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Stretching or conforming? Financing urban climate change adaptation in Copenhagen Cover

Stretching or conforming? Financing urban climate change adaptation in Copenhagen

Buildings and Cities
Volume 3 (2022): Issue 1
By: Stella Whittaker and  Kristjan Jespersen  
Open Access
|Nov 2022

Figures & Tables

bc-3-1-238-g1.png
Figure 1

Planned Cloudburst projects: Ladegårds Å, Frederiksberg Øst and Vesterbro.

Source: Ramboll Consultants for CoC (2012).

bc-3-1-238-g2.png
Figure 2

Multilevel perspective (MLP) on transitions.

Source: Geddes & Schmidt (2020).

Table 1

Urban adaptation developments: Copenhagen, 2011–22.

LANDSCAPEFINANCE REGIMESOCIO-TECHNICAL REGIMENICHE INNOVATIONS
NORMS, PUBLIC ATTITUDESFINANCE REGULATION, POLICY, INSTRUMENTSREGULATION, POLICY, INSTRUMENTSTECHNOLOGY, VISION, EDUCATION
2011–132013–222012–222011–22
Response to extreme precipitation events, 2011–13Financial agreement for municipalities (Danish Government 2012)National Adaptation Plan (Danish Government 2012)Copenhagen Climate Adaptation Plan (CoC 2011)
Taskforce for Climate-Related Financial Disclosure (TCFD 2016)Municipal Plans (Danish Government 2012)National web-based climate risk mapping (2012)a
EU Green Deal/Denmark’s Green Transition (Danish Government 2019)The Global Commission on Adaptation headquarters, established in Copenhagen in 2018Cloudburst Management Plan (CoC 2012)
EU Green Bond Standard (EU 2019)The State Government is in the process of developing a White Paper on storm surge, which is due to be released in 2022Climate Quarter-St. Kjeld’s Neighborhood (CoC 2012)
The Danish Government introduced the Service Level Act (Serviceniveaubekendtgøre lsen) for cloudburst projects in 2018 and updated it in 2020The CoC launched the Copenhagen Solutions Lab in 2015, which featured cloudburst innovations (https://cphsolutionslab.dk/en)
EU Taxonomy for sustainable activity (EU 2020)COHERENT project launched by the Technical University of Denmark (DTU) in 2011
Copenhagen Storm Surge Plan (CoC 2017)
A Realdania project to protect sites in Copenhagen from rising seas, which was commenced in 2020 (Realdania 2020)
Danish Government decision in 2021 to progress the Lynetteholm artificial island (Carlson 2021)

[i] Note: a This is an on-line tool, the first of which was launched in 2012.

Table 2

Methodology: stages, connections and outputs.

RESEARCH STAGELITERATURE REVIEWPOLICY DOCUMENT ANALYSISINTERVIEWS: INVESTORSINTERVIEWS: MUNICIPALWORKSHOP: ALL INTERVIEWEES
Research tasksReview of multiple scholarly fields for adaptation financingAnalysis of CPH government and Danish investor policy documents relating to financing adaptation measuresQuestions regarding factors in access to finance for urban adaptationQuestions regarding factors in access to finance for urban adaptationDeep dive with municipal and investor actors on financing of cloudburst and storm surge
MLP theory analysisNiche innovation enablers/interventions
Research gaps
Key MLP concepts		Finance regime and socio-technical regime elements: legislation, regulation, policy, budgets, cost estimates, commitments, targets etc.Investor MLP factors and interventions
Coding and mapping data to MLP concepts		Municipal MLP factors and interventions
Success and deficiencies: Cloudburst finance product
Coding and mapping data to MLP concepts		Interplay of MLP factors and interventions
Success and deficiencies: Cloudburst finance product
Key research ingredients, elements and outputsFigure 2: MLP
Table S2: Research gaps
Table S4: MLP enablers/interventions
Table S5: CPH planning and investment framework		Table 1: Urban adaptation in CPH
Table S5: CPH planning and investment framework
Table S6: CPH policy documents
Table S7: CPH adaptation needs and allocation		Figure 3: Factors/barriers (grouped by MLP concepts)
Figure S1: Changes needed to transition
Table S9: Informant quotations (MLP coded)		Figure 3: Factors/barriers (grouped by MLP concepts)
Table S9: Informant quotations (MLP coded)		Table 4: Factors/barriers (grouped by MLP concepts)
Figure 4: MLP model for CPH
Table S9: Informant quotations (MLP coded)

[i] Note: CPH = Copenhagen; MLP = multilevel perspective.

Table 3

Interviewees and workshop participants.

