Editing IPCC:AR6/WGIII/Chapter-8 (section)

== 8.5 Governance, Institutions, and Finance ==

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Governance and other institutions act as core components to urban systems by facilitating and managing linkages between different sectors, geographic regions, and stakeholders. This position renders subnational governments and institutions key enablers of climate change mitigation ( [[#Seto--2016|Seto et al. 2016]] , 2021; [[#Hsu--2018|Hsu et al. 2018]] , 2020c; [[#Vedeld--2021|Vedeld et al. 2021]] ) ( [[#8.4.1|Section 8.4.1]] ). Indeed, since AR5 more research has emerged identifying these actors as vehicles through which to accelerate local-to-global efforts to decarbonise ( [[#IPCC--2018a|IPCC 2018a]] ; [[#Hsu--2020b|Hsu et al. 2020b]] ; [[#Salvia--2021|Salvia et al. 2021]] ; [[#Seto--2021|Seto et al. 2021]] ) (Chapter 13, Sections 4.2.3, 14.5.5, 15.6.5 and 16.4.7, and ‘subnational actors’ in Glossary). The current extent ( [[#8.3.3|Section 8.3.3]] ) and projected rise ( [[#8.3.4.2|Section 8.3.4.2]] ) in the urban share of global emissions underscores the transformative global impact of supporting urban climate governance and institutions ( [[#8.5.2|Section 8.5.2]] ). Further, the multisector approach to mitigation emphasised in this chapter (Sections 8.4 and 8.6, and Figure 8.21) highlights the need for facilitation across sectors (Figure 8.19).

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[[File:c16c86de1cfa1108e668f27030a54651 IPCC_AR6_WGIII_Figure_8_19.png]]

'''Figure 8.19: Feasibility assessment based on the enablers and barriers of implementing mitigation options for urban systems across multiple dimensions.''' The figure summarises the extent to which different factors would enable or inhibit the deployment of mitigation options in urban systems. These factors are assessed systematically based on 18 indicators in 6 dimensions (geophysical, environmental-ecological, technological, economic, socio-cultural, and institutional dimensions). Blue bars indicate the extent to which the indicator enables the implementation of the option (E) and orange bars indicate the extent to which an indicator is a barrier (B) to the deployment of the option, relative to the maximum possible barriers and enablers assessed. The shading indicates the level of confidence, with darker shading signifying higher levels of confidence. Supplementary Material 8.SM.2 provides an overview of the extent to which the feasibility of options may differ across context, time and scale of implementation (Table 8.SM.3) and includes line of sight upon which the assessment is based (Table 8.SM.4). The line of sight builds upon urban case studies in ( [[#Lamb--2019|Lamb et al. 2019]] ) and assessments for land use and urban planning ( [[#IPCC--2018a|IPCC 2018a]] ) involving 414 references. The assessment method is further explained in Annex II, Section 11.

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=== 8.5.1 Multi-level Governance ===

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IPCC SR1.5 identified multi-level governance (see Glossary for full definition) as an enabling condition that facilitates systemic transformation consistent with keeping global temperatures below 1.5°C ( [[#IPCC--2018a|IPCC 2018a]] , pp. 18–19). The involvement of governance at multiple levels is necessary to enable cities to plan and implement emissions reductions targets ( ''high confidence'' ) ( [[#Seto--2021|Seto et al. 2021]] ) (Boxes 8.3 and 8.4). Further, regional, national, and international climate goals are most impactful when local governments are involved alongside higher levels, rendering urban areas key foci of climate governance more broadly ( ''high confidence'' ) ( [[#Fuhr--2018|Fuhr et al. 2018]] ; [[#Kern--2019|Kern 2019]] ; [[#Hsu--2020b|Hsu et al. 2020b]] ).

Since AR5, multi-level governance has grown in influence within the literature and has been defined as a framework for understanding the complex interaction of the many players involved in GHG generation and mitigation across geographic scales – the ‘vertical’ levels of governance from neighbourhoods to the national and international levels, and those ‘horizontal’ networks of non-state and subnational actors at various scales ( [[#Corfee-Morlot--2009|Corfee-Morlot et al. 2009]] ; Seto et al. 2014; [[#Castán%20Broto--2017b|Castán Broto 2017b]] ; [[#Fuhr--2018|Fuhr et al. 2018]] ; [[#Peng--2018|Peng and Bai 2018]] ; [[#Kern--2019|Kern 2019]] ), as well as the complex linkages between them ( [[#Vedeld--2021|Vedeld et al. 2021]] ). This more inclusive understanding of climate governance provides multiple pathways through which urban actors can engage in climate policy to reduce emissions.

