Access to credible, predictable, and affordable climate finance for effective climate action has been a long-standing issue for developing nations. Since the early days of multilateral climate negotiations, the ’responsibility paradigm’ and the ‘polluter pays principle’ have placed the burden of providing, mobilizing, and flowing climate finance on developed nations. Unfortunately, these countries have lagged in delivering the scope, scale, and speed of finance required.

Green Climate Fund: A Landmark Development

COP 16 (2010) in Cancun proved to be a turning point where the Green Climate Fund (GCF) was established under UNFCCC’s financial mechanism. The GCF was designed to mobilize resources to mitigate and reduce greenhouse gas (GHG) emissions and help developing countries adapt to climate change. It aims to support a paradigm shift towards low-carbon, climate-resilient development pathways in line with the goals of the Paris Agreement.

The Fund provides a wide range of financing options for both public and private sectors, including non-repayable grants, concessional loans, guarantees, and equity. These instruments are tailored to support adaptation and mitigation projects. GCF also offers direct access to the funds for countries and assists them in preparing for climate change through readiness and preparatory activities.

One of the key features of the GCF is its de-risking mechanism, which aims to encourage private sector investments in climate-smart initiatives. In addition, the fund focuses on capacity building and technical assistance, enhancing the ability of local authorities, civil society, and private sector stakeholders to effectively plan, implement, and monitor climate projects.

India’s Role and Ambitious Climate Targets

India has been a leading advocate of climate finance, particularly in pushing for the establishment of a financing mechanism under the UNFCCC. The country is committed to transitioning towards a sustainable, low-carbon energy future while sustaining its economic growth. To meet this goal, India has set ambitious climate targets, which require substantial financial resources.

According to India's Third National Communication to the UNFCCC, the estimated cumulative cost for climate adaptation under a business-as-usual (BAU) scenario is `56.68 trillion by 2030, with additional climate-induced damages potentially incurring an extra `15.5 trillion. Other analyses, such as those by the Climate Policy Initiative and the International Energy Agency, indicate a need for about $170 billion annually through 2030.

Role of Accredited Entities and the GCF Toolkit

Accredited Entities (AEs) play a crucial role in the GCF business model. They enable countries to access resources directly through Direct Access Entities (DAEs), promoting greater country ownership. To assist stakeholders in navigating the GCF resources and implementing projects, India’s Ministry of Environment, Forest and Climate Change (MoEFCC) released a comprehensive GCF Toolkit in October 2024. The toolkit provided detailed guidance on preparing funding proposals and accessing support.

The GCF presents an important opportunity for India to achieve its climate objectives by providing financial support, capacity building, and collaborative partnerships. Through strategic utilization of GCF resources, India can implement transformative climate projects that integrate both mitigation and adaptation strategies into its national policies.

Challenges and Way Forward

Despite progress made by the GCF, with $15.9 billion approved for 286 adaptation and mitigation projects in 133 developing countries, support for large developing nations, like India, remains inadequate. Reforms within the GCF are necessary to improve direct access to funds and ensure that financial assistance is allocated where it is most needed.

One of the key challenges is the high cost of capital associated with transitioning to cleaner technologies, largely due to elevated technological risks. Attracting private finance and promoting innovative financial instruments, such as blended finance, will be essential to overcome this barrier.

Prioritizing India’s Climate Needs

India's transition to a low-carbon pathway is hindered by resource constraints and insufficient financial commitments from developed countries. As one of the largest global economies, India’s success in achieving its climate commitments is vital for the global mitigation efforts and for meeting the objectives of the Paris Agreement.

Therefore, GCF must prioritize financial support for India’s climate initiatives to achieve global climate goals. Targeted funding for developing greener technologies in hard-to-abate sectors like industry, transport, and agriculture is crucial. Additionally, dedicated financing to address India’s adaptation needs will enhance its resilience to climate change.

The success of India’s climate journey depends significantly on GCF’s support, as it would help the country overcome its unique challenges and seize opportunities to the path of sustainable development. As India advances towards a low-carbon future, the GCF’s role will be pivotal in ensuring the country has the resources and partnerships needed to achieve its ambitious climate objectives. #

Abhishek Acharya is Director at MoEFCC; Pooja Verma is Monitoring & Evaluation Analyst at MoEFCC; and Rajasree Ray is Economic Advisor at MoEFCC.