From the Ground, Up: Climate Finance for Cities with Carbon Disclosure Project

By Matthew Gallagher

This summer, my role as Sustainable Infrastructure Fellow for the Carbon Disclosure Project (CDP) imparted three related lessons. First, climate change is already a salient and urgent reality at the local level around the world. Second, viable technology exists to prevent the most severe dangers of climate change, but financial innovation is required to scale these existing opportunities. Third, data is 21st century currency.

During the course of my fellowship, I worked within CDP’s Cities, States, and Regions division of the Climate Finance team. This team collects and analyzes disclosure data on projects related to the energy, transit, water, and waste management systems necessary for climate mitigation and adaptation. It shortly became apparent, given the current politics of both conventional development aid and climate diplomacy, that cities must shift from relying on public finance to engaging the private sector. Data transparency is critical to connecting private capital with public purpose. In this way, CDP is accelerating development of sustainable infrastructure globally.

To attract investors, increasing the “bankability” of climate projects is necessary. Specifically, this should involve aggregating or securitizing many small-scale projects for large-scale investment, creating reliable project pipelines for future investment, establishing an enabling environment of consistent regulations and favorable policies, and addressing exchange rate volatility for international investment. During my internship, I researched composition of project aggregation bundles, assessed performance of the Project Preparation Facilities that provide technical and financial assistance to make projects bankable, and contributed to a new guide for EU cities on attracting private sector climate finance.

To end my internship, I led research on Coalition for High Ambition Multilevel Partnerships (CHAMP) case studies across the Latin America, West Africa, and Asia Pacific regions. Closing the emissions gap requires elevating local government in both Nationally Determined Contributions (NDCs) and international negotiations. This is because implementation, in terms of actual climate action, happens on site and not at summits. Further, multilevel governance is key to high ambition because realizing conditional NDC targets will benefit from local-national coordination on risk sharing, credit enhancement mechanisms, and fiscal and monetary policy to garner international financial support.

I am grateful for the opportunity to have worked with a passionate team, developed practical skills in data analysis, deepened my knowledge of private sector criteria for climate finance, and gained experience assessing infrastructure projects. I would recommend any Fletcher student interested in environmental policy, business, or subnational diplomacy apply to this role next summer. CDP enables the development of projects that need to be completed in order to limit global warming to well below 2°C.

Matthew Gallagher is a second-year MALD student with fields of study in International Environmental Policy and Global Governance. His work focuses on energy, nature-based infrastructure, climate security, and sustainable finance.