Financing/Funding of Cities’ Climate Actions

It’s all well and good to have a firm grasp on the wide array of technical and policy fixes that can enable a City government to visualize what it will take to reach its climate goals. But unless the money is there to carry out the planned actions, much of the Climate Action Plan, upon which so many have labored to produce, will be just that – a plan. On a global basis, far greater funding of climate action than currently exists is needed for all countries to come even close to meeting the goals of the Paris Agreement. At the city level, the same situation applies. In this section, this website attempts to widen the pool of knowledge needed by a city’s government to try and do the most, climate-wise, with its own funds plus what it can find and attract from public and private sources beyond its borders.

Albany CA’s Energy Consumption Tax

Albany CA’s Energy Consumption Tax.  In November 2020 Albany’s voters approved Measure DD – Utility Users Tax – an energy consumption tax.  All Albany residents except for designated low-income residents pay an increased 9.5% blanket utility service tax that funds a variety of city services, including emissions reduction projects and environmental sustainability programs.  “Albany CA: Funding Climate Action” 4/13/21. www.cityclimatecorner.com

Blackrock

Blackrock.  “World’s Largest Asset Manager Puts Climate at the Center of its Investment Strategy”  1/14/20. www.npr.org  Blackrock manages $7 Trillion on behalf of its investors, and integrates ESG factors (Environmental, Social and Governance) into its business practices.  A City might want to pitch an innovative climate action Blackrock’s way.

Boulder CO’s Carbon Tax

Boulder CO’s Carbon Tax.  The passage of a city-wide referendum in November 2006 established a charge on electricity users based on how much energy they use.  The money raised by the tax supports Boulder’s Climate Action Plan. “Climate Action Plan Tax – Boulder CO”  www.ilsr.org  “How Boulder Taxed its Way to a Climate-Friendlier Future” 11/2/15. www.insideclimatenews.org  In 2012 voters again approved the carbon tax, by an 82% – 18% vote.  In November 2022 Boulder voters approved 2 measures (2A and 2B) that will support climate action in the city.  The Climate Tax goes into effect on 1/1/23 and will replace the original Climate Action Plan and Utility Occupation Taxes.  Details at www.bouldercolorado.gov/news/preliminary-november-2022-election-result-roundup

Carbon Emissions as a Financing Tool

Carbon Emissions as a Financing Tool.  A 1MW solar project near Jackson TN developed by a company called Clearloop (www.clearloop.us).  It is the first utility-scale solar project in the country (August 2021) to be partially financed by selling the carbon emissions it will displace over its lifetime.  Clearloop raised $400,000 – one-third of the project’s total cost – via the sale of carbon offsets for 60 million pounds (30,000 tons) of carbon emissions. Details at “The New Science of Siting Clean Energy to Push More Carbon From the Grid”. 9/20/21. www.canarymedia.com

Carbon Marketplace

Carbon Marketplace.  About a company called WattCarbon (www.wattcarbon.com).  “Startup Raises $4.5 Million to Launch 24/7 Carbon-Free Energy Marketplace”. 1/25/23.    www.renewableenergyworld.com .  “WattCarbon Nets $4.5 Million to Solve Offsets Trust Gap”. 1/25/23. www.axios.com . Also: “Carbon Credits Could Soon Help Fund Distributed Clean Energy Projects”. 2/13/23. www.canarymedia.com .  WattCarbon also manages a Virtual Power Plant (VPP) network.

Carbon Offset Registries

Carbon Offset Registries.  A carbon offset registry verifies the claims to the volume of carbon being saved by a particular action or program. The three largest registries in the U.S. are: 1. American Carbon Registry (ACR). www.americancarbonregistry.org  ACR is intended to create confidence in the environmental and scientific integrity of carbon offsets in order to accelerate transformational emission reduction actions. 2. Verra. Verra describes itself as the world’s leading greenhouse gas crediting program. www.verra.org  3. Climate Action Reserve. www.climateactionreserve.org  Describes itself as the most trusted, efficient and experienced offset registry for global carbon markets.

