The upcoming budget is likely to place emphasis on the generation of renewable energy but won’t be limited to solar
The Union Budget 2022–23 highlighted the importance of energy transition, sustainable development, and climate action. This was evident when Finance Minister Nirmala Sitharaman introduced the last year’s budget as a ‘Booster Budget’ or a ‘Climate Budget’ and made a higher budgetary allocation for the Ministry of Environment, Forest and Climate Change accompanied by a number of announcements and initiatives to augment the generation and production of clean energy,. Last year’s budget was aligned with Prime Minister Narendra Modi pledge at COP (Conference of Parties) 26 in Glasgow to achieve net zero emissions by 2070.
With initiatives like the Green Hydrogen Mission, rapid adoption of electric vehicles (EVs), and a thrust on solar energy, India has already begun its journey towards net-zero emission goals by year 2070. With the help of clean technology, designated EV mobility zones, and a battery swapping policy, the Budget 2022–23 encouraged the use of public transportation. This year, too, the minister is expected to take the story of sustainability forward.
A number of announcements could be made in the Union Budget for 2023–2024 to significantly speed up the deployment of renewable energy sources. Amidst heightened geo-political tensions, climate change and rising prices of fossil-fuel energy, ensuring energy security is paramount. In any case, the country has decided to derive 50 per cent of its energy requirements from renewable energy.
While Budget 22-23 announced the production-linked incentive (PLI) scheme for solar PV modules, the Union Budget 2023-2024 could include an announcement for PLI for electrolyser manufacturing. Moving beyond solar energy, the government is likely to declare initiatives and schemes to support off-shore wind and green hydrogen. We might hear of a substantial flow of money going into the recently announced Green Hydrogen Mission. The upcoming budget could reflect India’s interest in developing into a green energy hub. India Inc. anticipates a national carbon market in the upcoming budget.
With roughly 2.35 gigatonnes of carbon emissions in 2021, India is the third-largest carbon emitter in the world, according to the International Energy Agency. An announcement on a uniform carbon market is also on the anvil. The minister could list measures to facilitate the development of a National Emission Trading Scheme. In the carbon credit trading programme, polluters trade credits for emissions-equivalent amounts. The government can grant carbon credits to organisations, including companies and other institutions, that sign up the programme and have the freedom to buy and sell credits to meet their own personal carbon budgets.
Such measures would be in continuation of the steps taken towards the energy transition and the decarbonization of the economy made with the introduction of Sovereign Green Bonds as a component of overall market borrowings.