The climate transition and local public investment capacity
Europe’s local authorities have a crucial role to play in meeting the EU’s objective for climate neutrality in 2050 and the critical milestones for emission reductions in 2030. They manage important building stocks and transport networks, develop climate strategies, action and investment plans, while engaging stakeholders and citizens in the climate transition.
Turning climate policy ambition into reality, local authorities are responsible for implementing a lot of EU’s Green Deal legislative measures. The EU’s high-profile Mission for 100 Climate Neutral and Smart Cities by 2030 recognises this central role with a pledge for leading cities to trace a fast track towards a climate neutral urban future for others to follow.
Climate transition at local level requires scaling up building renovations, reinforcing sustainable transport infrastructure and investing in energy efficiency. This requires significant investments, in a period where public budgets are squeezed across Europe. But what are the actual public investment needs and do local authorities have the necessary financial capacity to invest in the climate transition? Our recent I4CE study of the situation of local authorities in France makes three important conclusion: 1) local public climate investments have leaped forward with an 44% increase between 2017 and 2022; 2) investments must more than double until 2030 to align with the climate goals established at the national and EU level, and 3) local authorities will not be able to both step up the transition investments and reduce their budget deficit at the pace planned by the previous French government.
The I4CE study focusses on France, but the methodological building blocks applied can be used in other European countries and at the EU level. Although the investment needs of local authorities will vary depending on geographical and socio-economic factors, local leaders across the EU face similar challenges of financing the climate transition through a mix of finance and policy measures. As part of an EU-scale project, I4CE is working with French cities to assess the costs of achieving climate objectives and to identify financial options to meet the investment demand. It will support a much better understanding of what a trajectory of local public finances compatible with the climate transition could look like across the EU as an investment-focused European Commission takes up its seat, and critical debates on the next long term EU budget are just around the corner.
