Supporting subnational government climate actions requires having a better understanding of the way they are funded and financed. The combination of public sources of revenue (e.g., grants, subsidies, user charges and fees, tax revenue) and external sources of revenue (e.g., loans, loan guarantees and bonds) available to subnational governments frames their room for manoeuvre in implementing their climate plans. 

The Compendium of Financial Instruments that Support Subnational Climate Action in OECD and EU Countries provides an overview of some climate-related public revenue sources transferred to subnational governments from central governments. The Compendium is completed by an analysis, which shed light on the diversity of climate-related revenue sources available to subnational governments and gaps that exist, providing recommendations on how and at what levels of government additional climate finance resources should be mobilised.  

The Compendium includes information on:

• The level of government providing the support: European Union level (for European countries), national government, state/regional governments or intermediate government, in countries where they exist.  

• The type of instruments available: earmarked or non-earmarked grants, loans, guarantees, contractual agreements, with or without co-financing components.   

• The sectors targeted, based on the Climate Bonds Initiative taxonomy: water, energy, transport, buildings, land use and marine resources, industry, waste, ICT, and air quality. 

• Whether the instrument supports climate change mitigation, adaptation, or both. 

• The conditions under which the financing can be accessed: guidelines for application, eligibility requirements, and a description of the instrument. 

Compendium of Financial Instruments for Subnational Climate Action in OECD and EU Countries: Analysis

Subnational Government Climate Expenditure and Revenue Tracking in OECD and EU Countries

This OECD working paper, prepared as part of the joint OECD-European Commission project on “Financing Climate Action in Regions and Cities”, presents a pilot methodology for tracking, measuring and comparing subnational government climate-significant expenditure and investment in OECD and EU countries based on national accounts data. It also includes an analysis of the data collected and a stocktake of existing climate finance tracking initiatives. On the revenue side, the paper presents an analysis of climate-related public revenue sources available to subnational governments in OECD and EU countries, the results of which are available in the new online Compendium of Financial Instruments that Support Subnational Climate Action.

Related works

• 2022 Edition of the CFE Climate Brochure
• The OECD/UCLG World Observatory on Subnational Government Finance and Investment
• Environmental Tax Policy Review of Andalusia
• Financing Cities of Tomorrow: G20/OECD Report for the G20 Infrastructure Working Group under the Indian Presidency

More OECD information

• International Programme for Action on Climate Change (IPAC)
• Paris Collaborative on Green Budgeting
• OECD Climate Change Hub
• PINE database

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