Financing India's Green Transition: Bridging the Climate Finance Gap
UPSC Relevance
Prelims: Environment & Ecology (Climate Finance, Green Bonds, Carbon Markets, International Solar Alliance - ISA, Sustainable Development Goals - SDGs); Indian Economy (Financial Markets, Institutional Investors like EPFO & LIC, Government Schemes).
Mains:
General Studies Paper 2 (International Relations): Bilateral, regional and global groupings and agreements involving India and/or affecting India’s interests (related to climate negotiations and finance).
General Studies Paper 3 (Economy & Environment): Infrastructure: Energy; Investment models; Indian Economy and issues relating to mobilization of resources; Conservation, environmental pollution and degradation, climate change.
Key Highlights from the News
India's renewable energy sector is making significant progress, but there's a large gap in climate finance needed to sustain this growth and achieve climate goals.
India needs approximately $1.5 to $2.5 trillion by 2030, but currently receives only a small fraction of this.
Currently, Green bonds are the main source of funding, with 84% issued by large corporate companies.
Main Challenge: These financial resources are inaccessible to MSMEs, agri-tech startups, and local infrastructure development projects.
Key proposals to bridge this financial gap:
The government should de-risk green investments by using budget allocations to encourage private investments.
Expand the concept of Blended finance.
Attract domestic institutional capital from institutions like EPFO and LIC into green projects.
Efficiently implement India's new Carbon Credit Trading Scheme.
Fund activities for adaptation to climate change and loss and damage.
The article states that India can become a global leader in climate finance by using new technologies like Blockchain and AI.
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