Analysing green budget frameworks: Lessons from global practices

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).

Both developed and developing countries are adopting green budget frameworks (GBFs), assessing their implementation, benefits, and key lessons, with experiences varying across Europe, Organisation for Economic Cooperation and Development (OECD), the Asia-Pacific, and Africa-Latin America. Their approaches highlight differences in implementation, benefits, and key lessons, focusing on tools, institutional mechanisms, integration with national strategies, and emerging innovations. 

Several key takeaways emerge for effective policy design. Climate budget tagging serves as a pragmatic entry point but must evolve into performance-based budgeting frameworks and robust impact assessments to be truly transformative. Importantly, green budgeting must be tailored to national contexts, grounded in development priorities and climate vulnerabilities.

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. Similarly, many emerging economies are in the process of adopting foundational green budgeting tools such as climate budget tagging, with a strong emphasis on transparency, capacity building, and empowering subnational actors.”

In developing countries, digital public financial management tools, and climate data infrastructure are also part of a successful framework.

Countries such as France, Ireland, and Mexico have successfully implemented green budgeting and achieved significant results. 

France’s green budget tagging in 2021 identified EUR38.1 billion (INR3.89 lakh crore) as environmentally positive expenditure, supporting clean transport, renewable energy, and energy efficiency. This helped shift subsidies away from polluting sectors and guide future fiscal planning, increasing allocations to EUR42.6 billion (INR4.35 lakh crore) by 2025. Ireland’s integration of climate budget tagging into its national budget similarly boosted environmental spending from EUR2 billion (INR20,400 crore) in 2020 to EUR7 billion (INR71,400 crore) in 2025. Mexico also recorded strong progress, with its climate budget rising sixfold from MXN70 billion (INR34,300 crore) in 2021 to MXN466 billion (INR2.28 lakh crore) by 2025.

In countries like Norway and the Philippines, climate budgeting has strengthened transparency and accountability, prioritised critical sectors, and ensured that fiscal planning supports national sustainability goals.

The integration of green budgeting with wider policy frameworks, such as SDGs, green bonds, Just Transition initiatives, and gender-responsive budgeting, offers a powerful means of aligning climate action with social and economic priorities.