On the sidelines of the Bharat Climate Forum 2026, Anoop Verma spoke with Franziska Ohnsorge, Chief Economist for South Asia at the World Bank, who was a speaker at the Forum. In this conversation, Ohnsorge offers an assessment of India’s climate trajectory — arguing that the country’s development-first approach to climate action is not only defensible, but economically sound.
Drawing on global empirical research, she explains why public goods such as infrastructure, health systems, and clean energy investments deliver “double dividends” by advancing growth while strengthening climate resilience. She situates India’s renewable energy push within the long-term demands of sustaining high growth without overwhelming global energy markets, reflects on how scale and policy coordination can make clean technologies commercially viable, and outlines which regulatory, informational, and financial tools have proven most effective in nudging firms toward greener choices.
The conversation also confronts questions around enforcement gaps and the persistent challenge of financing climate adaptation.
Edited excerpts:
India is a developing country, with large sections of infrastructure yet to be built. At the same time, it is making significant investments in climate action, particularly in renewable energy. How do you assess India’s approach to climate policy?
This is exactly the right approach. Our work at the World Bank, including a very extensive review of global literature on households’ and firms’ climate adaptation, shows that households’ climate adaptation is most effective when it is built around public goods. These are policies that deliver what we call double dividends: they support development outcomes while simultaneously strengthening climate resilience.
When we look at how households and firms adapt to climate shocks, we find that private responses can reduce the impact of shocks by almost half. One of the most effective responses of households draw on public goods. During floods, for example, infrastructure such as roads and transport networks allows access to markets, finance, and inputs; piped water systems ensure clean water ; and local clinics significantly reduce infant mortality.
Much of what governments already invest in for development purposes also turns out to be highly effective for climate adaptation.
Beyond adaptation, India is also making a major push toward renewable energy. How important is this shift in the context of India’s long-term growth trajectory?
It is absolutely critical. While the World Bank’s projections do not extend to 2047, achieving the Viksit Bharat vision could see India’s aggregate GDP expand nearly nine-fold over the next two decades. With the current energy mix and energy efficiency, sustaining that growth would be difficult because it would put pressure on global energy markets.
Pollution is another concern. If GDP were to grow nine times with the same energy structure and efficiency, air quality would deteriorate dramatically. From that perspective, the government’s pivot toward renewable energy is not just desirable, it is an economic imperative. Without cleaner energy, global resource prices would rise sharply, making long-term development objectives far more difficult to achieve.
How can governments make clean technologies a more attractive and economically viable proposition?
One of the most important insights from India’s experience is the power of scale. India’s advantage lies precisely in its ability to operate at scale. If the government coordinates a strong push in a particular technological direction, it can unlock economies of scale that sharply reduce costs and improve efficiency. Globally, we have seen this already with solar power, which is now competitive with almost all conventional energy sources.
In India, we have seen this with energy-efficient LED light bulbs. Thanks to a major government push, 80% of South Asia’s firms now use LED light, much more than in most other emerging markets. If India were to mobilise the same scale behind other technologies, costs could fall rapidly there as well. Whether the focus should be solar, wind, green hydrogen, or another technology is ultimately a policy choice, but coordinated scale-driven action can make clean energy competitive with coal and oil.
Based on global evidence, what policies are most effective in encouraging firms to adopt green technologies?
Our review of empirical studies points to three broad categories of effective policy instruments: regulation, information, and access to finance. Regulation can be extremely powerful, provided it is enforced. Both command-and-control regulations and market-based instruments can achieve environmental objectives. However, command-and-control approaches often have unintended side effects, such as productivity losses or the relocation of pollution which need to be addressed.
Market-based mechanisms, such as pollution trading systems, have proven similarly effective without those collateral costs. Information-based interventions, such as technology awareness campaigns, tend to be inexpensive but also have limited impact on their own. They work best when combined with complementary measures like management training or access to finance. Finance is more complex. Firms often cite lack of capital as a barrier to adopting green technologies.
Recent studies show promising evidence that improved access to finance does lead firms to invest more in green technologies.
India already has a relatively advanced regulatory framework on pollution. Where does the challenge lie?
The main issue is often not regulation itself, but enforcement. India’s standards are often ahead of other countries in the region. The challenge is enforcing them effectively. For example, India leapfrogged to Bharat Stage (BS) VI vehicle emission standards, which are equivalent to Euro VI standards, already in April 2020 and require basic emissions checks annually or bi-annually. However, the testing scheme has been criticised for superficial checks and issuance of certificates without testing.
Some cities (like Delhi or Hong Kong) have experimented with innovative risk-based enforcement through monitoring systems that place pollution sensors at strategic locations. This allows them to implement random roadside checks during high-emissions times or and track vehicle movement through registration data. This allows authorities to identify and follow up with owners of polluting vehicles. These kinds of enforcement innovations can make existing regulations far more effective.
Funding remains a major constraint, especially for climate adaptation. How should this be addressed?
The distinction between mitigation and adaptation is crucial. Mitigation projects often generate financial returns, making them relatively easier to finance. Adaptation, by contrast, is about avoiding losses rather than generating returns, which makes financing more difficult. This is where blended finance and risk-sharing mechanisms become essential.
Insurance also has a role to play, although it comes with challenges, particularly the difficulty of persuading households and firms to pay premiums in advance. Addressing adaptation finance will require innovative instruments that combine public support with private capital. And much adaptation, at least for households and firms, may ultimately need to be achieved through broader development efforts with double-dividends, such as the public goods we discussed at the beginning of our interview.
