Green Dollars for a Greener Tomorrow: India's Climate Finance Journey

"India’s climate future is not just a challenge, but an opportunity to lead the world in sustainable growth and resilience." In line with India's development objectives, the 2008-launched National Action Plan For Climate Change (NAPCC) emphasises both adaptation and mitigation. The plan places a strong emphasis on international cooperation, funding, and coordination, with state-level initiatives assisting national objectives. For a climate-resilient future, successful implementation necessitates robust legislation, more research, and private sector participation. 

A Climate Change & Energy Politics Desk Essay by Shubham Pani and Apoorva Chaudhary | Edited by Albin KS | Research and Publications Division

Climate Finance: The Enabling Component for Implementation 

Climate finance is one of the important enabling components from both domestic and international sources that support the successful implementation of NAPCC and SAPCC. It consists of funds that go into projects with greenhouse gas emission and enhanced adaptive capacities. 

Sources of International Repute 

Global Environment Facility (GEF): In line with government priorities like the Green India Mission and the spread of solar energy, India uses GEF money for multi-sector projects including biodiversity conservation and renewable energy initiatives. 

Green Climate Fund (GCF): GCF provides significant support for low-carbon, sustainable development, which is used for projects like India's "Solar Rooftop Investment Program" and climate-resilient agriculture programs. For instance, India pledged $2 million to GCF to support projects addressing climate change and mitigation in developing countries. 

Bilateral and Multilateral Assistance 

To obtain financial and technical support for initiatives like hydropower, urban sustainability, and disaster management, India works with organisations such as the Asian Development Bank and the World Bank. 
1. Compensatory Afforestation Fund Management and Planning Authority (CAMPA): India’s CAMPA utilises funds from deforestation compensations for afforestation and ecosystem restoration, boosting forest cover and biodiversity. 
2. Coalition of Finance Ministers for Climate Action: India participates in this global coalition to promote green investments, carbon pricing, and fiscal policies aligned with climate action, driving sustainable economic growth. 
3. National Clean Energy Fund (NCEF) and Coal Cess: India’s innovative carbon tax on coal finances renewable energy projects and supports climate change mitigation, fuelling initiatives like the National Solar Mission. 

Domestic Sources

Government Budgets and Policies: With a budget of ₹3,330.37 crore for 2024–2025, the Climate Change, Forests, and Environment Ministry prioritises climate resilience projects like the Green India Mission (₹220 crore), pollution control (₹858.50 crore) and biodiversity conservation (₹450 crore). Significant support is allocated to regulatory organisations like the NTCA (₹35 crore) and CPCB (₹113 crore). The ministry's diverse approach to environmental conservation is further demonstrated by grants to states and union territories (₹713.50 crore) and monies for education, coastal missions, and capacity building. 

Since 2014, the National Adaptation Fund for Climate Change (NAFCC) has disbursed more than ₹4,000 crore to assist adaptation initiatives at the state level in areas such as forestry, water, and agriculture. Water management receives about 40% of the funds, helping more than 100 million people. Project execution is improved by public-private partnerships. 60% of the ₹12,500 crore funded by India's green bond market in 2020 went toward renewable energy projects. 

“In addition to the contributions of major issuers like SBI, NTPC, and HDFC Bank, SEBI laws have made it easier to issue green bonds totaling over ₹8,000 crore, which have been used to finance wind, solar, and green infrastructure projects” 

National Action Plan on Climate Change 

A key component of India's strategy to address climate issues while maintaining sustainable development as a top priority is the National Action Plan on Climate Change (NAPCC), which was introduced in 2008. Solar energy, improved energy efficiency, water conservation, afforestation, and climate-resilient agriculture are its eight main aims. With a focus on environmentally friendly ecosystems and strategic knowledge building to increase resilience across susceptible sectors, the plan unites climate action with economic growth. 

Core Missions 

National Solar Mission [NSM]: NSM launched on 11th January 2010, is a major initiative of India with active participation from States to promote ecological sustainable growth while addressing India’s energy security challenges. National Institute of Solar Energy (NISE) has assessed India's solar potential of about 748 GW, targeting 3% of the waste land area to be covered by Solar PV modules. It will also constitute a major contribution by India to the global effort to meet the challenges of climate change.

