"Funding is a significant barrier to upgrading infrastructure. City authorities often need assistance in accessing grants and loans, and in strategically layering different financial solutions to implement projects,” says Kristy David, Senior Vice President, Clean Energy and Infrastructure at JLL.

Combining new funding sources with traditional measures such as carbon taxes can help cities work around limitations on public sector financing and mobilize existing funds.

“Funding raised at a city level can complement national funding mechanisms that require state or local co-investment, while mechanisms like a tourist tax can generate funding without burdening constituents,” says Robert Anderson, Senior Vice President – Clean Energy & Infrastructure at JLL.

Corporate surcharges are another means to raise critical funds and engage businesses in local initiatives. In Paris, employers contribute payments based on employee salaries to fund public transport system upgrades. In the U.S., Portland raises $90 million annually through the 1% Clean Energy Surcharge paid by large retailers on their sales, exempting essentials like groceries and medicines.

“Funding approaches depend on a city’s governance structure and legal pathways for financing,” says Phil Ryan, Director of Global Research, City Futures at JLL. “Mechanisms that drive behavioural changes – such as promoting active transport and reducing car travel – are also important to reduce the cost of decarbonizing systems. Cities are using these multiple levers to drive the transition to a low-carbon economy.”

Denver's Climate Protection Fund, for example, allocated $57.7 million in its first year to projects that support greener infrastructure, including e-bike libraries for essential workers and workforce development in the green job sector.

While some cities are opting for mandatory financial contributions, other schemes are looking to voluntary investments.

E.ON's crowdfunding platform brings together municipalities, local banks, and citizens to develop new energy infrastructures like solar PV parks and wind projects.

"While some environmental policies may encounter pushback due to their cost to people or businesses, more innovative initiatives are looking to engage communities’ hearts and minds,” says Kelly. “Encouraging local stakeholders to come together and actively participate in shaping and funding new renewables projects can unlock the financial and environmental benefits for all.”