Baku, Azerbaijan – On November 16, 2024, the MAIA project hosted a high-level side event at COP29 titled “Building the Business Case for Climate Finance at the Subnational Level.” Bringing together experts and more than 40 stakeholders from subnational governments, international and European organisations, financial institutions, and civil society, the event highlighted the critical role of subnational actors in accelerating global climate action.  

Subnational governments, responsible for 70% of mitigation and 90% of adaptation actions, face significant financial barriers. Despite international commitments to climate finance, less than 10% of funding reaches the local level according to the UNEP Adaptation Gap Report 2023. Addressing this challenge, the event explored innovative strategies to boost subnational access to finance, align climate investments with local priorities, and foster collaboration across sectors. 

Natalia Uribe (Regions4 Secretary General): “Investing at the subnational level is crucial for addressing climate challenges where 90% of solutions occur. Regions are uniquely positioned to tackle these challenges with tailored, locally relevant solutions, but the barriers of limited finance access and technical capacity must be addressed”.

Key Discussions and Insights

The event provided a platform for policymakers, financial experts, and researchers to discuss the barriers and opportunities in subnational climate finance. The discussions were structured around two key themes: the state of finance at the subnational level and innovative solutions to unlock funding. 

State of Play for Subnational Climate Finance 

The first panel examined the financial landscape for subnational climate action and the barriers to accessing funds. Speakers provided valuable insights: 

• María José Sanz, Scientific Director of the Basque Centre for Climate Change (BC3), highlighted the essential role of science in shaping finance strategies. She emphasised that governance, multi-level collaboration, and integrating local knowledge into financial planning are crucial for scaling effective climate investments. She also pointed out that fragmented data and limited financial access hinder the ability of subnational governments to develop scalable, bankable projects. 

• Phoebe Koundouri, Professor at the Athens University of Economics and Business, discussed the need for public-private partnerships and reformed global financial systems to facilitate investments in the Global South. She stressed that leveraging public funds to attract private investments is crucial and that financing climate action should prioritise social equity, ensuring vulnerable populations benefit from climate investments. 

• Manveer Gill, Senior Manager for Sustainable Finance at CDP, pointed out that demand for climate finance among subnational actors has risen dramatically, yet adaptation remains underfunded. In 2023, cities disclosed 63% more projects in need of finance compared to 2021. He also highlighted the need for better communication between local governments and private investors to ensure that projects are aligned with investment criteria. 

• Giorgio Maione, Minister of Environment and Climate of Lombardy Region, shared how integrating climate goals into public finance structures has helped Lombardy create more accountable and impactful green budgeting practices. His region’s participation in Under2’s Next Generation Budgets Project is fostering transparency and accountability in public finance by embedding climate considerations into fiscal planning. 

• Sergio Arjona Jiménez, Deputy Minister of Sustainability and Environment of Andalusia, presented innovative financing mechanisms, including blue carbon projects and regional reforestation initiatives backed by public-private partnerships. He noted that Andalusia has launched multiple adaptation projects, including allocating €4 million to municipalities to develop resilience-building initiatives.

María José Sanz (Basque Centre for Climate Change (BC3) Scientific Director and Lead Partner in the MAIA Project): “Science provides not only solutions but also frameworks and governance insights that are critical for effective climate finance. To succeed, we need interoperable data, trust among stakeholders, and financial tools that empower local actors. 

Building the case for investing in subnational innovative solutions 

The second panel delved into practical financial solutions that have successfully mobilised investments at the subnational level. Key takeaways included: 

• Kirsten Dunlop, CEO of EIT Climate-KIC, called for financial mechanisms tailored specifically to regional actors. She emphasised the need for holistic investment approaches that align with long-term resilience goals. She also stressed the importance of shifting from short-term, reactive funding to proactive, transformational investments that integrate mitigation and adaptation. 

• Sonsoles Letang, Director General of Climate Change and Environmental Quality of the Catalan Government showcased Catalonia’s Climate Fund, which has successfully mobilised over €380 million in climate adaptation and mitigation projects. She also highlighted Catalonia’s verified carbon market for forest credits, enabling businesses to offset emissions while supporting forest conservation.  

• Stephen O’Driscoll, Head of the Environmental, Climate and Social Division at the European Investment Bank (EIB), highlighted how tools like the ADAPT platform and the Climate City Gap Fund, are unlocking billions in investments by providing advisory support for early-stage project development. He noted that the EIB allocated €22 billion in 2023 alone to subnational projects, emphasising the need for well-designed, bankable proposals. 

