Why climate technology finance is just a trickle in India

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It was around fifteen billion and billions of dollars.

In the 18 months leading up to August, global seed funding for climate and cleantech startups amounted to a

record $ 40 billion


record $ 40 billion

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– a reflection of the inflated liquidity of the financial system. Of that deluge, however, only a trickle – about US $ 445 million – passed through India until November 11.

Last week, around 450 companies with $ 130 trillion in assets under the Glasgow Financial Alliance for Net Zero (

GFANZ


GFANZ

GFANZ is a global coalition of leading financial institutions committed to accelerating the decarbonization of the economy.


), has pledged to reallocate funds to green projects. Since rich nations are not

Meet


Meet

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their promise on climate finance relies heavily on the ardor and appetite of private investors, who, needless to say, seek to support projects that promise good returns.

In India, therefore, it is mobility companies that attract VCs (graphs below), while private equity companies (PEs) and financial institutions are putting their considerable resources at the service of renewable energies. Since 2020, nearly US $ 294 million has been injected into mobility companies, those that deal with electric vehicles, batteries and charging, which are obviously the flavor of the year. Globally, mobility agreements supported by VC represented as much as

US $ 75 billion


US $ 75 billion

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This year. Many of them have also seen participation from the venture capital branches of companies, with quite a few from the automotive sector. (Hyundai leads the pack with 37 mobility offerings.)

The Indian market is still nascent. “I haven’t found any Sponsors (LPs) in India who have an appetite for climate technology. Return on investment [here] is lower than other industries, ”says Harsha Moily. A former entrepreneur and management expert, Moily is in the process of raising a $ 200 million climate technology fund and hopes to close its first close by the end of January. All the money in this sector goes to Europe, Israel and the United States; not in India, he said.

“The so-called climate technology investments in India are for solar, wind and electric vehicles, but we don’t think any of them are moving the needle in climate technology because their chain supply contains a lot of fossil fuels, ”says Moily.


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