Municipal Finance For a Green and Just Recovery

Written by
Mark Goldstein '19
March 30, 2021

As governments at all levels chart a path out of the economic and social crisis created by the Covid-19 pandemic, measures to “build back better” in ways that address inequality and climate change are increasingly at the fore. On March 23, Andrew Eil *09, Partner at Climate Finance Advisors, a boutique consultancy that helps mobilize financial resources for climate solutions, spoke about how cities, in particular, can finance green and just recoveries from the pandemic, touching on many of the same themes as the JRCPPF’s 10th Annual Conference in February 2021.
Why cities? “Cities are a particularly interesting locus of investment and policymaking because the decisions and dollars invested that bend the emissions curve and help build resilience typically are happening at the local and regional level. It’s really important to make sure that solutions are being deployed at that level to meet the world’s climate challenges,” Eil said.

Eil, who was virtually “returning” to Princeton, where he earned an MPA in 2009, anchored his talk in three studies. The first, produced by the C40 Cities Climate Leadership Group in partnership with Climate Finance Advisors in December 2020, investigated how large cities finance major projects and identified the most important areas and methods of future investment.

The study revealed both good and bad news for proponents of a green and just recovery. The bad news: as of September 2020, only 3-5% of the $12-15 trillion Covid-19 stimulus funds for cities globally were explicitly focused on “green” solutions. The good news? This number needs to be only about 10% between 2020-2024 to stay on track towards a 1.5ºC climate change pathway. “3-5%, while low, is not perhaps as low as it might seem, when you consider all the various categories of investment that the stimulus goes to,” Eil said.

Eil highlighted three key takeaways from the study. One, “finance is available for cities to pursue a green and just recovery.” Two, overcoming these challenges requires dedicated and targeted support, and, three, cities must lay a strong foundation to attract these financial resources.

The second study, published by the Climate Change Finance Leadership Alliance in December 2020, investigated what portion of the $20.5 trillion (updated from September) committed to Covid-19 globally was devoted to green solutions in cities. Most of this funding provided short-term liquidity for local governments, but 48% was focused on longer-term infrastructure investments. Eil underscored the opportunities for cities to secure investment for green solutions and urban climate projects, especially through Development Financing Institutions (DFIs), and through diverse partnerships, from city networks to international organizations to National Development Banks.

The third (yet unpublished) study, by Climate Finance Advisors, guides cities in emerging markets on how to leverage support from Multilateral Development Banks (MDBs) to support a green recovery from Covid-19. “Cities are increasingly seen as an important focal point for financing operations, particularly in the post-Covid environment,” Eil said.

The video of the talk is available below.