New report from the Climate Group explores how state and regional governments can independently raise green funds, and catalyse investment in the net zero transition

State and regional governments across Europe and North America are being urged to embrace innovative ways of raising and mobilising climate finance independent of national governments.

Published today, new research from the Climate Group explores how localised carbon pricing, green bonds, taxes and fees could be harnessed by states and regions to raise funds to accelerate the net zero transition and bolster climate resilience, alongside funding from national governments.

According to the study, state and regional governments represent over 50 per cent of all environment and climate spending and as such have a critical, if often overlooked, role to play in delivering on net zero emission goals.

While acknowledging clear differences in the levels of autonomy available to regional governments compared to their national counterparts, the report offers a series of recommendations for how devolved administrations can help mobilise green investment.

For example, it highlights opportunities for greener procurement, tailored incentives and regulations for private sector investors, and better support for states and regions in accessing existing sources of finance, and understanding different mechanisms for raising climate finance.

The study, which analysed 10 states and regions signed up to the the Under2 Coalition of subnational governments that together accounts for over eight per cent of the population of Europe and North America and more than 12.5 per cent of GDP, also examines ways in which subnational governments can effectively spend climate finance and how they can help other groups access funds.

Dr Champa Patel, executive director of governments and policy at Climate Group, said that although net zero goals cannot be reached without "proper climate financing", states and regions still face too many barriers when accessing funds. "This is despite being the level of government closest to the people they serve and with a critical role to play in reducing emissions and improving communities' quality of life," she said. "Our research shows subnational governments don't have to wait for international institutions or national governments to take action - they can do it now. States and regions can raise funds, allocate green budgets and incentivise public-private investment while driving down emissions. This is clearly a win-win situation."

Benoit Charette, minister for the environment, the fight against climate change, wildlife and parks for the government of Québec, added that finding "innovative" ways for regional governments to raise climate finance was both a challenge and a necessary condition for mitigating the climate crisis.

"Québec is committed to use every tool at its disposal, be it carbon pricing, incentives or regulations to ensure that investments from the public and the private sectors are oriented toward achieving its climate and sustainable goals," he added.