Government releases draft framework of India's Climate Finance Taxonomy, aims to mobilize capital for climate actions

NEW DELHI: Acting on the government’s 2024-25 budget announcement, the finance ministry on Wednesday released a draft framework of India's Climate Finance Taxonomy which aims for enhancing the availability of capital for climate adaptation and mitigation. It’ll serve as a tool to identify activities consistent with a country’s climate action commitments and green transition pathway in sync with the long-term goal to become ‘net zero’ by 2070.The broad objective of the framework is to facilitate greater resource flow to climate-friendly technologies and activities, enabling achievement of the ‘net zero’ through various mitigation (emission reduction) actions while also ensuring long-term access to reliable and affordable energy.The ministry has sought stakeholders’ views/suggestions on the framework. It will be finalised after examining those views and suggestions.“The Taxonomy shall be consistent with the developmental goal of ‘Viksit Bharat’ to be achieved by 2047,” said the 32-page draft. It also underlined the requirement of billions of dollars annually in India for adaptation and energy transition.Finance for adaptation action is vital for addressing climate change impacts, building resilience and achieving India’s development goals. Preliminary estimates indicated that about $206 billion (at 2014-15 prices) would be required from 2015 to 2030 to implement adaptation actions in agriculture, forestry, fisheries, infrastructure, water resources and ecosystems.As per NITI Aayog’s India Energy Security Scenarios (IESS) 2047, the total investment required for energy transition is estimated at $250 billion per year till 2047.“The framework will deal with how to mobilise that much of resources for the country's mitigation and adaptation targets, and also for supporting transition of hard-to-abate sectors such as cement, steel, and aluminium,” said an official, explaining the need to have such a policy document to guide it towards meeting both short-term (2030) and long-term goal ( net zero by 2070).The Taxonomy, which will also work on preventing “greenwashing”, is based on eight guiding principles including focus on pathways in the country’s context, support to transition activities and promoting the use of indigenous technologies.“It has been formulated on the basis of consultations on the concept note and a review of existing taxonomies (globally). Further refinements will be based on public consultations on the draft framework,” said the document.