Climate finance is becoming an increasingly important topic, especially as we see more gaps in Nationally Determined Contribution (NDC) commitments and rising surface temperatures. Countries outline their climate goals by labelling targets as either unconditional, achievable with their own resources, or conditional, relying on international support for finance, technology, or capacity building. How a country classifies its strategies really shows its financial situation and how capable it is of gathering the resources necessary to reach its climate goals.
According to the United Nations Framework Convention on Climate Change (UNFCCC), the main focus of NDCs is on reducing emissions in energy supply, with significant attention also given to agriculture, forestry, land use (AFOLU), and transport. While most mitigation goals are set to be achieved independently, many are also dependent on external support, especially in the sectors of energy, transport, and buildings. Interestingly, about half of the countries have highlighted the need for external financial assistance, especially for renewables, energy efficiency, and low-carbon transport. This shows a growing trend where low-income countries and small island nations increasingly look to international support for funding, technology, and capacity building.
Although we've made good progress since 2013 in lowering energy use and carbon emissions, our activity levels are still growing faster than these improvements. More electricity use, more air travel, the popularity of road freight, high reliance on two-wheelers, and the rise of larger, heavier cars (almost half of all cars sold) have all contributed to increased emissions. This highlights how urgently we need a strong, focused climate action plan, both globally and nationally.
Transport mitigation trends
Transport mitigation strategies differ across income groups. As of October 2025, TERI's analysis of NDC submissions from 158 countries shows that high- and upper-middle-income nations often set ambitious zero-emission vehicle (ZEV) targets, backed by strong infrastructure and investment capabilities. Meanwhile, lower-middle- and low-income countries tend to focus on more affordable options, such as enhancing fuel efficiency and implementing locally tailored measures. Biofuels, shifts in transportation modes, and natural gas expansion are approaches used by countries across all income levels.
Looking more closely, lower-income countries tend to depend more on conditional commitments, whereas upper-middle- and high-income nations often have more unconditional targets. ZEV goals are mainly found in wealthier countries, where they're connected to industrial policies and EV supply chains. On the other hand, countries like Nepal, Pakistan, and Vanuatu have set conditional ZEV targets because of financial and infrastructure challenges. These nations are focusing on electrifying two- and three-wheelers, along with public transportation—affordable and impactful solutions that are gaining popularity across Asia, Africa, and Latin America.
Transport in India plays a vital role in global emissions and is a significant part of many countries’ efforts to combat climate change. India’s experience highlights both the challenges we face and the opportunities we can seize in making transportation more sustainable, particularly when considering emissions in relation to economic growth. According to TERI analysis, emissions from transport in lower-middle- and upper-middle-income economies have increased substantially, by 127% and 97% respectively, between 2005 and 2023, even though emissions per unit of GDP have decreased. This indicates that while development is becoming more efficient, there is also a growing demand for oil and more energy is being used in transportation.
India’s approach to climate change is rooted in the idea of Common but Differentiated Responsibilities and Respective Capabilities (CBDR-RC). This means that developed countries are encouraged to take the lead in reducing emissions and to offer consistent financial support, transfer of technology, and help in building capacity for developing nations. Alongside the Like-Minded Developing Countries (LMDCs), India has frequently highlighted the imbalance in global climate talks, where the focus tends to be more on mitigation than on finance and fairness.
India’s strategy depends on technology and system-led initiatives. These include: grid-connected or renewable energy-based mobility through the expansion of metro systems, bus rapid transit (BRT), electric buses, and two- and three-wheelers; rail electrification by utilising dedicated freight corridors and passenger rail to lower emissions; domestic manufacturing with local battery and EV production via the production linked incentive scheme to decrease costs and secure supply chains; and logistics efficiency through multimodal transport, coastal shipping, and inland waterways to reduce emissions and lower logistics costs as a share of GDP.
Strengthening India’s climate governance
Transport has been a part of India’s UNFCCC submissions since 2004. In the early days, the reports didn't include detailed activity data or systematic policy tracking. To make things even better, we can take a few simple steps to improve monitoring, reporting, and verification (MRV), encourage transport-inclusive submissions, and facilitate better access to finance. These are:
- As India gets ready to release its first Biennial Transparency Report (BTR), it's a wonderful opportunity to focus on making transparency truly helpful for strengthening domestic climate governance. While India has done a good job of fulfilling its UNFCCC reporting commitments, this new report presents an opportunity to go beyond mere compliance and generate practical insights that can truly guide policy, investments, and coordination across institutions.
- To bring India’s transport-sector reporting in line with the Enhanced Transparency Framework (ETF) under the Paris Agreement, it is essential to focus on closing ongoing data and methodological gaps. Currently, several issues remain – passenger and freight activity data are not consistently recorded and monitored.
- Building a strong and responsible institutional framework is really important. The Ministry of Statistics and Programme Implementation (MoSPI) would act as the central hub for data integration and quality assurance (QA) and quality control (QC). This setup would help India develop clear and reliable MRV systems that everyone can trust.
- Incorporating transport into India’s upcoming National Adaptation Plan (NAP) is vital since this sector plays a dual role—as a catalyst for economic growth and as a key area vulnerable to climate change. The NAP should clearly focus on strengthening infrastructure, building climate-resilient roads and bridges, and enhancing drainage systems in flood-prone areas, among other measures, to ensure effective real-time reporting.
- The transport sector, now the second-largest recipient of global mitigation finance after the energy sector, still faces significant funding shortages compared to what it needs for decarbonization. Closing this gap requires increased international collaboration, concessional financing, and greater involvement from the private sector. We can achieve this through mechanisms like green bonds, blended finance, and Article 6-based carbon markets.
Transport alone has the potential to cut emissions by 3.2 gigatonnes of carbon dioxide equivalent (GtCO₂e) annually by 2030 and by 4.8 GtCO₂e by 2035, with road transport playing the biggest role. Meeting these goals calls for coordinated policies, innovative technologies, and strong international cooperation. As countries update their NDCs and LT-LEDS, reducing emissions from transport remains a crucial tool for combating climate change, promoting sustainable development, and protecting our planet for future generations.
Sharif Qamar is Fellow and associate director - Transport and Urban Governance Division, TERI.