UN's GCF Is A Modest Sum. We Have To Use It To Draw Pvt Fin For Clean Tech

It requires an estimated US$ 160-170 billion in green investment annually by 2030. That makes the Green Climate Fund’s (GCF's) recent approval of US$ 200 million in concessional finance for India look small by comparison — but it could still be significant. Established in 2010 under the aegis of the United Nations Framework Convention on Climate Change (UNFCCC), the GCF is the world's largest fund to help developing countries seed climate finance.

"It contributes,” Praveen Garg, former Special Secretary at the Ministry of Environment, told The Secretariat. “And if it helps crowd in private capital or build institutional muscle, it becomes more than just the amount.”

The GCF has committed this amount to support the India Green Finance Facility (IGFF), a programme led by the Asian Development Bank (ADB) to help channel both public and private capital into emerging clean energy technologies. These are sectors that have yet to reach financial maturity, but are crucial to meeting India’s long-term decarbonisation goals.

The concessional funding, approved last week, includes US$ 187 million in loans and US$ 13 million in grants. Through IGFF, ADB will provide lines of credit to India’s development finance institutions (DFIs), which will be responsible for building pipelines of clean energy projects across the country.

Clean Energy Sectors That Need a Push

Unlike conventional solar or wind farms that already attract commercial investment, IGFF will focus on sectors that remain underfinanced — such as green hydrogen, compressed biogas, round-the-clock renewable energy, electric mobility in rural areas, and carbon capture and storage.

“Compressed biogas has not been so successful yet. Mixing ethanol with petrol, carbon capture — these are still evolving,” said Garg. Hydro and nuclear energy, though considered green, face their own political and environmental hurdles.

A key component of the facility is a US$ 65 million risk-sharing facility, which will provide partial credit guarantees for smaller developers often locked out of traditional finance. “Rising insurance costs and extreme events already influence how banks assess projects,” Garg explained. “If your house is near a forest or a river, they’ll consider that a risk. So when concessional funding comes with risk-sharing, it can help bring others to the table.”

Structured, But Slow

As with other multilateral programmes, the IGFF will flow through India’s Department of Economic Affairs (DEA), which oversees all externally aided projects. “There’s a division in the DEA that handles institutions like the World Bank and the ADB,” said Garg. 

The process is designed to be thorough, he noted, but that also means it’s slow. “ADB and World Bank funding doesn’t flow quickly."

Garg explained that once the funds are approved, the DEA may issue a call for proposals, which are then evaluated and routed through agencies like the Indian Renewable Energy Development Agency (IREDA) or state-level energy utilities. Accounting and compliance are managed by the Controller of Aid Accounts and Audit (CAAA) under India’s Comptroller and Auditor General (CAG) framework.

A Small Bet With Systemic Potential

India currently attracts US$ 40-60 billion in climate finance each year — far short of what is needed. While US$ 200 million may not go far on its own, the facility’s real potential lies in what it could unlock.

“Climate change is the ultimate financial risk,” said Garg. If this fund shows how structured finance can work for newer technologies, it sets the stage for more.

The IGFF is expected to run for seven years. If it succeeds in blending public and private capital at scale, it could become a model for how concessional funding can catalyse cleaner, more resilient energy systems in other developing economies as well.