Green financing in India rises to $82 billion, but flows mostly to established sectors: Report

Tracked financial flows for emission reduction such as renewable energy, energy efficiency, clean transportation and EVs grew from $50 billion in 2021-22 to $81.9 billion in 2023-24.

The Landscape of Green Finance in India, now in its fourth edition, maps actual finance flows or disbursements across sources, instruments, sectors, and subsectors for financial years 2022-23 and 2023-24. According to the report, while green finance has increased substantially between 2016-17 and 2023-24, financial flows remain concentrated in established sectors and technologies.

Tracked financial flows for emission reduction such as renewable energy, energy efficiency, clean transportation and EVs grew from $50 billion in 2021-22 to $81.9 billion in 2023-24. To enable financial flows beyond established sectors and technologies, the report calls for guidance, roadmaps, and an evolving climate finance taxonomy.

Clean energy accounts for more than half of tracked mitigation finance, $41.4 billion. Energy efficiency accounted for 31%, within this energy efficient appliances was the top draw, and clean transportation, 18% of mitigation finances.

To improve financial flows to new technologies and sectors, financial institutions need to be able to access information on the risks and rewards of lending to new and less proven technologies. Saket Kumar, Deputy General Manager at the Reserve Bank of India, suggests creating a robust knowledge hub that provides adequate information that financiers and financial institutions can draw on while determining lending decisions for technologies that are yet to be established. The share of private capital now exceeds public funds - 68% of domestic finance in 2023-24 - for mitigation. Further increasing private investment will require a stronger investment-ready project pipeline.