Enhancing India’s Readiness to Climate Finance

Enhancing India’s readiness to access and deliver international climate finance
In delegating the delivery of climate finance to DFIs, the agency should ensure a balanced
division of responsibility between various DFIs, and provide appropriate technical,
administrative, financial, and other capacity building training where necessary.
The agency should be able to provide support to DFIs to develop large scale programmes
which could be implemented under National Missions (as opposed to a project-based
approach). This is important to ensure the scale-up of climate-related actions.
The agency should have the mandate to monitor performance of low carbon and climate
resilient projects in India.
The initial capital for the establishment of the agency could be raised from the NCEF.
Budgetary support for the agency should be guaranteed for a multi-year period, so that the
Fund is immune from fluctuating and uncertain annual budgetary allocations.
Capacity-building support for both the agency’s secretariat staff and the partners that the
agency will work with (e.g. DFIs, private sector actors, project developers, etc.) should be
provided for in the capitalisation and funding of the climate finance agency.
Based on this guidance, the profile of the central coordinating agency overlaps with the requirements
of the National Designated Authority (NDA) for the Green Climate Fund. The MoEFCC has been
nominated as the NDA for the GCF, and is also the main focal point for the CTF, CDM and the
Adaptation Fund in India. The MoEFCC is therefore India’s de facto climate finance coordinating
agency at the international level (albeit without the formal mandate to carry out a wide variety of the
functions listed above) – which may lead to debate on whether the agency detailed in Box 7.1 should
be housed within the MoEFCC.
Lessons from international experience, however, indicate that independent agencies are better suited
to provide the coordinating functions needed to develop a robust national climate finance strategy.
Independent agencies are more suited to this role, as they are able to take quicker and more effective
decisions based on inputs from multiple stakeholders across government (e.g. inter-Ministerial
coordination), sectors, and regions. From an international financing perspective, donors and investors
are also likely to feel more confident in working with a governmental coordinating agency if officials
from Finance and Planning (among others) are included in the dialogue, in addition to officials from
the Environment and Climate Change portfolio. India should therefore explore the option of delegating
MoEFCC’s NDA role to the independent coordinating agency once it has been established, rather
than on designing a new agency that sits within the MoEFCC.
Readiness Gap 2
There have been limited efforts to assess the impact of climate change on the national economy,
and to prioritise climate-related investment within national and/or sectoral budgets, based on a
detailed needs assessment.
India’s new Government faces the challenge of balancing an ambitious growth agenda, while still
working towards the NAPCC’s low carbon and climate resilient goals. If managed effectively, these
two agendas can be mutually reinforcing, as long as finance is used to target major investments that
bring climate co-benefits. To do so, India will need detailed sectoral analysis of investment needs that
can be the basis for the prioritisation of investment in low-carbon growth.
Recommendation #2
India should undertake detailed quantitative needs assessment and cost-benefit studies to
prioritise mitigation and adaptation actions, and provide detailed cost estimates for their
implementation.
Ref: Ricardo-AEA/R/ED59216/Final Report
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