Climate financing has been one of the most effective tools in incentivising and scaling clean energy projects. The creation of carbon markets has provided an additional source of revenue for clean and renewable energy projects.
This has increased the commercial viability of such initiatives and consequently enabled them in scaling rapidly. One of the highly valuable avenues for generating capital for climate projects has been the Clean Development Mechanism (CDM). A part of the UNFCCC, CDM comes under the Article 12 of the Kyoto Protocol and seeks to reduce the concentration of GHG emissions in the atmosphere in a cost-effective way. It allows developed countries to use carbon credits generated from clean energy projects in developing countries to meet a part of their emission reduction targets under the Kyoto Protocol.
India has been one of the most active participants in the carbon markets and has piloted one of the largest Program of Activities (PoA) under the Clean Development Mechanism to enable efficient lighting in households. This led to over 3 crore replacement of incandescent bulbs with CFLs and energy savings of nearly 1450m KWh.