Supporting financing of local adaptation actions with combined instruments

Expected outcome

In support to the implementation of the EU Adaptation Strategy, the EU Mission on Adaptation to Climate change, and in particular having regard to the upcoming European Climate Adaptation Plan, project results should contribute to all of the following expected outcomes: Local climate adaptation actors, the financing sector, the public grant sector, and climate adaptation financing experience are brought to work together on making local adaptation actions financeable by combining public grant funding and private financing via bank loans and on overcoming the practical barriers on combining these and finding solutions, and specifically through demonstrating this with intermediated EIB adaptation lending. Local innovative adaptation actions (including nature-based solutions) have been implemented thanks to their financing by the combination of private financing via bank loans and public grant funding. National Promotional Banks (NPBs)/other banks are mobilised to actively finance local adaptation actions.

Scope

Rationale Financing of local adaptation actions, especially with other means than public grant funding, is currently still not taking place sufficiently. Adaptation actions are generally not generating sufficient revenues to become bankable, although they produce financial and economic benefits through avoiding or reducing losses or diversifying risk profiles. Local adaptation actions are typically smaller in size, resulting in high transaction costs and insufficient scale for bankability. These are barriers to financing. In principle, the financing of adaptation actions can be enhanced by combining public grants with private financing, such as bank loans. Demonstration and assessment in real-life conditions is still needed on the barriers and solutions to financing local adaptation actions, in particular on combining public grant funding and private financing via bank loans, and innovation work on the financing of local adaptation actions. Financing is one of the key enabling conditions of the Adaptation Mission . The goal of this topic is, by involving the necessary stakeholders from the private and public sector, to work on how to, by providing public grants, attract private financing via bank loans, to finance local adaptation actions, with a view to replicating and/or scaling up. The role of NPBs and other banks for financing local adaptation is, for reasons of size of and closeness to the local action, crucial and should, in view of the enormous amounts of financing required for adaptation and climate resilience [1] , grow in importance as quickly as possible. The European Investment Bank The European Investment Bank (EIB) as the EU Climate Bank is working, jointly with the European Commission, on addressing the barriers to adaptation financing, through both its lending and advisory assistance, in line with the EIB Climate Adaptation Plan and the EIB Climate Bank Roadmap . The EIB supports the Adaptation Mission. This Action is aligned with EIB support for ada

Areas of intervention

• Capture and analyse the barriers encountered in the financing of the above local adaptation actions, covering all sources of financing that are being combined to finance the local adaptation actions, including the combining of public funding and bank loans, and propose practical ways to overcome these.
• Analyse how the EU taxonomy is being applied.
• Collect lessons learnt.
• Raise awareness and disseminate knowledge by providing examples of good practices, including through short case studies of successful combining of public grants and bank loans.
• Provide recommendations, at least on successfully combining public grants and bank loans, and on the appropriate proportion and conditions of public grant funding, and appropriate combination of grant/bank loan. Produce recommendations on how to, by providing public grants, attract private financing via bank loans, to finance specifically local adaptation actions, with a view to replicating and/or scaling up.
• Disseminate the outcomes, via targeted channels and materials, for the benefit of regional and local authorities within the Mission and beyond.

What this means for cities and regions

Funds the financing side of local adaptation — combining grants, loans, guarantees and blended instruments to mobilise capital at municipal and regional level for adaptation investments. Strong fit for cities working with their national or regional public banks, ELENA, EIB Climate City Investment Platform, or InvestEU. Project size around €4 million per grant; close 23 September 2026.