With so many events, messages, and announcements coming out of COP27, we wanted to reflect on some of the key themes and messages announced that can leverage and influence urban climate finance. Below, we call attention to some of the main announcements and takeaways on 4 main areas: urban adaptation finance, zero-carbon buildings, governance, and data access.

While there is exciting urban climate finance news to report from COP27, we still recognize the need for it to be more of a focus in major international climate forums. Subnational governments and actors should be included in important ongoing discussions in the climate finance world as they are key actors and enablers who understand the needs and capacity on the ground in cities and urban areas.

At the official COP27 climate finance negotiations, we saw some main decisions and discussions that are important for cities: (1) a call to reform multilateral development banks (MDBs), including priorities and instruments, and make them fit for purpose, and (2) the announcement of a loss and damage fund to assist developing countries most vulnerable to climate change impacts. There was also (3) a disheartening lack of progress on developed countries’ commitment to mobilize USD 100 billion by 2025 for climate action in developing countries since the goal was set at COP15 in 2009 with a 2020 deadline, and then extended to 2025 at COP21. These topics have a direct impact on cities as most of the climate action needed to achieve the 1.5C goal will happen at the local level.

It was also great to see some recognition of subnational action from the COP27 Presidency outcomes. Of note, the COP27 Presidency with support of the High-Level Champions and Marrakech Partnership launched an Adaptation Agenda with 30 adaptation outcomes to enhance resilience for 4 billion people living in the most climate vulnerable communities by 2030. The initiative is underpinned by 2000 organizations including 131 countries in the Race to Resilience campaign. The Agenda includes specific outcomes pertaining to cities and urban dwellers.

1. Oceans and Coastal Systems: Urban coastline is protected by grey and hybrid solutions.
2. Cross cutting planning: 10,000 cities and 100 regional governments have evidence-based, actionable adaptation plans.
3. Human Settlements Systems: USD 1 trillion invested in nature-based solutions for communities in urban areas.

COP27 also marks the first-ever Ministerial meeting on Urbanization and Climate Change convening at a COP. The COP27 Presidency announced the Sustainable Urban Resilience for the Next Generation (SURGE) initiative developed in collaboration with UN-Habitat and facilitated by ICLEI. There are more than 100 members in the global SURGE alliance, and it’s endorsed by more than 70 global partners. SURGE aims to enhance and accelerate local and urban climate action through multi-level governance, engagement, and delivery through five integrated tracks, to help achieve Paris Agreement Goals and SDGs. The five SURGE tracks are: (1) Buildings and Housing, (2) Urban Water, (3) Urban Mobility, (4) Urban Waste/Consumption and (5) Urban Energy.

COP27 CCFLA participation in numbers: The Alliance hosted 2 events and spoke at 7 additional ones. We tracked 49 member events in our CCFLA COP27 Member calendar. In addition to events, COP27 marked the launch of new tools, research, and initiatives. These are the main 4 relevant topics and priorities we heard from COP27: urban adaptation finance, net zero carbon buildings, governance, and data access:

Urban Adaptation Finance

As underscored by the COP27 Presidency’s focus on the topic, adaptation, and the need to scale urban finance for adaptation and resilience and how this can be done was a key message in events, launches, and knowledge production. Here are some highlights:

1. CCFLA released a policy brief on How to Increase Financing for Urban Climate Adaptation and Resilience which identifies 7 key actions for national policymakers to take to scale financing for urban climate adaptation and resilience. The actions grounded the CCFLA hosted discussion on “How can national and local governments scale finance for urban climate adaptation and resilience?” Watch the event HERE if you missed it or want to revisit the discussion.
   
