The Institute for Energy Economics and Financial Analysis states that if India is to achieve its goal of net-zero emissions by 2070, it must align policy, institutional mechanisms, and capital flows to fund a low-carbon, inclusive, and equitable “just transition”.

“The green transition must address livelihoods, social equity, and regional economic diversification in addition to reducing emissions,” stated Gaurav Upadhyay, an energy finance specialist with IEEFA and the paper’s primary author, who posted the report on the World Economic Forum website recently.

Because their economies and revenues are dependent on businesses like coal mining, thermal power, cement, steel, and automobiles, coal-dependent states like Jharkhand, Chhattisgarh, and Odisha will be the most affected by the change. Although decarbonisation through renewable energy, electric vehicles, and green buildings has been the main focus of India’s climate finance, Upadhyay stated that funds must also assist entrepreneurship, small businesses, skill development, and safety nets for impacted populations.

“At this time, funding for these social aspects is still scarce and dispersed,” he stated, adding that disadvantaged areas might benefit from fiscal transfers, green budgeting, and other public finance instruments. Though institutional coordination is still lacking, policy interest in a just transition is increasing across India’s labour, environment, coal, power, and finance ministries.

There is no system in place to coordinate funding at the federal, state, and regulatory levels, which results in inefficiencies and a lack of local needs alignment.

Current tools like concessional loans, corporate social responsibility funds, and sovereign green bonds might be labelled and steered towards community-focused goals.

For instance, CSR spending in coal regions might give priority to education, health care, and entrepreneurship. To engage in just transition initiatives, private investors want quantifiable results, risk mitigation strategies, and unambiguous governmental signals, according to Upadhyay.

While sustainability-linked loans and bonds could tie funding to workforce or regional development targets, blended finance solutions could reduce the risk of investments.

In order to include just transition principles into reporting, lending, and project planning, the report recommended capacity-building at all levels, from the Reserve Bank of India and Securities and Exchange Board of India to state governments and civil society. India should concentrate on preparation measures between 2025 and 2030, such as requiring just transition disclosures under SEBI’s framework for business responsibility and sustainability reporting. Green jobs should be given priority in state budgets, and financing windows should be expanded between 2031 and 2035.

In order to guarantee that vulnerable populations are not left behind, ministries, state governments, businesses, and academic institutions must collaborate in the long run to reinvest green industry tax income into transition initiatives.

According to Upadhyay, “India must fortify the social scaffolding necessary to ensure that workers, communities, and vulnerable regions are not left behind as it accelerates the shift away from fossil fuels.” “The transition can be made both equitable and environmentally friendly with a well-designed just transition financing ecosystem.”

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