India-UK green pact to push clean energy

New Delhi: With the UK announcing a $1.2 billion package of public and private investment in green projects and renewable energy in India to tackle climate change, climate advocates on Friday said the partnership is a trendsetter for countries that how the public and private sectors can work together to speed the clean energy transition. This global partnership will boost private finance to support India's ambitious commitment to deploy 450 GW of renewable energy by 2030.

Responding to the announcement by UK Chancellor Rishi Sunak and Finance Minister Nirmala Sitharaman, Michael R Bloomberg, UN Special Envoy on Climate Ambition and Solutions and Chair of Climate Finance Leadership Initiative (CFLI), said: "This partnership is a great example of how the public and private sectors can work together to speed the transition to clean energy and make possible the deep emissions cuts we need to reach the goals of the Paris Agreement and beyond."

Climate Program WRI Director Ulka Kelkar said the massive scale of India's low carbon transition will require upfront capital investments. "Dedicated funding like this can be used to build new green energy, industry, and urban infrastructure and avoid lock-in to carbon-intensive projects. These new funding initiatives should also prioritise investments in decentralised rural energy and micro, small and medium enterprises (MSMEs), which have great potential to reduce emissions and support livelihoods but have lower capacity to access finance."

Adequate financial support has always been a vital concern for climate action, and more so as India moves ahead in its quest for a clean future. The announcement adds confidence towards constructive negotiations at COP26. It remains to see how funds will come, from what sources, and where they will be used. Even so, this development should contribute towards the flow of low-cost finance for clean energy goals.

India is taking bold steps to decarbonise its economy. Indian wind and solar capacities have quintupled to reach 76GW in 2020, making it a global success story for renewables deployment. Despite this success, BloombergNEF estimates deployment must accelerate and an additional $649 billion in financing may be needed across the power sector for India to reach its 450GW renewable energy target – a financing gap the private sector can help to fill.

Coming ahead of the COP26, this India-UK partnership should bring in more private capital for sustainable infrastructure, including wind and solar. This will create a multiplier effect towards reducing emissions from key sectors like power and transport. This is good news ahead of the important meetings to be held over the next few months. It makes the commitments to finance real and not a symbolic gesture alone.