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EU cities need more support for climate and digital upgrades, report says

04 August 2021

by Sarah Wray

European cities cite lack of funding, regulatory ‘red tape’ and technical capacity limitations as the major barriers to investment in climate action and digitalisation, according to a new report from the European Investment Bank (EIB).

The research, titled The state of local infrastructure investment in Europe, is based on a survey of 685 EU municipalities in summer last year.

In the wake of COVID-19, municipalities are now facing new challenges that add to “a backlog of a decade of underinvestment,” the report warns, calling for EU support for cities as part of the strategy to ‘build back better’. It notes the important role that local authorities have to play, accounting for 45 percent of all public investment in Europe as well as 70 percent of all greenhouse gas emissions.

Changing plans

Before the pandemic, over two-thirds of EU municipalities had planned to increase infrastructure investment over the next five years, with priorities including digital infrastructure and climate change mitigation and adaptation. Spending on climate change adaption increased the most.

However, by the summer of 2020, a third of municipalities anticipated changing their investment plans due to COVID-19. Investment intentions shifted towards digital and social infrastructure. A quarter of local authorities surveyed said that the pandemic exposed weaknesses in their health services.

Capacities lacking

The biggest barriers to infrastructure investment overall were cited as length of regulatory process (85 percent), regulatory uncertainty (83 percent) and lack of funds (76 percent).

Funding was named as the biggest barrier (69 percent) to investment in green and climate-related infrastructure specifically, followed by red tape and lack of technical capacity.

Nearly two-thirds report a lack of green administrative capacity, such as green budgeting, and almost half for digital, such as provision of digital government services. Most municipalities plan to do more to close these gaps.

“Most EU municipalities are telling us that their investment remains inadequate. One of the main barriers holding back such investment are technical and planning capacities. Many municipalities are ill-equipped to master the climate and digital transition challenges,” said EIB Chief Economist Debora Revoltella. “To meet its goals, Europe must help municipalities develop the capacities necessary to deal with climate change and to promote digitalisation. The good news is that municipalities, particularly those in less-developed regions, are eager to catch up.”

Mayors Alliance

Last month, the Mayors Alliance for the European Green Deal formed through the Eurocities network, bringing together more than 30 mayors from across Europe.

Launched in the same week that the EU announced its ‘Fit For 55’ climate package, the Alliance will advocate for the role and needs of cities to support a transition to climate neutrality.

Image: Rachwal Dreamstime.com

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