NITI Aayog’s report on Financing Needs towards Viksit Bharat and Net Zero | Current Affairs | Vision IAS

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ESC

In Summary

  • Global climate finance reached USD 1.9 trillion annually in 2023, insufficient for the 1.5°C goal, with debt dominating and adaptation/early tech underfunded.
  • India needs USD 22.7 trillion for Net Zero by 2070, facing a USD 6.5 trillion gap, primarily in the power sector (82%).
  • India's initiatives include a National Climate Finance Taxonomy, Carbon Credit Trading Scheme, and sustainability disclosures via SEBI and RBI frameworks.

In Summary

Current Climate Financing Landscape

  • Global: Finance for climate action increased to USD 1.9 trillion annually in 2023, well below the USD 6–9 trillion required annually to stay on 1.5°C trajectory. 
    • It is mainly dominated by Debt with adaptation and early-stage technologies remaining underfunded.
  • India: India’s Net Zero transition requires USD 22.7 trillion in cumulative investment by 2070.
    • India faces a cumulative financing gap of USD 6.5 trillion by 2070, with power sector constituting 82% of this gap. 

Recent Initiatives Strengthening India’s Climate Finance Architecture

  • Draft National Climate Finance Taxonomy: By Ministry of Finance categorising economic activities into climate-supportive, adaptation, and transition-aligned sectors.
  • Carbon Credit Trading Scheme (CCTS): GHG Emission Intensity (GEI) targets for first four sectors – Aluminium, Cement, Chlor Alkali, and Pulp & Paper issued. 
    • Recently, Petroleum Refineries, Petrochemicals, Textiles and Secondary Aluminium were also brought under its ambit. 
  • Sustainability disclosures: E.g. SEBI’s Business Responsibility and Sustainability Reporting (BRSR) framework and RBI’s Draft Disclosure Framework on Climate related Financial Risks. 
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RELATED TERMS

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Net Zero

A state where the amount of greenhouse gases emitted into the atmosphere is balanced by the amount removed, resulting in no net increase in atmospheric greenhouse gas concentrations. India has committed to achieving Net Zero by 2070.

Draft Disclosure Framework on Climate related Financial Risks

A proposed regulatory framework by the Reserve Bank of India (RBI) to guide financial institutions in identifying, assessing, and disclosing the financial risks associated with climate change.

Business Responsibility and Sustainability Reporting (BRSR)

A framework mandated by SEBI for listed companies in India to disclose their environmental, social, and governance (ESG) performance, promoting transparency and accountability in sustainability practices.

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