The announcement of the Union Budget last month by the Finance Minister was met with applause (largely) from the renewable energy industry. This year’s budget not only focused on specific clean energy segments like storage or solar but also on the subject of overall energy transition with significance on the raw materials required to achieve that, importance of climate finance and the role of industries in reducing carbon emissions.
In this regard, a policy document has been proposed that will highlight the appropriate energy transition pathways for the country which will balance the three important action items of employment generation, sustained growth, and environment. Further, to promote decarbonisation of hard-to-abate industries, a roadmap has been proposed to move them from energy efficiency and Perform, Achieve and Trade regime to clear emission targets with the Indian Carbon Market. Further, traditional, micro and small industries will be provided with financial support to enable them to adopt energy efficiency and clean energy solutions. A taxonomy has also been proposed for climate finance which will help in raising funds for facilitating this green energy transition and climate change mitigation.
On the technology side, the budget recognised the importance of household rooftops in achieving large-scale solar deployment and re-iterated the PM Surya Ghar Muft Bijli Yojana with support for 10 million residences. To promote domestic manufacturing with end-to-end local supply chains, solar glass and tinned copper interconnect were taken out from the custom duty exemption list. However, recognising the paucity of certain components still, custom duties were reduced on certain capital goods used in manufacturing of solar cells and modules. Custom duties were also fully exempted on 25 critical minerals essential for sectors like renewables in a bid to improve their availability and promote rapid equipment manufacturing scale-up in the country. In fact, a Critical Mineral Mission has also been proposed to give a boost to this space and ensure future minerals supply chains. Finally, with increasing penetration of renewables in the grid and storage becoming critical for clean energy security, a dedicated policy for pumped storage projects has been proposed.
Interestingly, green hydrogen and offshore wind did not find any mention in this budget despite their strategic importance in India’s energy transition plans. Nevertheless, the recent budget hits all the right marks and points towards India gearing for a much mature future clean energy ecosystem focused on a holistic energy transition and security rather than just meeting renewable energy goals.
