Financial resources can be made available to cities for climate action by participation in international or national emissions trading schemes (ETS).

Instrument category

National government transfers

Implementation status

Moderate - tried and tested

Enabling conditions and success factors
  • The city must be part of a country or region implementing an ETS.
  • It is usually the case that projects funded by revenue from ETS must be able to prove how effective they will mitigate carbon emissions.
Instrument benefits
  • There are rapidly increasing revenues available from ETS. For example, potential EU ETS auctioning revenues for Romania could amount to around EUR 4 billion per year by 2030, up from around EUR 100 million in 2020.
Challenges and risks to implementation
  • A lack of transparency between Federal and state governments (or central and local governments) and a flawed accountability system are usually the greatest challenges.
Case studies

Contribution of carbon credits to pay for green transport improvements in Bucharest, Romania

View case study

Want to share new instruments?

The Alliance is actively seeking updates to the financial instruments library. Please complete the form to suggest additional instruments.

Fill out the form