Some of the sources of Private Climate Finance:
(1) Clean Development Mechanism: The CDM provided under Article 12 of the Kyoto protocol enables the PSI to participate with the government to undertake mitigation commitments flexibly and cost-effectively by financing mitigation projects. While investors profit from CDM projects by obtaining reductions at costs lower than in their own countries, the gains to the developing country host parties are in the form of finance, technology, and sustainable development benefits.
(2) Private Climate Finance in India exists in the form of Debt Finance. These are usually in the form of local and foreign currency loans. Domestic (public and private banks) and Non-Banking Financial (NBF) Institutions/Agencies are given the former. Public banks that lend to India's renewable energy sector are the State Bank of India, Canara Bank, and Central Bank of India. Private Banks lending to the industry include ICICI, HDFC, and Axis Bank. On the other hand, foreign currency loans come from development banks, export-import banks, and foreign banks. In India, these loans come from JICA, Exim Bank of China and USA, Overseas Private Investment Corporation (OPIC), and Asian Development Bank.
(3) GREEN BONDS are fast emerging as another mechanism to finance green initiatives to meet the renewable energy target. There is a need to look at innovative channels for financing, and banking alone would not support the vast requirements. "Green bonds could be a potential option to keep these funding needs. They can act as a successful bridge between capital markets and addressing climate change.
(4) Private Equity and Venture Capital have also become one of the most significant sources of funds for renewable energy projects, especially wind and solar power projects. Total PE/VC investments in the sector are around 4.1 billion in 2016.