Subnational Government Climate Expenditure and Revenue Tracking in OECD and EU Countries

Accounting for almost 60% of public investment and 40% of public expenditure in OECD countries, regional and local governments, who have jurisdiction over key policy areas relevant to the green transition such as land-use planning, housing development, waste, water, energy, and transport, play a key role in achieving climate and environmental objectives. However, only limited evidence exists to establish how much subnational governments spend and invest on climate change, and if their sources of revenue are able to fund the needs of the green transition.

To bridge this data gap, the Centre for Entrepreneurship, SMEs, Regions and Cities (CFE) and the European Commission (DG REGIO) have joined forces to measure climate expenditure and revenue tracking of subnational governments in OECD and EU countries, and, in turn, assess and monitor the fiscal capacity of subnational governments to develop and implement their climate action policies and provide evidence to support policy-makers in mobilizing public and private funding and financing instruments to drive subnational climate action.

Building on a pilot methodology (OECD, 2019), a recent report published by the OECD presents the methodology and findings developed by the OECD to track subnational climate-significant expenditure and revenue flows.

  • The first section takes stock of past or current subnational climate finance tracking initiatives in OECD and EU countries and internationally.
  • The second presents key findings from the new online Subnational Government Climate Finance Database; populated using the updated subnational government climate expenditure and investment tracking methodology. It also introduces the Compendium of Financial Instruments that Support Subnational Climate Action; a repository of public climate-related sources of funding for subnational governments in OECD and EU countries.
  • The third section details the methodology used to develop the Subnational Government Climate Finance Database.

This report is part of a broader joint OECD-European Commission project on “Measuring and Enhancing Subnational Government Finance for Environment and Climate Action in OECD and EU Countries” which started in October 2020. The project also focuses on subnational green budgeting, and provides a more granular analysis of subnational government green expenditure, investment, and revenues.

This work is part of OECD program on Financing Climate Action in Regions and Cities. It was prepared under the leadership of the OECD Regional Development Policy Committee, with support from the RDPC Expert Group on Multi-Level Governance for Regional Development. It is published under the OECD Regional Development Papers series. Read the full report.