Activities aimed at reducing the vulnerability of human or natural systems to the impacts of climate change and climate-related risks, by maintaining or increasing adaptive capacity and resilience. Climate resilience and adaptation are terms often used interchangeably.
To be bankable, a project must be able to secure financing through equity or debt from public or private sources. A first pre-condition to bankability is a suitable project preparation. A financier will consider a project bankable when it has a high probability of success and is expected to generate sufficient cash flows to cover its costs and recover the investment or if the project is going to be implemented by a creditworthy public entity. The risk-return profile of a project is the key to bankability. Though the assessment of whether a project is bankable will may differ between specific financiers, they will all need confidence that the project is financially viable and that regulatory, environmental, social, and economic factors are unlikely to prevent the projects from being successfully completed. Also phrased as investment-ready or finance-ready.
A detailed plan for expenditures needed to implement a project.
A metric measure used to compare the emissions from various greenhouse gases based on their global warming potential, by converting amounts of other gases to the equivalent amount of carbon dioxide with the same global warming potential (CO2-eq).
Activities that strengthen the capacities of key actors involved in project preparation at the municipal level, including project promoters, municipal administrations, national development banks, and other key actors—at the personal/organizational/institutional/societal level—for topics related to the preparation, financing, and implementation of sustainable urban infrastructure projects, including capacities for technical and legal assessments, assessing project viability and risks, financial structuring, stakeholder consultation, and climate change considerations (see Enabling Environment Development).
Capital assets include land and land improvements; infrastructures such as roads, bridges, water, and sewer lines; easements; buildings and building improvements; vehicles, machinery, and equipment.
Expenditures on tangible capital assets, not easily converted into cash that have an initial useful life extending beyond a single financial reporting period, as well as debt capital repayment.
Local governments design and utilize climate action plans as customized roadmaps for making informed decisions and understanding where and how to achieve the largest and most cost-effective emissions reductions that are in alignment with other municipal goals. Climate action plans, at a minimum, include an inventory of existing emissions, reduction goals or targets, and analyzed and prioritized reduction actions. Ideally, a climate action plan also includes an implementation strategy that identifies required resources and funding mechanisms. Climate action plans also may include adaptation action in addition to mitigation actions.
The long-term change to the earth’s climate driven by increases in human emissions of greenhouse gasses, primarily from the burning of fossil fuels. While climate change will lead to an overall warming of the earth’s climate, the localized impacts will be diverse, including larger weather extremes, disrupted seasonal patterns, changes in precipitation rates and distribution, and sea-level rise.
Finance that aims to reduce emissions and enhance sinks of greenhouse gases and aims to reduce the vulnerability of, and maintain and increase the resilience of, human and ecological systems to negative climate change impacts.
Despite its centrality, there is no globally accepted definition of a city. A city can refer to a geographical subnational jurisdiction (“territory”) such as a community, a town, or a city that is governed by a local authority as the legal entity of public administration. A city can also refer to a built-up area with a single integrated economy regardless of the administrative boundaries or governance structure. In this case, a city’s boundaries are typically identified using population density and built-up area.
A comprehensive assessment of a project’s vulnerability to climate change impacts, and the risk of those impacts occurring. Methodologies used for CRVA vary depending on the implementer and the type of project. Assessments will be sector and location-specific and are undertaken at a preliminary stage to inform the design and improve the resiliency of the final project.
Defined as the benefits for the local society and environment because of climate action activities that go beyond tackling climate change. For example, creating compact and walkable cities can reduce the number of cars on the roads, which reduces GHG emissions and improves air quality leading to significant public health benefits. Job creation is a major co-benefit, both directly by the project as well as through improved urban conditions.
A short document outlining the project’s concept, including the identification of a problem, envisaged solutions, timeframe, project developer, targeted beneficiaries, expected outcomes, and expected capital and operating expenditures. The concept note is used to communicate with project preparation funders and/or other interested parties.
A decision-making tool that allows a comparison of options based on the level of benefit derived and the cost to achieve the benefit from different alternatives.
Feasibility of a project that accrues to all members of society in aggregate, whether in the form of financial flows or otherwise, such as reductions in environmental damage.
Set of pre-defined criteria that outlines whether a project can be considered for support or not. Each Project Preparation Facility (PPF) has criteria used to select projects that it will support. The eligibility of a project will differ for each PPF, and cities seeking support for project preparation should as a first step always verify the eligibility criteria of a PPF it may require support from.
