The plan to transition hard-to-abate industries from energy efficiency targets to emission targets and support for clean energy adoption in traditional industries, including MSMEs, both point towards government’s commitment to supporting sustainable industrial practices
One of the less talked about initiatives in the Union Budget has been on energy transition. The announcements in the Budget offers a glimpse into the country's approach to tackling climate change. A central theme is the acknowledgement of the need to balance economic growth with environmental sustainability.
There are several key themes that emerge from the Indian government's announcements on the energy transition:
Balancing economic growth and environmental sustainability: The announcements acknowledge the need to strike a balance between these two objectives. This is evident in their focus on promoting clean energy sources like solar and nuclear power, while also developing more efficient fossil fuel technologies like AUSC thermal power plants.
Promoting renewable energy sources: The government is clearly committed to increasing the use of renewable energy sources. This is evidenced by their initiatives such as the PM Surya Ghar Muft Bijli Yojana, which subsidises rooftop solar installations, and the planned Pumped Storage Policy, which will facilitate the integration of renewable energy into the grid.
Investing in clean energy technologies: The announcements also highlight the government's commitment to investing in research and development of clean energy technologies. This includes their support for advanced nuclear reactors and their efforts to improve the efficiency of coal-fired power plants.
Supporting sustainable industrial practices: The government recognises the importance of addressing emissions from industry. Their plan to transition hard-to-abate industries from energy efficiency targets to emission targets and their support for clean energy adoption in traditional industries, including MSMEs, both point towards this commitment.
It is estimated that MSMEs generate around 134 million tonnes of CO2 emissions annually and account for 3 to 4percent of India’s total CO2 emissions. A recent NITI Aayog suggests that more than half of these emissions come from five MSME subsectors textiles, Steel rerolling, Foundry, Food processing and Paper.
While MSMEs account for 45percent of exports from India, the national MSME federation, FISME, posits that 80percent of exports emanate from 60 industrial clusters. Keeping in view of emerging environmental regulations such as CBAM (Carbon Border Adjustment Measures) by the European Union, which is to begin levying a carbon tax on cement, electricity, iron and steel, aluminium, fertiliser, and chemicals etc., FISME has proposed carbon intensity mapping of industries in these 60 clusters.
The budget proposed investment grade energy audit- a detailed financial feasibility study for improving energy efficiency, thus reducing carbon intensity. The finance minister has simultaneously proposed financial support for implementing measures brought out in the audit. The scheme would be replicated in 100 more clusters later.
These themes suggest that the Indian government is taking a multi-pronged approach to the energy transition. They are looking to balance economic development with environmental sustainability by promoting clean energy sources, investing in new technologies, and supporting sustainable industrial practices.
(Anil Bhardwaj is Secretary General, Federation of Indian Micro and Small & Medium Enterprises.)