Increasing Support to Low-Carbon, Resilient Urban Development

NEW YORK, Sept. 19, 2023—Today, the governments of Germany and Luxembourg announced new funding of EUR 50 million for the City Climate Finance Gap Fund (Gap Fund), a multi-donor fund, implemented by the World Bank and the European Investment Bank with partners. These resources will support the development of low-carbon and climate-resilient urban investments and will nearly double the fund’s capitalization, bringing it to EUR 105 million, one of the largest early-stage technical assistance funds for cities and climate.

We are proud to see that the Gap Fund has been successfully up and running for three years now and is impressively meeting a growing demand. This shows just how crucial Technical Assistance is in the early phases of climate action planning and project preparation,” said a representative of the Federal Government of Germany. “With its unique and innovative approach, the Gap Fund helps unlock the urban investment needed to meet our global climate targets”.

Three years later, the growing interest of local actors and authorities for the Gap Fund’s support proves that we are moving in the right direction. We have now reached over our EUR 100 million target, which is further proof of our commitment and joint efforts,” said Joëlle Welfring, Luxembourg Minister for the Environment, Climate and Sustainable Development. “The Gap Fund is gradually becoming a key partner for local climate action.”

The Gap Fund is a multi-donor initiative funded by the Governments of Germany and Luxembourg and jointly implemented by the World Bank, and the European Investment Bank (EIB) in partnership with Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH. It provides much-needed funding for early-stage technical assistance and capacity building so that cities from low- and middle-income countries can operationalize their climate action plans, develop robust project concepts, and access climate finance resources. Since its establishment in 2020, it has supported 183 cities in 67 countries.

Action is needed now to end poverty on a livable planet.  Cities are key to boosting climate resilience while delivering steady economic growth and job creation. The Gap Fund will translate cities’ climate ambitions into real investments, giving millions of people a chance to improve their lives,” said Axel van Trotsenburg, World Bank Senior Managing Director for Development Policy and Partnerships.

The Gap Fund is currently supporting the cities of Mombasa (Kenya), and Porto Alegre (Brazil) in the development of their climate action plan. In Pristina (Kosovo), it supported the assessment of the city’s spatial development plan and the development of recommendations for compact urban growth consistent with the city’s own climate targets. To support adaptation to increased climate risks, the Gap Fund supports the implementation of the stormwater management plan in Mbombela (South Africa) and the identification and prioritization of investments in nature-based solutions for climate resilience in Kinshasa (Democratic Republic of the Congo). The Gap Fund also supports climate mitigation in cities, including the development of climate-smart waste management strategies in cities like Mangalore and Kolar (India) and energy-efficiency measures for public and private buildings in Palembang (Indonesia). It also supports sustainable mobility through the development of a strategy for e-mobility in Buenos Aires (Argentina) and a pre-feasibility study for the deployment of electric school-buses in Bogota (Colombia).

“Cities are in a race against time to become carbon neutral as well as more resilient to the effects of climate change. They also face major social and economic challenges, which place demands on their budgets,” said Ambroise Fayolle, EIB Vice President in charge of climate action and development policy. “The Gap Fund is helping cities make best use of scarce resources. This means connecting promising project ideas to preparation support and funding, as well as enhancing local capacity to manage investment. I would like to thank our donors who are helping us scale up this successful initiative, which is already providing support in over 180 cities globally.”

The Fund helps cities identify, prioritize, and develop impactful investments, while lowering the perceived risks of potential follow-on providers of finance. The linkage with downstream resources for detailed project preparation and financing is built into the design of the Gap Fund, which includes matchmaking between Gap Fund supported projects and potential sources of additional support and financing as one of its priorities. With its Euro 105 million in Technical Assistance grant funding, the Gap Fund aims to leverage more than Euro 4 billion in climate investments for cities.

The Gap Fund benefits from strong partnerships with city networks and global initiatives including the Global Covenant of Mayors for Climate and Energy (GCOM), the City Climate Finance Leadership Alliance (CCFLA), C40 Cities, and ICLEI – Local Government for Sustainability.

This new infusion of capital to the Gap Fund will help cities move forward with their ambitious projects and help us move faster in the fight against climate change.” said Michael R. Bloomberg, UN Secretary-General’s Special Envoy on Climate Ambition and Solutions, Global Covenant of Mayors for Climate and Energy Co-Chair, and Founder of Bloomberg Philanthropies and Bloomberg LP.

The Gap Fund partners collaborate closely to share knowledge, empower cities in addressing climate challenges, and find ways to connect them with additional support and funding.


Cities are key to creating a climate-smart future. Over half the global population lives in cities, generating 80% of total economic output and accounting for 70% of global CO2 emissions. While urbanization is a key driver of growth, unplanned, rapid urbanization and urban sprawl threaten to increase greenhouse gas emissions and vulnerability to climate change and other shocks. As many cities and local governments take steps to become low-carbon and climate-resilient, they face barriers in accessing finance as well as difficulties in planning and project preparation, due to insufficient capacity or resources — particularly in the early stages of the project cycle. The Gap Fund supports cities in addressing these specific challenges.


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