A Roadmap for Green and Transition Finance in India

The report argues that India requires cumulative investments of US$10.1 trillion by 2070 to reach net-zero, yet current tracked mitigation finance is only about 25 percent of the required amount. It distinguishes between 'green finance' for near-zero emission technologies and 'transition finance' for hard-to-abate sectors that lack immediate green alternatives. The document identifies critical gaps in the supply of finance, noting a lack of standardised taxonomy and an underdeveloped corporate bond market. On the demand side, it analyses the decarbonisation needs of the steel, cement, transport, power, and agriculture sectors, highlighting the high capital costs and technical risks of transformative technologies like Carbon Capture, Utilisation, and Storage (CCUS). The report proposes a five-pillar roadmap covering scope and definition, transparency, cooperation, supply chain support, and financial innovation, while recommending the establishment of a Prime Ministers Net Zero Council (PMNZC) to coordinate inter-ministerial efforts.

• India faces a massive investment gap for its climate goals, requiring cumulative investments of US$10.1 trillion by 2070, while current tracked finance for mitigation is only approximately 25 percent of the total required.
• Transition finance is distinct from green finance as it targets sectors that are 'hard-to-abate' and cannot be green in the short term due to technical or economic constraints, whereas green finance focuses on technologies already aligned with the Paris Agreement.
• The Indian steel sector, the world's second largest producer, is highly carbon-intensive, with the coal-based BF-BOF route accounting for approximately 46 percent of production and an emissions intensity of 2.46 tCO2/tcs.
• Decarbonising the cement industry requires a shift toward transformative technologies to address the 70-75 percent of emissions arising from calcination, as current efficiency measures can only reduce emissions by 15-20 percent.
• The transport sector's transition is driven by electric vehicle (EV) growth, with NITI Aayog projecting EV penetration in domestic sales to rise to 1315 percent for two-wheelers and 2628 percent for three-wheelers by FY 2026.
• India's power sector transition involves a strategic shift for thermal assets from base-load providers to flexibility and grid-stability providers, requiring retrofits like Condensate Throttling Systems (CTS) and conversion to synchronous condensers.
• Agriculture accounts for 14 percent of India's total GHG emissions, with enteric fermentation contributing over 54 percent of these emissions.
• MSMEs contribute over 30 percent of India's GDP and generate around 110 million tonnes of CO2 equivalent annually, yet they lack formal transition plans and access to credit.
• The Indian corporate bond market is underdeveloped, which hinders the raising of transition finance; however, GIFT City has emerged as a hub with green bond listings exceeding US$10 billion as of end December 2023.
• Securitisation of transition loans in India is currently limited because the market is dominated by retail loans and lacks a universally accepted definition of transition finance, though it could be viable for MSME loans in the future.

APA

Jaspal, M., & Khanna, N. (2024). A Roadmap for Green and Transition Finance in India. Climate Policy Initiative. https://www.climatepolicyinitiative.org/wp-content/uploads/2024/09/ORF-and-CPI-Compendium.pdf

Chicago

Jaspal, Mannat, and Neha Khanna. A Roadmap for Green and Transition Finance in India. Climate Policy Initiative, 2024. https://www.climatepolicyinitiative.org/wp-content/uploads/2024/09/ORF-and-CPI-Compendium.pdf.

Wikipedia

{{cite report |last1=Jaspal |first1=Mannat |last2=Khanna |first2=Neha |title=A Roadmap for Green and Transition Finance in India |publisher=Climate Policy Initiative |date=September 2024 |url=https://www.climatepolicyinitiative.org/wp-content/uploads/2024/09/ORF-and-CPI-Compendium.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{jaspal2024roadmap, author = {Jaspal, Mannat and Khanna, Neha}, title = {{A Roadmap for Green and Transition Finance in India}}, institution = {Climate Policy Initiative}, year = {2024}, month = sep, url = {https://www.climatepolicyinitiative.org/wp-content/uploads/2024/09/ORF-and-CPI-Compendium.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }