Assessing the Success of Green Projects in India

Assessing the Success of Green Projects in India
Highlights

In the world around us, temperatures continue to reach problematic levels In India and Pakistan, heatwavelike conditions killed 3,600 people in only three months in 2015, and these deadly heatwaves have become an annual threat As a direct result, it is clear that the need to reduce carbon emissions is growing

In the world around us, temperatures continue to reach problematic levels. In India and Pakistan, heatwave-like conditions killed 3,600 people in only three months in 2015, and these deadly heatwaves have become an annual threat. As a direct result, it is clear that the need to reduce carbon emissions is growing.

One sector where we have seen an increase in innovative green projects to tackle these challenges is in the area of green finance. In this post, we will assess how successful these schemes have been. To do this, we will outline what green finance is, the current status of India’s green projects, and the future of green finance in India.

What is Green Finance?

The term 'green finance' covers investments, instruments, and projects that help to achieve positive environmental benefits as well as inclusive, resilient, and cleaner economic growth.

The global nature of the associated challenge means that these green finance incentives touch all major financial markets, including the bond markets and FinTech start-ups who are pioneering the financial models of tomorrow. As green finance initiatives grow to a global scale, forex trading is also required to facilitate project financing, such as converting pounds to rupees for British businesses to support projects in India.

What Green Finance Initiatives Exist in India?

India is one of the top issuers of green bonds, with total issuances in 2017 standing at $6 billion. However, green finance projects in India remain scattered and shallow.

Within India, there remains a very limited understanding of international risk instruments, as well as a lack of experience in fund-raising. In addition, individual projects remain isolated, as there are no standards for green financial products, and companies who invest in eco-friendly projects are not rewarded.

Currently, capital has not been sufficiently mobilized, incentives for low-carbon transition remain absent, and knowledge has not been consolidated as it has been in London and Luxembourg.

The Future of Green Finance in India

The good news for India’s green credentials is that there is still time. If a national green finance strategy can be approved, then incentives can be developed for struggling sectors that require government assistance. Subsidies can also be devised, as can risk-management related regulatory fixes.

In order to meet green targets, a regulatory framework must be established, including the introduction of a taxonomy for green finance. There should also be an establishment of green standards for financial products and mandatory disclosure requirements.

Finally, in order to succeed, the government must create an environment that supports the development and formation of innovative solutions to the challenges presented by global warming, such as replacements for aging petrol and diesel cars, as well as innovative financing solutions for these projects to incentivize change.

A growing and persistent need to reduce carbon emissions has led to the creation of a green finance initiative and a number of other green projects. However, at present, these projects are not doing enough to tackle the issues, and more must be done to achieve the aim of reducing carbon emissions. The good news is that time remains, and if strategies and frameworks can be established alongside innovative finance solutions, the future could be bright.

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