By Stella Paul
HYDERABAD, India, May 28 2026 – Ahead of the Eighth Global Environment Facility (GEF) Assembly in Samarkand, governments and development institutions are grappling with a familiar challenge: How to finance environmental action at the scale required to meet rapidly growing needs.

As public budgets tighten and biodiversity and climate risks intensify, attention is increasingly turning to blended finance – an approach that combines concessional public funding with commercial investment to mobilise large-scale capital.

Supporters say this model can reduce investment risks and unlock private capital for projects that might otherwise struggle to secure funding. Critics caution that such approaches still depend heavily on public support and may not be easily replicable everywhere.

In Hyderabad, India, one of the world’s largest municipal LED streetlighting programs has emerged as a prominent example of how blended finance can work in practice.

Turning Streetlights into Climate Finance

Hyderabad, a rapidly expanding and climate-vulnerable metropolis, has sought to address rising temperatures and growing energy demand by retrofitting its street lighting system with energy-efficient LEDs under India’s Street Lighting National Programme (SLNP). The initiative was part of a broader programme – Creating and Sustaining Markets for Energy Efficiency – implemented by Energy Efficiency Services Limited (EESL) in partnership with the United Nations Environment Programme (UNEP) and the Asian Development Bank (ADB), with support from the GEF.

The program combined GEF grant funding with more than USD 434 million in co-financing to deploy energy-efficient technologies at scale.

“The environmental financing gap runs into hundreds of billions of dollars annually. This is a scale that grants and ODA alone cannot close,” said Fred Boltz, Head of Programming at the GEF.

“Mobilising private capital is essential to sustaining a healthy planet.”

Blended finance works by reducing risks for private investors – through concessional loans, guarantees, or grant support – making projects viable in markets where returns are uncertain. By absorbing part of the risk, public or philanthropic funding enables commercial investors to participate in sectors such as renewable energy, biodiversity, and sustainable infrastructure, which are often perceived as too risky.

In Hyderabad, EESL financed the installation of LED streetlights and recovered costs through future energy savings, eliminating the need for large upfront spending by the Greater Hyderabad Municipal Corporation (GHMC).

More than 450,000 streetlights were replaced during the initial phases, with further expansion extending coverage across the city. Electricity consumption linked to public lighting dropped by roughly half, generating annual savings of more than ₹1 billion (about USD 12 million) while significantly reducing carbon emissions.

How Savings Became an Asset

The financing structure relied on a “deemed savings” model. Instead of paying upfront, municipal authorities repaid investments over time using verified reductions in electricity and maintenance costs.

Supporters say such arrangements help cities modernise infrastructure, despite budget constraints. But analysts warn that they depend on accurate projections, reliable maintenance, and strong institutional capacity.

Experts agree that blended finance works best when public institutions remain actively involved in implementation and oversight.

In Hyderabad, the programme incorporated a Centralised Monitoring and Control System (CCMS), allowing authorities to track electricity use, detect faults, and monitor performance in real time.

The system improved operational oversight while generating the data needed for performance-linked financing – where payments are tied to independently verified outcomes.

Newly retrofitted LED street lights on the eastern edge of Hyderabad, in India. LED lights are a cost- and energy-efficient alternative to other lighting and bring a sense of security to the areas where they are installed. Credit: Stella Paul/IPS

Beyond Carbon: From Climate Finance to Everyday Life

For residents, the effects of the LED transition are often experienced less in financial or technical terms than in everyday routines and perceptions of safety.

Kavitha Ramavath (27) and her husband, Ravi Ramavath (35), recently moved with their two young children to Uppal Bhagath, a fast-growing neighbourhood on the eastern edge of Hyderabad. They previously lived in Uppal Kalan, about four kilometres away, where housing was cheaper, but the infrastructure was poor. Kavitha works as a domestic worker, while Ravi drives an auto-rickshaw.

Although their rent has nearly doubled, improved lighting has changed their daily lives.

“This area is more lively, with wider and better-lit roads,” Kavitha said, pointing toward an LED streetlight outside her lane. “Earlier, I used to feel scared walking alone to drop or pick up my children from tuition classes.”

Now, she says, her children can play outside longer in the evenings and nearby shops keep their shutters open later. Ravi adds that he can park his auto-rickshaw outside their home without worrying about theft or damage.

Urban planners say improved public lighting can influence mobility, informal economic activity, and perceptions of public safety – especially for women and children.

Last week, Kavitha started a small fruit cart outside her home. The brighter street allows her to continue working after dusk, when customer footfall increases.

For her family, the benefits are not measured in emissions reductions or financing structures but in the possibility of earning a little more income while feeling safer in public spaces.

From Local Streets to Global Finance Models

While Hyderabad’s experience highlights blended finance in climate mitigation, the model increasingly extends far beyond energy efficiency.

Across the world, GEF-backed blended finance initiatives are channelling investments into biodiversity conservation, ocean protection, and sustainable supply chains. These projects demonstrate how public funding can unlock private capital in sectors that have traditionally struggled to attract investment.

In Brazil, for instance, the Living Amazon Mechanism combines capital market instruments with philanthropic funding to support sustainable supply chains in the Amazon. It links cooperatives and local producers with financing while reducing risk through the participation of a corporate buyer, Natura, which acts as an investor and off-taker.

Similarly, global platforms such as the IFC–GEF Green Global Supply Chain Decarbonisation Initiative aim to provide long-term, green-linked loans to manufacturers and suppliers in emerging markets, helping address a critical barrier – access to affordable capital for decarbonisation.