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==== 8.5.1.1 Multi-level, Multi-player Climate Governance in Practice ====

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A multi-level, multi-player framework highlights both the opportunities and constraints on local autonomy to engage in urban mitigation efforts ( [[#Castán%20Broto--2017b|Castán Broto 2017b]] ; [[#Fuhr--2018|Fuhr et al. 2018]] ; [[#Vedeld--2021|Vedeld et al. 2021]] ). When multiple actors – national, regional, and urban policymakers, as well as non-state actors and civil society – work together to exploit the opportunities, it leads to the most impactful mitigation gains ( [[#Melica--2018|Melica et al. 2018]] ). This framework also highlights the multiple paths and potential synergies available to actors who wish to pursue mitigation policies despite not having a full slate of enabling conditions ( [[#Castán%20Broto--2017b|Castán Broto 2017b]] ; [[#Keller--2017|Keller 2017]] ; [[#Fuhr--2018|Fuhr et al. 2018]] ; [[#Hsu--2020b|Hsu et al. 2020b]] ,a; [[#Seto--2021|Seto et al. 2021]] ).

For example, Sections 8.4.3. and 8.4.5 highlight how instigating the electrification of urban energy systems requires a ‘layered’ approach to policy implementation across different levels of governance (see [[#8.4.3.1|Section 8.4.3.1]] for specific policy mechanisms associated with electrification), with cities playing a key role in setting standards, particularly through mechanisms like building codes ( [[#Hsu--2020c|Hsu et al. 2020c]] ; [[#Salvia--2021|Salvia et al. 2021]] ), as well as through facilitation between stakeholders (e.g., consumers, government, utilities) to advocate for zero-emissions targets ( [[#Linton--2021|Linton et al. 2021]] ; [[#Seto--2021|Seto et al. 2021]] ). Local governments can minimise trade-offs associated with electrification technologies by enabling circular economy practices and opportunities ( [[#Pan--2015|Pan et al. 2015]] ; [[#Gaustad--2018|Gaustad et al. 2018]] ; [[#Sovacool--2020|Sovacool et al. 2020]] ). These include public-private partnerships between consumers and producers, financial and institutional support, and networking for stakeholders like entrepreneurs, so as to increase accessibility and efficiency of recycling for consumers by providing a clear path from consumer waste back to the producers ( [[#Pan--2015|Pan et al. 2015]] ; [[#Prendeville--2018|Prendeville et al. 2018]] ; [[#Fratini--2019|Fratini et al. 2019]] ). Box 8.3 discusses the mitigation benefits of coordination between local and central government in the context of Shanghai’s GHG emissions reduction goals.

Still, there are constraints on urban autonomy that might limit urban mitigation influence. The capacity of subnational governments to autonomously pursue emissions reductions on their own depends on different political systems and other aspects of multi-level governance, such as innovation, legitimacy, and institutional fit, as well as the resources, capacity, and knowledge available to subnational technicians and other officials ( [[#Widerberg--2015|Widerberg and Pattberg 2015]] ; [[#Valente%20de%20Macedo--2016|Valente de Macedo et al. 2016]] ; [[#Green--2017|Green 2017]] ; [[#Roger--2017|Roger et al. 2017]] ). Financing is considered one of the most crucial facets of urban climate change mitigation. It is also considered one of the biggest barriers, given the limited financial capacities of local and regional governments (Sections 8.5.4 and 8.5.5).

When sufficient local autonomy is present, local policies have the ability to upscale to higher levels of authority, imparting influence at higher geographic scales. Established urban climate leaders with large institutional capacity can influence small and mid-sized cities, or other urban areas with less institutional capacity, to enact effective climate policies, by engaging with those cities through transnational networks and by adopting a public presence of climate leadership ( [[#Chan--2015|Chan et al. 2015]] ; [[#Kern--2019|Kern 2019]] ; [[#Seto--2021|Seto et al. 2021]] ) ( [[#8.5.3|Section 8.5.3]] ). Increasingly, subnational actors are also influencing their national and international governments through lobbying efforts that call on them to adopt more ambitious climate goals and provide more support for subnational GHG mitigation efforts ( [[#Linton--2021|Linton et al. 2021]] ; [[#Seto--2021|Seto et al. 2021]] ). These dynamics underscore the importance of relative local autonomy in urban GHG mitigation policy. They also highlight the growing recognition of subnational authorities’ role in climate change mitigation by national and international authorities.

