New Delhi: India’s top government think-tank has called for setting up a panel to guide policy and coordinate multi-ministry efforts on climate action and energy transition, two people aware of the development said.
In its draft roadmap for net-zero pathways, NITI Aayog has said that the proposed Low Carbon Development Commission would develop bankable project pipelines for mitigation and adaptation, while mobilizing $100 billion annually by building capacity to attract and absorb climate investment, the people cited earlier said on the condition of anonymity. These recommendations come at a time when India nears its 2030 deadline to achieve 500GW of non-fossil electricity capacity. Under its nationally determined contributions (climate actions that countries submit under the 2015 Paris Agreement), India plans to achieve net zero carbon emission by 2070. Further, India has also committed to reduce the emission intensity of its GDP by 45% from 2005 levels by 2030.
The NITI proposal noted that along with operating as the secretariat for policy support on climate change, the commission would also work towards “mobilize $100 billion annually by building capacity to attract and absorb climate investment,” said the first person. These pathways include measures to cut emissions across mobility, industry, energy, and agriculture, while promoting waste management, sustainable construction, mass transit, non-motorized and electric mobility, energy efficiency, and a circular economy. Queries emailed to NITI Aayog, Union ministries of new and renewable energy, power, and environment, forest and climate change remained unanswered till press time.
Net zero means cutting greenhouse gas emissions to as close to zero as possible, and offsetting the rest through carbon capture technologies, and afforestation, among others. The think-tank has reiterated its suggestion to set up a National Green Financing Institute. It had first spoken of the institute in its annual report for fiscal year 2025 (FY25), envisaging it to meet the financing gap to achieve the ambitious national net-zero target. The institute is expected to focus on blended finance, offering guarantees to reduce the weighted average cost of capital and developing standardized term sheets and power purchase agreements.
R.R. Rashmi, former bureaucrat and distinguished fellow for green shipping at Delhi-based The Energy and Resources Institute (TERI), said: “The proposed commission may be a desirable institution as a scientific and technical body entrusted with the work of data collection, analysis, projection and interpretation of emissions towards net zero goal. It may even support the national communications on climate change and the national inventory management system, which is the need of the hour.” “However, its function as a regulatory body to help reach the goal is open to question as India’s development trajectory is guided not by a centralized body but a myriad of institutions in a federal structure comprising central ministries, sectoral bodies and state governments,” he said, adding that development of proposals for mitigation and adaptation should be best left to states supported by professional agencies working within the financial ecosystem.
Financing is critical to executing projects aimed at curbing climate change, and the lack of it has been a key obstacle for the global transition goals. India has witnessed an accelerated flow of capital into transition and low-carbon initiatives and technologies, yet concerns about a massive financing deficit remain. NITI Aayog estimates that India will need $21 trillion investments to achieve net zero by 2070, of which $14 trillion is already available, leaving $7 trillion yet to be mobilized.
“Key challenges in climate financing include a weak business case for new technologies, such as CCUS (carbon capture, utilization and storage), green hydrogen, and green ammonia, as well as an evolving one for existing and established businesses like renewables. Further, to reach the 500GW non-fossil capacity by 2030, along with storage, India would require $25-30 billion per year for installing 50GW of capacity annually,” Vaibhav Pratap Singh, executive director, Climate and Sustainability Initiative (CSI), a global research organization, said.
He noted that in terms of international capital flowing in, global players are more interested in equity investments in clean energy projects and companies, rather than lending, even if equity comes last in terms of payback.
“This is because global financiers are reluctant to lend for long periods, such as 16 or 20 years, to developing countries. While FDI (foreign direct investment) inflow into renewable energy has been growing, in FY25, it increased 3 times compared to the previous fiscal year,” Singh said.
According to a Deloitte India’s report published in July, by the end of this decade, India would require $1.5 trillion investment by 2030 across key areas to address the climate challenge at scale. The investments would range across sectors, including renewable energy, biofuels, decarbonization, and sustainable infrastructure. In the past few months, the Union Ministry of New and Renewable Energy has held meetings on green finance amid the growing need to scale up and expand green energy penetration through storage capacities, transmission capacities, and green hydrogen. On 15 September, Mint reported that the ministry is looking at the feasibility of contract for difference or CfD for power-purchase agreements, which may be promoted instead of the conventional long-term pacts of up to 25 years, along with innovative financing models like mezzanine finance, which combines debt and equity. Under CfD, either party has to pay the difference between the contracted and the actual price.
Apart from these, the Ministry of New and Renewable Energy is considering seeking tax incentives for green bond buyers from the finance ministry. The ministry has already suggested that banks simplify financing for renewable energy projects, particularly rooftop solar panels, and called for the introduction of a renewable energy financing obligation to ensure dedicated funding for the sector, similar to renewable purchase obligations (RPO) for electricity distribution companies.
At a workshop on mobilizing finance for renewable energy in February, renewable energy minister Pralhad Joshi said India had secured commitments worth ₹34.5 trillion at the global renewable energy summit in Gandhinagar last year. He also urged financial institutions to streamline lending processes, ease compliance burdens, and adopt a more supportive approach to financing clean energy projects.
In March, Union environment minister Bhupender Yadav had said India had already achieved a 36% reduction in emission intensity between 2005 and 2020 and is on track toward its 2030 target.
Originally published in Mint & Livemint.