Chapter: India’s E-bus Adoption has a Financing Bottleneck
The chapter analyzes India’s National Electric Bus Program (NEBP), launched in 2022 with a $10 billion investment goal to deploy 50,000 electric buses, highlighting the slow progress with only 1.25% of buses being electric between 2015-2023. It identifies key challenges in the current implementation approach, particularly the financial struggles of State Road Transport Undertakings (SRTUs) with collective debt of Rs 380 billion and OEMs’ reluctance to participate due to delayed payment concerns and balance sheet risks.
The article proposes a solution through a Centre-owned electric bus financing programme, similar to IRFC and IREDA models, which would aggregate funds and manage procurement through CESL while entering into operating lease agreements with SRTUs. This proposed program would be capitalized through a blend of public financing (including FAME subsidies, development finance institutions, and multilateral development banks) and private financing (from commercial banks and capital markets), potentially generating additional revenue through carbon credits. The solution addresses both the financial challenges faced by SRTUs and OEMs’ concerns while providing a structured approach to accelerate sustainable public transportation in India.
Publisher: Bloomsbury Publishing India Pvt. Ltd
Chapter: Mobilising Green Finance for Indian MSMEs
The chapter examines the critical role of India’s 63 million MSMEs, which contribute 30% of GDP and consume 20-25% of industrial energy, in achieving the country’s net-zero emissions target by 2070. It identifies major financing challenges MSMEs face in their decarbonization efforts, including strict lending policies, high collateral requirements, and inability to access the sustainable debt market due to poor credit ratings. The article proposes a solution through a green finance platform governed by SIDBI (Small Industries Development Bank of India), which would issue green bonds and distribute proceeds to MSMEs via green loans, leveraging SIDBI’s AAA credit rating and Green Climate Fund accreditation. To address potential challenges, the article suggests creating a credit guarantee fund similar to CGTMSE to mitigate default risks and establishing a technical assistance pool for capacity building. The platform would benefit both MSMEs by providing access to green finance and SIDBI by enhancing its reputation among ESG investors while fulfilling its development mandate.
Publisher: Bloomsbury Publishing India Pvt. Ltd
Chapter: Repurposing India’s Coal Power Plants: Sustainability-linked Green Bonds as a Financing Solution
The chapter addresses India’s challenge of balancing growing energy needs with its NDC goals of reducing GHG emissions by 45% (compared to 2005 levels) by 2030, highlighting the controversy around early retirement of coal plants. It proposes an innovative financing solution through sustainability-linked green bonds (SLGBs) specifically for private utility players who control 35% (73 GW) of India’s coal capacity, citing a study that shows the financial benefits of repurposing coal plants could outweigh retirement costs by 2-4 times.
The chapter details a structured SLGB framework with three key performance indicators: decommissioning coal capacity by an ambitious date, adding renewable energy capacity, and ensuring just transition through reskilling and compensation packages. To make this solution cost-effective, the chapter suggests a dual-tranche issuance approach combining institutional investors (senior tranche) with Multilateral Development Banks and Development Finance Institutions (subordinate tranche), along with potential credit guarantees and grants for workforce reskilling. The proposed SLGB structure offers a credible pathway for both public and private debt providers to participate in India’s early retirement of coal plants while supporting the country’s emissions reduction goals.