Posted on: Aug 11th, 2022

Banking on cities: How to boost private investment in green urban infrastructure?

 

This event, held during the New York Climate Week, brought together major private institutions, city officials, and LUCI initiatives to discuss how project preparations can help increase private investment in urban climate projects.

There is a strong case for financing climate action in cities, with the potential to create 87 million jobs by 2030 and a global economic dividend of USD 24 trillion. However, as highlighted in the 2021 State of Cities Climate Finance report published by the Cities Climate Finance Leadership Alliance, climate finance flows for cities amounted to USD 384 billion according to the most recent estimates, far short of urban climate finance needs, estimated in the trillions. Securing funds to urban climate projects is crucial to achieving the Paris Agreement [and respective Nationally Determined Contributions (NDCs)] and the Sustainable Development Goals (SDGs).

Today, private finance in urban climate projects represents only a small fraction of total investments, despite the growing evidence that private funds are available and commercial institutions are willing to commit. One of the main barriers preventing private investment in urban climate infrastructure projects is the shortage of bankable projects attractive to the private sector.

Initiated by the German Federal Government at the UN Secretary General’s Climate Action Summit in 2019, and hosted by the Cities Climate Finance Leadership Alliance, the Leadership for Urban Climate Investment (LUCI) is a framework to promote collaboration between initiatives aiming to close the urban climate finance gap and track their contribution toward green and climate-resilient cities. The LUCI framework is structured around four targets reflecting the value chain for urban climate finance, including capacity building, project preparation, and linking to finance. 

Agenda

Welcome remarks

Opening remarks

  • Vera Rodenhoff, Head of Division for General Issues of International Cooperation, Implementation Initiatives, German Federal Ministry for Economic Affairs and Climate Action (BMWK) 

Panel discussion  – What lessons can we learn from project preparation facilities efforts to leverage the private sector?

Moderator:  

  • Katie Walsh, Head of Cities, States, Regions and Public Authorities, North America, CDP North America 

Panellists: 

  • Ben Broché, Associate Director, Global Innovation Lab for Climate Finance  
  • David Albertani, CEO, R20  
  • Carmel Lev, Programme Officer, Global Infrastructure Facility 
  • Thierry Déau, Founder and CEO, Meridiam 
  • Christian Deseglise, Group Head of Sustainable Infrastructure and Innovation, HSBC

Q&A 

Closing remarks

Key takeaways from the session included:

  • Project preparation facilities are well positioned to bridge project developers and investors but there is ample scope to do better.
  • Best practices include:
    – Early and often involvement of investors in the project selection and design process;
    – The deployment of innovative financial instruments capable of de-risking projects;
    – Working with investor partners willing to be pro-active, flexible and adapt their risk appetites; and
    – Adoption of standardization schemes like Fast Infra that signal projects’ sustainability characteristics and environmental impact to the market.