ORIGINAL RESEARCH article
Front. Sustain. Cities
Sec. Innovation and Governance
This article is part of the Research TopicBarriers and Enablers to Effective Climate Governance in CitiesView all 14 articles
Financing the Net-Zero Transition of Mission Cities: Governance Barriers and Enablers to the Use of Innovative Financing Instruments
Provisionally accepted
- 1Global Green Growth Institute, Seoul, Republic of Korea
- 2Universita degli Studi di Napoli Federico II, Naples, Italy
- 3Universitat Internacional de Catalunya, Barcelona, Spain
- 4FinEst Centre for Smart Cities, Tallinn, Estonia
- 5Bankers without Boundaries, Dublin, Ireland
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As CO2 emissions continue to rise and the impacts of climate change's impacts reach unprecedented levels, cities must accelerate the net-zero transition through rapid and effective action. The EU Mission for Climate-Neutral and Smart Cities has made strong commitments to lead this transition, but securing the necessary resources increasingly requires leveraging innovative financing instruments (IFIs). This paper provides an exploratory empirical assessment of governance barriers and enabling conditions shaping to innovative finance in Mission Cities, drawing on qualitative analysis of cities' Climate Investment Plans and in-depth interviews with six Mission Cities (Barcelona, Münster, Parma, Pécs, The Hague, and Thessaloniki). The results reveal a high level of interest but limited uptake of IFIs, with many instruments remaining conceptual. We identify six mutually reinforcing categories of barriers – fiscal and financial; legal and regulatory; institutional and capacity; behavioral and cultural; political and macroeconomic; and technological and market – through which instrument choices become constrained and cities remain reliant on grants and concessional loans. At the same time, progress is enabled by motivated municipal leadership, EU-funded technical assistance and peer learning, and prior "learning-by-doing" experience with specific instruments. Building on these findings, we propose governance-oriented recommendations across four areas to help cities move from plans to implementation: strengthening institutional and financial capacity, improving public engagement and acceptance, reforming national rules that constrain local fiscal tools and borrowing, and restructuring EU funding programmes to reduce administrative burden while by deliberately building more effective, innovative, and blended urban climate finance.
Keywords: Governancebarriers and enablers, Innovative financing instruments, Investment plans, Mission cities, Net-zero transition, Urban climate finance
Received: 14 Jul 2025; Accepted: 11 Dec 2025.
Copyright: © 2025 Kupper, Pennino, Deshayes, Veskioja and Haseth. This is an open-access article distributed under the terms of the Creative Commons Attribution License (CC BY). The use, distribution or reproduction in other forums is permitted, provided the original author(s) or licensor are credited and that the original publication in this journal is cited, in accordance with accepted academic practice. No use, distribution or reproduction is permitted which does not comply with these terms.
* Correspondence: Diana Kupper
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