“A devastating global pandemic, a historic economic downturn and a warming planet.”
These are the crises mentioned on the homepage of the City Climate Finance Gap Fund, aka “gap fund,” launched in 2020 by the World Bank and the European Investment Bank with other partners. Its mission is to address urbanisation in the context of the critical juncture of these crises.
And it is to this fund that, on 19 September, the governments of Luxembourg and Germany announced an investment totalling €50m. Luxembourg’s share is €8m.
Thanks to this injection, the fund has now surpassed its goal of €100m.
“The growing interest of local actors and authorities for the gap fund’s support proves that we are moving in the right direction,” said environment minister Joëlle Welfring (déi Gréng) in a World Bank press release, adding: “The gap fund is gradually becoming a key partner for local climate action.”
Says the press release of the fund: “It provides much-needed funding for early-stage technical assistance and capacity-building so that cities from low- and middle-income countries can operationalise their climate action plans, develop robust project concepts and access climate finance resources.”
In just three years, the fund has lent support to projects in 183 cities across 67 countries.
Included on that list are Mombasa (Kenya) and Porto Alegre (Brazil), where the gap fund is helping with the development of climate action plans. Pristina (Kosovo) is another beneficiary, namely for research on how to enable compact urban growth that preserves the city’s climate targets.
“Cities are key to boosting climate resilience while delivering steady economic growth and job creation,” points out Axel van Trotsenburg of the World Bank in the press release. “The gap fund will translate cities’ climate ambitions into real investments, giving millions of people a chance to improve their lives.”
Third-biggest EIB donor
Luxembourg has, since 2004, invested some €101m in the EIB across six different funds, which makes it the third-biggest donor to the institution.
Besides the gap fund, these are (2) the Luxembourg-EIB Climate Finance Platform; (3) the Financial Inclusion Fund; (4) the Facility for Euro-Mediterranean Investment and Partnership (Femip) Trust Fund; (5) the Economic Resilience Initiative Fund; and (6) the EU-Africa Infrastructure Trust Fund.