Green sectors such as renewable energy, energy efficiency, and low-carbon transport are helping drive economic growth in India.
Green investments outperformed India’s GDP growth from 2016-2018, but fell short of the total finance required for climate actions in India, according to a recent report.
While the average rate of GDP growth was 7.2% between 2016-17 and 2017-18, the increase in green investments was 24%, says a new report, ‘Landscape of Green Finance in India’. Green sectors such as renewable energy, energy efficiency, and low-carbon transport are helping drive the economic growth in India, says recent report brought out by Climate Policy Initiative (CPI), a finance and policy advisory organisation focused on economic growth and climate change.
Dinesh Jagdale, Joint Secretary, Ministry of New and Renewable Energy, Government of India, says, “A roadmap should be put in place for clean, secure, affordable energy supply in the renewable energy sector that is essential for all global communities. We need to develop refinancing models by mobilising domestic and foreign sources of private capital.”
India attracted green finance of INR 1,11,000 crore (USD 17 billion) in FY 2017 and INR 1,37,000 crore (USD 21 billion) in FY 2018. The total green finance during 2016-18 amounted to INR 2,48,000 crore (USD 38 billion), as per the report. It is 10% of INR 11,00,000 lakh crore or USD 170 billion per year required to finance climate actions across all sectors in India, as estimated by India’s Nationally Determined Contribution (NDC).
“The report shows the significant potential of renewable energy and other green technologies to fuel India’s economy. It is also encouraging to know that Government of India’s support to unlock private investment has helped, but we also see much more needs to be done,” says Mahua Acharya, Asia Director, Climate Policy Initiative.
The Government of India’s initiatives including the expenditure undertaken by the dedicated public sector undertakings (PSUs) on climate-related mitigation activities more than doubled from FY 2017 to FY 2018, and the budgetary allocations increased by 36%. Energy efficiency and power transmission, which comprise investments in built infrastructure, retrofits, renovation and modernisation (R&M), smart grids and green energy corridors, totaled INR 20,000 crore over two years. Green energy corridors projects captured the largest share of about 47% followed by smart grids under the National Smart Grid Mission (NSGM) at 14%. Both were driven by funding from domestic and international public actors. Public Sector Undertaking (PSUs) including Energy Efficiency Services Limited (EESL), Bureau of Energy Efficiency (BEE) and the National Thermal Power Corporation (NTPC) constituted the major sources of finance at 34%, and the central and state budget investments came a close second at 33% of the total tracked finance, notes the report.
Given the slowdown created by the COVID-19 pandemic, the government will have to find new and alternative ways to finance the transition and incentivise private sector participation to scale up investments for a sustainable and transformational impact. International finance is also likely to come with “green strings” cautions, adds the report.
The report was launched on 11th September 2020 by Dinesh Jagdale, Joint Secretary, Ministry of New and Renewable Energy, Government of India. He was joined by industry leaders like Sharmila Chavaly, Principal Financial Adviser, Northern Railway, Government of India; Balawant Joshi, Managing Director, Idam Infrastructure Advisory; Satish Mandanha, Senior Managing Director and Chief Investment Officer, EverSource Capital; Shloka Nath, Executive Director, India Climate Collaborative; Dharshan Wignarajah, Deputy Director, Themes, Finance and Resilience, COP26, Cabinet Office, UK; Govind Sankaranarayanan, Vice Chairman, ECube Investment Advisors, and Chintan Shah, Director (Technical) in Indian Renewable Energy Development Agency.
Guided by Acharya, the report was authored by CPI analysts Jolly Sinha, Shreyans Jain and Rajashree Padmanabhi. The advisory group comprised Rajasree Ray, Economic Adviser, Department of Economic Affairs, Ministry of Finance, Government of India; Balawant Joshi, Managing Director, Idam Infrastructure Advisory; Sharmila Chavaly, Principal Financial Adviser, Northern Railway; Government of India, and Kanika Chawla, Director, CEEW Centre for Energy Finance.
The report was supported by Shakti Sustainable Energy Foundation, a non-profit company.https://www.climatepolicyinitiative.org/wp-content/uploads/2020/09/Landscape-of-Green-Finance-in-India-1-2.pdf