Eastern  partnership countries (EAPs) are increasingly taking initiatives to define  and implement actions in the areas of energy efficiency, climate mitigation  and urban planning.    

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An indicator for this is the strong interest of local authorities (LAs) to  join EU’s trademark initiative in local energy and climate action – the  Covenant of Mayors. EaP countries have now the highest number of signatories  outside the EU – over 400.    

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To support the local authorities in these EAP countries DEM has been tasked  with the conduct of a study on municipal finance in Eastern Partnership  countries. This includes the assessment of the gaps in municipal investments  in the renewable energy, energy efficiency, climate and environment sectors  in EaP countries and present recommendations for future EU interventions,  which would help to address this gap and contribute to better sustainability  of municipal investments in these sectors. This means assessing the viability  of a variety of instruments that go beyond action grants and budget support,  including blended finance, financial instruments and de-risking tools for  projects.    

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The services we provided included provision of an analysis of state of play  of municipal financing in all EAP countries, with particular focus on  renewable energy, energy efficiency, climate mitigation and environment,  identification of the magnitude of investment needs in municipalities and the  investment gaps in these sectors, while taking into account absorption  capacity and other limitations in municipalities, and development of an  overview of and recommendations for 1) different financing modalities and  instruments and 2) thematic sub-sectors of municipal investments that could  be supported by the EU through those financial modalities. This shall include  recommendations for optimal scale and scope for EU interventions.