Analysing green budget frameworks: Lessons from global practices
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Key Findings
Green budgeting promotes better policy coherence, helping governments prioritise low-carbon, climate-resilient investments while fulfilling national and international commitments like the Paris Agreement and Sustainable Development Goals (SDGs).
France, Ireland, and Mexico have adopted green budgeting with strong commitment and measurable progress. France increased its green allocation from €38.1 billion (INR3.89 lakh crore) in 2021 to €42.6 billion (INR4.35 lakh crore) in 2025 as climate-positive expenditure. Ireland expanded its environmental spending from €2 billion (INR20,400 crore) in 2020 to €7 billion (INR71,400 crore) by 2025. Similarly, Mexico’s climate budget grew sixfold, from MXN70 billion (INR34,300 crore) in 2021 to MXN466 billion (INR2.28 lakh crore) by 2025.
Advanced economies, such as those in the EU and OECD, have progressively embedded climate performance criteria into their core budgetary and fiscal planning processes, leveraging mature institutions and data systems.
For developing countries, capacity building, digital public financial management (PFM) tools, and climate data infrastructure form the backbone of a successful framework.
Introduction
Green budgeting is an emerging public finance approach that uses policy-mapping methods to integrate environmental sustainability and climate change considerations into the budgeting process. As climate and ecological challenges intensify, governments worldwide are increasingly recognising the need to align fiscal policies with environmental goals. Green budgeting goes beyond traditional economic planning by systematically evaluating how public revenues and expenditures impact the environment.
This approach enables policymakers to make informed decisions that promote low-carbon development, climate resilience, and the sustainable use of natural resources. Green budgeting also helps mobilise resources for green investments, improve accountability, and ensures that public finances contribute to national and global sustainability commitments, such as the Paris Agreement and Sustainable Development Goals (SDGs).
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