happen?

Much of the climate funding is through loans. In the developing world, cities are financially weak and lack creditworthiness. Even if they do get them, how are they going to pay them back?

That’s the critical thing about the loss and damage fund. It’s not a loan that has to be paid back with a high interest, which will benefit the funders in the global north countries. Also, while working in the C40 Cities finance facility, we found that many programmes can be financed with national government grants.

Mumbai is a wealthy city. A lot of the elements of their climate action are self-funded, and they are not asking for loans from international finance houses. Also, several actions rely on policy changes -- policies that encourage recycling or making new buildings energy efficient. Working with the private sector is also critical. Putting energy efficiency measures typically doesn’t cost more than (constructing) a normal non-energy efficient building, but it saves money in the long run.

In Maharashtra, we are supporting [agencies] to develop a road map for energy transition for both the grid and buildings. There are different financing mechanisms. There are loans, but there could be escrows. If you’re putting solar panels on a bus station to charge electric buses, the savings in electricity will be substantial. So, you can potentially afford the capital cost, which will be offset by reduced operating costs going forward. There are lots of different ways of doing that.

The Urban-20 mayoral summit called for an enabling environment to ensure a direct flow of climate funds to cities from various sources, including multilateral development banks. How are cities to access these funds?

We’re talking to the G20 because it is its member countries — the UK, the US, France, Germany etc. — that put their money into multilateral organisations. If they put requirements (such as giving direct access to cities) as part of the request for funding (from multilaterals), these organisations will have to listen to them. At a short-term level, whilst it (funding) will still go through the bilateral funding mechanisms, the donor countries can say they want X proportion of the funds to go to urban climate actions of a specific nature. Denmark, for one, has been engaging with the African Development Bank where they want to focus on cities, and they’ve been requesting that.

The longer-term element is to overhaul the multilateral development banks so that they can focus much more on cities. But even in the short term, there is a potential to redirect their funds to the most efficient urban projects if the donor countries are willing to put pressure on them.

Funding for climate action is focused on mitigation and not so much on adaptation, which requires a lot of retrofitting of existing city infrastructure and could be capital-intensive. It’s virtually rebuilding cities.

50% of the buildings that will be there in 2050 are not there now because many areas, India is definitely one, are growing rapidly. We need to make sure that adaptation is central to the construction of the new buildings. Also, we need to integrate adaptation and mitigation. There is no point in having a zero-energy building if it is 40 degrees centigrade inside because it will be unliveable. There’s no point in having a new bus rapid transit if it’s underwater for three months of the year.

Adaptation is not considered nearly (important) enough. There are hundreds of billions of dollars of impact resulting from the climate crisis. A way out is to include that as part of the costing because if you’re paying money to fix the damage caused by floods etc., you’re not going to be spending the money on solving the problem (that caused those floods in the first place).

In Canada, they are looking at the (financial) risks associated with adaptation and how to build that into their budgetary processes. Ultimately, the funding will have to come from multilateral development banks from donor countries to help do that.

We need better information as well. There isn’t enough information on the potential risks associated with elements such as flooding or heat. At a granular level, insurance companies do have that data. But data relating to the poorest people in any city is not enough to make a good decision about what you should be protecting and how.

Are debt instruments such as green bonds a viable option for cities?

It is important to undertake a detailed review of each city project to determine the most appropriate mechanism. This will depend on the type of the project, city specifics such as its creditworthiness, and any national elements such as grants and other forms of support. In many cases, whilst there would be a capital outlay, the long-term cost-benefit ratio is significantly positive - we know that renewable energy is cheaper than fossil fuels, and energy efficiency measures lead to long-term savings in energy use and reduction in operating costs. It is important to consider other benefits of action. For example, the provision of electric buses will reduce the emissions of greenhouse gases but will also reduce air pollution. Retrofitting buildings to improve energy efficiency is labour-intensive and will create many new jobs for workers everywhere.

How do you fix cities that are already built and are densely populated to make them climate resilient?

It is a difficult problem everywhere. And it’s more costly to do things afterwards. Ultimately, with constrained budgets, cities must identify the elements that are at the most considerable risk.

Regarding mitigation measures, some of our C40 cities, including Mumbai, are involved in climate budgeting programmes where they identify the emissions levels in transport, waste, housing, etc., and they have a target to reduce emissions in each of those sectors. There is no such measure in that sense for adaptation. But the basic principles are the same. You must work out the critical priorities and integrate them into your budgetary processes.

The critical thing then, which many cities need support on, is how they can then develop the capability and capacity for project preparation. In Durban (which has seen massive flooding), C40 Cities’ project to clear the rivers of waste to reduce flooding is a good, relatively low-cost example of that. That’s now being expanded to other cities in South Africa.

What’s the progress on climate action by Indian cities that are part of C40? Part of the requirement of being in C40 is that (member) cities have climate action plans consistent with 1.5 degrees, which, broadly for cities, is reducing emissions by half. Indian cities are not required to do as much as London and Paris to go net zero by 2050.

In India, C40 operates in Delhi, Mumbai, Bengaluru, Chennai, Kolkata, and Ahmedabad. We are supporting them on their climate action plans. On a global basis, cities that have an action plan deliver five times as many actions as those that don’t have a plan. Both Mumbai and Chennai have already launched their plans. Bengaluru is close to completing it, and Ahmedabad has completed it. Two other cities that are to finalise their plans are Delhi and Kolkata.

Are there any mechanisms to monitor and assess climate action in cities?

Before projects are implemented, you need to estimate their impact on greenhouse gas emissions, air quality, jobs... All our cities also need to produce the greenhouse gas emissions inventory every couple of years, which shows how their emissions are reducing. So, you can look at project-wise implementation as well as city-wide.

Most G-20 cities have three-tiered governance structures. Is it possible to align all of them while formulating a climate agenda?

Cities cannot do this alone. The C40’s Deadline 2020 report states that C40 cities have the unilateral power to deliver actions contributing to a 5% (reduction) of emissions. The power to implement projects and policies in collaboration with others accounts for 46% (reduction) of emissions. The city does not have control over actions mostly related to the decarbonisation of the grid, which could (reduce) emissions by 49%. This is usually (done) at a state or national level. This is why the U20 is such an important forum, whereby the major cities of the U20 nations put the case to the national governments to act together.