The confluence of political will and policy action at the local level, and growing resources offered through municipal and regional networks and agreements, have provided a platform for urban actors to engage in international climate policy ( [[#8.5.3|Section 8.5.3]] ). This phenomenon is recognised in the Paris Agreement, which, for the first time in a multilateral climate treaty, referenced the crucial role subnational and non-state actors like local communities have in meeting the goals set forth in the agreement ( [[#UNFCCC--2015|UNFCCC 2015]] ). The Durban Platform for Enhanced Action ( [[#Widerberg--2015|Widerberg and Pattberg 2015]] ), as well as UN-Habitat’s NUA and the 2030 Development Agenda, are other examples of the international sphere elevating the local level to global influence ( [[#Fuhr--2018|Fuhr et al. 2018]] ). Another facet of local-to-global action is the emergence of International Cooperative Initiatives (ICIs) ( [[#Widerberg--2015|Widerberg and Pattberg 2015]] ). One such ICI, the City Hall Declaration, was signed alongside the Paris Agreement during the first Climate Summit for Local Leaders. Signatories included hundreds of local government leaders, in partnership with private sector representatives and NGOs, who pledged to enact the goals of the Paris Agreement through their own spheres of influence ( [[#Cities%20for%20Climate--2015|Cities for Climate 2015]] ). Similar Summits have been held at each subsequent UNFCCC COP ( [[#Hsu--2018|Hsu et al. 2018]] ). Like transnational climate networks, these platforms provide key opportunities to local governments to further their own mitigation goals, engage in knowledge transfer with other cities and regions, and shape policies at higher levels of authority ( [[#Cities%20for%20Climate--2015|Cities for Climate 2015]] ; [[#Castán%20Broto--2017b|Castán Broto 2017b]] ).

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=== Box 8.3: Coordination of Fragmented Policymaking for Low-carbon Urban Development: Example from Shanghai, China ===

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As a growing megacity in the Global South, Shanghai represents the challenge of becoming low carbon despite its economic growth and population size ( [[#Chen--2017|Chen et al. 2017]] ). Shanghai was designated as one of the pilot low-carbon cities by the central government. The city utilised a coordination mechanism for joining fragmented policymaking across the city’s economy, energy, and environment. The coordination mechanism was supported by a direct fund that enabled implementation of cross-sector policies beyond a single-sector focus across multiple institutions while increasing capacity for enabling a low-carbon transition for urban sustainability ( [[#Peng--2020|Peng and Bai 2020]] ).

'''Implementation and gov''' '''ernance process'''

In Shanghai, coordination between the central and local governments had an instrumental role for encouraging low-carbon policy experimentation. Using a nested governance framework, the central government provided target setting and performance evaluation while the local government initiated pilot projects for low-carbon development. The policy practices in Shanghai surpassed the top-down targets and annual reporting of GHG emissions, including carbon labelling standards at the local level, pilot programme for transitioning sub-urban areas, and the engagement of public utilities ( [[#Peng--2018|Peng and Bai 2018]] ).

'''Towards low-carbon ur''' '''ban development'''

New policy measures in Shanghai were built upon a series of related policies from earlier, ranging from general energy saving measures to air pollution reduction. This provided a continuum of policy learning for implementing low-carbon policy measures. An earlier policy was a green electricity scheme based on the Jade Electricity Program while the need for greater public awareness was one aspect requiring further attention in policy design ( [[#Baeumler--2012|Baeumler et al. 2012]] ), supporting policy-learning for policies later on. The key point here is that low-carbon policies were built on and learned from earlier policies with similar goals.

'''Outcomes and impacts of''' '''the policy mix'''

Trends during 1998 and 2015 indicate that energy intensity decreased from about 130 tonnes per million RMB to about 45 tonnes per million RMB and carbon intensity decreased from about 0.35 Mt per billion RMB to 0.10 Mt per billion RMB ( [[#Peng--2018|Peng and Bai 2018]] ). These impacts on energy and carbon intensities represent progress, while challenges remain. Among the challenges are the need for investment in low-carbon technology and increases in urban carbon sinks ( [[#Yang--2018|Yang and Li 2018]] ) while cross-sector interaction and complexity are increasing.

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=== 8.5.2 Mitigation Potential of Urban Subnational Actors ===

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A significant research question that has been paid more attention in both the scientific and policy communities is related to subnational actors’ role in and contribution to global climate mitigation. The 2018 UN Environment Programme’s (UNEP) annual Emissions Gap report in 2018 included for the first time a special chapter on subnational and non-state (i.e., businesses and private) actors and assessed the landscape of studies aiming to quantify their contributions to global climate mitigation. Non-state action on net-zero GHG or CO 2 emissions continues to be emphasised ( [[#UNEP--2021|UNEP 2021]] ) (Box 8.4). There has been an increase in the number of studies aiming to quantify the overall aggregate mitigation impact of subnational climate action globally. Estimates for the significance of their impact vary widely, from up to 30 MtCO 2 -eq from 25 cities in the United States in 2030 ( [[#Roelfsema--2017|Roelfsema 2017]] ), to a 2.3 GtCO 2 -eq reduction in 2030 compared to a current policy scenario from over 10,239 cities participating in GCoM ( [[#Hsu--2018|Hsu et al. 2018]] ; [[#GCoM--2019|GCoM 2019]] ). For regional governments, the Under 2 Coalition, which includes 260 governments pledging goals to keep global temperature rise below 2°C, is estimated to reduce emissions by 4.2 GtCO 2 -eq in 2030, compared to a current policy scenario ( [[#Kuramochi--2020|Kuramochi et al. 2020]] ).

