Europe’s Climate Crisis Calls For India To Build New Global Green Partnerships #IndiaFinance

The recently released European State of the Climate (ESOTC) report—jointly released by the Copernicus Climate Change Service and the World Meteorological Organization (WMO)— gave India reasons to wary. Europe, the report shows, is warming at twice the global average, and 2024 marked its hottest year on record. Severe droughts scorched Southern Europe, unprecedented floods swept through Central and Eastern regions, and widespread heatwaves disrupted lives, agriculture, and energy systems. These cascading impacts signal a pivotal transformation: Europe is no longer a distant observer of the climate crisis—it is now a direct victim.

India has long benefited from strong climate partnerships with Europe, drawing on financial assistance, technological collaboration, and trade mechanisms to drive its green transition. From smart urban planning to clean energy cooperation, the India-EU alliance has been central to India’s efforts toward achieving its climate goals.

A joint assessment by the European Environment Agency and the Joint Research Centre warns that annual economic damages from extreme weather events in Europe could rise tenfold—from €12 billion in the past decade to €170 billion by 2100 without adequate mitigation.

As climate change tightens its grip on the continent, Europe is likely to redirect its financial, technological, and political attention inward to shield its own economy and populations. The European Commission has already projected that a 3°C global temperature rise could shrink the EU’s GDP by up to 7% by 2100. A joint assessment by the European Environment Agency and the Joint Research Centre warns that annual economic damages from extreme weather events in Europe could rise tenfold—from €12 billion in the past decade to €170 billion by 2100 without adequate mitigation. These growing domestic vulnerabilities could trigger a recalibration of Europe’s external climate financing commitments. For countries like India, this emerging reality raises strategic questions. Can India continue to depend on traditional partners for climate finance and clean tech support? Or must it reimagine its global partnerships to navigate a more fractured climate landscape?

Extreme heat in southeast Europe during 2024 summer (Infographics from ESOTC Report)

India must first prepare for tightening climate finance flows from Europe. In 2022, EU countries together contributed around €23 billion to international climate finance, accounting for nearly 45% of all climate finance committed by developed countries under the UNFCCC. India has directly benefited from this through mechanisms like the India-EU Clean Energy and Climate Partnership (CECP), which has committed over €200 million toward solar park development, smart grids, and climate-resilient urban planning. However, early signs of contraction are evident. The UK has reduced its Official Development Assistance (ODA) budget from 0.5% to 0.3% of Gross National Income—cutting over £4 billion in aid, some of which funded climate adaptation and capacity-building projects in South Asia. Germany’s 2023 budget saw a 15% cut in overseas development funds, while Belgium has paused several new bilateral aid programs. These retrenchments are a warning signal for India, which already faces a $130 billion annual climate finance gap to meet its Nationally Determined Contributions (NDCs) by 2030.

Widespread flooding in 2024 (Infographics from ESOTC Report)

To bridge this emerging shortfall, India must double down on multilateral and South-South partnerships. The BRICS-led New Development Bank (NDB), with its $25 billion capital base and growing interest in climate lending, could become a major source of concessional finance. India can lead efforts to encourage the NDB to pilot local-currency climate bonds to finance Tier-2 and Tier-3 city infrastructure, often ignored by global capital due to perceived risks. Brazil, as the upcoming BRICS and COP30 chair, has launched the “Baku to Belém” initiative, aiming to mobilize $1.3 trillion in climate finance for the Global South by 2035. India can play a shaping role in co-designing this initiative, ensuring it is rooted in equity and adaptation finance rather than mitigation-only metrics. Additionally, global philanthropic climate funds are on the rise: the Bezos Earth Fund alone has pledged $10 billion toward climate solutions, and Bloomberg Philanthropies disbursed over $500 million in 2023 to accelerate clean energy transitions. A national platform to aggregate such philanthropic capital into India’s decentralised renewable energy projects or heat action plans could unlock flexible, fast-disbursing funds.

Trends in climate indicators (Infographics from ESOTC Report)

A second major concern is technology transfer. The India-EU CECP and the Horizon Europe programme, which committed €60 million to joint research in green hydrogen and battery storage, could be at risk of stagnation or diversion. Europe’s internal climate imperatives—such as the European Green Deal Industrial Plan and REPowerEU—are pushing massive investments into domestic renewable energy production, with the EU targeting 600 GW of solar and wind power by 2030. This inward push may constrain technology sharing with India, especially in frontier technologies like electrolyser manufacturing, offshore wind engineering, and next-gen EV batteries. For instance, India imports nearly 80% of its lithium-ion batteries, and while Europe has been a trusted source, it may prioritize its own industrial needs in coming years.

Here, India must recalibrate its clean technology alliances. The recent thaw in India-China relations offers a tactical window to rebuild technological cooperation, particularly since China supplies over 60% of global solar components and dominates the battery supply chain. Similarly, South Korea’s LG and Samsung SDI are world leaders in solid-state and high-density battery technology. South Korea accounted for over 25% of India’s advanced battery imports in 2023. Strengthening clean tech collaboration through joint ventures and co-development platforms with South Korea and Japan—especially via the Quad’s climate working group—could be instrumental in securing technology and expertise.

Glaciers are shrinking the fastest at the Alps (Infographics from ESOTC Report)

The third challenge is clean energy supply chain security. The EU’s Critical Raw Materials Act (2024), designed to reduce reliance on external suppliers by 2030, targets that at least 40% of critical minerals used in the EU’s clean energy technologies must be processed domestically. Europe’s localisation ambitions may tighten global supplies of minerals like lithium, cobalt, and rare earth elements—affecting India’s ability to source materials competitively. According to a 2024 World Bank report, such supply bottlenecks could reduce India’s renewable capacity addition by 15% by 2030. India currently relies on imports for over 85% of its lithium and cobalt needs, a vulnerability that cannot be ignored.

To offset these risks, India must diversify its mineral sourcing. Australia, which controls nearly 50% of global lithium reserves, is a natural partner. The India-Australia Critical Minerals Partnership signed in 2023 now needs rapid operationalisation through offtake agreements and joint exploration projects. Similarly, India can explore long-term mining collaborations with Chile and the Democratic Republic of Congo, both major hubs of copper and cobalt. Regionally, Vietnam, Thailand, and Indonesia are emerging as significant players in the solar and EV component manufacturing supply chains. Bilateral clean energy manufacturing pacts with these countries could reduce India’s overdependence on Europe or China.

The India-Australia Critical Minerals Partnership signed in 2023 now needs rapid operationalisation through offtake agreements and joint exploration projects.

Domestically, expanding the Production-Linked Incentive (PLI) scheme for clean energy components—beyond advanced solar PV and batteries to include green hydrogen electrolysers and wind turbine nacelles—could localise value chains and enhance resilience. India’s push to build 50 GW of annual solar module manufacturing capacity by 2026 and 20 GWh of battery storage production through the ACC battery PLI scheme are steps in the right direction, but they need robust backward integration in mineral processing and R&D.

While the long-term implications of Europe’s climate emergency on its global commitments are yet to fully unfold, India must act with foresight. Diversifying climate partnerships—across the Global South, with like-minded tech nations, and through domestic resilience strategies—is no longer optional. It is the only way to future-proof India’s green transition amid a rapidly changing global climate and geopolitical landscape.

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This commentary originally appeared in ETV Bharat.

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