Enhancing India’s Readiness to Climate Finance

Enhancing India’s readiness to access and deliver international climate finance
3 India’s climate finance track record
As the global landscape of climate finance begins to shift, it is important to reflect on how well India
has performed in the past when it comes to accessing and delivering international climate finance.
This chapter begins with a brief background on India’s institutional governance structure for managing
the national response to climate change, focusing on the role for international climate finance. Section
3.2 then examines India’s performance in accessing international climate finance – focusing on
multilateral and bilateral sources of public finance, as well as CDM finance. Section 3.3 follows with a
comparison between India’s track record in accessing international public climate finance, and that of
its peer countries – Brazil, China, Indonesia, Mexico, South Africa and Thailand. Section 3.4
concludes with a summary of high-level trends on India’s climate finance access performance.
3.1 Institutional governance of climate change in India
The Ministry of Environment and Forests and Climate Change (MoEFCC) is the lead agency
responsible for India’s national climate change response – working with the Planning Commission, the
Prime Minister’s Office, the Ministry of External Affairs, and relevant line Ministries to ensure
coordinated national action. The Climate Change Finance Unit (CFU), which is housed in the Ministry
of Finance, serves as the focal point on all climate financing matters – advising the MoEFCC and
Government of India and representing the MoF in all international forums on climate change.
In 2008, India launched its first comprehensive National Action Plan on Climate Change which aims to
promote national sustainable development with considerable climate co-benefits. The NAPCC
formally established eight ‘national missions’ which are responsible for the eight priority
sectors/themes that the Government of India will address between 2008 and 2017 – energy
efficiency; solar energy; sustainable agriculture; sustainable habitat; water; Himalayan ecosystems;
forestry (green India); and strategic knowledge for climate change. In line with the NAPCC, all Indian
States have been asked to prepare State Action Plans for Climate Change (SAPCCs). By asking
States to prepare SAPCCs, India seeks to adopt a more decentralized approach to managing the
climate change response. So far, 22 States have prepared draft Action Plans and MoEFCC has
approved 9 of them, with 3 others currently under review. 23
There is a wide variance in estimates on the total cost of responding to climate change in India. In
2013 the Ministry of Finance estimated that the total cost of implementing the NAPCC by 2017 would
be $38 billion (i.e. more than $7 billion per year). 24 At the high end of the scale, the Expert Group on
Low Carbon Strategies has concluded that a ‘low carbon inclusive growth strategy’, in India would
cost approximately $834 billion in investment between 2007 and 2030 (or nearly $35 billion per
year). 25 The Government of India recognises that efforts to bridge the funding gap in meeting India’s
low-carbon development needs must be based on an approach that combines public, private and
international sources of finance. However no unified strategy has been developed to raise the
necessary funds from these various sources and coordinate the delivery of funds to NAPCC priorities.
At the international level, individual line Ministries and relevant national agencies have been tasked
with liaising with major international funds to attract funding for a relevant project, sector, or NAPCC
mission. 26 Figure 3.1 below provides a general outline of the institutional structures for accessing and
delivering climate finance in India.
23 http://envfor.nic.in/ccd-sapcc
24 This figure comes from the 2012-2013 Economic Survey, undertaken by the Ministry of Finance.
25 As the latter figure includes activities beyond the NAPCC – including funding for nonconventional
climate-related programmes such as clean coal – the report will use the lower estimate of $38 billion as a
reference point for India’s climate finance funding gap. Readers must be cognisant that this is a low
estimate, and that the needs for climate-related investment in India are likely significantly higher.
26 Annexes IV-VII provides a more detailed examination of the efforts being made by India to target 3
important sources of multilateral climate finance and 1 important source of bilateral funding.
Ref: Ricardo-AEA/R/ED59216/Final Report
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