Germany and Luxembourg Contribute €50 Million to Address Urban Climate Finance Gap through City Climate Finance Fund.

21 Sep, 2023

Germany and Luxembourg Contribute €50 Million to Address Urban Climate Finance Gap through City Climate Finance Fund.

Germany and Luxembourg have joined forces to bolster low-carbon, climate-resilient urban development by injecting EUR 50 million into the City Climate Finance Gap Fund, a multi-donor initiative. This fund, operated in partnership with the World Bank and the European Investment Bank, is at the forefront of supporting cities in their battle against climate change.

This recent contribution from Germany and Luxembourg effectively doubles the Gap Fund's capitalization, elevating it to an impressive EUR 105 million. This positions the Gap Fund as one of the largest early-stage technical assistance funds dedicated to empowering cities in their climate endeavors. Germany's Federal Government has commended the Gap Fund for its successful three-year operation, particularly its essential role in providing technical assistance during the initial phases of climate action planning and project preparation.

Luxembourg's Minister for the Environment, Climate, and Sustainable Development, Joëlle Welfring, has emphasized the growing interest from local actors and authorities in the Gap Fund's support, highlighting its status as a pivotal partner in local climate action.

The Gap Fund, a collaborative initiative supported by Germany and Luxembourg, operates in partnership with the World Bank, the European Investment Bank, and the Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ). Its core objective is to offer essential financial support for early-stage technical assistance and capacity-building efforts aimed at assisting cities in low and middle-income countries. The aim is to help these cities implement their climate action plans, formulate strong project proposals, and gain access to climate finance resources.

Since its establishment in 2020, the Gap Fund has engaged with 183 cities in 67 countries, assisting them in navigating the intricate landscape of climate initiatives.

Axel van Trotsenburg, World Bank Senior Managing Director for Development Policy and Partnerships, has underscored the pivotal role of cities in enhancing climate resilience, fostering economic growth, and creating jobs. He highlights that the Gap Fund translates cities' climate aspirations into tangible investments, ultimately improving the lives of millions.

Currently, the Gap Fund is actively supporting cities like Mombasa and Porto Alegre in developing climate action plans. In Pristina, it has facilitated the assessment of the city's spatial development plan, aligning it with climate targets.

To address climate risks, the Gap Fund is assisting in the implementation of stormwater management in Mbombela and prioritizing nature-based climate resilience investments in Kinshasa.

Moreover, the Gap Fund champions climate mitigation projects, including climate-smart waste management strategies in Indian cities and energy-efficient measures for buildings in Palembang.

The Gap Fund has forged robust partnerships with urban networks and global initiatives, including the Global Covenant of Mayors for Climate and Energy, the City Climate Finance Leadership Alliance, C40 Cities, and ICLEI - Local Government for Sustainability.

This substantial financial boost to the Gap Fund signifies significant progress in advancing global climate action, empowering cities to embark on ambitious projects, and reinforcing the collective effort to combat climate change.

Michael R. Bloomberg, UN Secretary-General's Special Envoy on Climate Ambition and Solutions, Global Covenant of Mayors for Climate and Energy Co-Chair, and Founder of Bloomberg Philanthropies and Bloomberg LP, has lauded the Gap Fund's impact, emphasizing its role in assisting cities in taking concrete steps against climate change and securing a more sustainable future.

The collaborating partners of the Gap Fund work closely together, sharing knowledge and empowering cities to efficiently address climate challenges, with a strong focus on sustainability and resilience.

Cities, responsible for 70% of global CO2 emissions, hold the key to a climate-smart future. The Gap Fund empowers them to surmount challenges, lead the way toward sustainability, and play a pivotal role in addressing climate risks.