UK development body launches climate fund with eye on India's energy transition

The UK’s development finance institution and impact investor said its new British Climate Partners initiative, worth 1.1 billion pounds, is designed to mobilise private capital at scale to support developing economies in Asia to accelerate progress towards net zero.

Net zero is the balance between greenhouse gases emitted and removed from the atmosphere by any given entity, such as a country or an organisation.

India has been periodically raising its ambition towards mitigating greenhouse gas emissions and after the update in 2022, has in March 2026 announced its targets for 2031-35 marking a significant step towards the goal of achieving net zero by 2070.

BCP will focus on investments that support emissions reduction in fast-growing countries with coal-based energy networks and rising demand for clean energy, including India, the Philippines, Indonesia, Vietnam, Thailand, Malaysia and other South-East Asian economies.

“Over the past few months, I have been setting out the need for a new UK approach to development – one moving from traditional aid grants to long-term partnerships that bring investment, expertise and international finance reform together,” said Jenny Chapman, UK Minister for Development.

“It also means investing responsibly: bringing everything the UK can offer – from our work through international organisations and our investment tools, to research, practical advice and diplomacy. Used together, this can help businesses grow, create jobs and support the reforms and policies our partners choose for themselves.

“BII sits right at the heart of this approach, and its new strategy is pulling in the same direction we have set as a government. I know BII will lead from the front in turning our joint ambitions into genuine results over the next five years,” she said.

As part of a new five-year strategy unveiled this week, BII claimed that Asian countries accounted for around three-quarters of global coal demand in 2024 and therefore at the centre of the global energy transition challenge. It referenced documented research to highlight the significant scale of investment required to transition away from coal in the region, with India requiring an estimated 160 billion dollars a year and South-East Asia around 210 billion dollars annually until 2030.

“Asia’s energy transition will depend on mobilising private capital at scale and British Climate Partners is designed to do exactly that. Through this new initiative, we’ll use our experience, capital and partnerships to build platforms, de-risk projects and crowd in long-term investment into commercially viable climate opportunities across the region,” said Srini Nagarajan, BII’s managing director and head of Asia.

According to the UNDP, sustainable energy transition is a transformative shift in how energy is produced, distributed and consumed, aiming to move away from fossil fuels towards a system centred on renewable energy sources such as solar, wind, hydropower and geothermal.

BII said through BCP, it will work in partnership with private investors to deploy capital through a combination of equity platforms and “mezzanine finance” to scale climate projects, reduce early-stage risks and offer potential higher returns to attract commercial investors.

In the next five years, BII expects that at least 40 per cent of new investments, including BCP, will qualify as climate finance – up from the target of 30 per cent in the last strategy period.

During that period, at least 25 per cent of BII’s new investments will be committed to Least Developed Countries as defined by the United Nations, where private capital remains scarce and development needs are greatest.

In a further evolution of its approach, BII said it will also seek to make “market-level impact” investments that go beyond a commitment to a single company and help to develop a wider sector or market. It also plans to increase its commitment to gender-based investing in support of women-led projects.

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