Climate Finance in 2023-2024

As we approach the end of the financial year, it's crucial to reflect on the progress made in India's environmental, sustainability, and climate change sectors. ????

Positive Developments:

Renewable Energy: India has made significant strides in renewable energy, surpassing its target of 175 GW of renewable energy capacity by 2022. The country is now aiming for 450 GW by 2030, with solar and wind power leading the way. As of 2021, India's renewable energy capacity stood at 146 GW, with solar and wind accounting for the majority. In the financial year 2022-2023, India added 14.7 GW of renewable energy capacity, surpassing its annual target of 14 GW.

Electric Mobility: The adoption of electric vehicles (EVs) has gained momentum, with the government offering incentives and subsidies to promote their use. This shift towards cleaner transportation is crucial for reducing emissions and improving air quality. As of 2021, India had over 1.5 million electric two-wheelers and 600,000 electric three-wheelers on the road. In the financial year 2022-2023, India sold 3.8 lakh electric vehicles, a 3.5% increase from the previous year.

Waste Management: India has been working on improving waste management practices, with initiatives such as the Swachh Bharat Mission and the Plastic Waste Management Rules. These efforts aim to enhance waste collection, recycling, and disposal practices across the country. As of 2021, India generated around 62 million tonnes of municipal solid waste annually, with around 43 million tonnes being collected and 11.9 million tonnes being treated. In the financial year 2022-2023, India collected and treated 48 million tonnes of municipal solid waste, a 10% increase from the previous year.

Climate Adaptation: India has been focusing on climate adaptation strategies to mitigate the impacts of climate change. This includes measures such as afforestation, water conservation, and disaster preparedness to build resilience in vulnerable communities. As of 2021, India aims to restore 26 million hectares of degraded land by 2030. In the financial year 2022-2023, India restored 1.2 million hectares of degraded land, a 4.8% increase from the previous year.

Policy Initiatives: The government has introduced several policy initiatives to promote sustainability and combat climate change. These include the National Clean Air Programme, National Action Plan on Climate Change, and the National Solar Mission, among others. As of 2021, India has implemented the National Clean Air Programme in 132 cities, with a focus on reducing particulate matter (PM10 and PM2.5) concentrations by 20-30% by 2024. In the financial year 2022-2023, India reduced PM10 and PM2.5 concentrations by 15% and 20%, respectively, in the cities covered under the National Clean Air Programme.

Negative Developments:

Air Pollution: Despite efforts to improve air quality, India continues to face challenges with air pollution, particularly in urban areas. This poses health risks and affects the quality of life for millions of people. As of 2021, air pollution kills an estimated 16 lakh people in India every year. In the financial year 2022-2023, India recorded an increase in air pollution levels in several cities, with PM10 and PM2.5 concentrations exceeding the National Ambient Air Quality Standards.

Water Scarcity: Water scarcity is a growing concern in many parts of the country, exacerbated by climate change and unsustainable water management practices. As of 2021, India is facing water scarcity in 54% of its geographical area. In the financial year 2022-2023, India experienced severe water scarcity in several states, with groundwater levels declining significantly.

Natural Disasters: India is prone to natural disasters such as floods, cyclones, and droughts, which can have devastating effects on communities and the economy. As of 2021, India recorded 1,258 natural disasters in the last 50 years, resulting in over 1.5 million deaths and economic losses of over $79 billion. In the financial year 2022-2023, India experienced several natural disasters, including floods, cyclones, and droughts, resulting in significant economic losses.

Future Outlook:

To achieve its Nationally Determined Contributions (NDCs) set by the UN, India needs to continue investing in renewable energy, sustainable transportation, and climate adaptation measures. This will require significant funding and collaboration between the government, private sector, and civil society. As of 2021, India's NDCs include reducing the emissions intensity of its GDP by 33-35% by 2030 compared to 2005 levels and achieving 40% cumulative electric power installed capacity from non-fossil fuel-based energy resources by 2030. In the financial year 2023-2024, India plans to invest $100 billion in renewable energy projects to achieve its NDCs.

Effect of ESG Reporting and Carbon Credits:

ESG (Environmental, Social, and Governance) reporting and carbon credits can play a crucial role in driving sustainability. Companies that prioritize ESG factors are more likely to attract investors and customers, while carbon credits provide financial incentives for reducing emissions. As of 2021, India's Ministry of Corporate Affairs is developing a comprehensive ESG reporting framework for companies, which is expected to be ready by March 2022. In the financial year 2022-2023, India issued 10 million carbon credits, generating $50 million in revenue.

Required Growth for a Sustainable Future:

To ensure a sustainable future, India needs to focus on sustainable agriculture, water conservation, and biodiversity conservation. This will require investments in research, technology, and infrastructure. As of 2021, India needs to invest around $270 billion in water infrastructure by 2030 to meet its water needs. In the financial year 2023-2024, India plans to invest $50 billion in sustainable agriculture and biodiversity conservation projects.

Expenses Due to Climate Change:

The economic costs of climate change are significant, including damage to infrastructure, loss of agricultural productivity, and increased healthcare costs. Investing in climate adaptation and mitigation measures can help reduce these costs in the long run. As of 2021, India recorded economic losses of over $79 billion due to natural disasters in the last 50 years. In the financial year 2022-2023, India spent $10 billion on climate adaptation and mitigation measures.

Effect of Natural Disasters on the Economy:

Natural disasters can have a devastating impact on the economy, leading to loss of life, property damage, and disruption of economic activities. Investing in disaster preparedness and resilience can help mitigate these risks. As of 2021, India recorded economic losses of over $79 billion due to natural disasters in the last 50 years. In the financial year 2022-2023, India's GDP growth rate declined by 1% due to natural disasters.

As we look ahead to the new financial year, it's essential to build on the positive developments and address the challenges to ensure a sustainable and resilient future for India. Collaboration between the government, private sector, and civil society will be key to achieving these goals.