Bonds

Cities have hundreds of climate-related projects queued up

As environmental disclosure becomes increasingly important to municipal investors, a new snapshot of U.S. cities sheds light on hundreds of infrastructure projects planned by the cities to mitigate climate exposure.

The U.S. Infrastructure Snapshot Report is produced by nonprofit CDP, which runs an annual environmental disclosure platform for companies, cities, states and regions.

The report digs into the cities’ 2021 climate disclosures to highlight their infrastructure plans, examining the kind of projects, the financing status, and the development stage, among other things.

“We want the snapshot to empower city leaders by seeing the map of development across the U.S.,” said Katie Walsh, CDP’s head of cities, states, regions and public authorities, North America.

CDP

The snapshot is based on 108 cities, representing nearly 25% of the U.S. population, which together reported 188 sustainable infrastructure projects valued at just under $30 billion.

Cities in California reported the highest number of projects seeking funding, with 83 projects, followed by Florida, Texas and Massachusetts. The most popular project categories were buildings’ energy and efficiency and renewable energy followed by transportation.

“We want the snapshot to empower city leaders by seeing the map of development across the U.S., and be in service of conversations in D.C. for both federal and state officials as a road map of understanding the demand and the potential for aggregation,” said Katie Walsh, CDP’s head of cities, states, regions and public authorities, North America.

The report features a series of interactive maps searchable by city, sector, or stage of project development, among other filters.

The snapshot “gives us the sense of the areas for investment and where the gaps and opportunities are,” Walsh said.

Cities are also asked to disclose post-project social and equity impact, a rising focus of many investors, she said.

The report comes as environmental, social and governance-related disclosure is of rising importance to investors, regulators and issuers. Cities that participate in CDP’s disclosure program are providing a side benefit for market participants by disclosing the the myriad of sustainable local infrastructure projects that they hope to fund.

CDP has collected city-based disclosure for 10 years, and it’s the second year the firm has highlighted the infrastructure projects.

This year, for the first time, the firm launched a municipal disclosure campaign that brought aboard 20 municipal investment firms who signed a letter asking cities to participate in CDP’s climate disclosure regime, Walsh said. The investors together represent $8 trillion of assets under management, she said. The cities are now in the process of disclosing the 2022 information.

“Municipal investors want to understand the impact of their lending, especially with general obligation debt,” she said. “This data is not on EMMA and it’s not in the official statements, so credit analysts are looking to CDP for these details so they can see what work the city has done and what it’s planning.”

The report shows that 38 cities in 2021 reported 55 transportation-related projects seeking funding with a total value of $1.8 billion and needing around $1 billion to move forward.

Thirty cities disclosed 53 resilience-based projects to deal with extreme weather events and climate disasters, that carry a total cost of $10.5 billion and need around $5 billion to advance.

Funding is expected to fall short of demand despite the passage of the $1.2 trillion Infrastructure Investment and Jobs Act, CDP said, citing the American Society of Civil Engineers’ 2021 report card that found a roughly $2.59 trillion investment gap.

Funding infrastructure projects to help protect against climate risk is a priority in the IIJA. On Friday, Transportation Secretary Pete Buttigieg announced the release of guidance for a $7.3 billion IIJA formula funding program called PROTECT that gives states money over five years to make surface transportation infrastructure more resilient to extreme weather and natural disasters. The program also includes competitive grants.

“In every part of the country, climate change is impacting roads, bridges, and rail lines that Americans rely on, endangering homes, lives and livelihoods in the process,” said Transportation Secretary Pete Buttigieg Friday during a press conference in Utah announcing the funding. “Using funds from President Biden’s Bipartisan Infrastructure Law, we’re launching this unprecedented effort to help communities protect their transportation infrastructure from extreme weather and improve routes that first responders and firefighters need during disasters.”

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