Some studies suggest that subnational mitigation actions ( [[#Roelfsema--2017|Roelfsema 2017]] ; [[#Kuramochi--2020|Kuramochi et al. 2020]] ) are in addition to national government mitigation efforts and can therefore reduce emissions even beyond current national policies, helping to ‘bridge the gap’ between emissions trajectories consistent with least-cost scenarios for limiting temperature rise below 1.5°C or 2°C ( [[#Blok--2012|Blok et al. 2012]] ). In some countries, such as the United States, where national climate policies have been curtailed, the potential for cities’ and regions’ emissions reduction pledges to make up the country’s Nationally Determined Contribution under the Paris Agreement is assessed to be significant ( [[#Kuramochi--2020|Kuramochi et al. 2020]] ).

These estimates are also often contingent on assumptions that subnational actors fulfil their pledges and that these actions do not result in rollbacks in climate action (i.e., weakening of national climate legislation) from other actors or rebound in emissions growth elsewhere, but data tracking or quantifying the likelihood of their implementation remains rare ( [[#Chan--2018|Chan et al. 2018]] ; [[#Hsu--2019|Hsu et al. 2019]] ; [[#Hale--2020|Hale et al. 2020]] ; [[#Kuramochi--2020|Kuramochi et al. 2020]] ). Reporting networks may attract high-performing cities, suggesting an artificially high level of cities interested in taking climate action or piloting solutions that may not be effective elsewhere ( [[#van%20der%20Heijden--2018|van der Heijden 2018]] ). These studies could also present a conservative view of potential mitigation impact because they draw upon publicly reported mitigation actions and inventory data, excluding subnational actors that may be taking actions but not reporting them ( [[#Kuramochi--2020|Kuramochi et al. 2020]] ). The nuances of likelihood, and the drivers and obstacles of climate action across different contexts is a key source of uncertainty around subnational actors’ mitigation impacts.

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=== 8.5.3 Urban Climate Networks and Transnational Governance ===

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As of 2019, more than 10,000 cities and regions ( [[#Hsu--2020a|Hsu et al. 2020a]] ) have recorded participation in a transnational or cooperative climate action network, which are voluntary membership networks of a range of subnational governments such as cities, as well as regional governments like states and provinces ( [[#Hsu--2020a|Hsu et al. 2020a]] ). These organisations, often operating across and between national boundaries, entail some type of action on climate change. Among the most prominent climate networks are GCoM, ICLEI, and C40, all of which ask their members to adopt emission reduction commitments, develop climate action plans, and regularly report on emissions inventories.

Municipal and regional networks and agreements have provided a platform for urban actors to engage in international climate policy ( [[#Fraundorfer--2017|Fraundorfer 2017]] ; [[#Keller--2017|Keller 2017]] ; [[#Fuhr--2018|Fuhr et al. 2018]] ; [[#Hsu--2018|Hsu et al. 2018]] , 2020b; [[#Westman--2018|Westman and Broto 2018]] ; [[#Kern--2019|Kern 2019]] ; [[#Seto--2021|Seto et al. 2021]] ). Their impact comes through (i) providing resources for cities and regions to reduce their GHG emissions and improve environmental quality more generally, independent of national policy; (ii) encouraging knowledge transfer between member cities and regions; and (iii) acting as platforms of national and international policy influence ( [[#Castán%20Broto--2017b|Castán Broto 2017b]] ; [[#Fuhr--2018|Fuhr et al. 2018]] ).

Subnational governments that participate in transnational climate networks, however, are primarily located in developed countries, particularly Europe and North America, with far less representation in developing countries. In one of the largest studies of subnational climate mitigation action, more than 93% of just over 6000 quantifiable subnational climate commitments come from cities and regions based in the European Union ( [[#NewClimate%20Institute--2019|NewClimate Institute et al. 2019]] ). Such gaps in geographic coverage have been attributed to factors such as the dominating role of Global North actors in the convening and diffusion of ‘best practices’ related to climate action ( [[#Bouteligier--2013|Bouteligier 2013]] ), or the more limited autonomy or ability of subnational or non-state actors in Global South countries to define boundaries and interests separately from national governments, particularly those that exercise top-down decision-making or have vertically integrated governance structures ( [[#Bulkeley--2012|Bulkeley et al. 2012]] ). Many of the participating subnational actors from under-represented regions are large megacities (of 10 million people or more) that will play a pivotal role in shaping emissions trajectories ( [[#Data%20Driven%20Yale--2018|Data Driven Yale et al. 2018]] ; [[#NewClimate%20Institute--2019|NewClimate Institute et al. 2019]] ).

