In Short : Budget 2024: India provides a significant policy boost to the energy transition and emission reduction efforts. Increased funding and supportive policies for renewable energy, such as solar and nuclear, aim to curb emissions and promote a sustainable and resilient energy sector.
In Detail : In her budget speech on Tuesday, Sitharaman said that the government will soon come out with a taxonomy for climate finance, which will make it easier for companies to raise capital at preferential rates for funding green projects.
Mumbai : Finance minister Nirmala Sitharaman on Tuesday announced policy measures that will expedite energy transition away from fossil fuels, and help companies access cheap credit for green projects that are key to curbing carbon emissions.
In her budget speech on Tuesday, Sitharaman said that the government will soon come out with a taxonomy for climate finance, which will make it easier for companies to raise capital at preferential rates for funding green projects.
“Taxonomy for climate finance will facilitate the development of the market for green bonds and fund sectors such as renewable energy, battery storage and other emerging sustainable technologies,” Crisil said.
The government will also outline a roadmap for moving hard-to-abate industries from targets around energy efficiency to emission-based targets, the finance minister said in her budget speech for 2024-25. These industries will also soon transition from the current ‘Perform, Achieve and Trade’ regulations to carbon markets-based regulations, she said.
“The plan to develop energy transition pathways, and the setting of energy emission-based targets for hard-to-abate sectors will drive investments in sustainable technologies and lay the framework for the development of the carbon market. This is a seminal step towards de-carbonisation,” according to Crisil.
Overcoming intermittancy
As the country moves away from high-emission sources of power like coal-fired thermal projects, to renewable energy generation from solar and wind, the government is looking to overcome the intermittency (wind and solar energy aren’t available round the clock, they are intermittent) of these renewable sources by promoting pumped hydro storage. A policy for promoting pumped storage projects will soon be brought, the finance minister said.
The government will also partner with the private sector to set up small nuclear reactors and drive research and development on small modular reactors and newer technologies for nuclear energy, she said.
Last year, the government announced plans to add 50 GW of renewable energy capacity annually for the next five years (FY24-FY28), as India aims to have 500 GW of installed electricity capacity from non-fossil fuel (renewable energy + nuclear) sources by 2030.
“Tapping nuclear energy with new technology reactors will diversify our electricity sources and reduce GHG (green house gas) emissions. It may also help in creating a hydrogen economy,” said Anurag Singh, managing director of Primus Partners, a business and management consulting firm.
Energy transition is a keystone for reliable inclusive economic growth, said N. Venu, managing director and CEO, India and South Asia, Hitachi Energy.
“The government recognized the same with its focus on developing many pathways to energy transition; from advanced ultra super critical thermal power plants, modular nuclear reactors, to fiscal support of pumped storage and rooftop solar and tax revision of components in the solar value chain,” he said.
Expanding exempted capital goods
On solar energy, the government is expanding the list of exempted capital goods for use in the manufacture of solar cells and panels in the country, while also scrapping customs duty exemptions provided for the import of solar glass and tinned copper interconnects used to make solar cells and modules in India.
“While the increase in basic customs duty on glass imports will result in higher input costs for domestic power producers in the short term, this is a necessary long-term measure to strengthen the domestic supply chain, especially given our ambitious goal of achieving 50 GW of renewable energy annually,” said Shashank Sharma, founder, chairman and CEO, Sunsure Energy Pvt. Ltd.
The finance minister also underlined the consumer response to the PM Surya Ghar Muft Bijli Yojana announced in the interim budget earlier this year. The scheme promotes installation of rooftop solar panels for up to 1 crore households through subsidies.
The scheme has so far received more than 1.28 crore registrations and 14 lakh applications, Sitharaman said.
“The PM Surya Ghar Muft Bijli Yojana is a game-changer, bringing the benefits of clean energy to millions of households and showcasing our commitment to an inclusive energy future,” Sunsure’s Sharma said.
“This budget sends a strong signal that India’s renewable energy transition is accelerating,” he said.
