Pvt capital not ready to embrace risks, opportunities associated with energy transition: CEA

Private capital is not fully ready to embrace both the risks and opportunities associated with funding energy transition, Chief Economic Adviser V Anantha Nageswaran said on Thursday. Speaking at the Raisina Dialogue 2024, Nageswaran said there is a lot of talk about funding energy transition and climate change requirements but nothing much is happening on the ground.

Citing an example, he said, yields on sovereign green bonds that India issues only have a benefit of one or two basis points.

"It is very clear that private capital isn't fully ready to embrace both the risks and the opportunities associated with funding energy transition. Now, if that requires further de-risking by the multilateral agencies, or by sovereigns, then that is an explicit cost that needs to be factored in, given the not so great fiscal situation of several other countries after the pandemic and the debt crisis," he said.


During India's G20 presidency, he said, "we did bring out the two volume report of the Independent Expert Group (IEG) on how to scale up the financing available with multilateral development banks and how in turn, they could use that to leverage private capital."

So it's very important that this work, which was completed under the Indian presidency, is carried forward in the coming year, he said.

"That is one important requirement for mobilizing private capital because... it is time to act on it and its recommendations in terms of mobilizing private capital," he said.

Independent Expert Group (IEG), appointed under India's G20 Presidency, has recommended a triple agenda to harness the potential of Multilateral Development Banks (MDBs).

The report suggested adopting a triple mandate of eliminating extreme poverty, boosting shared prosperity, and contributing to global public goods, tripling sustainable lending levels by 2030 and creating a third funding mechanism, which would permit flexible and innovative arrangements for purposefully engaging with investors willing to support elements of the MDB agenda.