Seville, June 30 - States and regional governments should be given the authority and resources to scale climate finance in the fight against climate change, select members of the Under2 Coalition said in a statement today. They’re calling for global solidarity levies on high-emitting sectors to ensure developing economies have better access to climate finance and can increase their climate action.
The statement, co-signed by 32 Under2 governments—including 20 state and regional governments and all 12 Moroccan regions, launched as governments and global finance leaders gather at the Fourth International Conference on Financing for Development (FfD4) in Seville this morning.
Recent global pledges, including the US $300 billion commitment at COP29, fall far short of the funding that is needed to cover the costs of climate mitigation, adaptation, loss and damage, and nature protection. Now more than ever, innovative approaches to raise climate finance are critical, the signatories stated. Local governments –those driving on-the-ground action- need to be empowered with the adequate financing.
“Today, 44% of all compliance carbon pricing instruments globally are implemented by state and regional governments,” said Dr Champa Patel, Climate Group’s Executive Director for Governments and Policy. "These initiatives, ranging from levies, carbon taxes and cap and invest programs, reflect bold leadership at the local level. But to scale their impact, these governments urgently need support from national and international institutions. Many subnationals do not have the powers to generate domestic revenue this way and ensuring those implementers are also supported is crucial to combatting climate change."
Initiatives such as Washington State’s Cap-and-Invest Program, Catalonia’s carbon tax on fossil-fuel vehicles, and California’s hybrid cap-and-trade approach are generating billions for local climate action and resilience.
Subnational governments drive local action with global impact. Québec has allocated over CAD $100 million of its carbon revenues to support countries that are hardest hit by climate change. Scotland led the way with a £1 million pledge for loss and damage-initiatives – a major milestone in subnational solidarity and a first of its kind commitment by a developed government.
Yet many subnational governments, particularly in developing economies, lack the authority, resources, or enabling conditions to introduce carbon pricing or scalable finance models. A fair global financing system must empower all states and regions – the real implementers of climate plans.
Dr Patel continued: “We know that subnational governments are uniquely positioned to accelerate climate solutions that work for people and the planet. States are proving that climate action and development go hand-in-hand. What they need now is support, investment, and the opportunity to shape the global discussion on how we will mobilise the 1.3 trillion we know is needed.”
The listed states and regions (see below) who are part of the Under2 Coalition urge the FfD4 outcome to:
The statement is signed by: Government of the State of Aguascalientes (Mexico), State Government of Baden Württemberg | (Germany), Government of Catalonia (Spain) Government of Cordoba (Argentina) Gauteng Provincial Government (South Africa) Government of the State of Minas Gerais ( Brazil) North Bank Region Kerewan (Republic of Gambia) Government of Pernambuco (Brazil) Government of Piaui (Brazil) Government of Quebec ( Canada) Government of the State of Rio de Janeiro (Brazil) Government of the State of Rondonia (Brazil) Government of Santa Fe (Argentina) Scottish Government ( United Kingdom) Government of Taraba State (Nigeria)
-ENDS-
Notes to editors:
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About the Under2 Coalition
The Under2 Coalition is the largest global network of states and regions committed to achieving net zero emissions by 2050 at the latest.
Today, the coalition represents close to 200 subnational governments across 36 countries totalling more than 50% of global GDP
Statement text in full
As global finance leaders convene at the Fourth International Conference on Financing for Development (FfD4), subnational governments – nearly 200 states, regions, devolved administrations, and provinces in the Under2 Coalition – are demonstrating that their leadership in climate action is not optional, but essential to achieving a just, equitable, and sustainable future.
At COP29, deep disagreements on climate finance dominated. The US$300 billion by 2035 pledged by developed countries falls far short of expectations. To meet the true costs of climate action, we need additional ways to mobilise the much-needed finance across mitigation, adaptation, loss and damage, and nature. Subnational governments are now key drivers of carbon pricing measures. Today, 44% of all compliance carbon pricing instruments globally are implemented by subnationals.1 From carbon pricing to green bonds and sub-sovereign climate funds, we’re pioneering financing solutions tailored to local needs.
This leadership is delivering tangible results. From Washington State’s Cap-and-Invest Program to Querétaro’s carbon tax on industrial emissions, subnationals are generating domestic revenue and reinvesting it in domestic climate action. Catalonia introduced Spain’s first carbon tax on fossil-fuel-powered vehicles, generating €52 million in 2024. This revenue is reinvested via the Natural Heritage and Regional Climate Fund, which is expected to invest €491 million by 2030.
California’s hybrid approach – combining cap-and-trade with a rising floor price and sector-specific charges – has delivered sustained emission cuts and strong investment signals. Subnational cooperation is also scaling impact: the California–Québec carbon market is in its 11th year, and the Northeastern US 11-state Regional Greenhouse Gas Initiative, now 15 years old, saved consumers over $1.2 billion in its first five years.2
These examples demonstrate the effectiveness of scalable finance models. Similarly, partnerships with development banks and philanthropies help states like São Paulo and British Columbia expand green finance initiatives. Yet many subnational governments – especially in developing economies – lack the legal authority, enabling conditions, or resources to introduce pricing tools or scalable financing initiatives. These actors must not be left behind.
Carbon pricing – whether through levies, taxes, cap-and-trade or other mechanisms – delivers real results when set at the right level and applied in the right conditions. It is important to distinguish between carbon pricing for local reinvestment, many of the examples above, and the use of solidarity levies to support developing countries. We advocate for scaling the latter as a new, additional source of climate finance. While the principle of pricing pollution is well-established, its application through solidarity-based instruments is a critical new frontier of climate finance.
We acknowledge the work of the Global Solidarity Levies Taskforce and its call for momentum behind levies on aviation, fossil fuels and financial transactions by COP30. The IMO’s draft levy on high-emitting vessels reinforces the polluter-pays principle on the global stage.3 But equitable revenue distribution to implementing levels of government from cross-border levies is essential.
Subnational governments are already utilising carbon pricing instruments and just revenue distribution to start filling the international financing gap:
Subnational governments are uniquely positioned to design climate finance systems that align with local priorities, especially when national frameworks fall short. They are well-placed to ensure that revenue generated is channelled into local solutions. To support this, we call for dedicated international finance mechanisms, including via Multilateral Development Banks, to provide direct, grant-based funding to subnational governments. To ensure climate action supports equity and development, without adding to debt or deepening existing inequalities.
We also urge global leaders to embed subnational actors in the design of climate finance frameworks, recognising their capacity to accelerate solutions.
The FfD4 outcome should:
We call on global leaders to act now to deliver internationally coordinated carbon pricing mechanisms for high-emitting sectors, with subnational governments as integral partners. Subnationals are not just delivery agents – we are catalysts for local climate ambition and development. The path to 1.5°C runs through local action, and a finance system that empowers subnational leadership is essential for immediate and effective climate solutions.