Last month, subnational governments from both sides of the Atlantic came together to kick-off the Next Generation Budgets project.
Next Generation Budgets is a project led by Climate Group, in partnership with the Government of North Rhine Westphalia and funded by Stiftung Mercator. Through Next Generation Budgets, Under2 Coalition’s state and regional governments including Baden-Württemberg, North Rhine-Westphalia (Germany), Basque Country, Catalonia (Spain), Colorado, Hawai’i, Maryland and New York State (United States), Emilia-Romagna, Lombardy (Italy) and Wales (United Kingdom) receive technical green budgeting training, and take part in a community of practice to improve and learn ways to unlock climate finance for their territories.
Taking a ‘whole of government’ approach to mainstream climate action in key government ministries and departments, each government has established an internal Next Generation Budgets taskforce. This will ensure cross ministerial coordination throughout the project.
To set the scene, Enver Enver, Interim Chief Finance Officer and Catherine Barber, Assistant Director for Environment from Greater London Authority (GLA) shared the city’s approach to green budgeting and expertise with the participating governments, including the benefits and impact. The Mayor of London, Sadiq Khan has set an ambition for London to be a net-zero city by 2030. The administration sees climate budgeting as a means to create strong links between finance and environment and had implemented their first climate budget in 2022. The climate budget is intended to identify all projects and programmes that reduce emissions from the GLA Group.
“As CFOs, we have a material impact on decisions about how resources are deployed in our cities. Climate action is unlikely to happen at the scale and pace we need unless we, as CFOs, are on board. Still, climate change always seemed outside our scope of work. It wasn’t clear how I, or the wider finance department, could get involved. Climate budgeting changed that” - Enver Enver, Interim Chief Finance Officer, GLA.
During the session, Climate Group shared an analysis of the assessment survey that participating governments filled in prior to the kick-off. This survey aimed to understand current practices around green budgeting, and unlocking subnational climate finance, as well as knowledge gaps and learning interest, in order to tailor the project activities. The survey revealed that North Rhine Westphalia and the Basque Country had already made efforts to partially align their budgets with their climate actions, whilst Colorado, Hawaii and Catalonia integrate climate measures into their general budgets.
The survey results also showed that environmental impact assessments, green budget gap analysis and climate tagging are the most popular budgeting tools. As they enter the next phase of the project, governments have a strong interest in improving how:
When it comes to unlocking climate finance, some of the top challenges raised by governments were establishing public-private partnerships, attracting large-scale investments, using public money to mobilize private capital towards regional low-carbon project, and lastly staff capacity to write climate action proposals.
“Understanding that there will never be enough public funds to address climate infrastructure, the state is becoming more aware and intentional about leveraging and mobilizing private capital.” - Participating government