Enhancing India’s Readiness to Climate Finance

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Enhancing India’s readiness to access and deliver international climate finance Is there strong institutional experience/knowledge in accessing & delivering international climate finance? opportunities? 5.2 What experience is there in accessing international climate finance? Climate Finance Unit, which has developed a strong understanding of international climate finance opportunities. There is strong experience accessing international public climate finance • India has been successful in accessing several bi/multilateral sources of international climate finance. • Approved multilateral climate finance in India exceeds $554 million, with the GEF and the CTF being the largest sources of finance 3 • Bilateral flows have also been significant, particularly from Germany a – which provided $701 million of climate finance in 2012 according to Rio Markers data. • India has also reportedly received significant bilateral climate finance from Japan, although the volume received by India is not well understood • Under the CDM India hosted the second-highest number of CDM projects (21.9% of the global total), second only to China. 5.3 How are cross-cutting issues on climate related funding coordinated across various ministries and DFIs? Are roles clearly defined? There is no central agency or committee coordinating climate related spending decisions • The MoEFCC has been the lead agency coordinating climate finance, however capacity to deal with cross-cutting issues (energy security, green growth) has been limited. • The Ministry of Finance, through its Department of Economic Affairs has engaged with relevant line ministries to identify priority areas for climate finance, but these efforts are still limited and weak 1 • The planning commission and DEA have provided cost estimates for meeting India’s climate objectives under the NAPCC, but without any clear strategy for financing these plans. 5.4 Have efforts been made to assess where international climate finance might add the most value? (What sectors, what type of financing?) There has been limited analysis to identify and prioritise key sectors for international climate finance • There have been no formal efforts in prioritising sectors and types of financing where international climate finance could add the most value. • The 12 th Five Year Plan outlines the role of domestic financing as only financing projects that bring climate co-benefits. According to the Plan, all direct climate-related spending should come from international sources; however a strategic assessment of how this will be achieved has not been undertaken. 1 Ref: Ricardo-AEA/R/ED59216/Final Report 79
Enhancing India’s readiness to access and deliver international climate finance 5.5 Who liaises with existing international funds? Existing government departments (MoEFCC and DEA) and Development Finance Institutions (SIDBI, IREDA, NABARD) have good experience in accessing international climate funds and deploying climate finance in key projects, respectively 3 • The Department of Economic Affairs within the Ministry of Finance is the key agency through which all multilateral and bilateral access is coordinated. • The DEA takes the lead role for bilateral coordination, but multilateral coordination is often supported by the National Designated Agency (e.g. MoEFCC for the GEF) and the National Implementing Agencies (e.g. NABARD for the AF), which vary depending on the thematic focus of the fund. • Other agencies, such as BEE, EESL, MNRE, MoUD, MoA, MEA, & Ministry of Water Resources are also engaged, but mostly through the DEA. 5.6 Do Government and Development Finance Institutions (DFIs) have the capacity to identify and successfully access international climate finance? Capacity constraints and knowledge gaps still exist for scaling up access and deployment of international climate finance; specially to deal with evolving international climate finance architecture • India has been successful in accessing international funds at both public & private sector level. Good experience exists in accessing established sources of climate finance (e.g. GEF, CTF) • Government: MoEFCC has limited capacity to access international finance given the strenuous eligibility criteria required by international funds. MoEFCC requires additional institutional and human resource support from institutions such as IREDA, PFC, REC, and SIDBI 1.5 • Developmental Finance Institutions have played an important role in deploying climate finance in key projects (e.g. IREDA, SIDBI, NABARD). • However DFIs need to enhance capacities to deal with the complexities involved in new forms of international climate finance and greater volumes of funding that are expected to flow to India with the establishment of these new modalities. • For both government and DFIs, capacity challenges remain in the ability for institutions to: design, evaluate and screen programmes; extend the geographical and sector reach of their activities; understand how to use innovative financial instruments; and to MRV projects and programmes. 6. Mainstreaming of climate change into national budgets 6.1 Are climate change priorities reflected in the national strategy also reflected in the Only recently the 12 th Five Year Plan and 13 th Finance Commission have made references to incorporating climate change actions in planning and financing requirements for State governments 1 Ref: Ricardo-AEA/R/ED59216/Final Report 80
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Acknowledgements Enhancing India’
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STRENGTHS Enhancing India’s readi
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4.2 Readiness Framework overview En
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Enhancing India’s Readiness to Climate Finance

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