India’s Climate Finance Needs Systemic Resilience

India’s clean energy transition is advancing, but fragmented climate finance limits resilience against growing climate risks. Investments focus heavily on solar and wind projects, which face threats from floods, cyclones, and heatwaves. Physical risks, like extreme weather, damage infrastructure, while transition risks stem from policy or market shifts. Resilient designs, such as elevated solar panels and robust turbines, increase reliability but raise costs. Concessional capital and private investment are needed to scale such infrastructure.

Current financing neglects grid flexibility, storage, and supply chains, hindering decarbonisation. Systemic financing, integrating mitigation and adaptation, can better manage risks. Tools like a national climate database, regulatory innovation, green budgeting, and a climate finance taxonomy can guide investments. 

States like Odisha and Kerala are embedding resilience in budgets, setting examples. A just transition requires protecting communities through climate-smart infrastructure.

Shifting to systemic resilience ensures long-term returns and aligns with India’s National Adaptation Plan and global goals. The RBI’s climate risk initiatives are a start, but expanded data coverage is needed. Fintech innovations, like green credit products, can accelerate solutions. Insurance costs are rising, with hail-related claims on solar projects increasing premiums.

Systemic approaches can stabilize supply chains for battery materials and enhance grid reliability. Community-focused projects, like flood-resistant housing, protect vulnerable groups. India’s diverse geographies require tailored solutions to balance mitigation and adaptation. The shift to systemic financing is essential to secure a sustainable, inclusive energy future.

Source: Outlook Business