Climate Finance

India needs to invest substantially in climate change mitigation and adaptation in order to achieve its ambitious climate goals. Climate finance is a key enabler and building block in this transition.

It is now overwhelmingly clear that climate change can pose major a threat to humanity. Countries all over the world are mobilising resources and capital to tackle this challenge. At COP26, India announced a net zero emissions target by 2070 and enhanced 2030 NDCs. Perhaps most critically, India has called for $1 trillion in climate finance over the next decade from developed countries. Financial resources and sound investments are needed to address climate change, to reduce emissions, promote adaptation to impacts already occurring and to build resilience.

India, like many developing countries, lacks financial resources to make the transition to clean energy that could reverse climate change. More than $2.5 trillion is required for India to fulfil its climate mitigation commitments by 2030. This does not take into account the costs of a just transition, which is likely to grow exponentially without immediate action. Current tracked climate investments in India fulfil less than 25 per cent of the previously estimated climate financing needs. An additional $1 trillion in adaptation and resilience investments is required between 2015 and 2030, i.e. $67 billion annually till 2030.

The Challenges

There are several clear challenges around raising the required climate finance for scaling up climate action. Low-carbon and climate-resilient development options often require upfront investments that can be costlier than conventional solutions.

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    Such options often also require low-cost, long-term financing, which is a mismatch with the expectation of the short-liability duration of most financiers. Climate finance still needs to be fully mainstreamed into the investment processes due to gaps in technology and capacity. And it must also be tracked more effectively in order to highlight opportunities to mobilise finance and fulfil investment potential. Given the sheer size of the investment requirement, both public and private investment flows will have to be mobilised. It is also imperative that climate change issues be integrated within financial governance systems to achieve lasting impact.

    Our Goals

    Financing the clean energy transition will require proportionate, transformative increases in investment, mobilising debt, strengthening capital markets and creating new and innovative financial instruments. Shakti's climate finance program seeks to enhance capital flows for climate mitigation and adaptation in India and to create an enabling financial ecosystem that can deliver positive climate impact. We work with members from the banking and finance industries, technical experts and key stakeholders to convene collective action, facilitate shared learning and develop practical resources to equip financial institutions to scale up the overall quantum of climate finance. We facilitate the integration of financial risks and opportunities from climate and environmental factors into mainstream financial decision making and aid the formation of a robust green market in India.

    Highlights of our Work

    The Green Indian Financial System Initiative

    The Clean Power Transition in India: How Philanthropies Can Fill the Financing Gap

    Indian Taxonomy for Sustainable Activities