Scaling Up Blended Finance to Support the Renewable Transition

Scaling Up Blended Finance to Support the Renewable Transition

Blended finance combines concessional funds from sources like governments or philanthropic organizations with funds from development finance institutions like the International Finance Corporation (IFC). This approach can attract private sector investments for projects that have significant development benefits.

Blended Finance

The IFC’s “Blended Finance for Climate Investments in India” report suggests that blended finance can help India increase private investment in climate initiatives, which will support its transition to clean energy.

The report highlights the use of concessional blended finance as a way to encourage private sector investments in climate-related projects in India, which can also lead to positive development outcomes. These projects are close to being commercially viable, but they need more financial support to reduce risks, offer incentives, or adjust the risk-return profile in order to attract private sector investors.

India will need to increase its climate investments from $18 billion to $170 billion annually by 2030 in order to reach its net-zero targets. Currently, India only has $44 billion available for climate action.

The report highlights the need to overcome regulatory challenges, work together with donors and DFIs, improve institutional capabilities, and create a regulatory sandbox. It recommends initiating trial transactions under current frameworks while making regulatory changes to jumpstart the market.

The World Bank has put forward a plan to transition low and middle-income countries to renewable energy and energy efficiency, while reducing the use of coal. They estimate that these countries will need to invest $1.3 trillion annually by 2030, which is more than four times the current investment.

Reference- IFC Report, World Bank, MErcom India, Economic Times, Money Control, CNBC