Climate budgeting should be seen as a crucially important governance tool for
local authorities in the pursuit of carbon neutrality. The careful incorporation of local emission targets into municipal budgets helps cities to ensure the availability of necessary funds for significant CO2 reduction measures.
Such a budgeting approach facilitates collaboration between the employees of different city departments, which is indispensable for achieving the carbon emissions reduction targets.
Furthermore, making information on the city’s strategic climate goals and measures an integral part of its annual budgets and reports allows city managers to continually monitor progress towards the established CO2 targets.
For city representatives, climate budgeting makes it possible to communicate the actual performance improvements and development needs more effectively to citizens and other partners.
However, the successful implementation and use of comprehensive climate budgets cannot be narrowed down to a technical measurement or an accounting exercise by the cities. Even more importantly, it is about building a supportive culture throughout the different parts of various city organisations.
Place the climate-related goals derived from municipal strategy documents at the centre of the city's budgeting process.
Make the city's carbon emission reduction targets and measures visible in annual budgets and related reports.
Combine the climate-related and financial information for more effective decision-making about budget allocations and capital inve
Advance and encourage cooperation between different departments for effective planning, budgeting, and acting towards city's climate targets. Break down the 'silo' mentality, as the successful tackling of climate change requires coordinated efforts of people from the different fields and functions of the city.
Key Benefits for the City
Gives a high priority to climate objectives in the city and mobilises different functions to work in the name of CO2 reduction.
Quantifies the amount of maximum allowable emissions per year.
Helps to decide and allocate costs between measures for CO2 reduction.
Allows the tracking of progress and quick responses to emerging challenges.
Clarifies accountability for actions and results throughout the city organisation.
Adds transparency and improves communication with citizens on climate issues.
While climate budgeting does not guarantee that the city will reach its CO2 reduction targets, it enhances the chances of it doing so.
from the Nordics
The capital of Norway adopted its first climate
budget in 2016, the very first city climate budget in the world. Oslo’s climate budget is not just
another bureaucratic document – it is fully integrated into the annual financial budget of the city.
The climate budget sets a ceiling on the volume of
annual CO2 emissions and includes a wide range
of measures the city plans to conduct in order to
reach its climate objectives. Oslo has achieved
significant emission reductions on its path to becoming a nearly zero-emissions city by 2030.
Take a look at Oslo's climate budget on the city's website!
The City of Växjö in Sweden was the first municipality in the world that back in 1996 set a goal
of becoming fossil fuel-free. In 2003, Växjö began working towards the implementation of its
first ecoBudget aiming to set clear environmental
targets and track progress towards them. This is
integrated with the city’s financial budgeting and
reporting system. The ecoBudget laid the ground
for collaboration between various city departments to reach the CO2 reduction targets. Växjö
represents a city that has successfully decoupled
its economic growth from CO2 emissions..
Take a look via Växjö's EcoBudget at Green City Times!
Tampere is the first Finnish city that adopted
a climate budget (in 2019). It imposes ceilings
on sectorial CO2 emissions between 2020 and
2030. Following in the footsteps of Oslo’s climate budget, the City of Tampere has formed 37
sets of measures along with various performance
indicators, timeframes, and budget impacts in its
roadmap to climate-neutrality by 2030. Some
of the CO2 reduction measures are also expected to result in cost savings for the city.
Linking the City’s Climate
to its Annual Budget Cycle
In real life situations, public budget or financial cycles consist of various interrelated processes that
feed into each other. In cities, at least five general stages of an annual budget cycle – from budget
preparation to budget appraisal – can be distinguished, as shown in Figure 1. Driven by the city’s
strategic CO2 emission goals, each of the stages
comprises specific climate-focused budgeting tasks.
A climate budget should be an integral part of the overall city budget. In other words, the information on the city’s annual climate objectives, measures, and results is combined and presented together with the respective finance figures throughout the budget cycle.
Combining climate and financial data for budgeting and reporting purposes becomes important for better informed decision-making on cost allocations and investments. Climate budgeting is an evolving practice that needs to be assessed and adjusted for its effective functioning with little bureaucratic efforts for staff.
What Is Needed for Successful Implementation?