(Bloomberg) -- New policies to classify green investments would help spur an energy transition in India that's likely to need spending of $200 billion a year, according to REC Ltd., a key lender to the nation's power sector.
The company, controlled by state-run peer Power Finance Corp., is aiming to increase its own exposure to renewable energy and sees a role for legislators and regulators in helping attract other investors, REC Chairman Vivek Kumar Dewangan told Bloomberg Television in an interview.
“The main challenge is how to bring down the cost of financing,” Dewangan said Tuesday. “India is in the process of finalizing a green taxonomy, which will be very crucial. The regulatory framework and policy framework needs to be in place to attract investments.”
India has established an expert committee to examine issues including a green taxonomy, the nation's reserve bank said in a May report. Since last month, the Reserve Bank of India has allowed lenders to raise so-called green deposits in an effort to encourage more financing of projects tied to clean energy or climate action.
Read More: India Central Bank Proposes Carbon Tax to Meet Net Zero Aim
To be on track for net zero emissions by mid-century, the nation would need investments averaging $221 billion a year to 2030, including for renewables, electric vehicles, hydrogen and carbon capture, according to BloombergNEF. About $17 billion was spent on those technologies last year, BNEF data shows.
Prime Minister Narendra Modi's government is seeking to hit net zero by 2070 and to almost triple the share of non-fossil fuel power generation capacity by the end of this decade.
--With assistance from Haslinda Amin and Rishaad Salamat.
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