Arjun Dutt, Abhinav Soman, Kanika Chawla, Sandeep Bhattacharya, Prashant Vaze
June 2019 | Sustainable Finance
Suggested Citation: Dutt, Arjun, Abhinav Soman, Kanika Chawla, Neha Kumar, Sandeep Bhattacharya, and Prashant Vaze. 2019. Financing India’s Energy Transition: A Guide on Green Bonds for Renewable Energy and Electric Transport. New Delhi: Council on Energy, Environment and Water.
India is undergoing a major energy transition. However, constraints on access to capital — both in terms of adequacy and affordability — are impeding the pace and efficiency of this transition. This report published in collaboration with the Climate Bonds Initiative focuses on the potential of green bonds as an effective instrument to finance India’s switch from fossil fuels to renewable resources. The bond market could complement traditional sources of debt – banks and non-bank financial institutions – through the refinancing of primary debt. Key regulatory and market developments could accelerate the development of India’s corporate bond markets, and facilitate capital raising through the bond route. Green bonds have the potential to be used as a tool to address the capital raising needs of both the private sector, as well as sub-sovereign government (in this case state governments), for the renewable energy (RE) and electric mobility sectors.
As part of its Nationally Determined Contribution under the United Nations Framework Convention on Climate Change, India aims to generate 40 per cent of its power from non-fossil fuel sources by 2030. To achieve this, it needs an annual investment of USD 30 billion over the period 2018 – 2030, The government is also increasingly endorsing the electric mobility sector. However, the current sales of electric vehicles (EV) are only 0.1 per cent of the total vehicle sales against a target of 30 per cent by 2030.
The report also presents a toolkit, which provides a step-by-step guide of the green bond issuance process for prospective issuers.
Source: Adapted From “New markets for green bonds: A guide to understanding the building blocks and enablers of a green bond market” by Williams et al