Smart policy and innovation can unlock climate investment opportunities in Chinese cities and beyond, according to a new report by the International Finance Corporation (IFC), a member of the World Bank Group.

The report, Climate Investment Opportunities in Cities, released by the IFC on November 29, analyzes cities' climate-related targets and action plans, identifying opportunities in priority sectors such as green buildings, public transportation, electric vehicles, waste, water, and renewable energy. It highlights the innovative approaches that cities have already taken—such as green bonds and public-private partnerships—to attract private capital and build urban resilience.

With more than half of the world's population currently living in urban areas, cities consume over two-thirds of the world's energy and account for more than 70 percent of global carbon dioxide emissions. How cities address climate change will be critical to efforts to limit global warming to 1.5 degrees Celsius, according to the Intergovernmental Panel on Climate Change.

"There's a great urgency to address climate change—we must take meaningful action now," IFC CEO Philippe Le Houérou said. "Cities are the next frontier for climate investments, with trillions of dollars in untapped opportunities. To deliver on the promise of climate-smart cities, the public sector needs to enact reforms that are aimed at attracting more private sector financing."

The report notes that Chinese cities are leading in the electrification of the transport sector. National government policies and incentives for the electrification of public fleets are helping manufacturers achieve economies of scale to make the production of private electric vehicles economically viable.

"By 2030, three in 100 people in China are expected to own a private electric vehicle, creating significant opportunities in China and the region," Randall Riopelle, IFC Country Manager for China, Mongolia and South Korea, said. "Smart policies could help cities attract private investment and build resilience. We are keen to promote such solutions, stimulating climate investments in China and other parts of the world."

The report also highlights the adoption of innovative approaches in Chinese cities. For example, the dockless bike service has grown rapidly from Beijing to other cities, resulting in 50 million bike journeys a day and fewer cars on the road. Shenzhen has adopted the "sponge city" concept and transformed itself into a water supply catchment area.

Globally, green buildings will account for $24.7 trillion of cities' climate investment opportunities. Significant investment potential exists in low-carbon transportation solutions such as energy-efficient public transport ($1 trillion) and electric vehicles ($1.6 trillion). At the same time, investments in clean energy ($842 billion), water ($1 trillion) and waste management ($200 billion) remain essential components of sustainable urban development.

Copyedited by Sudeshna Sarkar

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