Source : INDIA TODAY NEWS
On 30 June, the World Bank’s Climate Change Action Plan quietly expired. There was no successor framework. No new target for the share of lending that would go to climate-related projects. The 45 per cent climate finance goal that Ajay Banga had announced at a Paris summit in June 2023, to a standing ovation from Emmanuel Macron and Abiy Ahmed, was gone. In its place came a phrase called “smart development”, and a promise from the World Bank president that climate would remain embedded in projects even if it would no longer be counted separately.
advertisement
The retreat did not happen because the money wasn’t flowing. In 2025, the World Bank’s climate finance reached $39.2 billion, accounting for 48 per cent of its total lending. It had exceeded its own target. The retreat occurred because the US Treasury, under Scott Bessent, had spent months pressuring the bank to jettison the target, and because a new Washington was no longer interested in multilateral climate leadership. Nearly 100 developing countries, led by Brazil and China, sought to preserve the framework. More than ninety civil society organisations wrote open letters. Neither effort held.
For much of the Global South, the news was received as a shock. For India, it should be read as a vindication of a decade of quiet institution-building.
Consider what New Delhi has been doing while the Bretton Woods system slowly turned its face away from climate. In January 2023, the same month Mr Banga was preparing his Paris announcement, the Government of India issued its first sovereign green bond, worth Rs 80 billion. A sovereign green bond is a government borrowing instrument, structurally similar to a normal government bond.
Investors, mostly banks, insurance companies, pension funds, and increasingly foreign institutions, lend money to the government by buying the bond. The government promises to pay it back with interest, on a fixed schedule. The one important difference is that the money raised must be spent on projects that reduce carbon emissions or build climate resilience, and the spending must be independently verified and publicly reported. When India issued Rs 80 billion (8,000 crore rupees, or roughly $ 950 million) in its first tranche, the proceeds went into renewable energy, energy-efficient railway electrification and clean transport, and afforestation.
Rs 8,000 crore is enough to build roughly two large-scale solar parks of one gigawatt each, at current Indian solar tariffs. It is also, more importantly, the beginning of a market. Once the government establishes a green yield curve, private issuers can price their own green bonds against it, which is how you build a sustainable debt market of the scale India now has.
By late 2024, eight tranches later, the Government had raised Rs 477 billion through sovereign green issuance alone, creating a domestic green yield curve that did not exist five years ago. Further tranches have followed since. The broader Indian sustainable debt market crossed $ 55.9 billion by the end of 2024, a 186 per cent rise from 2021 levels.
India is now the fourth-largest emerging-market issuer of green, social and sustainability-linked debt in the world, behind only China, South Korea and Chile.
This is climate finance without a World Bank imprimatur. It is domestic capital, sovereign credit, and increasingly, international investor participation, directed at renewable energy, clean transport, energy efficiency and ecosystem restoration. When the multilateral spigot narrows, this is the architecture that keeps flowing.
For a sense of scale, India’s domestic sustainable debt market is now several times the size of the World Bank’s annual lending to India, which has been in the range of $3-4 billion in recent years.
Then there is the International Solar Alliance. Launched by India and France at COP21 in Paris in 2015, headquartered in Gurugram, it now has more than 120 member and signatory countries. The United States withdrew from the ISA in January 2026, part of a broader exit from sixty-six international organisations, and the alliance simply kept going. India and France still lead it.
The Global Solar Facility continues to aggregate demand and lower solar finance costs for Least Developed Countries and Small Island Developing States. STAR-C centres continue to be rolled out across Africa. The Solar Fellowship continues to train mid-career professionals from partner countries. PM-Surya Ghar and PM-KUSUM continue to be shared as replicable models across the developing world.
None of this depends on a 45 per cent target set in Washington.
The domestic climate story is even stronger. India has reached 50 per cent of its installed electricity capacity from non-fossil sources, five years ahead of its 2030 target. Solar manufacturing capacity has grown thirty-eight-fold between 2014 and 2025, from 2.3 GW to 88 GW. Cell manufacturing has grown twenty-one-fold in the same period.
Solar-plus-storage tariffs in states like Madhya Pradesh are now among the lowest in the world. Green hydrogen prices out of India are globally competitive. All of this is being financed through a combination of domestic capital, sovereign green bonds, Production Linked Incentives and international partnerships that do not run through the World Bank.
None of this means the World Bank retreat does not matter. It matters, particularly for smaller economies that depend on concessional multilateral finance in ways India increasingly does not. Small Island Developing States, several least-developed African economies, and a number of climate-vulnerable middle-income countries in South Asia will feel the loss of the 45 per cent target as a real narrowing of options. India itself continues to work with the World Bank on specific projects, from the Green National Highways Corridors Project to state-level climate resilience programmes, and that partnership remains valuable, which is precisely why the emerging architecture that India has helped build- the ISA, the Coalition for Disaster Resilient Infrastructure (CDRI), the sovereign green bond programme, the LiFE Mission, the India-led Global Biofuels Alliance- becomes more important than it looked a year ago.
India’s climate strategy since 2015, when it helped launch the International Solar Alliance, has rested on a specific insight.
Climate finance flowing through Western multilateral institutions was always going to be politically contingent, subject to the priorities of a shifting handful of large shareholders, and slower than a country the size of India could afford to wait for. So, India built parallel institutions. It built domestic financial instruments. It positioned itself as a bridge between traditional donors and the Global South. It exported its own successful national schemes- solar irrigation, rooftop solar, clean cooking gas connections, decentralised renewable power- as templates that other developing countries could adapt.
That approach did not always look, in the moment, like leadership. It often looked like slow institutional plumbing. It is now clear that it was a considered response to a real risk: that the multilateral climate finance system would prove less durable than its founders hoped. That risk has now materialised. And India is one of the few large developing economies not caught out by it.
There is genuine work still to be done. Domestic green bond markets need to deepen. The sovereign green bond programme needs to overcome the yield-related auction challenges that have appeared in 2024 and 2025. The ISA needs to move from institutional infrastructure to accelerated delivery. Domestic solar manufacturing needs to move up the value chain into cells, wafers and polysilicon. Green hydrogen needs its first real commercial-scale deployments. The financial architecture for adaptation, as opposed to mitigation, remains thinner than it should be.
But these are the challenges of a country that has been preparing for the moment the World Bank stepped back, not the challenges of a country caught off guard by it. The 45 per cent target has been jettisoned in Washington. The 500-gigawatt renewable energy target for 2030 remains alive in New Delhi. And the institutional architecture to fund it, mostly Indian and increasingly Global South, is already running.
The World Bank’s climate ambition was, in the end, always going to depend on the politics of its largest shareholder. India’s climate ambition was quietly designed to depend on nothing of the sort. That is beginning to look, in the events of this month, like foresight.
(This is an authored article. Divya Singh Rathore is a senior policy professional, and Saiyami Bhardwaj is an associate professor at Ramjas College.)
– Ends
SOURCE :- TIMES OF INDIA
