Finance with low cost of capital important to meet India’s decarbonization goal: Deputy Director General, IRENA

Dec 06, 2023

DUBAI, 6 December 2023: Led by the Department of Economic Affairs (DEA) in partnership with IFSCA and supported by NSE, FICCI organized ‘Mobilizing Climate Finance for low Carbon Development’ at the India Pavilion in UNFCCC COP28 Dubai on Monday.

The session had the panel deliberate on how businesses can access and mobilize climate finance for mitigation and adaptation projects. While also discussing various instruments for financing like green/climate bonds, debt mechanisms for green/clean projects, accessing green funds and funding through market mechanisms for emerging green technologies. The session had discussions on mobilizing private capital flow through blended financing, which would not only be beneficial to the investors but also to society. 

Ms Gauri Singh, Deputy Director General, International Renewable Energy Agency (IRENA), highlighted the large amount of finance that is required in India for decarbonization that needs to be accompanied with a reduction in the cost of capital. The financial intermediaries in India have an important role to play here by rethinking and repurposing their mandate to look at currency hedging, she added.

Dr Mukund Govind Rajan, Chair, FICCI Environment and Climate Change Committee and Chairman, ECube Investment Advisors, emphasized on the need of mobilization of climate finance with Indian Businesses being a positive force to deliver on investment needs of the country.

Dr Harish Ahuja, Head – Power & Carbon Markets, National Stock Exchange (NSE) underlined that India's 2047 goal of a developed nation is inter-related with the country's transition to net zero by 2070. For India to achieve Net zero, carbon emissions abatement can be looked at from five different ways: cap & trade carbon credit market, joint trade market mechanism under article 6, scaling up of green bonds and infrastructure trust and sustainability bonds. Where Sustainability bonds have a huge potential to address the market risks and increase market confidence.

Elaborating on the carbon markets, Mr Kamran Khan, Managing Director, Head of ESG for Asia Pacific, Deutsche Bank highlighted that diversification is of paramount importance in managing the risk associated with carbon pricing and markets. To deliver on the needs of emerging economies and small, medium enterprises in such carbon markets, separate discussions are required along with incentives to keep them moving forward.

Mr Sean Kidney, CEO, Climate Bonds Initiative (CB) said that global tradability, flexibility and liquidity are required for carbon markets. Mutual acceptability of thus raised carbon credits requires negotiation discussions between the countries and other stakeholders. These measures should be backed up by more risk support and enabling policy framework, he emphasized.

Given that the mitigation costs are different across sectors, companies and countries, a tailored approach is required while establishing carbon markets said Mr Björn Fondén, International Policy Advisor, International Emissions Trading Association (IETA). He further added that in India high liquidity and flexibility of the carbon market is crucial while considering the international market demand. India has the potential to earn up to 12 billion dollars by 2030 through international carbon markets underscored, he added.

Mr Abhilash Mulakala, General Manager, International Financial Services Centres Authority (IFSCA) talking about investments in emerging green technologies underlined that with the right infrastructure, regulations and collaborations, investment flow in India can increase significantly leading to low-cost funding being available to the Indian market.

Elaborating on the need for increased integrity in voluntary carbon markets Mr Filipe B. Managing Director, Head of Sustainable & Impact Finance Strategy, Bloomberg LP stressed on making a Shift to dynamic data for due diligence in Indian carbon markets. He added that there is a need to regulate the carbon market repository to capitalise on the already available funds with companies.