While these networks have proven to be an important resource in local-level mitigation, their long-term effects and impact at larger scales is less certain ( [[#Valente%20de%20Macedo--2016|Valente de Macedo et al. 2016]] ; [[#Fuhr--2018|Fuhr et al. 2018]] ). Their influence is most effective when multiple levels of governance are aligned in mitigation policy. Nevertheless, these groups have become essential resources to cities and regions with limited institutional capacity and support (for more on transnational climate networks and transnational governance more broadly, see Sections 13.5 and 14.5).

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=== Box 8.4: Net-zero Targets and Urban Settlements ===

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Around the world, net-zero-emissions targets, whether economy-wide or targeting a specific sector (e.g., transport, buildings) or emissions scope (e.g., direct scope 1, or both scope 1 and 2), have been adopted by at least 826 cities and 103 regions that represent 11% of the global population with 846 million people across six continents (NewClimate Institute and Data-Driven EnviroLab 2020). In some countries, the share of such cities and regions has reached a critical mass by representing more than 70% of their total populations with or without net-zero-emissions targets at the national level.

In some cases, the scope of these targets extends beyond net-zero emissions from any given sector based on direct emissions (see Glossary) and encompass downstream emissions from a consumption-based perspective with 195 targets that are found to represent economy-wide targets. These commitments range from ‘carbon neutrality’ (see Glossary) or net-zero GHG emissions targets, which entail near elimination of cities’ own direct or electricity-based emissions but could involve some type of carbon offsetting, to more stringent net-zero-emissions goals (Data-Driven EnviroLab and NewClimate Institute 2020) (for related definitions, such as ‘carbon neutrality’, ‘net-zero CO 2 emissions’, ‘net-zero GHG emissions’, and ‘offset’, see Glossary).

Currently, 43% of the urban areas with net-zero-emissions targets have also put into place related action plans while about 24% have integrated net-zero-emissions targets into formal policies and legislation (Data-Driven EnviroLab and NewClimate Institute 2020). Moreover, thousands of urban areas have adopted renewable energy-specific targets for power, heating/cooling and transport and about 600 cities are pursuing 100% renewable energy targets ( [[#REN21--2019|REN21 2019]] , 2021) with some cities already achieving it.

Box 8.4

The extent of realising and implementing these targets with the collective contribution of urban areas to net-zero-emissions scenarios with sufficient timing and pace of emission reductions will require a coordinated integration of sectors, strategies, and innovations ( [[#Swilling--2018|Swilling et al. 2018]] ; [[#Hsu--2020c|Hsu et al. 2020c]] ; [[#Sethi--2020|Sethi et al. 2020]] ; [[#UNEP%20IRP--2020|UNEP IRP 2020]] ). In turn, the transformation of urban systems can significantly impact net-zero-emissions trajectories within mitigation pathways. Institutional capacity, governance, financing, and cross-sector coordination is crucial for enabling and accelerating urban actions for rapid decarbonisation.

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=== 8.5.4 Financing Urban Mitigation ===

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Meeting the goals of the Paris Agreement will require fundamental changes that will be most successful when cities work together with provincial and national leadership and legislation, third-sector leadership, transformative action, and supportive financing. Urban governments often obtain their powers from provincial, state and/or national governments, and are subjected to laws and regulations to regulate development and implement infrastructure. In addition, the sources of revenue are often set at these levels so that many urban governments rely on state/provincial and national government funds for improving infrastructure, especially transit infrastructure. The increasing financialisation of urban infrastructures is another factor that can make it more difficult for local governments to determine infrastructure choices ( [[#O’Brien--2019|O’Brien et al. 2019]] ). Urban transit system operations, in particular, are heavily subsidised in many countries, both locally and by higher levels of government. As a result of this interplay of policy and legal powers among various levels of government, the lock-in nature of urban infrastructures and built environments will require multi-level governance responses to ensure meeting decarbonisation targets. The reliance on state and national policy and/or funding can accelerate or impede the decarbonisation of urban environments ( [[#McCarney--2011|McCarney et al. 2011]] ; [[#McCarney--2019|McCarney 2019]] ).

The world’s infrastructure spending is expected to more than double from 2015 to 2030 under a low-carbon and climate-resilient scenario. More than 70% of the infrastructure will concentrate in urban areas by requiring USD4.5–5.4 trillion per year ( [[#CCFLA--2015|CCFLA 2015]] ). However, today’s climate finance flows for cities or ‘urban climate finance’, estimated at USD384 billion annually on average in 2017/18, are insufficient to meet the USD4.5–5.4 trillion annual investment needs for urban mitigation actions across key sectors ( [[#CCFLA--2015|CCFLA 2015]] ; [[#CPI%20and%20World%20Bank--2021|CPI and World Bank 2021]] ; [[#Negreiros--2021|Negreiros et al. 2021]] ). Low-carbon urban form (e.g., compact, high-density, and mixed-use characteristics) is likely to economise spending in infrastructure along with the application of new technologies and renewable energies that would be able to recover the increasing upfront cost of low-carbon infrastructure from more efficient operating and energy savings ( ''medium evidence'' , ''high agreement'' ) ( [[#Global%20Commission%20on%20the%20Economy%20and%20Climate--2014|Global Commission on the Economy and Climate 2014]] ; [[#Foxon--2015|Foxon et al. 2015]] ; [[#Bhattacharya--2016|Bhattacharya et al. 2016]] ; [[#Floater--2017|Floater et al. 2017]] ; [[#Colenbrander--2018b|Colenbrander et al. 2018b]] ).