 

National Mission for Enhanced Energy Efficiency: The National Mission for Enhanced Energy Efficiency is the second mission, implemented in 2011. NMEEE consists of four initiatives to enhance energy efficiency in energy intensive industries: Perform, Achieve and Trade (PAT) Market Transformation for Energy Efficiency (MTEE) Energy Efficiency Financing Platform (EEFP) Framework for Energy Efficient Economic Development (FEEED). 

”A substantial amount of money, estimated at $108 billion a year until 2030, is needed to achieve these goals. Coordination of activities is required to overcome obstacles like funding shortages, legal restrictions, and restricted R&D capabilities” 

In addition to government programs, the private sector's participation will be essential to furthering India's climate financing plan. India can increase investment in green technologies by establishing incentives like tax cuts and subsidies. Increased private sector involvement will also be necessary for the development of renewable energy markets and energy-efficient technologies. Green bonds and carbon trading are two examples of innovative finance instruments that will release more funds to help the nation achieve its climate goals.

New Missions Post-Cop21 

Considering the climate changing impacts, four new missions have been initiated by NAPCC:

1. Health Mission : In order to address health challenges associated with climate change, the mission focuses on improving public health infrastructure along with intention to raise public understanding of the connections between climate change and health. One essential element is early warning systems for health risks brought on by climate change. The objective is to lessen the impact of climate change on health in areas that are particularly vulnerable.

1. Waste- to - Energy : The Waste-to-Energy Mission seeks to lessen the load on landfills by turning industrial and urban garbage into renewable energy. It promotes sustainable energy generation and reduces emissions by turning garbage into electricity. It supports India's objective of lowering its reliance on fossil fuels. By managing garbage, this program also helps to achieve environmental sustainability. 

1. The National Coastal Mission : Protecting India's coastal areas from the effects of climate change, including rising sea levels and extreme weather, is the main goal of the National Coastal Mission. It aims to strengthen coastal communities' resilience to disasters and restore ecosystems like mangroves. In addition, the mission seeks to improve infrastructure in coastal areas that are at risk. 

1. The National Wind Mission : In order to fully utilise India's enormous potential for renewable energy, the mission focuses on wind-rich areas. It helps India achieve its renewable energy targets, such as the 500 GW target by 2030, by increasing wind energy to increase installed capacity and develop wind power infrastructure. This aim also includes technological advancements in wind energy efficiency. 

SAPCC Framework 

SAPCCs are state-specific climate action plans. The overarching target of NAPCC is portrayed by the end goal in the state-based SAPCCs. They will emphasise local adaptation and mitigation measures. 

In order to secure a sustainable future, India has taken major action against climate change at the federal and state levels, concentrating on a number of areas. Leading states in the development of solar and wind-powered renewable energy are Gujarat and Rajasthan. By utilising their natural resources, these states want to lower greenhouse gas emissions. Gujarat has made huge investments in wind energy, helping the country reach its renewable energy targets, and Rajasthan is one of India's top producers of solar energy. 

Another important area in which states like Kerala and Himachal Pradesh are actively involved is water management. These states are concentrating on water conservation measures as a result of climate change altering rainfall patterns. While Himachal Pradesh is building robust irrigation infrastructure to better manage its water resources, Kerala has adopted rainwater gathering practices and sustainable watershed management. The goal of these initiatives is to guarantee future water security, particularly in areas with erratic rainfall patterns. 

With an emphasis on dry-land crops and better irrigation techniques, states like Madhya Pradesh and Punjab have made sustainable agriculture a top priority. To become more resilient to droughts and water shortages, some states are implementing climate-smart agricultural practices. The northeastern Indian states of Manipur, Arunachal Pradesh, and Nagaland, on the other hand, prioritise forest preservation and biodiversity. In order to lessen the environmental effects of climate change, these areas are putting policies into place to preserve forests and biodiversity, cut down on deforestation, and encourage sustainable land-use practices. 

