Financing climate-friendly cities – The City Climate Finance Gap Fund

Context

Cities around the world must invest in their infrastructure to achieve their climate goals. Support programmes for cities have been created worldwide to address these investment needs. However, they mainly provide assistance for mid to late stages of the infrastructure development process. This means that there is a gap when it comes to identifying infrastructure investments and assisting cities with early project preparation.

Objective

Cities in low- and middle-income countries take a sustainable approach to growth and development. In doing so, they identify and develop high-quality, climate-friendly infrastructure investments, establish contact with potential financing partners and work with international partners.

Approach

The Gap Fund initiative comprises two trust funds. One is managed by the World Bank and the other by the European Investment Bank (EIB). The EIB fund is financed by the International Climate Initiative (IKI) of the German Federal Ministry for Economic Affairs and Climate Action (BMWK) and the Government of Luxembourg. GIZ provides personnel for the Technical Secretariat.

The Gap Fund assists cities in low- and middle-income countries by providing technical advice in the early stages of the infrastructure development process as they plan and prepare projects.

The Gap Fund’s activities include:

• Building the capacity of cities to drive climate-friendly urban development. This is done in cooperation with financial institutions and city networks.
• Supporting the identification and prioritisation of investments as part of a climate strategy or investment programme.
• Developing project concepts and components of implementation reviews.
• Fostering financing methods by bundling and scaling up interventions.
• Connecting cities with potential partners that provide support and financing in the later project preparation and implementation phases.

Last update: July 2023