Governments have traditionally financed a large proportion of infrastructure investment. When budget powers remain largely centralised, intergovernmental transfers will be needed to fund low-carbon infrastructure in cities. During the COVID-19 pandemic, cities tend to rely more on intergovernmental transfers in the form of stimulus packages for economic recovery. Nonetheless, the risk of high carbon lock-ins is likely to increase in rapidly growing cities if long-term urban mitigation strategies are not incorporated into short-term economic recovery actions ( [[#Granoff--2016|Granoff et al. 2016]] ; [[#Floater--2017|Floater et al. 2017]] ; [[#Colenbrander--2018b|Colenbrander et al. 2018b]] ; [[#CPI%20and%20World%20Bank--2021|CPI and World Bank 2021]] ; [[#Negreiros--2021|Negreiros et al. 2021]] ). Indeed, large and complex infrastructure projects for urban mitigation are often beyond the capacity of both national government and local municipality budgets. Additionally, the COVID-19 pandemic necessitates large government expenditures for public health programme and decimates municipal revenue sources for urban infrastructure projects in cities.

To meet the multi-trillion-dollar annual investment needs in urban areas, cities in partnership with international institutions, national governments, and local stakeholders increasingly play a pivotal role in mobilising global climate finance resources for a range of low-carbon infrastructure projects and related urban land use and spatial planning programmes across key sectors ( ''high confidence'' ). In particular, national governments are expected to set up enabling conditions for the mobilisation of urban climate finance resource by articulating various goals and strategies, improving pricing, regulation and standards, and developing investment vehicles and risk sharing instruments ( [[#Qureshi--2015|Qureshi 2015]] ; [[#Bielenberg--2016|Bielenberg et al. 2016]] ; [[#Granoff--2016|Granoff et al. 2016]] ; [[#Floater--2017|Floater et al. 2017]] ; [[#Sudmant--2017|Sudmant et al. 2017]] ; [[#Colenbrander--2018b|Colenbrander et al. 2018b]] ; [[#Zhan--2018|Zhan and de Jong 2018]] ; [[#Hadfield--2019|Hadfield and Cook 2019]] ; [[#CPI%20and%20World%20Bank--2021|CPI and World Bank 2021]] ; [[#Negreiros--2021|Negreiros et al. 2021]] ).

Indeed, 75% of the global climate finance for both mitigation and adaptation in 2017 and 2018 took the form of commercial financing (e.g., balance sheets, commercial-rate loans, equity), while 25% came in the form of concessionary financing (e.g., grants, below-market-rate loans). However, cities in developing countries are facing difficulty making use of commercial financing and gaining access to international credit markets. Cities without international creditworthiness currently rely on local sources, including domestic commercial banks ( ''medium evidence'' , ''high agreement'' ) ( [[#Global%20Commission%20on%20the%20Economy%20and%20Climate--2014|Global Commission on the Economy and Climate 2014]] ; [[#CCFLA--2015|CCFLA 2015]] ; [[#Floater--2017|Floater et al. 2017]] ; [[#Buchner--2019|Buchner et al. 2019]] ).

Cities with creditworthiness have rapidly become issuers of ‘green bonds’ eligible for renewable energy, energy efficiency, low-carbon transport, sustainable water, waste, and pollution, and other various climate mitigation projects across the global regions since 2013. The world’s green bond market reached USD1 trillion in cumulative issuance, with issuance of USD280 billion in 2020, during the COVID-19 pandemic. While green municipal bonds still account for a small share of the whole green bond market in 2020, scale is predicted to grow further in emerging markets over the coming years. Green municipal bonds have great potential for cities to expand and diversify their investor base. In addition, the process of issuing green municipal bonds is expected to promote cross-sector cooperation within a city by bringing together various agencies responsible for finance, climate change, infrastructure, planning and design, and operation. Indeed, the demand for green bonds presently outstrips supply as being constantly over-subscripted ( ''robust evidence'' , ''high agreement'' ) ( [[#Global%20Commission%20on%20the%20Economy%20and%20Climate--2014|Global Commission on the Economy and Climate 2014]] ; [[#Saha--2017|Saha and D’Almeida 2017]] ; [[#Amundi%20and%20IFC--2021|Amundi and IFC 2021]] ).

