Cities and regions have a crucial role in enabling and catalysing private-sector climate investments, as investments always take place within the boundaries of a specific city or region. CLC and City of Espoo partnered with Sweco Finland to create Climate Investment Framework for Cities, which is designed to help municipalities overcome obstacles and recognizing opportunities in attracting private clean investments to their regions.
Creating an enabling environment
Public funding alone cannot meet the scale of investment needed. Cities and other public sector actors must take on a new role, not just as funders, but as enablers of private investment. Private investors are increasingly drawn to green opportunities, influenced by e.g. EU taxonomy. Yet, a persistent challenge remains, securing sufficient early-stage financing for green projects.
The public sector plays a vital role in creating an environment conducive to green investment. National governments are responsible for establishing comprehensive legislation and building large-scale infrastructure such as energy grids. Meanwhile cities must take a more hands-on approach by shaping local investment landscapes through planning, partnerships and incentives.To support this, capacity building and education are essential.
Public officials and private investors need the skills and knowledge to navigate the complexities of green finance. Cities can also help close the investment gap by leveraging innovative financing mechanisms, such as green bonds, climate funds, and blended finance models. Financial incentives such as tax breaks, subsidies, and grants can further attract private capital. Moreover, cities can reduce investment risk through guarantees, insurance, and by maintaining a stable and predictable regulatory environment.
The Espoo Climate Community (COMET) project goals
1) Accelerating systemic transformation for the rapid decarbonization in Espoo to reduce carbon footprint
2) Contributing to global emission reductions with products and services developed in Espoo to increase the carbon handprint
3) Changes in necessary skills, capabilities, mindsets, and actions of the city community to promote carbon heartprint
The framework
The initiative explores a critical question: How can a city track and accelerate climate investments to reduce emissions while fostering economic growth?
To address this, a climate investment framework was developed in partnership with Sweco Finland, offering a set of actionable strategies for cities and regions to enable and catalyze climate-related investments.
Espoo served as a case study, with a focus on its three largest sources of emissions: construction, energy, and transport. The process involved gathering and analyzing data on green investments and identifying the actions needed to support them. In-depth interviews were conducted with key stakeholders, including the biggest investors in Espoo as well as other comparable Northern European cities. These insights were further refined through a series of workshops, where participants reviewed findings and discussed practical steps forward.
The framework reflects both the specific context of Espoo and broader insights from other Northern European cities. It is designed to be scalable and adaptable, offering a practical model for cities and regions across Europe to follow in their own climate investment strategies.
