Enhancing India’s Readiness to Climate Finance

More documents

Recommendations

Info

Enhancing India’s readiness to access and deliver international climate finance 1 Introduction 1.1 Context In 2008 India released its National Action Plan on Climate Change (NAPCC), which outlines eight ‘national missions’ that will help the country begin a low carbon and climate resilient transition. According to the recent Economic Survey of India, the country needs approximately $38 billion to meet its climate goals under the NAPCC. 8 Yet at present, existing budgetary support instruments for climate related expenditure, such as the National Clean Energy Fund (NCEF), will be insufficient for mobilising this volume of funds. The Expert Group on Low Carbon Strategies has stated in its Final Report that aggressive action on mitigation cannot be achieved without substantial international financial support. 9 India already receives a relatively large volume of international public climate finance compared to other developing countries (see Chapter 3.3). However, there is consensus among government, civil society, and the private sector in India that India could improve its capacity to access international climate finance and increase the amount of international support that the country receives – from both public and private sources. One of the main challenges that countries face in accessing international climate finance is that the climate finance landscape is fragmented and difficult to navigate. The complex sources of climate finance – multilateral climate funds (e.g. Clean Technology Fund), bilateral climate funds (e.g. Germany’s International Climate Initiative), bilateral development assistance with environmental cobenefits, private sector investment, green bonds, etc. – make it difficult to coordinate a unified national climate finance response, particularly since each source has its own access requirements and bureaucratic structures to follow. The international community is slowly attempting to move from a fragmented climate finance delivery structure, to one that is more streamlined and efficient. In 2010, at the 16 th Conference of the Parties to the UNFCCC (COP 16), the Green Climate Fund (GCF) was formally established. The GCF is expected to be the main delivery vehicle for the $100 billion per year of climate finance that the international community has committed to mobilise for developing countries by 2020. In May 2014, the GCF Board agreed on the final decisions necessary to operationalise the fund, and it is now hoped that at least the first $10 billion will be available by November 2014 to begin project funding. The establishment and operationalisation of the GCF is just one of many examples of the growing importance of climate finance for developing countries, along with others such as private sector climate finance and the green bond market, listed above. The challenge that lies ahead is for countries to translate these opportunities into meaningful projects and programmes that contribute to national sustainable development and climate change priorities. 1.2 Purpose of the report For developing countries attempting to capitalise on emerging sources of climate finance, an important first step is to improve national climate finance readiness. Climate finance readiness can be described as “the capacities of countries to plan for, access, deliver, and monitor and report on climate finance, both international and domestic, in ways that are catalytic and fully integrated with national development priorities and achievement of the MDGs”. The importance of ‘readiness’ is based on the logic that countries with strong political commitment to tackling climate change, strong 8 Ministry of Finance, Government of India. Economic Survey 2012-2013, p.264. Estimates for NAPCC implementation are INR 230,000 crore, equivalent to $38 billion. 9 Planning Commission of India (2014). Final Report of the Expert Group on Low Carbon Strategies for Inclusive Growth. Ref: Ricardo-AEA/R/ED59216/Final Report 1
Enhancing India’s readiness to access and deliver international climate finance institutions, and proven financial management capacity will receive greater volumes of climate finance in the future. The purpose of this report is to identify opportunities for India to strengthen its ability to effectively access and deliver increasingly large volumes of climate finance from international public and private sources, in order to meet its national climate change policy objectives under the NAPCC. The report examines the international climate finance landscape, India’s experience in accessing international climate finance, national policies to address climate change, and the effectiveness of India’s institutional management of climate change. Specifically, the report uses a climate finance ‘Readiness Framework’ which analyses these main topics, in order to make an assessment of the strengths, barriers, and gaps in India’s ability to access international climate finance. This analysis provides the basis for a series of constructive recommendations that will guide policymakers and other stakeholders in how to improve India’s ability to access and deliver future flows of climate finance. In conducting this analysis, the report is driven by the following research questions: What main trends will drive climate finance flows (in India, and more broadly in the international arena) over the next 5 years? What funding streams will be particularly important for India (focusing on easy wins in the short-term and longer-term funding streams that can catalyse transformative change in India)? Where has India performed well, and how can these successes by replicated and scaled-up? What capacity gaps remain in accessing and delivering international climate finance? What institutional changes or new requirements are needed for accessing future international climate finance? 1.3 Approach The report was developed over four complementary stages to ensure that feedback was integrated into the final report. 1. Conducting desk research on topics that included: − India’s performance in accessing international climate finance. − Donor priorities for climate finance spending in developing countries. − Existing climate finance readiness frameworks, and their appropriateness for India − Lessons from peer countries. 2. Individual interviews with key experts and stakeholders representing the Government of India, multilateral financial institutions, bilateral funding agencies, the private sector within India, Indian research organisations and think-tanks, and climate finance readiness researchers working at the international policy level. These interviews were essential in validating the climate finance readiness framework that was developed through desk research, and applying it to the Indian context through expert analysis. 3. Discussion and validation on the interim project findings on India’s climate finance readiness with a wide stakeholder group in Delhi on 2 nd May 2014. This input was integral in developing the report’s main recommendations outlined in Chapter 7. 4. Follow-up interviews with key Indian experts to validate the report recommendations in June and July 2014. 1.4 Scope of the report The report is structured around the following parameters: The report will focus on climate finance for mitigation – targeted at low-carbon development policy options such as renewable energy, energy efficiency, transport, etc. Ref: Ricardo-AEA/R/ED59216/Final Report 2
Page 1 and 2: Enhancing India’s readiness to ac
Page 5 and 6: Acknowledgements Enhancing India’
Page 9 and 10: STRENGTHS Enhancing India’s readi
Page 19: Enhancing India’s readiness to ac
Page 39 and 40: 4.2 Readiness Framework overview En
Page 55 and 56: 5.5.2 Detailed scoring of Tier 1 in
Page 71 and 72:
Enhancing India’s readiness to ac
Page 73 and 74:
Page 75 and 76:
Page 77 and 78:
Page 79 and 80:
Page 81 and 82:
Page 83 and 84:
Page 85 and 86:
Page 87 and 88:
Page 89 and 90:
Page 91 and 92:
Page 93 and 94:
Page 95 and 96:
Page 97 and 98:
Page 99 and 100:
Page 101 and 102:
Page 103 and 104:
Page 105 and 106:
Page 107 and 108:
Page 109 and 110:
show all

Enhancing India’s Readiness to Climate Finance

Create successful ePaper yourself

Delete template?

Save as template?