For grants, funds may only be used for eligible costs which will be specified in the financing documents. For loans by International Financial Institutions (IFIs), only some parts of a project might be eligible for lending (e.g., new e-buses) while others are not (e.g. buying land for bus depots). For tenders, please view eligibility criteria for cost in the respective tender documents.
ESIAs are conducted to assess and identify potential adverse social and environmental impacts from a project. The scope and level of detail required will vary depending on the nature of the project and the requirements of the project’s financiers and the relevant governments.
Investments that give the investor an ownership stake in the project or project company. Equity stakes entitle the investor to revenue from the project and can be sold to another owner. Equity represents the value that would be returned to a company’s shareholders if all of the assets were liquidated and all of the company’s debts were paid off. Equity is “junior” to debt (loans and bonds), meaning that if funding to repay financing falls short, debt will be repaid first, making equity higher risk.
Distinct from the financial meaning of equity, in a social context, equity is the inclusion of all in society so they can participate, prosper, and reach their full potential. Due to social, financial, and physical marginalization, equity may require different levels of support for different groups.
Financial feasibility is the ability of a project to repay the financing needed to implement the project from sources such as user fees, subsidies, and grants. A financial feasibility study will identify what financing costs and structures make the project feasible and whether those match what can be expected from financial markets.
Financing refers to the short, medium, or long-term provision of the funds required to undertake the project (for example, to cover construction costs). Finance for infrastructure projects may be provided by the private sector or by the government, through cash surpluses or borrowings. In some cases, projects are also financed by multilateral or bilateral agencies, International Financial Institutions, and Development Finance Institutions. Instruments used to finance infrastructure projects include grants, loans, concessional loans, and guarantees.
Funding refers to how the project will ultimately be paid for in the long term. Projects are typically funded through either taxes that fund the project through a subsidy, or user charges creating revenue linked to the service the project provides. In some cases, projects are also partly funded by international development aid through grants.
Grants are non-repayable funds disbursed by a grantor, or donor, who provides funds to the grantee, or recipient. Grants usually have strict limits on what the funds can be spent on, also referred to as earmarked or conditional grants. Grants do not charge interest and not being repayable unless specific milestones are achieved, reducing the risk for project developers in case of project failure.
Jobs that directly contribute to climate adaptation or mitigation (e.g. renewable energy construction workers) or other environmental benefits (e.g. ecosystem restoration, improving biodiversity) while providing the workers with decent wages and working conditions.
Natural and industrial gases that trap heat from the Earth and warm the surface. The Kyoto Protocol restricts emissions of six greenhouse gases: natural (carbon dioxide, nitrous oxide, and methane) and industrial (perfluorocarbons, hydrofluorocarbons, and sulfur hexafluoride).
The COVID-19 pandemic led to a global socioeconomic crisis in addition to the health crisis. Recovery funding can promote an economic recovery that drives progress towards climate goals by concentrating stimulus investments on climate-friendly and sustainable infrastructure while creating co-benefits for employment, well-being, and environmental health. Precise definitions of a green recovery vary between institutions and governments.
An institution set up and capitalized by one or more countries. Prominent IFI’s include multilateral development banks (MDBs) which are funded by multiple countries or international institutions or bilateral institutions established by a single country. IFI’s typically provide investment, in the form of grants, loans, and concessional loans, to cities and local authorities through national governments, though some work directly with cities.
A debt instrument where a financier provides capital up-front in return for scheduled payments of the loan amount, or principal, plus interest at a pre-negotiated rate. Loans with a lower interest rate than the typical market rate, called concessional loans, can be provided by development finance institutions (DFIs). A loan may also be an open-ended line of credit up to a specified limit or ceiling amount.
Activities aiming at reducing or preventing emissions of greenhouse gases including gases regulated by the Montreal Protocol. Mitigation can mean using new technologies and renewable energies, making older equipment more energy efficient, or changing management practices or consumer behavior.
Monitoring is the ongoing and regular collection of information about project activities. Evaluation is the assessment of whether a project has achieved its goals and identifies causes of failure if it has not.
