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EU's City Climate Finance Gap Fund Ends First Year with Finance to 33 Cities

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Recognizing that municipalities would have trouble raising the finance for infrastructure projects, particularly those that involve energy efficiency, renewable energy, sustainable mobility, waste management and water projects, the EU set up the Gap Fund to support cities in developing and emerging economies. It also gives free technical assistance for the preparation of early-stage climate action projects.

The City Climate Finance Gap Fund (the 'Gap Fund') has approved technical assistance for 33 cities since its operational launch in September 2020, filling a critical area in technical assistance funding to help cities turn their climate ambitions into finance-ready projects.

Projects are supported in India, Mexico, Ethiopia, Morocco, Democratic Republic of Congo, Panama, Senegal, Vietnam, and many others.

The Gap Fund is currently capitalized at 55 million euros ($64 million), with a target of at least 100 million euros ($116 million) and the potential to unlock an estimated four billion euros ($4.67 billion) in investments. The aim is to help cities understand their exposure to climate challenges, develop plans and strategies to reduce emissions and vulnerability to climate risks, and identify and prioritize climate-smart urban infrastructure investments and partner with suitable companies to deliver these plans.

"As cities rebuild from a devastating pandemic and the impacts of climate change, there are smart investments they can make right away - if they have the right support," said Michael R. Bloomberg, UN Secretary-General's Special Envoy for Climate Ambition and Solutions, Founder of Bloomberg LP and Bloomberg Philanthropies, and Co-Chair of the Global Covenant of Mayors. "The Gap Fund is a vital resource for cities, as they implement projects that fight the climate crisis while creating jobs and building healthier and more equitable communities."

The Gap Fund demonstrates a unique collaborative model -- with funding from Germany and Luxembourg, it is co-implemented by the World Bank and the European Investment Bank in partnership with the Deutsche Gesellschaft für Internationale Zusammenarbeit and works directly with city groups and networks including GCOM, ICLEI, C40 and CCFLA.

Two of the Gap Fund's most recent grant activities are:

  • San Miguelito, Panama: Identify climate-smart and energy-efficient urban interventions for new cable car infrastructure, with the potential to cut emissions and reduce vulnerability to floods.

  • Dakar, Senegal: Integrate low-carbon and climate-resilient considerations into the planning, development and construction of affordable and green housing in the greater Dakar region, including piloting a green building certification incentive for building developers.


This fund is a useful addition to the finance needed to improve the infrastructure of developing areas, which will need clean and energy-efficient cities if we are to reduce damaging emissions while improving the quality of life for people living there.


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