The government of India has adopted a raft of green measures to meet its 2070 goal of net zero and enhance the speed towards it
Energy security figures out as one of the priority areas in the budget. In her speech Finance Minister Nirmala Sitharaman remarks that the government will come up with a policy document on energy transition path that will focus on employment, growth, and environmental sustainability.
The PM Surya Ghar Muft Bijli Yojana that was announced in the interim budget too finds mention, as far as now 1.28 crore registration and 14 lakh applications have been registered and the government aims to provide fillip to it. For the growing percentage of renewable energy in the energy mix, a pumped storage policy will be rolled out.
“Energy transition is critical in the fight against climate change. To support energy transition, I propose to expand the list of exempted capital goods for use in the manufacture of solar cells and panels in the country. Further, in view of sufficient domestic manufacturing capacity of solar glass and tinned copper interconnect, I propose not to extend the exemption of customs duties provided to them” says the finance minister.
Ishver Dholakiya, Managing Director and Founder, Goldi Solar says, “Exempting capital goods for solar manufacturing will reduce costs and boost domestic production. The PM Surya Ghar Muft Bijli Yojana, offering up to 300 units of free electricity monthly to 1 crore households, will enhance rooftop solar adoption.”
Energy mix has also been part of the focus, nuclear energy is deemed to be a small percentage of the energy mix for Viksit Bharat, for which the government will partner with private sector for setting up Bharat Small Reactors, research and development of Bharat Small Modular Reactor and research and development of newer technologies for nuclear energy.
"The government's focus on advancing nuclear energy through Bharat Small Reactors and modular technologies signifies a strategic diversification of our energy mix with reliable, low-carbon options. Additionally, the support for Advanced Ultra Super Critical (AUSC) thermal power plants underscores a clear path towards improving efficiency and reducing emissions from thermal power generation. Together, these initiatives create a robust framework that balances employment, growth, and environmental sustainability, paving the way for a future Viksit Bharat.", says Vishal Mehta, Managing Director & Partner, Energy Lead BCG India.
The ‘hard to abate” industries have been a tough deal to deal with climate change for that the government proposes, a framework for moving from ‘energy efficiency’ targets to ‘emission targets’. From the present, “Perform, Achieve, and Trade” mechanism there will transition to “Indian Carbon Market” mode.
Zerin Osho, Director of India programme at the Institute for Governance & Sustainable Development (IGSD) says, “Carbon markets will help incentivise reductions in greenhouse gases (GHGs) by offering financial rewards for cutting emissions. India, already a major player in global voluntary carbon markets, aims to launch its ‘India Carbon Market’ (ICM) in 2026. A well-developed carbon market in India could avoid US$ 35 trillion in climate-related costs over the next 50 years. Incentivising faster climate action by developing financial 'carrots' and a more nuanced approach to carbon trading will be essential. “
To add coherence to India’s climate commitments and green transition, the government plans to come up with a taxonomy on climate finance this will increase the availability of capital for the purpose of climate adaptation and mitigation.
Arunabha Ghosh, CEO, Council on Energy, Environment and Water says, “The Budget’s proposal to define climate finance is a positive step towards mobilising capital for sustainability. These measures can lay strong foundations for a sustainable and prosperous India, with the energy transition as the fulcrum on which public policy can be leveraged for a wider economic transformation.”
Vaibhav Pratap Singh, Executive Director, Climate and Sustainability Initiative, adds, “The proposed development of a taxonomy for climate finance is a landmark initiative. It will streamline investments towards climate adaptation and mitigation, aligning financial flows with the country’s net zero targets. Additionally, the policy document on energy transition pathways and public-private partnerships in R&D for small and modular nuclear reactors highlights a forward-thinking approach to tackling climate challenges.”
Critical minerals like lithium, copper, cobalt and rare earth elements are important for sectors like, nuclear energy and renewable energy, the customs duties on 25 critical minerals have been fully exempted, this will help in a conducive ecosystem for their processing, refining and availability.
There was no direct announcement about electric vehicles in the budget. “There was no specific announcement for EVs or FAME 3 in today's budget, but that was expected. A couple of days back H.D. Kumaraswamy, the Minister of Heavy Industries, stated that the announcement regarding this will be made in the near future, but not in the upcoming Union Budget as the preparatory work on FAME 3 is still underway” says Amit Bhatt, India Managing Director, ICCT.
However, the sector is finding connections. Rajeev Chaba, CEO Emeritus, JSW MG Motor India Pvt. Ltd says, " During Union Budget 2024, Honourable Finance Minister’s decision to waive import duties on critical minerals, including lithium, copper, and cobalt, is a step in right direction for the electric vehicle [EV] industry. This move will reduce battery manufacturing costs, making EVs more affordable and attractive. It will also enhance lithium-ion battery production in India, supporting localisation efforts and advancing the sector's growth.