Fellow Spotlight: Stephen Hammer

Stephen Hammer brings more than three decades of experience working on climate policy and finance across cities, national governments, multilateral institutions, and academia. Three Penn institutions have partnered to bring him to Penn to help foster dialogue and research on climate policy and finance: the Penn Institute for Urban Research, Kleinman Center for Energy Policy, and Perry World House.

He joined the World Bank in 2013 as its first-ever Global Lead for Cities and Climate Change when they were developing major new initiatives to include cities in the sustainable development agenda, including the City Creditworthiness Academy, the Low Carbon, Livable Cities Initiative, and the City Resilience Program.  Working with other partners, he also helped establish the Coalition of Finance Ministers for Climate Action and the City Climate Finance Leadership Alliance to address enormous structural challenges.

Your yearlong appointment as Senior Fellow in Climate Finance bridges the three centers' missions to further energy, urban, and global policy research. What questions are you most interested in pursuing, and what opportunities do you see to bring those perspectives together around climate finance? What might Penn do to build a stronger body of knowledge around these issues?

I know multilateral finance from the inside — how these institutions actually work, and how to get more money flowing for climate action on the ground, including in cities. That's the experience I'm bringing to Penn, built up working on climate policy and finance across different levels and geographies.

Don’t forget that these institutions were originally designed to work with central government ministries as their primary counterpart, not mayors. Cities are nonetheless where a large portion of their financial support ultimately lands, because that's where a country’s needs are greatest…where most people live, and where national economic activity is centered. 

My goal is to put the network and knowledge I've built to work getting more resources flowing to the cities that need it most, at speed and at scale. Penn has world-class experts across campus, and I want to connect that network to mine so their expertise actually reaches these conversations. 

How did your work at the World Bank inform your views about the financial barriers facing cities, particularly in emerging markets and developing economies? How can urban climate mitigation and adaptation support sustainable development goals (SDG) such as poverty reduction and equity? 


One of the biggest takeaways for me when I joined the World Bank was that folks who have great ideas about how cities can do things better don't necessarily have the same insights about how to pay for those ideas. Ultimately that means some amazing ideas never move forward in a meaningful way. 

As a result, I became a bit of a translator, helping people understand what “bankability” means and how to get central government to agree that urban projects should be prioritized when asking for World Bank support. 

We need more of this kind of fluency within local governments, because otherwise key financial stakeholders may simply talk past each other without really understanding each other’s unique needs or operating model.

In the global context of climate finance, the current financial architecture is not fit for purpose. What institutional changes are required to move climate considerations from the margins of public finance into mainstream fiscal and investment decision-making?


First, we can’t simply wave a wand and change the existing architecture, so a lot of what I think about is how to use the system more effectively. 

The Bridgetown Initiative was a political movement launched several years ago that led to several key reforms, ultimately increasing the level of resources available from multilateral development banks. The next generation of reforms may ask whether MDBs and other development finance institutions should continue to support every activity and sector they currently do. Debt sustainability and climate concerns are likely to force hard choices about how these institutions focus their limited resources — and given how outsized cities are as population centers and economic engines, the share of urban finance could well increase, given its greater relative impact on jobs, tax revenues, and health outcomes.

Second, we need to unpack the problem, particularly when it comes to urban adaptation investments. Too many conversations lump all adaptation spending into a single pool and complaining there isn't enough money available. But look at a city's actual adaptation needs — a power grid that holds up under more frequent, more severe storms, a subway system that doesn't flood every time it rains — and these are systems with dedicated user fees that can and should pay for hardening them against disaster.

Street level and coastal flooding are tougher nuts to crack, so we need to think about cost sharing between a city budget and some share being borne by individual property owners. These are difficult conversations to have, but we can’t shy away from them.

We know you’ll be discussing the Transition Away from Fossil Fuel (TAFF) initiative at Climate Week NYC. Can you describe for our readers what this work is? What are some examples of cities making good progress on just energy transitions? What role can cities play in this transition that could lead to better outcomes?

TAFF is about the hardest question in the energy transition: how do countries whose economies run on fossil fuel extraction and export replace that trade once global demand dries up? I attended the TAFF conference in Colombia this April and came back to real appetite for building a program on this at Penn. Our Climate Week session takes that question head-on.

So, we're bringing folks together to talk about what's needed to have a realistic “whole-of-economy” discussion, including impacts on national and local tax flows, what it takes to develop and deliver a new national industrial policy, and how this is backed by a different education and labor-market strategy. Each of those is a hard question on its own — TAFF puts all of them on the table at once. 

The IPCC is preparing its first Special Report on Climate Change and Cities. Why is a dedicated cities report significant, and how might it influence the global climate agenda? What would make the report useful to both investors and policymakers?


City experts have been pushing for the IPCC to turn its attention to cities and the outsized role they play as both a source of greenhouse gases and a location that may be disproportionately affected by climate impacts. We already know much of what the report will say, because the trend lines have been understood for some time.

The key question for me is how we use the timing of the report to get folks who don’t ordinarily read IPCC reports – namely the private sector – to pay more attention to its implications. As a scientific report IPCC studies traditionally have a hard time getting traction in the media and with a broader readership because it's pretty dense stuff.

Another climate week event we have planned is a closed-door discussion with investors about how to get cities and climate issues more systematically on their radar screens. Based on another discussion in April hosted by Penn IUR as the Secretariat of the SDSN Global Commission for Urban SDG Finance, we know that saying the same ‘doom and gloom’ message isn’t resonating. Instead, investors are more likely to respond to a framing emphasizing the investment opportunities emerging as cities work to decarbonize or enhance their resilience.

One of the things we’ll discuss during climate week is the possibility of preparing a new “Summary for Investors” that will sit alongside the summary the scientists are already preparing for policymakers. Understanding what messages will resonate in such a summary, particularly in the current political climate, is something we hope to hear from that session.

Looking ahead five to ten years, what would meaningful progress on urban climate finance look like? What changes in institutions, financial markets, public policy, and local capacity would indicate to you that cities are finally gaining the tools they need to meet the climate challenge?

The big thing to watch is whether cities can actually borrow money on decent terms without needing a small army of consultants and a one-off donor grant every single time. Right now, getting a mid-sized city in, say, Kenya or Indonesia financing for a climate project is such a heavy lift that it barely happens at scale. Real progress looks like that becoming routine — pooled bond deals, guarantee schemes, that kind of plumbing — so cities can tap global capital the way countries already do.

The other half is money and power actually matching up locally. Cities keep getting handed climate responsibilities without the taxation authority or borrowing power to act on them, and without staff who know how to put a bankable project together. So, the real test in 5-10 years isn't "is there a shiny new green fund" — it's whether cities have their own steady revenue, the ability to borrow, and in-house people who can do this without outside help every time. If that's true, cities go from being dependent on hand-outs to genuinely being able to deliver on a climate agenda that reflects local needs.