On the other hand, cities without creditworthiness face difficulty making use of commercial financing and getting access to international credit markets ( [[#Global%20Commission%20on%20the%20Economy%20and%20Climate--2014|Global Commission on the Economy and Climate 2014]] ; [[#CCFLA--2015|CCFLA 2015]] ; [[#Floater--2017|Floater et al. 2017]] ). The lack of creditworthiness is one of the main problems preventing cities from issuing green municipal bonds in developing countries. As a prerequisite for the application of municipal debt-financing, it is an essential condition for cities to ensure sufficient own revenues from low-carbon urbanisation, or the default risk becomes too high for potential investors. Indeed, many cities in developed countries and emerging economies have already accumulated substantial amounts of debts through bond insurances, and ongoing debt payments prevent new investments in low-carbon infrastructure projects.

National governments and multilateral development banks might be able to provide support for debt financing by developing municipal creditworthiness programme and issuing sovereign bonds or providing national guarantees for investors ( [[#Floater--2017|Floater et al. 2017]] ). Another problem with green municipal bonds is the lack of aggregation mechanisms to support various small-scale projects in cities. Asset-backed securities are likely to reduce the default risk for investors through portfolio diversification and create robust pipelines for a bundle of small-scale projects ( [[#Granoff--2016|Granoff et al. 2016]] ; [[#Floater--2017|Floater et al. 2017]] ; [[#Saha--2017|Saha and D’Almeida 2017]] ).

In principle, the upfront capital costs of various low-carbon infrastructure projects, including the costs of urban climate finance (dividend and interest payments), are eventually transferred to users and other stakeholders in the forms of taxes, charges, fees, and other revenue sources. Nevertheless, small cities in developing countries are likely to have a small revenue base, most of which is committed to recurring operating costs, associated with weak revenue collection and management systems. In recent years, there has been scope to apply not only user-based but also land-based funding instruments for the recovery of upfront capital costs ( [[#Braun--2015|Braun and Hazelroth 2015]] ; [[#Kościelniak--2016|Kościelniak and Górka 2016]] ; [[#Floater--2017|Floater et al. 2017]] ; [[#Colenbrander--2018b|Colenbrander et al. 2018b]] ; [[#Zhan--2018|Zhan and de Jong 2018]] ; [[#Zhan--2018a|Zhan et al. 2018a]] ).

In practice, however, the application of land-based or ‘land value capture’ funding requires cities to arrange various instruments, including property (both land and building taxes), betterment levies/special assessments, impact fees (exactions), tax increment financing, land readjustment/land pooling, sales of public land/development rights, recurring lease payments, and transfer taxes/stamp duties, across sectors in different urban contexts ( [[#Suzuki--2015|Suzuki et al. 2015]] ; [[#Chapman--2017|Chapman 2017]] ; [[#Walters--2017|Walters and Gaunter 2017]] ; [[#Berrisford--2018|Berrisford et al. 2018]] ). Land value capture is expected not only for cities to generate additional revenue streams but also to prevent low-density urban expansion around city-fringe locations. Inversely, land value capture is supposed to perform well when accompanied by low-carbon urban form and private real estate investments along with the application of green building technologies ( ''robust evidence'' , ''high agreement'' ) ( [[#Suzuki--2015|Suzuki et al. 2015]] ; [[#Floater--2017|Floater et al. 2017]] ; [[#Colenbrander--2018b|Colenbrander et al. 2018b]] ).

For the implementation of land-based funding, property rights are essential. However, weak urban-rural governance leads to corruption in land occupancy and administration, especially in developing countries with no land information system or less reliable paper-based land records under a centralised registration system. The lack of adequate property rights seriously discourages low-carbon infrastructure and real estate investments in growing cities.

The emerging application of blockchain technology for land registry and real estate investment is expected to change the governance framework, administrative feasibility, allocative efficiency, public accountability, and political acceptability of land-based funding in cities across developed countries, emerging economies, and developing countries ( [[#Graglia--2018|Graglia and Mellon 2018]] ; [[#Kshetri--2018|Kshetri and Voas 2018]] ). Particularly, the concept of a transparent, decentralised public ledger is adapted to facilitate value-added property transactions on a P2P basis without centralised intermediate parties and produce land-based funding opportunities for low-carbon infrastructure and real estate development district-wide and city-wide in unconventional ways ( [[#Veuger--2017|Veuger 2017]] ; [[#Nasarre-Aznar--2018|Nasarre-Aznar 2018]] ).

The consolidation of local transaction records into national or supranational registries is likely to support large-scale land formalisation, but most pilot programmes are not yet at the scale ( [[#Graglia--2018|Graglia and Mellon 2018]] ). Moreover, the potential application of blockchain for land-based funding instruments is possibly associated with urban form attributes, such as density, compactness, and land-use mixture, to disincentivise urban expansion and emissions growth around city-fringe locations ( ''medium confidence'' ) ( [[#Allam--2019|Allam and Jones 2019]] ).