2. WRI Launched the African Cities Water Adaptation Fund (ACWA fund) which aims to channel USD 5 billion to urban water resilience solutions in 100 African cities by 2032.
3. The High-Level Climate Champions, the Ocean and Climate Platform, Resilient Cities Network, and ICLEI released their Blue-Tinted White Paper, Investment Protocol: Unlocking financial flows for coastal cities adaptation to climate change and resilience building. The paper offers 6 tips for investors to finance coastal cities resilience, including investing in nature, engaging with local communities, and exploring different financial mechanisms.
4. A collaborative Call to Action from ICLEI, FMDV, Cities & Regions, and UNCDF on Climate Emergency Finance outlines how financing a climate emergency must diverge from “business-as-usual” finance in: scale, focus, type of support, rapidness, and key actors. Accessibility to subnational finance remains a challenge. To fill the funding gap, we need to leverage all revenue sources, find innovative financing mechanisms, and involve a range of key stakeholders.
5. The EU Commission announced EUR 1 billion in climate finance with their Team Europe Initiative for adaptation and resilience in Africa, which includes: mobilizing climate finance from the private sector; reinforcing early warning systems at the regional and national levels; and supporting climate risk data collection, aggregation, and analysis.
6. The German G7 Presidency launched the Global Shield insurance initiative which is geared not only for cities, but will provide EURO 172 million to communities facing the impacts of climate disaster in low-income and vulnerable countries. It also aims to strengthen social protection schemes and climate risk insurance. Canada, Ireland, and Denmark among other countries have already pledged an additional EUR 40 million.

Zero Carbon Buildings

Increased funding for zero carbon buildings was another priority topic where we took note of key announcements during COP27.

1. CCFLA kick-started a major effort in 2022 to tackle the challenges in achieving net zero carbon buildings at scale and highlighting the importance of financing them at the city level. CCFLA convened city stakeholders at the Global ABC Pavilion to discuss city-level policies and financing modalities that can facilitate public and private investment in low-carbon buildings during the event, “Net zero carbon buildings in cities: getting the policy right.” Event discussions included key initial findings of CCFLA’s soon-to-be-launched zero carbon building instruments city guide. Speakers reflected on the main barriers to investment and financial and non-financial policy solutions. Watch the event HERE if you missed it or want to revisit the discussion.
2. The Roof Over our Heads (ROOH) campaign was launched by the Society for Promotion of Area Resource Centres (SPARC), SDI, Global Resilience Partnership and others, and was launched with the UN Climate Change High-Level Champions. ROOH intends to provide 2 billion climate vulnerable people living in informal settlements with affordable, low carbon homes by 2050.
3. The EUR 460 million Programme for Energy Efficiency in Buildings investment facility in the Mediterranean region (PEEB Med) was launched at COP27 and will begin implementation in January 2023. PEEB Med will combine technical project assistance (integrating energy and climate targets in line with NDCs), and will support countries throughout the construction process (including inception and design) of large public and private renovation and construction projects in the region. Overall, the project aims to reduce the financial barrier and perception of investment risk for energy-efficient buildings.
4. During the COP27 Buildings Breakthrough Agenda Ministerial, the French and Moroccan governments confirmed they will continue leading the Buildings Breakthrough initiative and taking forward its agenda. 15 countries and 13 initiatives/foundations support the group’s mission of “near-zero emission and resilient buildings are the new normal by 2030.”

Improving governance and data access

With all the ongoing work, we need clear guiding resources and funding sources with clear direction for urban climate finance. Some interesting resources launched at COP27 to that end include:

1. A key document is the Summary for Urban Policymakers of the IPCC Sixth Assessment report series from a partnership of GCoM, Resilience First, Indian Institute for Human Settlements, German Federal Ministry for Economic Affairs and Climate Action, GIZ and Resilience Rising. SUP includes 3 summary reports (Volumes I-III) and an Action Agenda. The Action Agenda goes beyond the assessment to include input from city and business leaders and written from their perspective.
2. On the funding side, exciting news came from the IDFC with their International Climate Initiative (IKI) funding to more actively mobilize NDBs for sustainable urban development. The NDBs Urban Climate Action Programme identified NDBs as well positioned to de-risk urban development investments, and leverage locally adapted financial instruments.
3. The improved intake, delivery, and collaboration around data for reporting and tracking cities climate finance has long been a priority. A positive outcome was the World Bank and IFC launch of An Investment Planning App for Cities. APEX not only identifies investments suitable for green financing but helps users develop strategies for the long term (e.g. climate action plans) and assess and track performance for cities.