Roadmap for Answer Writing
1. Introduction
- Define green financing and its significance.
- Fact: India needs $10 trillion to achieve net-zero emissions by 2070 (International Financial Services Centres Authority).
- Mention India’s climate goals and global commitments (e.g., COP26 net-zero pledge).
2. Strategies to Improve Access to Green Financing
Heading 1: Conducive Policy and Regulatory Environment
- Enact policies and regulations to signal governmental commitment.
- Develop a green taxonomy to provide clear definitions and build investor confidence.
- Fact: Green taxonomy helps reduce investor uncertainty and fosters capital inflow (RBI Report on Currency and Finance 2022-23).
Heading 2: Formal Carbon Pricing Frameworks
- Introduce carbon taxes and Emissions Trading Systems (ETS) to incorporate climate costs in investment decisions.
- Fact: ETS and carbon pricing can generate fiscal revenue to fund green projects (RBI Report 2022-23).
Heading 3: Mobilizing Domestic and International Capital
- Encourage innovative instruments like Green Infrastructure Investment Trusts (InvITs).
- Strengthen bond markets for issuing green bonds.
- Fact: SEBI’s mandate for the Business Responsibility and Sustainability Report (BRSR) supports better investment decisions.
Heading 4: Green Finance Through Banks
- Enhance priority sector lending quotas for green projects.
- Consider Renewable Finance Obligations (RFOs) for financial institutions.
- Fact: Parliamentary Standing Committee on Energy’s 21st Report recommends exploring RFOs.
Heading 5: Advocacy at International Forums
- Use platforms like G20 and COP to push for regulatory reforms.
- Advocate for funds from developed nations to flow to developing countries.
3. Conclusion
- Emphasize the transformative potential of green financing for Mission 2070 and sustainable development.
- Highlight the importance of a coordinated policy, regulatory framework, and financial innovation.
Relevant Facts
- India’s Financing Needs: $10 trillion investment required for net-zero emissions by 2070 (International Financial Services Centres Authority).
- Carbon Pricing: Recommended by the RBI Report on Currency and Finance 2022-23.
- Green Bonds: SEBI’s BRSR facilitates better decision-making by investors.
- Policy Innovation: Parliamentary Standing Committee recommends Renewable Finance Obligations.
Model Answer
India’s commitment to achieving net-zero emissions by 2070, announced at COP 26, necessitates a $10 trillion investment, according to the International Financial Services Centres Authority. Below are strategies India can adopt to enhance access to green finance and achieve its climate and sustainable development goals:
1. Develop a Conducive Policy and Regulatory Environment
2. Introduce Formal Carbon Pricing Frameworks
3. Mobilize Domestic and International Capital
4. Expand Green Finance Through Banks
5. Advocate at International Forums
Conclusion
To make green financing a cornerstone of Mission 2070, India must implement a holistic policy framework and foster strong domestic and international financial collaboration. Initiatives like carbon pricing, innovative financial instruments, and advocacy on global platforms will be pivotal in ensuring a sustainable and climate-resilient future.