Greater thrust needed on climate finance, says the survey
Following India’s commitment to achieving net-zero emissions at COP26 (26th session of the Conference of the Parties) in Glasgow last year, climate action has assumed significance for the country, notes the Economic Survey 2021-22.
The Climate Change Action Programme (CCAP), a central sector scheme, launched in 2014 with a total outlay of Rs. 290 crore for the duration of five years has now been extended up to 2025-26. The survey also lists a number of other initiatives taken under the National Action Plan on Climate Change (NAPCC) and the National Adaptation Fund on Climate Change (NAFCC).
Namrata Rana, Director, Futurescape says, “The net-zero transition means that companies that till now were focused on cost reduction and profit maximisation are now expected to also measure and reduce carbon emissions. Organisations both big and small need funds for the energy transformation, knowledge to drive the necessary changes, and most importantly new skills and knowledge for processes that would now need to be implemented. Climate Finance can play a critical role in enabling a just transition, where no one is left behind.”
India’s climate actions, especially the adaptation efforts, are largely financed domestically, according to the survey. Around 30 projects focusing on agriculture, water, forestry, the coastal and Himalayan ecosystem with a total allocation of Rs. 847.5 crore have been sanctioned from 2015-19 under the National Adaptation Fund on Climate Change (NAFCC) launched in 2015.
Namita Vikas, Founder and Managing Director, auctusESG LLP opines, "Climate-proofing economic activities is pivotal to India’s economic resurgence. In light of rising ESG & climate risk concerns and the country’s goal to be net-zero by 2070, this is the time to mobilise finance and complement target-setting with an effective climate and SDG impact-driven roadmap." auctusESG LLP is an advisory firm to enable ESG risk management, climate and SDG finance.
The survey also mentions the National Hydrogen Mission for generating hydrogen from green energy. In 2021, Prime Minister Narendra Modi announced 20 per cent ethanol blending in petrol by 2025. In this regard, India expects an investment of up to $5,541 million to achieve its ethanol blending target of 10 per cent by 2022 and 20 per cent by 2025.
According to the survey, Indian Railways has set a target of net-zero carbon emission by 2030, primarily through sourcing its energy requirements through renewable energy sources. Complete electrification of its network by December 2023, use of three-phase technology for regenerative braking, and use of renewable energy sources are the intended ways to achieve this goal.
The survey has also highlighted initiatives like the Sustainable Finance Group (SFG) launched by the Reserve Bank of India to deal with climate change-related financial risks. The SFG coordinates with and participates in issues relating to sustainable finance or climate risk with the international standard-setting/cooperation bodies, central banks, financial sector regulators and the government of India.
“The volume of investments needed for achieving the SDGs and India's climate targets not only requires the active involvement of the private sector but specifically private investors and financiers. An initiative, therefore, on sustainable finance for India is in the works, and is expected to bridge the investment gap for achieving critical environmental and social impacts that are in the best interest of our country,” said Rijit Sengupta, Chief Executive Officer at the Centre for Responsible Business.
RBI has also joined the Central Banks and Supervisors Network for Greening the Financial System (NGFS) as a member last year. The former head of CDP, Damandeep Singh who is now Associate Partner, ESG and CCaSS at EY India is quite glad about this development. "The Economic Survey presents a good summation of India's efforts on climate. What I find particularly appealing is the section on climate finance. It makes a reference to the RBI joining Central Banks and Supervisors Network for Greening the Financial System (NGFS). This was crucial and, to my mind, will be an important step to attract climate finance to India. GFANZ, Glasgow Financial Alliance for Net Zero has commitments from over 450 firms across 45 countries and claims that it can potentially deliver the estimated $100 trillion of finance needed for net zero over the next three decades. This is a large portion of the world's investable capital. GFANZ is helping steer this capital towards climate-friendly investments. They are looking for signals from areas that would promote this kind of effort. RBI joining NGFS will be a great step towards this."
The survey also lists India’s international initiatives like the International Solar Alliance (ISA) and the Green Grids Initiative -- One Sun One World One Grid (GGI –OSOWOG), and Coalition for Disaster Resilient Infrastructure (CDRI) – at Glasgow.