Climate fund will mobilize billions for global urban redevelopment

More than half of the world’s population today lives in cities – and that figure will have increased to two-thirds by 2050. We know cities as centres for culture, economy, jobs and innovation. However, they are the largest consumers of energy in the world and they also emit the greatest amount of global CO2. A climate-friendly future and the limiting of global warming to 1.5°C cannot be achieved without their contribution.

Many cities have already developed plans to reduce their CO2 emissions and prepare for the consequences of climate change. Cyclones, droughts, floods and heatwaves are increasing in frequency and intensity, causing enormous human suffering and economic damage. Cities such as La Chorrera in Panama, Blantyre in Malawi and Bogor in Indonesia – and their inhabitants – need sustainable public transport, energy-efficient buildings, clean energy systems, integrated material recycling, green living spaces and freshly-conceived sustainable urban districts.

What cities will need in the near future

The Moroccan city of Casablanca is pushing ahead with an extensive urban renewal programme aimed at preserving the cultural and historical features of the city while optimising buildings and their energy consumption at the same time. To this end, specific projects must be defined and the feasibility of models for attracting private investment examined.

In the medium-sized city of Santa Bárbara d'Oeste in Brazil, a new plant is to be built that will recycle household waste from a total of eight municipalities. When a plant like this goes into operation, landfills can be closed and environmentally-harmful influences and climate-damaging greenhouse gases can be reduced. However, the city needs support to carry out a feasibility study on the proposed waste recycling technologies. The selection of the right technology during the initial stage of the project is a decisive factor for its subsequent stages and successful implementation, but the city has not yet been able to find a partner to help it progress.

IKI Projects for Sustainable Urban Development

By 2030, more than 65 trillion US dollars will have to be invested in the construction of sustainable urban infrastructure. This sum equates to 70% of the required investments in sustainable infrastructure worldwide and amounts to almost 20 times Germany’s GDP last year (3,344 billion, 2018).

However, cities often fall at the first hurdle when they attempt to develop specific projects from ideas and check their feasibility. International support provided by project development facilities or climate funds is mostly focused on the development of climate plans before this phase or the further development and financing of projects after it. A global climate fund will now close this gap and help cities to overcome their initial problems.

How cities can finance their restructuring

On 22 September 2019, Svenja Schulze, Germany’s Minister of the Environment, announced the establishment of the ‘Cities Climate Finance Gap Fund’ at the climate summit in New York convened by the UN Secretary-General. The Gap Fund will make funds available to cities in developing countries. Experts will then help the cities to develop sustainable infrastructure projects until project preparation facilities can subsequently provide support for them. When the development has progressed this far, investors should then be willing to finance the implementation.

The Gap Fund is to receive more than 100 million euros in grants, enabling the construction of urban infrastructure projects with a total value of 4 billion euros. Cities can thus make an essential contribution to achieving the goals of the Paris Agreement and the 2030 Agenda for Sustainable Development.

The Gap Fund was developed jointly with the Global Covenant of Mayors (GCOM), a city network. Other multilateral development banks, financial institutions, climate funds and think tanks were also involved. As the main donor, Germany plans to provide up to 40 million euros and Luxembourg will donate up to 10 million euros.

The Gap Fund is part of the Leadership for Urban Climate Investment (LUCI) framework initiative, which is aimed at improving sub-national stakeholders’ access to international climate finance. The Fund also cooperates closely with the Cities Climate Finance Leadership Alliance (CCFLA), a leading platform for international cooperation and knowledge sharing in the field of sub-national climate finance.

The Gap Fund should be fully operational by the start of the climate negotiations at the COP 26 in 2020, supporting cities with the implementation of their sustainable infrastructure projects.

Further Information

Further Information



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