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City Climate Finance Gap Fund II - EIB

As of: September 2021

Cities and municipalities are facing various challenges in developing and implementing climate change mitigation projects and range from increasing debt and budgetary constraints to inadequate credit ratings. In addition to financial constraints, local authorities often do not have sufficient capacities for planning, designing, preparing, and implementing projects. The City Climate Finance Gap Fund intends to fill this gap. It provides direct support at an early stage of project preparation to cities in low and middle-income countries that have already made commitments in line with the Paris Agreement. The City Climate Finance Gap Fund is expected to mobilize more than €100 million for the preparation of climate projects. This financial support aims at facilitating a pipeline of low carbon and climate-resilient infrastructure projects with a total value of at least €4 billion.

State of implementation/results

The Global Covenant of Mayors for Climate, together with the Governments of Germany and Luxembourg, announced at the UN Climate Summit in September 2019 the launch of the City Climate Finance Gap Fund. Both governments together intend to provide up to EUR 50 million in grants. The Fund aims for a capitalization of at least EUR 100 million which will unlock EUR 4 billion in high-quality low-carbon and climate resilient infrastructure projects in cities.
  • Accounting for 75 percent of global greenhouse gas emissions, cities play a key role in successfully combating climate change. Thus, climate action of cities as part of the development and implementation of Nationally Determined Contributions (NDCs) is explicitly recognized in the Paris Agreement on Climate Change. An increasing number of cities are developing climate action plans and tracking their own "Locally Determined Contributions" through initiatives such as the Global Covenant of Mayors for Climate & Energy. However, they often lack critical resources and capacity to advance concrete infrastructure projects from an idea to a robust business case. As a result, a multi-billion Euro pipeline of high-quality infrastructure project ideas that can contribute to climate change mitigation and adaptation never reach the stage of investment readiness and implementation. The newly announced City Climate Finance Gap Fund will address the critical lack of grant funding necessary to mature pipelines of projects from concept to a stage where they can be advanced towards full feasibility analysis and ultimately investment. This will significantly increase the pipeline of high quality bankable climate friendly urban infrastructure projects that must be progressed to meet the urgency of the climate crisis.
  • The Gap Fund aims to raise more than EUR 100 million in grants in order to unlock at least investments worth of EUR 4 billion in urban infrastructure projects. Germany intends to provide up to EUR 40 million and Luxembourg up to EUR 10 million. The Gap Fund will support project preparation activities for low-carbon and resilient urban infrastructure projects in a minimum of some dozen cities per year by pursuing the following three principle objectives:
  • Capacity building: Enhance cities and local authorities’ capacity to mature high-quality project ideas to later–stage project preparation;
  • Pipeline-building for later-stage technical assistance: Build a solid portfolio of project business cases for initiatives and institutions that focus on providing technical assistance for late-stage project preparation; and
  • Pipeline-building for investors: Increase at scale pipelines of bankable projects.
  • BMU collaborate with the European Investment Bank (EIB) and GIZ as well as the World Bank in implementing the Gap Fund.
  • The Gap Fund has been officially launched at the UN Climate Week on the 23rd of September 2020.
  • Website of Gap Fund:

Project data


Implementing organisation:
European Investment Bank

Implementing partner(s):
  • Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH

BMU grant:
15.000.000,00 €

11/2020  till  06/2025



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