Managing externally funded projects in a municipality presents significant challenges in obtaining an overview of other ongoing projects. An overview would facilitate coordination, learning, and scaling up. For this reason, authorities signing the Viable Cities Climate Contract 2030 are seeking a solution to this issue. Since 2020, the six authorities signing the Swedish Climate City Contract – Formas, Vinnova, the Swedish Energy Agency, the Swedish Agency for Economic and Regional Growth, the Swedish Transport Administration, and the Swedish Environmental Protection Agency – have been focusing on four overarching commitments.
Three of these commitments concern funding for the transition, through various forms of support and coordinated efforts around financing, both nationally and internationally. The fourth commitment involves reviewing laws, regulations, and other control measures that hinder the pace of climate transition. Several policy labs have been initiated to explore barriers and opportunities with challenging regulations. Examples of policy labs that have been started or are planned include municipal energy plans, energy sharing and utilizing waste heat, land use and land allocation, mobility beyond the car norm, resource-efficient circular material use, and reverse auctioning for energy efficiency.
The coordination of the work by these six authorities in funding the local transition journey is a substantial task. There is a recognized need among municipalities for a clearer overview of available supports, their goals, and a consolidated picture of when the funds can be applied for. Additionally, municipalities expressed that there has been too much focus on innovation and new ideas, while they need broader approach and possibility to copy from others, and a bigger focus on implementation and scaling up. Work is underway in various places, for example within the Council for Sustainable Cities, which lists current calls through the portal Hallbarstad.se. The County Administrative Boards also partially do this for climate and energy and environmental goals through regularly updated summaries.
An exploration is now underway into whether municipal project portfolios – a compilation of the projects a municipality has applied for and been granted by the authorities – could be a step forward.
Testing Local Project Portfolios
In the context of system innovation and transition processes, an important principle is to merge knowledge and information into a larger system, referred to as the portfolio principle. This involves moving from fragmented projects to an ecosystem of efforts all aimed in the same direction, creating a portfolio of efforts with the mission in sight.
As a first step, the Climate City Contract authorities have considered how to leverage existing data. There is access to a wealth of data on funded projects, which has been compiled and sorted from the perspective of the recipient, the municipality.
An initial test involved five municipalities that were at the forefront in developing climate investment plans in 2021: Malmö, Gothenburg, Stockholm, Umeå, and Uppsala. The goal was to create local project portfolios based on historical data from the past five years to assess potential benefits. The aim was to facilitate the municipality's overview and contribute to better decision-making for new external financing needs in the transition.
Challenges Along the Way
Retrieving information and data from the six authorities' different systems proved more challenging than anticipated. Data on the impact of the funds at the ground level was particularly difficult to obtain. Research funders often lack data on which municipalities are involved in projects, making it hard to search by municipality. Additionally, there are various ways to define data, complicating the process of formulating an instruction to retrieve equivalent data.
Starting with five municipalities and dedicating time to sorting and compiling was a good initial step. This test involved sorting projects granted to the municipality or a municipal company as the direct applicant (main project owner) or indirectly (part of the project). Data on the number of projects and total funding were retrieved and categorized by main theme (e.g. transport & mobility, energy), horizontal theme (e.g. circularity, digitalization), and development phase (e.g., research, innovation, testing, commercialization, or investment support).
Feedback from the cities was sought to understand how to continue the development work and to listen to their needs.
Conclusions so far
There is a clear need at the local level for an overall picture of ongoing externally funded initiatives across various levels and areas within the municipality and from different funding sources. This comprehensive knowledge is currently lacking at both state and local levels.
The municipalities’ collected reflections were that:
- The overview is valuable for identifying where initiatives have occurred, promoting learning, synergy, and supporting scaling or continuation of projects.
- A consolidated portfolio aids decision-makers and helps with needs analysis, particularly for seeking external funding.
- Given the relatively small proportion of external funding in comparison to total budgets, effective coordination is essential to maximize its impact.
- Climate Investment Plans have fostered a portfolio perspective, highlighting funding gaps and strategic synergies between state-supported and independently initiated projects.
- Comparisons between municipalities provide learning opportunities through best practices and encourage strategic dialogue.
- The focus should not be on whether municipalities receive “too little” or “too much” state funding, but on better strategic coordination.
- Authorities need a clear overview of support mechanisms, and municipalities should be key dialogue partners.
- Prioritization and matching are essential, considering 1) The average number of projects per municipality is about 100. Do they have the resources to manage their project volume? 2) Why do some areas attract external funding and others do not? And 3) How well does the project portfolio's distribution align with municipal strategies and priorities?
Dialogue with municipalities has raised important follow-up questions for further discussion. For instance, which other city actors were involved in the project besides municipal administrations and companies? Cross-sectoral actors, including residents and businesses, are needed to increase impact. Additionally, the geographical area might be more interesting than the municipality as an organization, with the region as a potential boundary.
From five to 23 municipalities
The next step is to scale up the test to include all 23 municipalities in the Viable Cities Climate Neutral Cities 2030 program and to provide an interactive web interface with the collected data, enabling municipalities to perform their own analyses. The categorization method from the initial test may not be sustainable, and alternative methods to demonstrate areas of impact are being explored. This initiative is part of the broader work on digitalization and open data, aiming to eventually provide all municipalities with access to a local project portfolio, accompanied by a broader discussion on how this tool should be managed and financed in the long haul.
For local portfolio analyses of authorities' financing to be a significant decision basis for climate transition work, they should be supplemented with funding data from other sources – including EU funding, although this may reveal itself administratively challenging. This would help municipalities identify where new initiatives and investments should occur and how national state funding could be combined with municipal and private funding to leverage the transition.
N.B. Data shown in the figure does not reflect real numbers but is meant to illustrate the ambition of the web interface.
Recommendations and lessons learnt
- The local portfolio analysis sheds light on multiple funding schemes – from research and innovation to ERDF and some investment schemes – and where they end up geographically, which has not been compiled before. It helps the municipalities to piece together the puzzle on what efforts they can build upon, as well as where and why there are funding gaps. While this is not the complete solution, it provides a foundation from both the municipalities’ and the authorities’ perspectives to rethink and reshape how they work moving forward.
- Develop a joint information model and strengthen data quality: To facilitate data sharing and analysis between different municipalities and authorities, a common information model should continue to be developed and implemented. It is important that all parties understand and use the same terms and concepts.
- Method over perfection? On the one hand, the anticipation is that the perfected model will provide a much needed understanding of patterns and a foundation for designing funding schemes that complement each other across the authorities. On the other hand, even though the perfect data may not exist, the method can still prove highly valuable for dialogue and development of the financial system and what public funding should support.
- Deepen discussions on EU and national funds, and navigate vision vs pragmatism: Explore the possibilities of including more EU funds, especially those not managed in Sweden, to maximize support for municipalities and regions. Even if it proves challenging from a data management perspective, there may be different ways to navigate around it if the value of it is big enough. In the end, it helps to refocus on the essence of a mission-oriented approach – aligning different actors across all levels to work towards the same direction.