Just Transition Financing Framework

The Climate Policy Initiative proposes a Just Transition Financing Framework (JTFF) to support Indian states, particularly Jharkhand, in transitioning from solid fossil fuels to a clean energy economy. The framework emphasizes a four-pronged approach: evidence-based policy making, capacity building for workers and officials, technical assistance for project bankability, and the mobilization of a blend of public and private capital. By establishing a governance structure involving a Ministerial Board and a Project Management Unit, the JTFF seeks to mitigate fiscal risks and socioeconomic disruptions while fostering green economic diversification.

• India has achieved 50% of its total installed power capacity of 500 GW through non-fossil-fuel sources, reaching this milestone five years ahead of its 2030 nationally determined contribution target. The current mix consists of 48% (234 GW) renewable energy, 2% (9 GW) nuclear, and 50% (242 GW) thermal power.
• Jharkhand, Odisha, and Chhattisgarh contain approximately 70% of India's national solid fossil fuel reserves. Jharkhand specifically holds about 24% of these reserves as of FY 2024 and is identified as the state requiring the most prompt and maximum support for energy transition planning.
• The transition poses significant fiscal risks to Jharkhand because solid fossil fuels are a critical revenue source; in FY21-22, 16% of the state's own revenue was derived from these fuels, and in FY22-23, 17% of its revenue was at risk due to the transition.
• The proposed Just Transition Financing Framework (JTFF) is built upon four primary objectives: enabling informed decision-making via policy and regulatory support, supporting capacity development for the workforce and policymakers, facilitating project preparation to create bankable projects, and mobilizing private capital while optimizing public funds.
• The JTFF identifies a diverse range of financial sources and mechanisms tailored to different risk-return profiles. These include grants and concessional loans from philanthropies and MDBs for social returns, and commercial debt or equity from PE/VC firms and private banks for market-rate financial returns.
• The operational structure of the JTFF involves a hierarchical governance model where an Inter-Departmental/Ministerial Board provides strategic oversight, a Secretariat handles coordination, and a Project Management Unit (PMU) manages the execution of activities and capital mobilization.
• To ensure accountability and investor confidence, the framework requires a Monitoring, Reporting, and Verification (MRV) system to track environmental indicators (emission reduction), social metrics (livelihood security), and economic parameters (job diversification).
• The framework draws on the EU's Just Transition Fund as a global precedent, which utilizes three pillars: a Just Transition Fund for economic diversification and training, the InvestEU Just Transition scheme for budgetary guarantees, and a public sector loan facility blending EIB loans with EU grants.

APA

Habib, M. T., & Kumar, K. S. (2025). Just Transition Financing Framework. Climate Policy Initiative. https://www.climatepolicyinitiative.org/wp-content/uploads/2025/12/Just-Transition-Financing-Framework.pdf

Chicago

Habib, Md. Tariq, and Krishna S. Kumar. Just Transition Financing Framework. Climate Policy Initiative, 2025. https://www.climatepolicyinitiative.org/wp-content/uploads/2025/12/Just-Transition-Financing-Framework.pdf.

Wikipedia

{{cite report |last1=Habib |first1=Md. Tariq |last2=Kumar |first2=Krishna S. |title=Just Transition Financing Framework |publisher=Climate Policy Initiative |date=December 2025 |url=https://www.climatepolicyinitiative.org/wp-content/uploads/2025/12/Just-Transition-Financing-Framework.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{habib2025just, author = {Habib, Md. Tariq and Kumar, Krishna S.}, title = {{Just Transition Financing Framework}}, institution = {Climate Policy Initiative}, year = {2025}, month = dec, url = {https://www.climatepolicyinitiative.org/wp-content/uploads/2025/12/Just-Transition-Financing-Framework.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }