India’s Green Goals Hitting a Wall

India’s ambitious ‘green goal’ is facing several hurdles that may derail the country’s plan to become a net-zero nation by 2070 due to a lack of adequate funds. At the same time, the country’s energy demand is increasing rapidly to sustain its impressive growth rate, putting India in an unenviable position where it must maintain a delicate balance between green energy and development. Moreover, green bonds are underperforming compared to higher-return bonds. Thus, India will need to formulate its climate policy very carefully to fulfill its dream of building a sustainable nation.

However, India’s efforts are facing a roadblock as developed nations show little inclination to assist developing countries in tackling the climate crisis. For instance, developed nations are providing only USD 300 billion annually, disregarding the decision of the United Nations Climate Change Conference (COP29), which categorically stated that developing countries need USD 1.3 trillion to combat the climate menace. As a result, countries like India are left with no choice but to raise funds domestically. Here too, India faces a big challenge, as the country requires INR 10 trillion annually to reduce carbon emissions, while it is currently getting less than 25 percent of the required funds. Such a situation could have been averted had developed nations come forward with the necessary support. Clearly, these nations must reset their outlook toward the impending danger mankind faces due to global warming. They are not only duty-bound to reduce per capita carbon emissions but also to help other nations switch from fossil-based energy to renewable energy, which requires substantial funding.

To tackle the problem of resource crunch, India has adopted an innovative plan to raise funds. After finding that investors are not very keen on green bonds due to low returns, India has taken its green funding efforts to the grassroots by empowering municipalities to raise funds for this cause. Urban bodies in Ghaziabad, Ahmedabad, Pune, and others have already issued municipal green bonds to fund projects like modern tertiary sewage treatment plants, water treatment facilities, and pumping stations. These low-cost bonds are receiving good responses from citizens, unlike sovereign green bonds, which failed to sustain interest after the first tranche was oversubscribed nearly four times.

The only problem with this ambitious plan is the lack of coordination among municipalities. While a few have started issuing bonds to combat the climate threat, many others are still waiting for external funding to implement green projects. It should, therefore, be made mandatory for all municipalities to generate their own resources for green projects, as this may help the country overcome the resource crunch to a large extent.