Cities

Cities account for around 80% of global energy use and 70% of emissions, bringing together investment in clean energy, transport, buildings, water, waste and resilience. Urban governments are developing climate plans and project pipelines, and leading cities report emissions reductions. Yet most identified projects still lack finance, adaptation receives a small share of urban investment, and smaller or lower-capacity cities struggle to prepare and deliver projects.

Status

Urban climate plans and investment pipelines are expanding, and leading cities are reporting measurable emissions reductions. Project-preparation facilities and national-local partnerships are helping move towards implementation, but finance remains the main constraint: most disclosed projects are still seeking funding. Adaptation receives a small share of urban climate investment, while smaller and rapidly growing cities often lack the revenues, institutional capacity and borrowing authority needed to finance infrastructure. Evidence of who benefits from investment, particularly in vulnerable neighborhoods, and whether adaptation reduces climate losses remains limited.

Scale

Magnitude relative to the need

Stalled

Tracked global urban climate finance reached around USD 831 billion annually in 2021–22, but only USD 10 billion was adaptation-specific and a further USD 7 billion combined mitigation and adaptation (Press-Williams et al., 2024). City demand far exceeds accessible funding: 507 cities disclosed 2,164 projects seeking around USD 105 billion in 2025, 87% of which were still seeking finance (CDP, 2025). A separate World Bank estimate places annual investment requirements for resilient, low-carbon urban development in low- and middle-income countries at USD 256–821 billion through 2050 (Deuskar et al., 2025). These figures have different scopes and are not comparable.

Speed

Pace of reform against what's needed

Slow

City climate-project preparation is expanding, but too few projects progress from concepts to finance and implementation. The City Climate Finance Gap Fund/Global Covenant of Mayors partnership generated 111 new project ideas in 2025, bringing its portfolio to 285 projects across 59 countries, while ICLEI's Transformative Actions Programme has facilitated access to finance for 39 projects, with 79 more in its pipeline (GCoM, 2026, 2025; ICLEI, n.d.). The disclosed city pipeline grew from USD 86 billion in 2024 to USD 105 billion in 2025, but most projects remain unfunded (CDP, 2025). Preparation gains have not yet translated into timely delivery.

Reach

How far it extends across countries and institutions

Slow

Urban climate initiatives are spreading, but smaller, rapidly growing and lower-capacity cities face the steepest financing constraints. The Gap Fund/Global Covenant of Mayors partnership engaged 429 cities across 43 countries in 2025, while UN-Habitat's RISE UP operates across nearly 30 countries, including resilience plans in 23 cities (GCoM, 2026; UN-Habitat, 2026). These indicators show program coverage, not finance received by underserved neighborhoods. Limited municipal revenues, borrowing authority and project-preparation capacity constrain wider access, especially in informal settlements and cities facing high physical climate risk. Beneficiary-level reach remains poorly tracked.

Impact

Depth of real world effect

Slow

Mitigation results are becoming visible in leading cities, while evidence of resilience and distributional benefits is weaker. By 2025, 73% of C40 cities with sufficient data had peaked emissions and were on declining trajectories; 11 had cut emissions by more than 30% from their peaks (C40 Cities, 2025b). Urban adaptation is also expanding: the C40 Cities Finance Facility reports 2 million people better protected from climate impacts (C40 Cities, 2026c). However, expected project benefits, adaptation plans and population coverage do not establish avoided losses or improved resilience. Comparable evidence of outcomes for low-income and informal communities remains limited.

Action fronts

Climate finance reform advances on five fronts, from replenishing the funds that already exist to reshaping how the whole system works. These are the fronts where Cities is making headway.

Re-channeling
Revamping
Overhauling the institutions, rules, and instruments that climate finance runs on
Rebalancing

The Path Forward

Cities need more finance and stronger institutions to move climate projects from pipelines to delivery. Greater support for urban adaptation and for smaller, lower-capacity cities will help investment reach the communities with the greatest needs.

Cities need stronger own-source revenues, more predictable intergovernmental transfers and borrowing arrangements suited to local capacity, alongside municipal capacity for planning, budgeting, procurement and infrastructure delivery. Project-preparation support should extend from identification and feasibility through financial structuring, procurement and financial close, with earlier engagement from financing institutions. National governments should incorporate city priorities into NDC implementation, national investment plans and country platforms, including aggregation of projects from smaller cities where appropriate. Grants, concessional development finance, guarantees and private capital should be combined according to project characteristics, with greater support for urban adaptation and for low-income households and informal settlements exposed to heat and flooding. Better data on project progression, funding, neighborhood-level reach, emissions and resilience outcomes will make implementation more accountable.