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=== 8.5.5 Barriers and Enablers for Implementation ===

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Irrespective of geography or development level, many cities face similar climate governance challenges such as lacking institutional, financial, and technical capacities ( [[#Gouldson--2015|Gouldson et al. 2015]] ; [[#Hickmann--2017|Hickmann and Stehle 2017]] ; [[#Sharifi--2017|Sharifi et al. 2017]] ; [[#Fuhr--2018|Fuhr et al. 2018]] ). Large-scale system transformations are also deeply influenced by factors outside governance and institutions, such as private interests and power dynamics ( [[#Jaglin--2014|Jaglin 2014]] ; [[#Tyfield--2014|Tyfield 2014]] ). In some cases, these private interests are tied up with international flows of capital. At the local level, a lack of empowerment, high upfront costs, inadequate and uncertain funding for mitigation, diverse and conflicting policy objectives, multiple agencies and actors with diverse interests, high levels of informality, and a siloed approach to climate action are constraining factors to mainstreaming climate action ( [[#Beermann--2016|Beermann et al. 2016]] ; [[#Gouldson--2016|Gouldson et al. 2016]] ; [[#Pathak--2018|Pathak and Mahadevia 2018]] ; [[#Khosla--2019|Khosla and Bhardwaj 2019]] ).

Yet urban mitigation options that can be implemented to transform urban systems involve the interplay of multiple enablers and barriers. Based on a framework for assessing feasibility from a multi-dimensional perspective, feasibility is malleable and various enablers can be brought into play to increase the implementation of mitigation options. The scope of this assessment enables an approach for considering multiple aspects that have an impact on feasibility as a tool for policy support ( [[#Singh--2020|Singh et al. 2020]] ). In Figure 8.19, the assessment framework that is based on geophysical, environmental-ecological, technological, economic, socio-cultural, and institutional dimensions is applied to identify the enablers and/or barriers in implementing mitigation options in urban systems. The feasibility of options may differ across context, time, and scale (Section 8.SM.2). The line of sight upon which the assessment is based includes urban case studies ( [[#Lamb--2019|Lamb et al. 2019]] ) and assessments of land use and spatial planning in IPCC SR1.5 ( [[#IPCC--2018a|IPCC 2018a]] ).

Across the enablers and barriers of different mitigation options, urban land use and spatial planning for increasing co-located densities in urban areas has positive impacts in multiple indicators, particularly reducing land use and preserving carbon sinks when the growth in urban extent is reduced and avoided, which if brought into interplay in decision-making, can support the enablers for its implementation. Improvements in air quality are possible when higher urban densities are combined with modes of active transport, electrified mobility as well as urban green and blue infrastructure (Sections 8.3.4, 8.4 and 8.6). The demands on geophysical resources, including materials for urban development, will depend on whether additional strategies are in place with largely negative impacts under conventional practices. The technological scalability of multiple urban mitigation options is favourable while varying according to the level of existing urban development and scale of implementation (Tables 8.SM.3 and 8.SM.4).

Similarly, multiple mitigation options have positive impacts on employment and economic growth, especially when urban densities enable productivity. Possible distributional effects, including availability of affordable accommodation and access to greenspace, are best addressed when urban policy packages combine more than one policy objective. Such an approach can provide greater support to urban mitigation efforts with progress towards shifting urban development to sustainability. The electrification of the urban energy system involves multiple enablers that support the feasibility of this mitigation option, including positive impacts on health and well-being. In addition, increases in urban densities can support the planning of district heating and cooling networks that can decarbonize the built environment at scale with technology readiness levels increasing for lower temperature supply options. Preventing, minimising, and managing waste as an urban mitigation option can be enabled when informality in the sector is transformed to secure employment effects and value-addition based on the more circular use of resources (Sections 8.4.3 and 8.4.5, and Tables 8.SM.3 and 8.SM.4 in Supplementary Material 8.2).

As a combined evaluation, integrating multiple mitigation options in urban systems involves the greatest requirement for strengthening institutional capacity and governance through cross-sectoral coordination. Notably, integrated action requires significant effort to coordinate sectors and strategies across urban growth typologies (Sections 8.4 and 8.6, and Figure 8.21). Institutional capacity, if not strengthened to a suitable level to handle this process – especially to break out of carbon lock-in – can fall short of the efforts this entails. These conditions can pose barriers for realising cross-sectoral coordination while the formation of partnerships and stakeholder engagement take place as important enablers. Overcoming institutional challenges for cross-sectoral coordination can support realising synergies among the benefits that each mitigation option can offer within and across urban systems, including for the SDGs. These include those that can be involved in co-located and walkable urban form together with decarbonising and electrifying the urban energy system as well as urban green and blue infrastructure, providing the basis for more liveable, resource efficient and compact urban development with benefits for urban inhabitants ( [[#8.2|Section 8.2]] ).

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