Aligning Regional and Local Budgets with Green Objectives

Subnational Green Budgeting Practices and Guidelines

image of Aligning Regional and Local Budgets with Green Objectives

Green budgeting is emerging at subnational levels as an important tool for regions and cities to use to align their expenditure and revenues with their green objectives, and enhance the transparency and accountability of their climate and environmental action. It is also a tool that subnational governments can use to prioritise low-carbon investments and identify funding gaps, as well as to mobilise additional sources of both private and public climate finance. In order for subnational governments to make full use of green budgeting however, more methodological, technical, and financial support is needed. This report presents a first stocktake of subnational green budgeting practices in OECD and EU countries as well as a set of guidelines for subnational governments to use in developing and launching a green budgeting practice. It is accompanied by two green budgeting case studies – one with the Region of Brittany (France) and one with the City of Venice (Italy) – and a self-assessment tool. The self-assessment tool allows regions and cities to measure their capacity to launch a green budgeting practice or strengthen an existing one, and is available on the OECD Subnational Government Climate Finance Hub as a downloadable Excel file.


Assessment and recommendations

Climate change, biodiversity loss, and widespread environmental degradation are imminent threats to our planet and societies. Addressing these threats requires unprecedented co‑ordination of policy action among and within all levels of government. Fiscal policy is one of the most powerful and effective tools that policy makers have at their disposal for resourcing and implementing co‑ordinated policy action. Green budgeting is defined by the Paris Collaborative on Green Budgeting (PCGB) as “using the tools of budgetary policymaking to help achieve environmental and climate objectives. Therefore, it can help governments to mainstream climate and environmental action within budgetary decisions and broader policy-making, and to monitor progress towards achieving environmental and climate goals (OECD, 2020[1]). As such, it also contributes to “making finance flows consistent with a pathway towards low greenhouse gas emissions and climate-resilient development”, a central objective of the Paris Agreement (UNFCCC, 2015[2]).


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