National Development Banks, often referred to as National Development Finance Institutions (NDFIs), public banks, policy banks, or promotional banks, are ‘any type of financial institution that a national government fully or partially owns or controls and has been given an explicit legal mandate to reach socioeconomic goals in a region, sector, or market segment’.
Under the 2015 Paris Agreement, each signatory country prepares, communicates, and maintains successive nationally determined contributions towards the Agreement’s climate change reduction goals that it intends to achieve. The NDCs provide the framework for each country’s GHG emissions reduction efforts that the efforts of national and local governments can be judged against.
Ongoing expenses for the life of an infrastructure asset, such as staff, purchase of goods and services (e.g. energy, fuels), financial charges, and insurance.
A Project Implementation Unit is the team responsible for following up on the implementation of a project. This can be either a specific municipal department, a cross-departmental team of professionals within one municipality, or even an inter-municipal team responsible for and/or the planning, development, implementation, and maintenance of municipal/regional infrastructure projects. To respond to the interdisciplinary nature of (urban low-carbon) infrastructure projects, the PIU is composed of a cross-sectoral team.
Most PPFs require a project application or expression of interest to be considered for support. Project applications generally include a concept note describing the identified issues to be addressed by the project, details of the applicant or beneficiary, envisaged activities, any studies that have been previously completed, and a description of the type of support requested.
The process of defining a project concept, studying and refining that concept to develop it to the point that it can raise financing from public or private sources, becoming bankable (see bankable).
Organizations, projects, or institutions that support cities in developing bankable, investment-ready projects, typically from the project concept/design/scoping stage up to the financial close. A PPF may provide both technical and/or financial supports to project owners or concessionaires. PPFs can provide a wide range of support depending on a project’s stage and sector. See the Green City Finance Directory for a listing of city and climate-focused PPFs.
Structuring is the design of the contract and tendering process. The project structure will define the responsibilities of the parties and the mechanisms for financing and risk. The contract is an enforceable document that codifies the project structure. The tendering process is the process the government will use to find a suitable partner for the project.
The purchase by a government authority of goods or services. The process for an infrastructure project typically involves the hiring of private firms for the technical design and construction of the project that will be publicly owned. Procurement processes often include tenders and other competitive bidding processes.
An arrangement between a public authority and a private partner designed to deliver a public infrastructure project and service under a long-term contract. Under this contract, the private partner bears significant risks and management responsibilities. The public authority makes performance-based payments to the private partner for the provision of the service (e.g. for the availability of a road) or grants the private partner a right to generate revenues from the provision of the service (e.g. tolls from users of a bridge).
The potential of a project to be recreated or applied in a new context such as a new location or sector. For example, a financing mechanism that could be used in other cities or countries would be replicable. Replicability is related to scalability (see Scalability) but refers to the ability to implement new projects based on the template of the original rather than scale up the initial project.
The capacity of a human or natural system to withstand the impacts of exogenous shocks, and to cope with and/or recover from them while retaining the essential functions of the original system. Resilient infrastructure refers to assets such as roads, bridges, mobile phone towers, and power lines that can withstand multiple external shocks, as defined by the developer or procurer, typically including climate-related hazards. Strengthening the capacity of a system to withstand climate-related shocks or stressors (defined as climate resilience) is where adaptation and resilience intersect.
The ability of a project to accommodate additions to its capacity or capabilities and expands its scope of operation. It also deals with its ability to increase in size, volume, quantity, or scope to accommodate unforeseen additional components or features of the project. Scalability is related to replicability (see Replicability) but refers to the ability to scale up the initial project rather than implement new projects based on the template of the original.
All activities to be carried out as part of the project. Activities or projects can consist of a standalone project, multiple standalone projects under a larger program, a component of a standalone project, or a program financed through a financial intermediary.
A range of analytical and participatory approaches that can help cities integrate environmental considerations into policies, plans, and infrastructure programs and evaluate the interlinkages with economic and social considerations. Strategic Environmental Assessments (SEAs) complement Environmental and Social Impact Assessment (ESIAs) since they are applied at the early planning and decision-making stages, rather than the project level.
Non-financial assistance provided by local or international specialists to address specific “technical” project issues. It can take the form of improving or developing project documentation (e.g. studies, plans), sharing information and expertise, instruction, capacity development, the transmission of working knowledge, and consulting services and may also involve the transfer of technical data.
Preparing legal arrangements for financial close, when the full financing needed to build the project is secured.