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India's Climate Finance Strategy
Context
India is actively revising its climate finance approach in response to evolving global dynamics, particularly following the United States' withdrawal from the Paris Agreement in January 2025.
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US’s Emission Levels (UNEP Report 2024)
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US Withdrawal & Impact
- The United States' exit from the Paris Agreement has created a substantial void in global climate finance.
- Notably, the US had pledged significant contributions to the USD 300 billion annual climate finance goal and was a key participant in the Loss and Damage Fund, designed to support countries severely affected by climate change.
- The absence of US support places additional pressure on other developed nations, especially the European Union, to fulfill financial commitments.
India's Climate Finance Landscape
- India's climate initiatives have predominantly been financed through domestic resources. As of February 2024, India received approximately USD 1.16 billion from international climate funds, including:
- Green Climate Fund (GCF): USD 803.9 million
- Global Environment Facility (GEF): USD 346.52 million
- Adaptation Fund: USD 16.86 million
- Despite these contributions, the funding remains insufficient relative to India's climate action requirements.
- Domestic Financial Commitments: India has made substantial domestic investments in climate adaptation and mitigation:
- Adaptation Expenditure: In 2021-22, India allocated 5.6% of its GDP to climate adaptation efforts, amounting to approximately Rs 13.35 lakh crore.
- Future Requirements: The Economic Survey 2024-25 estimates that India will need around Rs 56.68 lakh crore (approximately USD 700 billion) by 2030 for climate adaptation measures.
Strategic Financial Instruments
To bolster climate finance, India is leveraging various instruments:
- Sovereign Green Bonds: The Reserve Bank of India issued Rs 1,697.40 crore in 10-year Sovereign Green Bonds in the first half of 2024-25 to fund green infrastructure projects.
- Blended Finance Models: India is exploring concessional financing to attract private investments, thereby amplifying the impact of public funds.
- Climate Finance Taxonomy: The government is developing a taxonomy to standardize and enhance the transparency of climate-related financial flows.
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Loss and damage
Other important Global Climate Funds
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