In 2023, India experienced the hottest February since 1901, the first year the country’s Meteorological Department started its weather records. Extreme weather events like this are becoming frequent and are expected to get worse due to climate change. India is among the countries most affected by the impacts of extreme weather events. As the world’s most populous country, with nearly 1.4 billion inhabitants, the carbon intensity of India’s economy has a direct impact on global emissions, and thus, on climate change.  In 2021, India’s greenhouse gas emissions (GHG) amounted to some 3.9 billion carbon dioxide (CO2)-equivalent tonnes, making it the world’s third largest emitter, behind China and the United States, although GHG emissions per capita were only 2.8 CO2-equivalent tonnes, compared to a world average of 6.9 and 17.5 in the United States.

 India’s longstanding commitment to the environment 

The protection and improvement of the environment, as well as the safeguarding of forests and wildlife, are embedded in the country’s Constitution. In 2008, the Government of India launched its National Action Plan on Climate Change, with eight national missions that aim to reduce the economy’s emission intensity, improve energy efficiency, increase forest cover, and develop sustainable habitats. The climate policy is coupled with other policy goals, such as energy access and water security.

India’s 2030 climate targets submitted under the Paris Agreement include reducing its economy’s emission intensity by 45% compared to 2005 and increasing the share of non-fossil fuel-based energy resources to half of the installed capacity. To finance these and other commitments, the country needs around $170 billion per year in investments. However, with an average of $44 billion per year, estimated climate finance flows have fallen short.

During the 27th United Nations Conference of Parties (COP) in Egypt last November, India highlighted the need to scale up financial flows to emerging countries to strengthen their efforts to address and adapt to climate change. Immediately following the COP, the Government of India took important steps to mobilize private sector capital for its own needs.

A giant leap into sustainable finance

On February 1st, 2022, Union Minister for Finance and Corporate Affairs, Ms. Nirmala Sitharaman announced the Government of India’s plan to issue sovereign green bonds to mobilize resources for green infrastructure. The proceeds will be deployed in public sector projects that contribute towards reducing the carbon intensity of the economy. On January 25, 2023, India issued the first tranche of its first sovereign green bond worth INR 80 billion (equivalent to $980 million).  On February 9, 2023, the Government of India announced the issuance of another INR 80 billion ($968 million) in sovereign green bonds. […]