CLEAN ENERGY AND CLIMATE FINANCE

06.10.2025

CLEAN ENERGY AND CLIMATE FINANCE

Context
India has emerged as a global leader in renewable energy, advancing solar and wind investments in line with its Paris Agreement goals. As global discussions increasingly highlight the role of climate finance, India is focusing on sustainable funding, innovative instruments like Green Bonds, and global partnerships to drive its clean energy transition.

India’s Clean Energy Leadership
India ranks third globally in solar power generation, after China and the U.S., with renewables contributing about 5% of its economy. The sector generates substantial employment and signals a decisive move toward low-carbon development. India aims to meet 50% of its energy needs through non-fossil sources by 2030 and achieve net-zero emissions by 2070.

Financial Needs and Investment Challenges
Reaching these targets requires about USD 5 trillion by 2030 across sectors like renewable power, electric mobility, and grid modernization. Mobilizing such capital demands a blend of domestic financing, foreign investments, and stable policy frameworks to mitigate risk and attract investors.

Green Bonds: Key Instrument
Green Bonds are dedicated financial tools for funding eco-friendly projects. India’s sovereign green bond program channels funds into renewable energy and emission-reduction projects, reinforcing transparency and accountability. It also aligns with India’s leadership in the G20 Sustainable Finance framework (2023).

Global Climate Finance and India’s Role
Under the UNFCCC, developed nations pledged USD 100 billion annually for developing countries—targets yet unmet. India upholds the principle of Common but Differentiated Responsibilities (CBDR), urging developed economies to take greater responsibility. Through initiatives like the International Solar Alliance (ISA) and Coalition for Disaster Resilient Infrastructure (CDRI), India actively shapes global climate governance.

Economic and Social Impact
Clean energy expansion empowers rural communities via decentralized power systems, creates green jobs, drives domestic manufacturing under Make in India, and improves air quality and health outcomes.

Policy and Institutional Support

India’s progress in clean energy is supported by an evolving institutional and regulatory ecosystem.

• National Solar Mission (2010): Aimed at achieving large-scale solar capacity and lowering the cost of solar power.
   
• National Hydrogen Mission: Focuses on producing green hydrogen as a future clean fuel alternative.
   
• Production Linked Incentive (PLI) Scheme: Encourages domestic manufacturing of high-efficiency solar modules and battery storage systems.
   
• State-Level Initiatives: Various states, such as Gujarat, Tamil Nadu, and Rajasthan, have launched renewable energy parks and policy incentives for private investment.

Challenges and Opportunities
Major hurdles include a $5 trillion funding gap, high technology costs, grid integration limits, and policy uncertainty. Yet these challenges also invite innovation, private investment, and global collaboration in clean energy finance.

Conclusion
India’s clean energy transition blends growth with sustainability, using financial innovation and partnerships to reach ambitious climate goals. Achieving the $5 trillion target will require a unified national and global effort—turning environmental responsibility into a long-term economic opportunity and a foundation for resilient, green growth.