According to the Global Landscape of Climate Finance 2015 more than 74 percent of climate finance originating in developed nations in the year 2015, was invested domestically. This needed to change especially since going into Paris for COP21, developing nations were vocal about needing significant support in terms of finance and technology to achieve climate targets that the international community was pushing hard. The Paris Agreement came through in support and reaffirmed the commitment of USD 100 billion per year by 2020 through 2025 for developing nations along with a new financing goal by 2025.
This if adhered to it can diversify climate finance channels. India’s compliance with international pressure on climate action is hinged on funding from developed nations and it stated in its INDC that it needs an estimated USD 2.5 trillion between now and 2030 from international (vs domestic) sources to meet its targets. Having received a positive sign from the UNFCCC the nations now need to establish domestic project pipelines and infrastructure to tap into the existing climate finance opportunities as well as those that will be launched.
The India GHG Program is building capacity with climate finance to help business develop projects that are suitable for such funding while at the same time aiding financial institutions develop investment criteria and funding framework for low carbon projects. Between these two fall a multitude of other to opportunities for institutional capacity addition and scaling up of existing success stories that the program wishes to support. To this effect, it is convening a Steering Committee on Climate Finance to inform policy and industry stance.
As investors seek to expand their portfolios, they are gaining confidence to invest in low carbon initiatives. Climate finance will be one of the key drivers which will help unlock significantly more investment for emerging economies and developing countries like India. Further impetus will come through clear signals and direction from policy makers. The successful approval of international multilateral funding worth USD 554.04 million is indicative of the role policy plays in channelizing international climate finance. Stakeholders look for an enabling environment which provides guidance, motivation and a platform for more effective partnerships. Guidance in accessing international funds will aid financial institutions and businesses to develop low carbon portfolios.