• Niina Ratilainen, Member of the Turku City Council and of the European Committee of the Regions, stressed the need for increased capacity-building to help subnational actors navigate complex climate finance structures. As stated in the recently launched CoR report focused on adaptation financing mechanisms for local and regional governments, smaller municipalities often lack the expertise and resources to access available financing, and the EU should enhance technical assistance programs.  

• Roger Cruz, Marketing and Uptake Lead at the FAST-Infra Label Secretariat, emphasised the importance of standardising sustainability metrics to attract more private investment into climate resilience projects. He discussed the challenges in financing adaptation, as only 15% of funds currently go toward resilience measures, despite its critical importance. 

Kirsten Dunlop (CEO at EIT Climate-KIC): “To mobilise subnational climate finance effectively, we need tailored, co-designed mechanisms. Bridging gaps, changing perceptions of bankability, and integrating adaptation and mitigation must be at the forefront of financing models.” 

Key Recommendations 

1. Assess Subnational Climate Finance Needs: Conduct region-specific assessments to identify subnational priorities and financing gaps. Tailor financial mechanisms to the unique environmental, social, and economic contexts of each region. 

2. Advocate for Increased Finance Allocation to Subnational Actors: Work with national governments, financial institutions, and private sector partners to allocate a greater share of climate finance to subnational actors, emphasising their role in implementing impactful projects. 

3. Strengthen Capacity-Building Initiatives: Provide guidance and training to subnational governments to improve project design and enhance access to climate finance resources. High-quality, well-structured projects have a significantly higher likelihood of securing funding. 

4. Promote Knowledge Sharing and Best Practices: Facilitate the exchange of successful climate finance models and lessons learned among subnational governments. Showcase innovative solutions to inspire further investment and collaboration globally. 

5. Develop and Disseminate Tailored Financial Mechanisms: Expand access to innovative financial instruments such as verified carbon markets, blue carbon credits, and resilience bonds, ensuring they are accessible and practical for subnational actors. 

6. Adopt a Strategic, Long-Term Approach to Adaptation Finance: Transition from short-term, reactive funding to strategic, anticipatory investments that build long-term resilience. Increase the volume of adaptation finance while integrating mitigation and adaptation into cohesive frameworks. 

7. Foster Multi-Stakeholder Collaboration: Encourage partnerships between public and private entities to co-design locally driven solutions. Leverage private capital to supplement public funds and scale climate action. 

8. Enhance Data Interoperability: Invest in platforms and tools that enable seamless data sharing among stakeholders. Improved data accessibility and transparency will strengthen the design and implementation of projects and attract additional investment. 

By implementing these recommendations, the international community can unlock the transformative potential of subnational actors, ensuring equitable, sustainable, and effective climate action globally. 

A Pathway to Scalable Subnational Climate Finance 

As the event wrapped up, Kirsten Dunlop and Natalia Uribe, Secretary General of Regions4, emphasised the need to connect science, policy, and finance in a way that empowers subnational actors. Effective governance structures, stronger multi-level collaboration, and innovative financial mechanisms are critical to closing the finance gap. 

The discussions reinforced that public funds alone cannot meet the scale of the climate crisis. Instead, leveraging private capital, enhancing local financial capacity, and ensuring inclusive, data-driven decision-making are key to building a resilient and sustainable future. 

By addressing systemic barriers and embracing innovative solutions, the international community can unlock the transformative potential of subnational actors.  

COP29 provided a vital platform for advancing these conversations, but the momentum must continue beyond the conference halls, translating commitments into tangible climate investments for the regions that need them most. 

The outcomes of this policy-science dialogue will inform MAIA’s ongoing work, including the development of policy briefs to bridge the policy-science knowledge gap. 

Moderators and speakers at the MAIA side event at COP29. 

About the MAIA Project 

The MAIA project, a key initiative under the EU Mission on Adaptation to Climate Change, aims to enhance the accessibility of fragmented climate knowledge and research across the EU.  

By organising events like this policy-science dialogue, MAIA fosters discussions, strengthens partnerships, accelerates climate action and promotes climate strategies. 

Watch the event recording here.  

Access to the photo gallery here. 

Access the outcomes report here. 

For more information on MAIA’s initiatives, visit the MAIA Project website.