What is the issue?
- Cities consume enormous resources and accounts to be the centre for climate change.
- Role of Local bodies is needed to build a strong climate smart transformation.
What is the role of cities in climate change?
- According to UN-Habitat’s estimates, over 64 per cent of the world population is expected to reside in cities by 2050.
- The Intergovernmental Panel on Climate Change estimates that urban infrastructure accounts for two-third of the global energy use and 70 per cent of energy related Green House Gas (GHG) emissions.
- By 2025 megacities of 10 million or more people will house more than half the world’s population and contribute more than half of global GDP.
- As India’s urban population grows from 410 million in 2014 to 814 million in 2050, with about 7 cities having more than 10 million people,
- So will there be rise in energy consumption, degradation of forest areas and agricultural land and disturbed ecosystems, problems of water supply and solid waste management.
What is Climate smart transformation?
- Series of global climate changes holds an opportunity for cities to lead the world towards a sustainable future by becoming resilient and climate-smart.
- Climate-smart transformation needs set of city-specific strategies to systematically reduce city’s carbon footprint and enhance resilience to climate change.
- This can be achieved by smart, affordable infrastructure, and mixed form of adaptable land-use.
- Sustainable transformation model should include the following
- A clearly defined ‘low carbon pathway’.
- A series of interventions under certain plausible scenarios around integrated solid waste management (ISWM).
- Energy efficient energy/ water supply, harnessing rooftop solar and battery storage.
- Green urban mobility (including electric mobility, public and, non-motorised transport),
- Green and affordable building infrastructure, smart grids,
What are the barriers in achieving such targets?
- Climate finance moves towards mitigation projects that largely focus on energy and transport, such mitigation project needs healthier cash flow dynamics.
- The risk/ return profiles of the climate-resilience projects often lack financing beyond government’s budgetary endowment.
- The perceived lack of creditworthiness for most cities in India becomes a critical barrier to secure affordable financing on international market or issue bonds to fund climate projects.
- Project preparation is expensive, typically accounts for 5-10 per cent of the project cost.
- Most cities lack capacity for conducting feasibility, design and, financial structuring of the projects.
How involvement of local body will reach the goal?
- An effective way to catalyse private investment in urban projects is to mobilise credits through local financial institutions (LFIs)
- Projects such as micro-grids, bundled energy efficiency in water pumping, or waste-to-energy, having smaller deal sizes make them a better fit for local financial institutions having smaller investment appetite.
- However, to maximise the development impact, the LFIs while disbursing credits should ensure appropriate Environment-Social Governance (ESG) safeguards.
- Tapping into diverse, well-administered local sources of revenue can decrease reliance of cities on the Centre’s transfers.
- City-focused ‘fund’ becomes useful, on one-side to support project development and, on the other side to mobilise lending for actual project implementation.
- Such a mechanism can ultimately make climate resilient investments, which might not otherwise meet investors’ risk adjusted return, financially more attractive.
- At a certain level, cities should also consider reforming the principles of municipal budgeting to accurately value.
Source: Business Line
