India needs to quadruple climate finance to meet the Paris Agreement: Study

The Climate Policy Initiation (CPI India) on Wednesday released an update on India's first-ever effort to track green investment flows, which are falling far short of the country's current need for its ambitious climate targets.
According to the new report, 'Landscape of Green Finance in India', the tracked green finance in 2019-2020 was Rs 309,000 crore ($44 billion) per annum, which is less than a fourth of India's needs.
The report estimates that for India to achieve its Nationally Determined Contributions (NDCs) under the Paris Agreement, the country requires an approximate Rs 162.5 lakh crore ($2.5 trillion) from 2015 to 2030 or roughly Rs 11 lakh crore ($170 billion) per year.
The evaluation of financial flows has been estimated for key real economy sectors like clean energy, clean transport and energy efficiency. The study tracks both public and private sources of capital — domestic as well as international — and builds a framework to track the flow of finance right from the source to the end beneficiaries through different instruments with an emphasis on bottom-up approaches based on actual flows rather than commitments, providing the most accurate analysis to date of where India's climate finance stands, the finance gaps it faces, and the opportunities that lie ahead.
This year the report also provides a first-of-its-kind evaluation of adaptation financing for select sectors.
"The report shows increased flows to renewable energy sectors. This indicates the positive role policy support has had on the renewable sector. We would also hope to see a similar role in other sub-sectors like distributed renewable energy - rooftop solar and clean mobility," said Neha Khanna, Project Manager and Lead Author, Climate Policy Initiative.
In 2021, India put forth enhanced ambitions on climate action. It announced the Panchamrit targets, which include adding 500 GW of non-fossil fuel-based energy capacity and meeting 50 per cent of its energy requirements through non-renewable sources.
Such enhanced ambition requires the mobilization of green finance at a much faster pace.
While the scenario for green investments does not look promising, in the two years since CPI's initial report, finance flows increased by 150 per cent from 2017-2018 to 2019-2020. In the overall increase, public sector flows rose by 179 per cent, and private sector flows by 130 per cent.
This shows increased commitment from public sources -- both domestic and international.
However, domestic sources continue to account for the majority of green finance, with 87 per cent and 83 per cent in FY2019 and FY2020, respectively.
Of these domestic sources, the private sector contributed about 59 per cent, Rs 156.9 thousand crores ($22 billion). In comparison, public sector flows were evenly distributed between government budgetary spending (Central and state) and PSUs at approximately 54 per cent and 46 per cent, respectively.
The share of international sources increased from 13 per cent in FY 2019 to 17 per cent in FY 2020, but it is still a far cry from the Prime Minister's demand of a trillion dollars of climate finance at Glasgow last year to help meet India's 2030 and net-zero goals.