Subnational Climate Finance: Trends in NDC Partnership Support is an Insight Brief published by the NDC Partnership in October 2023. It analyzes country requests related to subnational climate finance and identifies trends, gaps, and barriers in mobilizing finance for climate action at the level of cities, municipalities, provinces, and other subnational actors.
Key insights:
The brief explains that subnational governments are essential for climate action because cities, municipalities, and local authorities play a major role in reducing emissions, adapting to climate impacts, and building resilience.
The NDC Partnership received 161 requests from 36 countries related to subnational finance, representing around 3% of all requests.
Only 44% of subnational finance requests were fully supported, while 56% received partial, indicative, or no support.
Most subnational finance requests are project-related, with 57% focused on project support and 43% focused on technical assistance.
The requests are balanced across climate areas: 38% are cross-cutting, 37% focus on adaptation, and 25% focus on mitigation.
The brief shows that subnational finance requests are mostly sector-specific, covering areas such as agriculture, buildings, energy, transport, waste, water, forestry and land use, and tourism.
A major gap is support for developing bankable projects and pipelines at the subnational level, where demand is high but partner support remains limited.
Circular economy is highlighted as an important topic at the subnational level, but one that has received very little support from partners.
The brief identifies several barriers to mobilizing subnational climate finance, including local governments’ limited ability to borrow, weak creditworthiness, lack of capacity to prepare projects, and unequal access to finance between large cities and smaller municipalities.
It recommends stronger vertical integration between national and subnational governments, better project preparation support, stronger local financial systems, and use of national mechanisms to channel finance toward local climate action.
Main message: Subnational actors are critical to achieving climate goals, but they often lack the authority, capacity, creditworthiness, and project pipelines needed to access finance. Scaling subnational climate finance requires stronger national-local coordination, more support for bankable projects, and financing systems that reach both large cities and smaller local governments.