CDP Matchmaker

CDP Matchmaker.  Local governments continue to face significant barriers in accessing capital to finance climate-related projects.  CDP Matchmaker bridges the barriers between public entities and potential investors by analyzing and showcasing projects in adaptation, transportation, renewable energy, water management, and energy efficiency to its network and partners, including policymakers, companies and the capital markets.  www.cdp.net/en/cities/sustainable-infrastructure/matchmaker

Chicago IL 2022 Climate Action Plan

Chicago IL 2022 Climate Action Plan.  “Climate Financing and Delivery Capacity” p. 23.  “Chicago Climate Action Plan” 2022. www.chicago.gov Also: Chicago Climate Infrastructure Fund (CIF)  “Mayor Lightfoot Announces New Climate Infrastructure Fund”  www.chicago.gov 12/20/22. The CIF offers grants to nonprofit organizations and small businesses to implement climate-focused strategies.  $5 Million in the Fund.  Grant amounts will range from $50,000 to $250,000.  The Fund is intended to help the City meet targets in its 2022 Climate Action Plan.

Cincinnati OH

Cincinnati OH.  Cincinnati voters, in 2020, approved a transit-oriented sales tax – Issue 7.  The measure will raise the county sales tax by 0.8% to create a new funding source that will primarily go toward Cincinnati Metro bus services, thereby reducing local private vehicle emissions.

Cities Climate Finance Leadership Alliance

Cities Climate Finance Leadership Alliance (CCFLA).  www.citiesclimatefinance.org  The CCFLA is a coalition of leaders committed to deploying finance for city level climate action at scale by 2030.  “2021 State of Cities Climate Finance”  6/30/21. www.citiesclimatefinance.org  This report presents new data and analysis to show current levels of investment in urban climate action, and outlines solutions and enabling frameworks to mobilize increased volumes of urban climate investment to maximize impact.  The Report delivers its findings in 2 parts:

1. The Landscape of Urban Climate Finance; and

2. The Enabling Conditions for Urban Climate Finance.

City Forest Credits

City Forest Credits (CFC). www.cityforestcredits.org  CFC offers 2 services for the private sector to contribute to local climate action and enrich our communities: 1. Companies can purchase carbon offsets from urban forest projects, or 2. Can invest in certified planting projects with health, equity, and environmental impacts.

Climate Action Financing Excellence, according to the criteria of The Brookings Institute

Climate Action Financing Excellence, according to the criteria of The Brookings Institute. “How US Cities Are Finding Creative Ways to Fund Climate Progress”. 2/22/23. www.brookings.edu  The criteria established by Brookings are: 1. Spell out details on funding and financing; 2. Identify existing funding sources; 3. Propose specific, innovative, consistent and/or long-term funding sources or financing mechanisms; and 4. Estimate the financial impacts of each decarbonization strategy.  The cities that met the Brookings criteria are: Cincinnati, Denver, Memphis, Nashville, New York, Sacramento, San Francisco, and San Jose.

Climate Bonds

Climate Bonds.  www.climatebonds.net.  “A New Breed of Miami Bond is Financing Climate Change” 9/26/14   www.nextcity.org  Projects funded by climate bonds typically align with internationally recognized guidelines such as the Climate Bond Standards. www.climatebonds.net/market/best-practice-guidelines  States, cities and other special purpose authorities can issue these bonds, with proceeds being used exclusively to develop clean energy, transportation, water, and green building projects.

Climate Finance Advisors

Climate Finance Advisors (CFA).  Washington DC.  CFA is a mission-driven B-Corp, woman-owned consulting and advisory firm.  It describes its work as being at the nexus of private investment and climate change.  CFA specializes in helping its clients develop climate finance strategies, appraise and structure climate-aligned investments, channel public and private capital to sustainable investment, and integrate climate considerations into investment decisions, financial products and services, and policies.

Cloverly

Cloverly. www.cloverly.com  Cloverly is considered to be a carbon marketplace. It bridges the gap between project developers that are generating the value of the carbon offset, and the parties seeking to purchase offsets to reduce their own carbon footprints.

