Paper: GS – III, Subject: Environment, Ecology and Disaster Management, Topic: India’s initiatives, Issue: Significance of climate finance.
Context:
The UN Secretary-General’s 2025 Climate Report recognizes India, alongside Brazil and China, as leaders in scaling solar and wind energy.
Key Highlights:
India’s Achievements:
- India added 24.5 GW of solar energy capacity in 2024, making it the third-largest global contributor after China and the US.
- The renewable energy sector in 2023 employed over 1 million people, contributing to 5% of GDP growth.
- India established International Solar Alliance (ISA), a key initiative for global solar cooperation.
- Successful solar park auctions and issuance of sovereign green bonds.
- Expansion of Green, Social, Sustainability & Sustainability-linked (GSSS+) bonds whose Issuance reached $55.9 billion by Dec 2024 (186% rise since 2021).
- Green bond investment projected to cross $45 billion in 2025, with a target of $100 billion by 2030.
Gaps in Climate Finance:
- Large Financing Needs: Requirement of $1.5 trillion by 2030 to stay on a 1.5°C pathway. Further Ministry of Finance placed target at $2.5 trillion by 2030.
- Sectoral Requirements: Huge capital needed for renewables, battery storage, hydrogen tech, decentralised grids, and sustainable transport which risks failing climate targets.
- Funding mismatch: Financing largely skewed towards big corporations (84% of green bond issuance) while limited finance access for MSMEs, agri-tech innovators, local infrastructure developers.
Strategies to Expand Climate Finance:
Conclusion:
The recent initiatives support India’s energy security and climate commitments under the Paris Agreement. It helps bridge the climate finance gap and ensure a just transition and positions India as a leader in global renewable energy transition.
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