While focusing climate-tech investments in sectors with high share of greenhouse gas (GHG) emissions is the path to impact and economic growth, some sectors in India’s climate-tech industry are seeing a disparity in the funding received by them and the share of emissions they are responsible for, according to a report by consulting firm FSG.
For example, the industry, manufacturing and resource management sector contributes around 30% of emissions, while food, agriculture, and land use accounts for about 20%.
But between 2019 and 2023, these sub-sectors have received only a small proportion of climate-tech investments, collectively representing about 4-5% of the total investments.
“This dissonance between emissions and financial support raises critical questions about the alignment of investment strategies with environmental priorities, necessitating a reevaluation of resource allocation for more impactful outcomes,” the report said. On the other hand, while the mobility and transport sector in India’s climate-tech landscape has attracted 29% of the total investments between 2019-2023, its contribution to GHG emissions is relatively lower at 9-10% of total emissions.
“This disparity suggests a potential misalignment between the substantial funding this sector receives and the pressing need for emissions reduction in sectors with higher emissions,” the report said.One sector has so far avoided such disparity. The energy sector, which is the biggest contributor to the country’s GHG emissions, is responsible for around 38% of total emissions. However, between 2019 and 2022, the green energy sector managed to secure an average 74% share of climate-tech investments. “While this outsized investment favors the energy sector, it leaves other emissions-intensive sectors lacking adequate funding,” the report noted.
Within the energy sector, the energy generation segment — which includes companies such as Adani Green Energy and ReNew Power — secured nearly 94% of the total investments in the green energy sector from 2019 to 2022.Besides these sectors, the building and urban planning sector accounts for about 4% of the emissions, but has received only 0.82% of the climate-tech investments during 2019-2022. However, the sector is now seeing an increased share of climate-tech investments, rising to 3.18% by the end of November 2023.As for financial services meant for funding climate technologies, India lags considerably in the proportion of funding directed at such financial platforms, compared to global figures. Between 2019 and 2022, 2.7% of the overall global funding in climate-tech went into financial services, as opposed to just 0.72% in India.
