Public capital must absorb early risks before private investment can scale clean energy: Vibhuti Garg

India's clean energy ambitions will require a new approach to financing, with public capital playing a critical role in reducing the risks associated with emerging technologies before larger pools of private investment can participate, according to Vibhuti Garg, South Asia director at the Institute for Energy Economics and Financial Analysis (IEEFA).

Speaking at OPEN Green Shift, Garg said technologies such as battery energy storage, green hydrogen and green ammonia remain commercially challenging despite their long-term potential. She argued that government-backed financing, blended finance mechanisms and well-designed policy support are essential to bridge the gap between innovation and large-scale commercial deployment.

Garg cited battery storage as an example of how targeted policy interventions can help transform a nascent technology into an investable opportunity. As deployment has accelerated, costs have declined sharply, improving investor confidence and creating a pathway for greater private sector participation. She said this demonstrates the importance of using public capital strategically to catalyse, rather than replace, private investment.

She also called for stronger climate finance frameworks to support India's broader energy transition. That includes expanding access to blended finance, strengthening green bond markets and creating policy certainty that allows long-term investors to commit capital with greater confidence. Predictable regulation, she said, is often as important as financial incentives in attracting investment into new technologies.

On carbon markets, Garg said India has an opportunity to develop a more robust framework that encourages emissions reductions while improving market credibility. Clearer benchmarks, transparent price signals and stronger institutional architecture will be necessary if carbon markets are to become a meaningful source of climate finance rather than a compliance exercise, she said.

Garg argued that financing the energy transition is not simply about mobilising larger amounts of capital but about deploying the right kind of capital at the right stage of technology development. Public finance, she said, should take on early-stage risk so that commercial investors can enter once technologies mature and business models become more predictable.

For Garg, India's clean energy transition will ultimately be determined not only by technological innovation but also by financial innovation. Building scalable climate finance mechanisms today, she argued, will be essential to ensuring that the next generation of clean technologies can move from pilot projects to widespread adoption.