Unlocking private capital is key to meet the requirements of climate finance: Shri NK Singh
“It is important to recognize what makes private capital reticent, what can be done to minimize and mitigate the risks, including regulatory risks, so that they can contribute to climate finance.” said Mr N K Singh, Member, High Level Committee on Simultaneous Elections, Co-Convenor, G20 Expert Group on MDB reforms, President, Institute of Economic Growth, and Chairman, 15th Finance Commission of India. He was speaking at the session on ‘Financing Climate Transitions’ during CII Annual Business Summit 2024, at New Delhi today.
Mr Singh further elucidated that in addition to mobilizing private capital, there is also a need to increase public private partnerships, enlarge the fiscal space of State & Centre and for multilateral development bank (MDBs) to play a larger role in reforming international finance architecture. He noted that multilateral development banks have a long way to go to improve their processes to address the daunting challenge of meeting the financing needs required for an orderly climate transition. We have to examine if we may create a form of financing that is based on blended finance and deploy greater use of hybrid capital, he added.
Mr Suman Bery, Vice Chairman, NITI Aayog, highlighted that that climate finance is both about addressing mitigation as well as adaptation needs. He suggested that perhaps clean technology projects could be bundled together along with capital from various sources to bring in greater private sector participation.
Highlighting the success achieved by Oman in the renewable energy space, H E Mr Pankaj Khimji, Foreign Trade and International Cooperation Adviser, Ministry of Commerce, Oman underscored that the country is exploring options in green hydrogen and carbon capture projects. These projects will be executed in public private partnership modes to leverage private capital required. The projects will generate green hydrogen not only for Oman’s energy needs but will also be exported to other countries, he further added.
The cost of capital in India is very high partly due to India’s low credit rating, highlighted Mr Sumant Sinha, Chairman & CEO, ReNew. Pointing to India’s good track record in terms of payments, he suggested that credit rating agencies globally should revisit and revise India’s rating. This would in turn help increase climate finance flows in the country.
Mr Sanjiv Puri, President Designate, Confederation of Indian Industry (CII) mentioned that private capital will be mobilized essentially when it is assured of positive economic returns on its investments. In this regard, harmonizing policymaking to reduce friction will greatly help in making projects more financially viable from a business perspective, he added.
17th May 2024
New Delhi