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Bloomberg Philanthropies support

Catalytic Cities is led by Catalytic Finance Foundation with the support from Bloomberg Philanthropies, and in collaboration with C40 Cities and Global Covenant of Mayors for Climate & Energy (GCOM).

Catalytic Cities

Catalytic Cities sets out to mobilize finance to accelerate the uptake of urban climate solutions, aligning with the goal of 1.5°C maximum global warming.

Our strategic approach includes:

  • Achieving a market transition to low-carbon technologies in urban sectors with the highest carbon emissions, including building, transport, energy and waste

  • Increasing financing sources for public and private project developers from commercial and catalytic investors and lenders

  • Focusing on countries whose cities have the highest or fastest growing carbon emissions

Our activities and impact

Catalytic Cities aims to:

II) Enhance project identification and preparation

III) Establish partnerships between public and private stakeholders

I) Deliver different geographic and sector-specific blended finance investment vehicles with technical assistance facilities

This facilitates access to blended finance options for subnational governments, enabling them to secure funding for climate infrastructure projects, and the support for the successful execution of them. Ultimately, the program is designed to contribute to the global climate goals by reducing carbon emissions, enhancing climate resilience, and improving adaptive capacity, all while fostering wider sustainable development (such as job creation, economic growth, and improvement of ecosystems).

Currently, Catalytic Cities is working on the following blended finance solutions:

Municipal Solid Waste Management

Municipal Solid Waste (MSW) is a significant source of GHG emissions, mostly from methane generated from the decomposition of organic waste in landfills and dumpsites. Waste is the third largest source of man-made methane emissions. Appropriate MSW management is needed to reduce methane emissions, but the scaling of projects is hindered by financial, policy, and market barriers. Catalytic is working on innovative finance solutions to address structural and financial barriers within the current business models, with a focus on developing countries.

Port Decarbonization

Shipping and ports are significant sources of Greenhouse gas (GHG) emissions and air pollution, emitting as much CO2 as Germany. Its impacts are global, with air pollution from ships contributing to an estimated 250,000 premature deaths and 6.4 million cases of childhood asthma worldwide each year according to the Ocean Conservancy. While the industry has committed to reducing its environmental impact, progress towards a 1.5°C scenario by 2050 has been slow due to various barriers.

 

A blended-finance solution can help overcome these barriers, provided it is structured to address key stakeholders' interests and concerns. In this context, we are leading the design and structuring of a Port Decarbonization funding solution.

Addressing climate needs

While up to 80% of climate mitigation and adaptation actions will be implemented at the city and local levels, their needs are not currently being met by adequate financing sources and solutions. Hundreds of cities and regions joined the Race to Zero and the Race to Resilience Campaign around the COP26, with Nicola Sturgeon and Michael Bloomberg’s advocacy.

 

Meanwhile, alliances of investors also committed trillions of dollars to meet the net-zero goal by 2050. This shows the necessity for governments at all levels and the private sector to work hand-in-hand to accelerate climate action. 

Catalytic Cities, through collaborating with a coalition of partners (networks of cities, private sector actors, fund managers, public and private investors), aims to bridge this gap by delivering innovative blended-finance investment vehicles. The vehicles will invest in urban climate solutions in key sectors and geographies to yield the most significant climate impact towards achieving the 1.5°C goal, turning city climate action plans into reality.

E-buses in Latin America

The transportation sector significantly contributes to global CO2 emissions and air pollution, particularly urban buses. Latin America, due to its heavy reliance on affordable mode of transport, faces a pressing issue, with transport responsible for almost 39% of the region’s greenhouse gas emissions. E-buses offer a compelling solution and existing blended finance approaches have kickstarted the transition in specific countries and cities, such as Santiago and Bogota. Nevertheless, wider adoption remains hindered by financial, institutional, and technological barriers. We are working on a de-risking solution to unlock these financial barriers to accelerate wider e-bus deployment across cities in Latin America.

Catalytic Cities aims to overcome four key barriers

Project Pipeline

  • Lack of pipeline of bankable projects coupled with extensive need for project preparation and de-risking support

  • Resource intensive and challenging to aggregate small-scale projects to reach scale for investors (e.g., energy efficiency)

  • More business models to share risk and payments of public goods (e.g., clean air) required

Investor Capacity

  • Lack of data and resources to account for external climate-related risks for infrastructure projects

  • Investor requirements and financial regulations not conducive to long-term investment

  • Creditworthiness of cities below par (only 20% of cities in developing countries are credit-worthy)

  • Regulatory barriers to access capital markets

Development Finance

  • Scarce public and philanthropic climate finance

  • Limited use of de-risking mechanisms such as development guarantees and insurance

  • Need for replication and standardization of success cases

Policy and Governance

  • Domestic policies not adequate to incentivize the integration of externalities

  • Insufficient integration of climate targets into long-term city investment plans

  • Lack of political stability, PPP framework and/or track record in some geographies

  • Poor governance of environmental externalities

Ideation and screening of potential funding concepts

1

Initial assessment & further screening: investment vehicle memos

2

Investment vehicle design: identify potential anchor investors and create consortium

3

Secure funding from anchor investors

4

Final set-up of Investment Vehicle Consortium

5

Execution of Investment Vehicle and its TA Fund

6

Connecting cities with climate finance

Catalytic Cities is mobilizing finance to accelerate uptake of urban climate solutions. This is our plan to help cities align with the IPCC's goal of limiting global warming to 1.5°C.

Execution

of Investment Vehicle and its TA Fund

6

Final set-up

of Investment Vehicle Consortium

5

Secure funding

from anchor investors

4

Investment vehicle design:

identify potential anchor investors and create consortium

3

Initial assessment & further screening:

investment vehicle memos

2

Ideation and screening

of potential funding concepts

1

Connecting cities with climate finance

Catalytic Cities is mobilizing finance to accelerate uptake of urban climate solutions. This is our plan to help cities align with the IPCC's goal of limiting global warming to 1.5°C.

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