Financing climate change mitigation actions in cities: insights from the Covenant of Mayors initiative

• Analysis of 203 SECAPs from 21 EU Member States covering 46 million inhabitants. • Dataset includes 8572 mitigation actions with total investments above €100 billion. • Grants and public procurement finance over 80 % of reported mitigation actions. • Innovative tools (PPPs, green bonds, EPCs) remain marginal in local climate finance. • Small and medium municipalities face major barriers to diversified funding access. Financial capacity is critical to implementing local climate actions, including renewable energy deployment, energy efficiency improvements, and transport decarbonisation. This study examines how 203 European cities from 21 EU countries and covering 46 million inhabitants have financed their climate change mitigation efforts in the context of the Covenant of Mayors for climate and energy (CoM) initiative. It uses data submitted by participating cities in their Sustainable Energy and Climate Action Plans (SECAPs), and it analyses three key dimensions: (i) total budget allocation, (ii) funding sources, and (iii) financial instruments. The selected SECAPs, include more than 8500 mitigation actions and an estimated total investment exceeding €100 billion. The results reveal a strong dependence on public funding, primarily on municipal budgets and grants, while innovative instruments such as green bonds, public–private partnerships (PPPs), third-party financing, and pay-for-performance schemes remain underutilised. Statistical analysis shows that population size and energy demand (measured through heating and cooling degree days) are the strongest predictors of planned investment, while GDP per capita is negatively correlated with investment levels. Climate targets’ ambition does not significantly influence budget allocation. These findings underscore persistent barriers to financial diversification, especially among small and medium-sized municipalities. By combining quantitative analyses with qualitative insights, this study provides policy-relevant evidence on local climate finance practices and supports efforts to enhance financial capacity for climate neutrality across the EU.