Covenant of Mayors in Sub-Saharan Africa

Covenant of Mayors in Sub-Saharan Africa (CMSSA).  www.comssa.org  The Covenant is an initiative which aims to support Sub-Saharan cities in their fight against climate change.  Started in 2015, it is funded by the EU and, from 2019, co-funded by the German Ministry for Economic Development and Cooperation, and by the Spanish Agency for International Development Cooperation. It offers a New Climate Finance Course: An Introductory Guide to Climate Finance for African Cities.  www.learningportal.comssa.org/courses/com-ssa-finance-course/

Creative City Climate Finance/Various Sources

Creative City Climate Finance/Various Sources.  “How US Cities Are Finding Creative Ways to Fund Climate Progress” 2/22/23. www.brookings.edu   Four examples  cited include: 1. Greenhouse Gas Reduction Fund (part of the 2022 Inflation Reduction Act);  2. Green Banks (www.coalitionforgreencapital.com  3. Portland OR’s Clean Energy Community Benefits Fund (www.portland.gov/code/7/07  and www.portlandcleanenergyfund.org  4. Denver CO’s Climate Protection Fund. “How Denver Got its Climate Sales Tax” 11/25/20. www.cpr.org and the “Denver Climate Action Task Force”. www.denvergov.org  Also: “Cities Are Using a Variety of Other Financial Strategies to Pay For Decarbonization Activities”  2/22/23. www.brookings.edu

Denver CO

Denver CO. In November 2020 Denver residents voted to pass Ballot Measure 2A, creating a new sales tax estimated to generate $40 Million to fund programs aimed at eliminating greenhouse gas emissions, reducing air pollution, and adapting to climate change.  The measure adds a 0.25% sales tax on non-essential items.  “How Denver Got its Climate Sales Tax” 11/25/20.  www.cpr.org

Digital Twins

Digital Twins.  “Digital Twins: Solving the City Climate Funding Gap” 12/1/22. www.forbes.com  The article is focused on ClimateOS, a digital twin-type of decision-making platform for cities to plan, simulate, and execute their climate actions. It provides a digital twin for a city, enabling planners to effectively model the impact of planning and investment decisions, climate-related and otherwise.  Also: “Why Cities Choose ClimateOS” www.climateview.global/climateos/why

Diplomacy

Diplomacy.  Defined as striving for increased climate action financing through city diplomacy, which includes a city’s engagement with regional, state, national, and international political actors, processes, and institutions. The city’s goal in engaging in climate diplomacy is to help shape national and global discussions, and to gain recognition for the city’s own action on climate.  “How to Advance Your City’s Climate Action Through City Diplomacy”  www.c40knowledgehub.org

Direct Pay Credits

Direct Pay Credits. For tax years after 12/31/22, and before 1/1/33, tax-exempt entities, state and local governments, and Indian tribal governments may elect to treat certain tax credits as refundable payments of tax.  Such entities are eligible to receive a direct payment for any amount paid in excess of their tax liability (these entities may have zero Federal tax liability) under various sections of the tax code, including: 30C – alternative fuel refueling property; 45 – renewable electricity production credit; 45Q – zero-emission nuclear power production credit; 45V – clean hydrogen production credit;  45X – advanced manufacturing production credit; 45Y – clean electricity production credit; 45Z – clean fuel production credit; 48 – energy investment tax credit; 48C – qualifying advanced energy production credit; 48E – clean electricity investment credit; and, for certain tax-exempt entities, 45W – qualified commercial vehicles. For further details, see: www.bakerlaw.com/inflation-reduction-act-clean-energy-tax-credits  Also: “How Local Governments Can Use Direct Pay on Clean Energy Projects” 12/22/22. www.nlc.org  This article points out how, for city leaders, Direct Pay is an option for funding city-owned clean energy projects that will make these projects more affordable for local governments and will level the playing field between local governments and the private sector, which has traditionally benefitted from tax credits.  “Tax Incentives Municipalities Can Use to Further Their Energy Goals”  2/14/23. www.vlct.org   See also: Production Tax Credits.

Emissions Trading

Emissions Trading.  See “Carbon Emissions Trading” at www.wikipedia.org  Emissions trading for CO2 and other GHGs is a form of carbon pricing. It is an approach to limit climate change by creating a market with limited allowances for emissions.  This can lower the competitiveness of fossil fuels and accelerate investments into low carbon sources of energy.

Funding of Electric School Buses

Funding of Electric School Buses.  The 2021 IIJA (Infrastructure Investment and Jobs Act) directed the EPA to award $5 Billion through 2026 for zero- or low-emissions school bus purchases.  In 2022 nearly 400 school districts were awarded a total of just below $1 Billion from the EPA’s Clean School Bus Program to add more than 2400 battery-powered buses to their fleets.

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