INDIA REQUIRES ADEQUATE CLIMATE FINANCING

NEWS: India requires adequate climate financing for energy transition, emissions reduction, climate adaptation and sustainable development.

Government Initiatives

  • Sovereign Green Bonds (SGBs)à Issuance of ₹477 billion SGBs to finance green projects.
  • National Adaptation Fund for Climate Change (NAFCC)à To support adaptation activities in the States and Union Territories (UTs) vulnerable to the adverse effects of climate change.
  • National Clean Energy and Environment Fund (NCEEF)à Finances and promotes clean energy, renewable energy technologies and related research and innovation in India.
  • Priority Sector Lending (PSL) frameworkà Includes Green activities and sovereign green bonds.
  • Climate Finance Taxonomy and Green Steel Taxonomy; RBI's Climate Finance and Climate Risk Management Directions (2025) etc.

Challenges

  • Massive financing gap and inadequate international climate finance commitments.
  • Lack of a comprehensive climate finance architecture and clear green classification.
  • Limited private-sector participation due to high risks and low profitability of green technologies.
  • Inadequate integration of climate risks into financial decision-making.
  • Other challenges: Risk of greenwashing; limited borrowing capacity and access to states; etc.

Major Global Climate Finance Mechanisms

  • Global Environment Facility (GEF)à Supports climate, biodiversity, and environmental projects
  • Green Climate Fund (GCF)à Funds climate mitigation and adaptation projects.
  • New Collective Quantified Goal (NCQG)à Commits $300 billion by 2035.
  • Others: Adaptation Fund (AF); Least Developed Countries Fund (LDCF); Special Climate Change Fund (SCCF) etc.
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