At the sovereign level, blended finance is also enabling innovative debt and bond instruments. The Seychelles blue bond, supported by a World Bank guarantee and GEF concessional financing, has demonstrated how countries can raise private capital for marine conservation while reducing borrowing costs

In Latin America and the Caribbean, a new facility backed by the Inter-American Development Bank (IDB) and GEF is using blended finance to expand debt-for-nature conversions, which allow countries to refinance debt at lower costs and redirect savings toward biodiversity conservation and climate resilience.

These models share a common principle: public or concessional capital absorbs risks, enabling private investors to enter sectors where financial returns alone might not justify investment.

Building Markets Beyond Cities

The Hyderabad programme did not stop with municipal infrastructure. Through India’s UJALA initiative, EESL also expanded access to LED lighting in households by aggregating demand and procuring bulbs in bulk.

This approach helped reduce LED bulb prices dramatically, making energy-efficient lighting affordable for millions of households and introducing on-bill financing systems that allowed payments in small instalments.

By addressing both public infrastructure and household demand, the programme aimed not only to deploy energy-efficient technologies but also to create long-term, self-sustaining markets.

“The path to scalable environmental outcomes runs through blended finance. Public capital does what private capital won’t – it absorbs excess risk and funds the rigorous monitoring that turns lessons into lasting change. Crowd out the public, and you crowd out the results,” said Boltz.

A Test Case for Blended Finance

As global discussions on climate and biodiversity financing intensify, Hyderabad is increasingly being viewed as a test case for how blended finance can operate at the city level.

Srinivas Kona, a clean energy expert from the Hyderabad-based consultancy Proventure, says, “The LED programme demonstrated how concessional funding, public-sector implementation, and savings-based repayment structures can work together to expand urban infrastructure without large upfront municipal expenditure.”

At the same time, he cautions that challenges remain. “It’s not clear how easily such models can be replicated elsewhere, especially in smaller cities with weaker revenue systems and lower administrative capacity,” he said, noting reports of maintenance issues affecting some installations.

Still, Hyderabad’s experience offers a glimpse into how global finance debates translate into visible changes in everyday urban life.

Last week, Kavitha Ramavath stood beside her new fruit cart under a bright LED streetlight, arranging guavas and bananas as evening customers passed by.

Fruit vending comes with risks, she says, but the extra income could help her family manage rising rent and school expenses.

For Kavitha, the impact of blended finance is not measured in investment flows or policy frameworks. It is reflected in the ability to work longer hours safely, earn a little more money, and imagine a more stable future for her children.

Note: The Eighth Global Environment Facility Assembly will be held from May 30 to June 6, 2026, in Samarkand, Uzbekistan.

This feature is published with the support of the GEF. IPS is solely responsible for the editorial content, and it does not necessarily reflect the views of the GEF.

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By Bisma Qamar
UNITED NATIONS, May 28 2026 – In this exclusive interview, Dr. Felipe Paullier, UN Assistant Secretary-General (ASG) and Head of the United Nations Youth Office shares his leadership approach, insights on youth engagement, and his vision for driving institutional change from the grassroot level — redefining what is possible and proving that age is just a number.

Bisma Qamar: As the youngest and first ASG of the United Nations Youth Office, what drives and shapes your leadership style?

Dr. Paullier: I focus on perspective. Young leaders naturally bring fresh ideas and question why processes exist, fostering creativity and improvement. My approach is human-centered. Issues like mental health and wellbeing indicate societal shifts and must be taken into consideration. Leadership should be accessible and empathetic while understanding one’s potential and well-being. Today’s teams value approachable, realistic leaders rather than authoritative leaders.

“Leadership must blend insight with empathy; people want leaders who understand and support individuals”

From Potential to Performance :

Qamar: As member states become informed and establish programs like the youth delegate program, which strategic aspects are key to truly empowering young voices and ensuring meaningful participation beyond symbolism?

Dr. Paullier: The main challenge is converting narratives into actionable participation. Institutions need inclusivity, structured funding, and support mechanisms. Multilateral collaboration is essential, and power must be genuinely shared with youth. Meaningful participation involves more than representation—it requires influence over decision-making.

UN Youth Forums: Advancing Inclusion and Participation

Qamar: How do forums such as ECOSOC and HLPF contribute to advancing inclusion and promoting equitable opportunities?

Dr. Paullier: ECOSOC and similar platforms provide a structured environment where youth voices can be heard and actively contribute to institutional change. They allow spaces to be created where meaningful dialogue across generations and individuals from diverse backgrounds are possible. These forums emphasize translating strategic narratives into tangible actions at both institutional and grassroots levels, encouraging participants to understand their potential impact as well as the limitations of the processes involved and the power of collaboration to create impact.

Insights from Youth Participation at ECOSOC 2026 :

Qamar: Reflecting on 2026, what are your insights on the impact and engagement such as the ECOSOC for instance?

Dr. Paullier: Geopolitical tensions made participation more difficult for some regions. Nonetheless, enthusiasm remained high. This demonstrates the resilience and determination of young participants who continue to assert their presence and contribute meaningfully, even amid complex global situations.

“Despite such challenges which may occur, youth engagement continues to be a powerful message of hope and influence.”

Conclusion

This conversation highlights the transformative power of human-centered leadership, grounded in trust, collaboration, and vision. Dr. Paullier embodies a model where young leaders not only challenge norms and drive innovation but also inspire inclusion and collective action. His message is clear and compelling: meaningful change is achievable because leaders who step forward, embrace responsibility, and demonstrate possibility.

Through platforms like the United Nations Youth Office, these principles translate into tangible impact, proving that when vision is coupled with courage and collaboration, nothing is impossible — change happens because leaders like him are present to make it so.

As he states “It’s possible, because I am here”

Bisma Qamar is Focal Person for UN and Global Youth Affairs, PMYP.

IPS UN Bureau

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