This report, prepared by ICLEI South Asia with support from the British High Commission in Delhi discusses the opportunities for urban climate finance in Indian cities. It starts by detailing the context of urbanisation in India, and its impacts upon governance at the city and local government levels. It outlines India’s impacts with regards global GhG emissions, noting the city areas are the major sources. In order to explore the challenges faced and the opportunities for climate finance, the authors conducted a qualitative review which included interviewing key stakeholders in government, civil society and banks, to understand current sources of climate finance available to urban policymakers, and the barriers. Based on the results, coupled with secondary research, the report proposes various policies, across various sectors, which could pursue low carbon, resilient development in India. Next, it outlines the schemes and financing available at various scales for low carbon urban growth and renewable energy, offering case study examples.

The authors found that there is a wide range of funding options available to Indian cities. However, poor technical, governance and financial capacities limit local governments to capitalise upon them. The fragmentation of authority through devolution currently leads to problems for unified planning processes at the city level, but presents an opportunity in future for mobilising new and innovative sources of climate finance. Even when finance is made available from multi and bi-lateral donors, local governments face difficulties in tracking and accessing the funds. This creates barriers to implementation, even when a unified policy framework has been put in place. Even with transparent financing, Indian local governments face a series of challenges which hamper attempts at implementation, which are outlined by the authors. Greater private sector involvement would help to mobilise finance, but private investors remain hesitant due to bureaucratic problems which great too great a risk for them to pursue the investment. The authors outline a range of responses to reduce those risks.