As the world becomes increasingly urban, there has been a growing recognition of the link between cities and climate change. While cities are responsible for the lion’s share of global energy consumption (70%), they also face the highest risks of exposure to climate risks. According to the Cities Climate Finance Leadership Alliance, over 3.3 billion city dwellers will be at risk from severe climate impacts by 2050. Cities around the world have recognized their roles in the climate crisis, with 12,613 cities worldwide participating in the Global Covenant of Mayors for Climate and Energy, many of which have made progress on climate action planning. With the understanding that city-level mitigation and adaptation measures are vital, there is growing recognition of the importance of climate finance directly targeted at the city level. This piece will explore how much local governments are spending and investing in climate change mitigation and adaptation. In exploring this question, I will delve into existing city-level emissions data and discuss the current state of local-level climate spending.

Local Level Emissions

The first step to understanding the gravity of climate change impacts at the city level is determining localized GHG emissions. According to the World Bank, cities account for over 70% of global GHG emissions. Until recently, accounting for emissions at the local level has been inconsistent and unreliable on a global level. However, recent satellite-based approaches to measuring GHG emissions have enabled a more robust, localized approach to GHG emissions accounting and estimation. Notably, the Global Gridded Model of Carbon Footprints estimates the carbon footprints of 13,000 urban clusters worldwide based on 2015 data. While this is not the only model estimating city-level emissions, it is one of the most comprehensive models of its kind to date. The authors’ findings indicate that just 100 cities cover almost 20% of global emissions.

From the database of 13,000 urban areas, here are some characteristics of the top 500 cities with the largest estimated carbon footprints.

Unsurprisingly, we see that the vast majority of top emitters are cities in high-income and upper-middle-income countries, with zero of the top emitting cities coming from low-income countries. Most of the top-emitting cities are located in Europe & Central Asia, East Asia & the Pacific, and North America. The top emitting urban areas per capita according to the Global Gridded Model of Carbon Footprints are Hong Kong, Mohammed Bin Zayed City (UAE), Abu Dhabi (UAE), Singapore, and Hulun Buir (China). Not adjusting for population, the top-emitting urban areas overall are Seoul (South Korea), Guangzhou (China), New York City (USA), Hong Kong, and Los Angeles (USA).

Local Level Climate Finance

With an understanding of who the top emitters are, we turn to the question of city-level climate spending. This is a challenging question because most governments do not track climate spending at the local level. Recognizing this knowledge gap, in 2020 the Organization for Economic Cooperation and Development (OECD) began classifying climate expenditures and investments to cover subnational climate finance between 2001 and 2019. This dataset disaggregates OECD member climate expenditures and investments at the local, state, and national government levels. While these breakdowns do not include estimates for specific cities, they estimate spending by local-level governments in each OECD member country.

First, I explore how much of OECD member climate finance is comprised of local level expenditures and investment compared to the same measures at the state and national levels. As evidenced by the graphs below, the vast majority of climate finance accounted for occurs in the “expenditures” bucket, rather than in the “investment” bucket. We can also see that most subnational government climate finance is happening at the local level, rather than at the state level.

Focusing specifically on local government expenditures and investments, I evaluate the top spenders since 2015, at both the aggregate and per capita levels. While Luxembourg is the biggest local climate spender by capita, Japan is the top local climate spender overall in the OECD.

Comparing These Countries’ Local Spending with Urban Emissions

No urban areas in Luxembourg are in the top 500 urban areas by carbon footprint overall or per capita according to the earlier cited gridded model of 13,000 urban areas. There are no Japanese cities in the top 250 urban areas by carbon footprint (per capita). Tokyo is the No. 9 ranked urban area for carbon footprint overall. A more comprehensive climate spending database would allow a comparison between all urban climate spending and emissions.

From the top 10 per capita climate spenders at the local level, I chose the top five countries to analyze their climate finance and urbanization patterns over time. While the gridded emissions model does not allow a temporal assessment of emissions growth, an assessment of urbanization levels should allow for a reasonable proxy of emissions growth within certain urban areas. A preliminary regression analysis shows a small but significant positive relationship between urbanization levels and climate spending. Additional data and variables over time would be necessary for a more robust analysis.

Limitations

There are several data limitations involved in this analysis. First, while the OECD dataset appears to be the most comprehensive database in existence on subnational climate finance, it inherently excludes these figures for most developing countries, which is where both urbanization and climate impacts are projected to hit the hardest.

Also, the OECD dataset does not track specific cities, only the level of government where expenditures are made. While this is an important first step in shedding light on the importance and scale of local involvement in climate finance, the data does not necessarily shed light onto specific cities that might be the most appropriate actors and targets in local level climate expenditures and investment. Private sector commitments in urban areas are also not captured in this database.

Conclusion

The OECD database allows a fantastic unprecedented opportunity to look at local level climate finance across a broad array of countries, but this is just a first step to understanding the state of local climate finance. The Cities Climate Finance Leadership Alliance is developing new methodologies to track urban climate finance, along with encouraging cities to improve tagging mechanisms of existing funding. Better data is essential to keeping governments accountable to their climate commitments. Understanding emissions, climate actions, and climate spending at a more granular level will allow more transparency on these commitments and can catalyze data-driven spending to combat the climate crisis. Better knowledge of financing gaps can identify opportunities for both the public and private sector in the future.

Works Cited

Cities Climate Finance Leadership Alliance (2021). The State of Cities Climate Finance. https://citiesclimatefinance.org/wp-content/uploads/2021/06/2021-State-of-Cities-Finance-Executive-Summary.pdf

Global Covenant of Mayors for Climate and Energy (2022). Energizing City Climate Action. https://www.globalcovenantofmayors.org/wp-content/uploads/2022/11/2022-GCoM-Impact-Report.pdf

OECD (2022). Subnational government climate expenditure and revenue tracking in OECD and EU Countries. OECD Regional Development Papers, No. 32, OECD Publishing, Paris, https://doi.org/10.1787/1e8016d4-en.

Moran, D., Kanemoto K; Jiborn, M., Wood, R., Többen, J., and Seto, K.C. (2018) Carbon footprints of 13,000 cities. Environmental Research Letters DOI: 10.1088/1748-9326/aac72a.