Climate Policy Initiative has analyzed the green finance fund flow to India’s clean energy, clean transport, and energy efficiency sectors.
Total green finance increased over the last four years, reaching a biennial average of INR 309 thousand crores in 2019/2020, a 150% increase from the previous two years.
However, this is nowhere near enough finance required for India to meet its NDCs and Panchamrit targets.
Based on our estimates, green finance must increase by at least 3.5x — to INR 11 lakh crores annually by 2030 — to meet our climate objectives.
This diagram provides a snapshot of green finance from the original source of financing –
private on the left-hand side – through to how
that finance is used on the right.
The thickness of the lines correlates to the amount of money flowing. CPI presents bi-annual averages to smooth out data fluctuations, so the numbers here denote an annual average over 2019 and 2020. All figures are in INR Crores.
So, who is behind the INR 309 thousand crores?
The public sector accounted for 43% (INR 133 thousand crores) of 2019/2020 tracked green finance.
Private actors accounted for 57% (INR 175 thousand crores), with commercial financial institutions and corporations together contributing almost 69% of the total.
The Landscape categorizes transactions by the instrument used to structure the provision of green finance, covering grants, debt, government budgetary spending, and equity.
Debt accounted for 49% (INR 152 thousand crores) of 2019/2020 green finance, with balance sheet financing as the main source of debt funding.
Government budgetary expenditure accounted for nearly 19% (INR 57 thousand crores) of total green finance.
And equity investments accounted for 26% (INR 81 thousand crores) of total green finance.
The India Landscape tracks green finance along three, broad-sector classifications: clean energy, clean transportation, and energy efficiency.
The majority of mitigation finance went towards clean energy, which includes investments in renewable
power and heat generation assets, transmission and distribution networks, as well as support to policy
and national budget and capacity building.
Clean energy finance was almost evenly split 50-50 between public and private actors. The solar and wind energy sub-sectors received greater funding from private players at 75% combined, indicating the maturity of this market.
While clean energy had the highest share of finance flows (41%), clean transport and energy
efficiency showed increased finance flows as compared to 2017/2018.
Overall, 32% of total green flows went to energy efficient appliances, followed by 17% to Mass Rapid Transit System (MRTS), and 15% to rooftop solar, indicating greater engagement by consumers in energy efficiency and the active role played by both private sector (rooftop solar) and public sector (MRTS).