Although cities are responsible for 70% of greenhouse gas emissions and are home to nearly 60% of the world's population, urban climate-related infrastructure faces an annual financing gap of $410 to $5 trillion. One of the barriers to scaling up urban climate finance is the lack of bankable or investable infrastructure projects.
The lack of bankable projects is affected by a variety of factors, including macroeconomic conditions, city creditworthiness, and silos between project financiers and sponsors, affecting investment and project development.
Cities, especially in low- and middle-income countries, encounter various obstacles in meeting the demands of international financiers. These include:[1]
- Due to different local conditions and different levels of development, small-scale gatherings are difficult
- The development costs of large-scale infrastructure projects are high
- Reliance on foreign currency financing leads to exchange rate fluctuation risk
- Unfavorable regulatory environment and licensing barriers deter investors and complicate multi-sector solutions
To address these barriers, development finance institutions, city networks and NGOs have established Project Preparation Facilities (PPFs). These PPFs provide grants and technical assistance to cities to help them prepare projects that attract investment. CCFLA members operate 32 PPFs, 16 of which are committed to achieving greater ambition, partnerships and impact through the Leadership in Urban Climate Investment (LUCI) platform. This enhanced cooperation and support is aimed at overcoming the challenges faced by local governments, ultimately making their programs more attractive to private and international financiers.
While providing critical support to cities, the PPF faces the twin challenges of limited information and lack of coordination, which results in fragmentation and inefficiency, limiting the collective impact of the project preparation ecosystem in addressing urban climate finance gaps. Many PPFs focus on early or late readiness support, which means that projects must rely on multiple PPFs to provide support from project identification to financial close.
The PPF lacks the information and partnerships with other PPFs to effectively coordinate preparation support for urban climate infrastructure projects. Collaboration is slow and resource-intensive, limiting current collaboration and preventing projects from moving along the readiness value chain. Cities also face barriers to obtaining readiness support due to a lack of information and a fragmented project readiness ecosystem.
To address these challenges, CCFLA launched the PPF Connector Program in 2023, funded by Bloomberg Philanthropies and in partnership with C40 Cities and the Global Covenant of Mayors. The PPF connector is designed to support CCFLA member PPFs in the following ways:
- Dedicated focal point to support the development of partnerships and project matchmaking to advance projects along the project preparation value chain
- Information resources to improve matching and partnerships
- Help city networks connect city climate plans to PPF support
- Identify gaps in existing preparedness support services
The PPF Connector builds on past activities of the CCFLA Project Preparedness Action Group and LUCI. In 2020, PPAG members developed a unified PPF application form that standardized a minimum set of questions to allow project applications to be shared across PPFs. In 2022, CCFLA organized a LUCI workshop in Bonn, Germany, identifying project initiation and handover support as a priority need. This meeting resulted in the launch of the LUCI Local Data and Project Pipeline Sharing Tool, which enables LUCI initiatives to share project information and local data resources in a centralized space.
Support offers
PPF Connector provides project docking services and partnership development support for PPF, and provides information resources for PPF, city networks and other stakeholders.
Project docking and partner development support
PPF connectors help match projects in the early preparation stages, including concept description and pre-feasibility stages, with later stage support, such as feasibility studies, other technical studies, business case development, construction and investor matchmaking. Matchmaking activities include:
- Later project procurement of PPF: The PPF Connector identifies high-quality projects of appropriate maturity for post-production preparation and organizes pairing meetings between PPFs for validated projects.
- Early PPF project offtake: The PPF Connector screens projects receiving early readiness support to identify eligible PPF offtakers and verify their interest and ability to provide subsequent readiness support.
PPF Connector enables PPF to proactively establish partnerships based on demand. For active partnerships, the connector will utilize the PPF project database to identify PPFs working on similar projects in the same city and ensure they are connected to each other. For demand-driven partnerships, Connectors will follow a structured process: identify potential partners, assess their interest, schedule meetings, assist in developing agreements, and promote the partnership to CCFLA members.
Information resources
PPF project database: The PPF prepares a project repository for technical assistance (TA) that contains information on local data and generated research and other TA needs. PPF can use the repository to find projects by city, sector and phase, as well as research and data done by previous TAs to identify handover opportunities.
PPF connector workspace: A secure platform containing important information about the PPF, application window, call for proposals, focal points and projects. It is continuously updated by CCFLA and participating PPFs as a dynamic collaborative resource, ensuring that shared information is relevant and useful in facilitating project handovers and identifying potential PPF partnerships.
Project preparation resource directory: A public catalog of PPF and Capacity Development Plans to support cities’ ability to prepare bankable projects. It helps city networks and project sponsors find readiness support for their projects. The directory allows users to search and filter PPFs by country, department, project phase, supported activities and application cadence to build a shortlist of PPFs for which their projects may be eligible.
Since its launch in June 2023, the PPF Connector Program has laid the foundation for enhanced collaboration through pairing and relationship building by facilitating bilateral meetings, presentations and pairing sessions. The program's first workshop provided an important opportunity to gather feedback from participants, highlighting their positive perceptions of PPF connector mating support.
Most participants viewed the PPF Connector's information integration positively and recognized its value in facilitating smoother interactions. Notably, the PPF Connector has laid the foundation for three potential partnerships and provided matchmaking for five projects, showing good promise for fostering future collaborations.
For more information about the PPF connector program, please contact John Michael LaSalle.
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[1] Nassiry and Pickard, “Urban Climate Infrastructure Needs for PPF Support: Advanced Findings from Expert Interviews.”