Budget Allocation and Climate Finance Challenges 

In the financial year 2024-2025, the Indian Ministry of Environment, Forests, and Climate Change had allocated ₹3,330.37 crore. Extraordinary allocations include: 

•  Pollution Control: ₹858.50 crore for National Clean Air Program. 
• Green India Mission: Incremental Forest cover addition of ₹220 crore. 
• Coastal Protection: ₹50 crore for the National Coastal Mission. 

 Climate Finance Challenges 

Funding Mechanism Complexity, Often State level entities get confused while trying to utilise all avenues. Expertise deficit at both centre and state levels in the existing project designing and implementation. Lack of data, transparency issues call for suitable monitoring and reporting mechanisms to access the fund Inequitable distribution; however, it is not possible to have corresponding available resources reached to the most vulnerable sections. 
International cooperation is equally important. India has shown itself to be a leader in sustainable development, but it still faces obstacles that call for outside assistance. India, a major participant in international climate talks, promotes more financial support from rich countries to ensure that adaptation and mitigation efforts for climate change are funded fairly. 

Alternatives in place for better utilisation of climate finance and have improved NAPCC and SAPCC implementations

1. Improved collaboration: To guarantee that local governing bodies can efficiently obtain and use climate funds, there must be greater collaboration between federal and state authorities. This collaboration makes it possible to match regional climate initiatives with more comprehensive national plans and makes it easier to obtain both domestic and foreign financing sources, guaranteeing fair distribution and results. 
2. Capacity Development: To provide local government representatives with the abilities and know-how required to plan, carry out, and oversee climate-related projects, training programs are crucial. These initiatives increase the institutional capacity to carry out sustainable projects and enhance their ability to incorporate climate factors into development plans.
3. Public-Private Partnerships (PPPs): More funding for climate projects is generated when the private sector is involved through tax breaks, subsidies, and alluring investment opportunities. By utilising the knowledge and financial resources of private organisations, PPPs can improve resource mobilisation, speed up innovation, and close funding gaps. 
4. A Clear Monitoring System: Transparency and accountability are ensured by putting in place strong frameworks for monitoring development, evaluating results, and reporting. Reliable monitoring systems increase stakeholder trust, draw in more funding, and allow for course correction to successfully meet targeted climate resilience targets. 

 Conclusion 

India has made a commitment to fight climate change by its all-rounded approach in NAPCC and SAPCC. Climate finance, both domestically and internationally sourced, would be a necessary requirement to achieve these action plans. However, making finance less complex with proper capacity building, systemic, and equitable distribution of funds would remain relevant to the state executing sustainable climate action. A pathway for optimum climate resilience and sustainable development would be paved through strengthened coordination, improved capacity building, PPPs, and rigorous monitoring. 

References 

Ministry of Health and Family Welfare. (2024). National Centre for Disease Control (NCDC) Report. Retrieved from https://ncdc.mohfw.gov.in/wp-content/uploads/2024/04/27505481411548674558.pdf
 
Department of Science and Technology. (n.d.). Climate Change Programme. Retrieved from https://dst.gov.in/climate-change-programme 
Prime Minister’s Office. (n.d.). National Action Plan on Climate Change (NAPCC). Retrieved from https://archivepmo.nic.in/drmanmohansingh/climate_change_english.pdf 
Climate. (2024). The State of Climate Finance in India 2024. Retrieved from https://s3.ap-south-1.amazonaws.com/climake.co/The_State_of_Climate_Finance_in_India_2024.pdf 
Ministry of Finance. (2024). Demands for Grants 2024-25: Ministry of Environment, Forest, and Climate Change. Retrieved from https://www.indiabudget.gov.in/doc/eb/sbe28.pdf 
PRS Legislative Research. (2023). Demand for Grants Analysis: Environment, Forest, and Climate Change 2023-24. Retrieved from https://prsindia.org/files/budget/budget_parliament/2023/DfG_2023-24_Analysis-Environment_Forest_and_Climate_Change.pdf