Blended finance: The solution for climate resilence in India

India is at a turning point in its history, with a bold goal of moving to a lowcarbon, sustainable energy future.

- DRS DURGA

The country’s population is expected to increase by a quarter of a billion people by 2070 arises the importance of combatting climate change. India’s proposed massive energy switch will come at a high cost. It will entail expanding the use of renewable energy sources, updating infrastructure, and enhancing sector-wide energy efficiency. The promotion of blending finance for climate change is considered to be a strong opportunity on one side while being a challenge on the other. It assures that developing countries are in a position to pursue low-emission climate-resilient development that is vital as they experience most of the impacts of climate change. One of the sustainable financing opportunities that have been hailed as feasible for such financing deficits is blending which entails the use of both public and private capital. The blended finance structures combine such cheap capital from either the public or philanthropic organisations with the commercial finance to avoid risks and attract more funds. It can boost the possible returns of climate projects that the private investors can consider as being unprofitable or too risky to fund. However, there is a set of several attached obstacles that have to be addressed to make effective use of blended finance: On the execution level, it refers to the challenge of deal structuring, to raising the issue of quality, and to the objectives of how to ensure that more than business-as-usual is delivered by a blended finance approach. Perhaps much has been penned on how blended finance has provided capital for decarbonisation as well as adaptation.