Budget 2024 must further India’s clean energy goals. Climate change is an economic problem – EQ
In Short : Budget 2024 should prioritize advancing India’s clean energy goals, recognizing climate change as an economic challenge. Investing in renewable energy and sustainable practices is essential for long-term economic stability and growth.
In Detail : The renewable energy ecosystem requires budgetary support, tax breaks, relief in import duties and tariff barriers to expedite development and attract necessary investment.
This year hit many records with unprecedented weather conditions, from extreme winters to heatwaves and torrential rains. Rising heat-related illnesses and deaths in India and across Asia, Europe and North America this summer have laid bare the inescapable impacts of climate change.
The heatwave in India, with maximum temperatures crossing 50°C, sent power demand soaring, with peak demand touching 250 gigawatts in May 2024, an increase of 3 per cent from the peak demand across all months in financial year 2023-24 (243 GW), putting pressure on the electricity system. With government efforts to ramp up electricity generation by increasing domestic coal supply and availability of imported coal and gas, peak demand increased by 4 per cent during the same period.
Such climate change-induced extreme weather events not only have an impact on electricity demand but also other macroeconomic factors like inflation and high interest rates, crippling the economic growth of a country. The Reserve Bank of India (RBI) governor Shaktikanta Das reiterated concerns about the risks posed by global warming and how frequent climate shocks drive up food prices.
Addressing climate change is, therefore, a top priority for the government. India has pledged to install 500 gigawatts of renewable energy capacity, produce 5 million tonnes of green hydrogen a year, reach 30 per cent electric vehicle (EV) sales and cut CO₂ emissions by one billion tonnes through greater energy efficiency, all by 2030.
Later this month, when Finance Minister Nirmala Sitharaman presents her sixth full Budget in the Lok Sabha, Prime Minister Narendra Modi’s government can take decisive action to honour its pledges.
Last month’s announcement of Rs 7,453 crore ($892 million) in Viability Gap Funding for two large-scale offshore wind projects—India’s first—totalling 1GW was a significant, albeit overdue, step toward the 2030 target. The government should extend such funding to micro, small and medium enterprises (MSMEs) so they can partner with multinational investors to develop a supply chain of locally manufactured components and skills.
While renewable energy has demonstrated positive growth, it has fallen short of the 2030 target. Successful deployment and integration of renewable energy depends on a secured supply chain, smart grid infrastructure expansion, flexible generation sources and development of innovative market mechanisms. As such, the renewable energy ecosystem requires budgetary support, tax breaks, relief in import duties and tariff barriers or tax credits to expedite development and attract necessary investment.