ORGANISATION TYPENUMBER OF INTERVIEW PARTICIPANTSNUMBER OF WORKSHOP PARTICIPANTSMLP LEVELCOUNTRY
Municipality: Greater Copenhagen Area64NIDK
Other municipality or municipal organisation13NIDK
Engineering consultant31NIDK
Bank52FR, StRDK
Government/municipal funds12NIDK
Government00StR, NIDK
Finance consultants20FRGlobal
Institutional investor/pension fund20FRDK
Finance association30FRDK
Other10StRDK
Climate NGO11FR, StR, NIGlobal
Philanthropic organisation10FR, NIDK
Water utility11FR, NIDK
Academic24ADK, SE

[i] Note: Actor/participant type: FR = finance regime (investor), NI = niche-innovation (municipal), A = academic, StR = socio-technical regime, DK = Denmark, SE = Sweden, NGO = non-governmental organisation.

bc-3-1-238-g3.png
Figure 3

Factors/barriers identified by interviewees.

Table 4

Factors/barriers (workshop).

DOMINANT FACTORS IN THE INTERACTIONS FINANCE REGIME–NICHEACTOR DESCRIPTIONS OF FACTORS/BARRIERS
Regulation/policy

  • Regulatory constraints

  • Lack of stable climate change adaptation policy

  • Lack of long-term stability and credibility in climate change policies and regulation (also CB regulation) (I and M)

  • Regulations (financial and non-financial) disenabling adaptation investment (I, M)

  • Contradictory State regulations (CB, planning, water, environment, etc.) (M)

  • Lack of State vision and process for adaptation investment (M)

  • Distrust by State Government of the municipality’s and water utility’s appropriation of the water tariff (M)

  • Municipal spending limits delaying programmed CB investments (M)

  • Dominant focus on public sector debt ratios stifling borrowing for adaptation (M)

  • Lack of institutional arrangements (M)

Acceptable risk/return of investments

  • Unacceptable risk/return

  • Lack of suitable financial vehicles/instruments

  • Business case for adaptation investment lacking (I, M)

  • No or limited income streams for adaptation (I)

  • Adaptation projects do not present an acceptable risk/return profile for investors (I)

  • Absence of investment models for adaptation projects (I)

  • Lack of investor confidence; lack of adaptation projects, no data, no transaction history and limited disclosure record (I)

  • Short-term investment horizons of investors present challenges for adaptation investment that require a longer term view (I)

  • Cash flow rates mismatched to impact and benefit (I)

  • Lack of demand-side economic policies to incentivise investment in adaptation (e.g. taxes, rebates, quotas) (I)

  • Lack of investment-ready and bankable adaptation projects and project pipeline (I)

  • Lack of demand and corporations bias towards mitigation projects (I)

  • Lack of competition in financing products (I)

Knowledge and heuristics

  • Lack of knowledge

  • Lack of models

  • Difficulties measuring impacts

  • Unfamiliarity and lack of knowledge of climate change adaptation within the investor community (I)

  • Lack of understanding of urban climate-related risks (I, M)

  • Lack of data (all areas) (I, M)

  • Nowhere to look at best practice internationally (I, M)

  • Complexity in the assessment of climate impacts (I, M)

  • Lack of resources in municipalities dedicated to climate change (funds and people) (M)

De-risking investments

  • Shortage of finance (supply)

  • Technology risks

  • Lack of proactive financing despite long-term economic case for investment (I, M)

  • Lack State Government assistance (M)

  • Governments failing to leverage with high-risk capital to create incentives for private capital (I)

  • Constraints on municipal taxation (M)

  • Conflicting adaptation technological and infrastructure solutions (M)

  • Lack of insurance products/mechanisms (I)

  • Monopolisation of CB investment by public sector (I)

  • Lack of a track record (I)

Size transformation and capital aggregation

  • Projects not large enough

  • Complex capital aggregation

  • CB legislation does not allow for larger projects and scaled investment (M)

  • Lack of scaled investment-ready and bankable adaptation projects and pipeline (I)

[i] Note: CB = Cloudburst, I = investors, M = municipal.

bc-3-1-238-g4.png
Figure 4

Multilevel perspective (MLP) model of Copenhagen’s niche-innovations in urban adaptation.

Sources: Adapted from Geels (2012), Geddes & Schmidt (2020) and Hynes (2016).

DOI: https://doi.org/10.5334/bc.238 | Journal eISSN: 2632-6655
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Language: English
Submitted on: Apr 8, 2022
|
Accepted on: Oct 25, 2022
|
Published on: Nov 23, 2022
Published by: Ubiquity Press
In partnership with: Paradigm Publishing Services
Publication frequency: 1 issue per year
Keywords:
adaptation,
cities,
climate finance,
climate risk,
investors,
sustainable transition,
Copenhagen

© 2022 Stella Whittaker, Kristjan Jespersen, published by Ubiquity Press
This work is licensed under the Creative Commons Attribution 4.0 License.

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