How cities can factor the climate crisis in budgets
As cities reach what is now an indisputable tipping point, the importance of better decision-making on climate action has only grown
2023 was the warmest year since the mid-1800s with severe weather events and climate extremes becoming more frequent. India, as the seventh most affected country, has set short term targets for 2030 to meet a national goal to cut emissions to net zero by 2070. To meet the needs of a growing urban population and build green, resilient and inclusive cities, Indian states and cities need to focus on integrating sustainable urban development policies and practices into their governance structures.
Municipalities in India are largely dependent on State and central transfers even for meeting regular administrative, operations and maintenance expenditures. There is no mechanism to ensure that city governments draw all the funds they are eligible for and utilise them effectively and efficiently. This results in poor resource efficiency, inefficient and ineffective public expenditure management and poor infrastructure and service delivery for citizens.
An important and innovative approach to achieve this is climate budgeting, a governance system that mainstreams climate commitments and considerations into decision-making on policies, actions and budgets. Climate budgeting is not only a way of mobilising finance but also works efficiently to ensure holistic planning and immediate implementation of climate action. Every decision a city undertakes must be evaluated and aligned with climate targets.
The climate budgeting process creates a conducive environment for policy, institutional and financial support, and helps to effectively incorporate climate action into the core of a city’s daily operations, roles and ways of working across departments and agencies. Stakeholders relevant to climate action end up moving away from silos and moving towards delivering high-level climate goals. Climate budgeting helps to utilise the city’s formal processes to steer climate action while adapting the city’s budgetary processes to develop integrated systems.
Climate budgeting is a process of linking long term vision and what a city needs to achieve, and balancing that with immediate actions. The climate budget process also ensures accountability, transparency and clarity of how the city is taking climate action seriously and calling on state or national governments to collaborate with them.
Mumbai, India’s most populous city, faces significant challenges such as extensive informal settlements, notable income equality, issues of overcrowding, and environmental concerns. In 2022, Mumbai announced detailed plans as part of the Mumbai Climate Action Plan (MCAP) to zero out carbon emissions by 2050, a target that placed it two decades ahead of India’s national goal and made it the first city in South Asia to set such a timeline. One of the key commitments as part of the MCAP was committing to a climate budget and the establishment of a climate cell.
On February 2, 2024, in a first for a Global South mega city, the Brihanmumbai Municipal Corporation announced its climate budget (green budget book) to counter the city’s rising pollution levels by implementing Mumbai Climate Action Plan strategies. The climate budget outlines actions to systematically reduce emissions and enhance climate resilience, transparently disclosing its impacts and financial allocations. The BMC is eyeing climate initiatives that include developing gardens, as well as giving a push to projects such as renewable hybrid energy and waste-to-energy plans with responsibility for implementation and tracking distributed across departments.
Mumbai’s 2024-2025 annual budget allocation is ₹59,954 crore, a 10% increase from last year, and gives the city an advantage over peers in implementing climate targets. The ambitious and extensive engagement process undertaken by the city is just the start of a recurring process to systematically work towards delivering crucial climate targets.
Cities such as London, Montreal, New York, Tshwane and Rio de Janeiro have already implemented or are committed to launching a climate budgeting process. Mumbai’s extraordinary achievement in operationalising and mainstreaming climate action via a climate budget is a major step towards realising ambitions of rolling out similar climate budgets in other Indian cities. As cities reach what is now an indisputable tipping point, the importance of better decision-making on climate action has only grown. Transformative climate governance approaches such as climate budgeting hold promise as effective instruments for steering cities towards a sustainable future.
Shruti Narayan is regional director for South and West Asia, C40 and Catrin Robertsen is head of climate budgeting at C40, a new programme supporting cities to improve their governance systems to operationalise and deliver climate targets. C40 Cities are supporting 13 cities through a climate budgeting programme, including Mumbai, to carry out a knowledge transfer process to scale up and implement climate budgets in other C40 member cities. The views expressed are personal