Energy Transition

In her budget speech, Finance Minister Nirmala Sitharaman outlined significant policy measures aimed at accelerating India's energy transition away from fossil fuels. These initiatives are crucial for reducing carbon emissions and promoting sustainable development.

Key-highlights

• Taxonomy for Climate Finance: The government will introduce a taxonomy for climate finance. This framework will enable companies to secure capital at favorable rates for green projects like renewable energy, battery storage, and emerging sustainable technologies.
  • The taxonomy is expected to boost the market for green bonds, facilitating investments in environmentally friendly sectors.
  • Taxonomies help provide a framework that classifies economic activities based on their environmental sustainability. This helps streamline climate finance towards sustainable businesses. The European Union, South Africa, and Canada have their own climate finance taxonomy.
• Transition of Hard-to-Abate Industries
  • Hard-to-abate industries will move from energy efficiency targets to emission-based goals. They will shift from the current 'Perform, Achieve and Trade' regulations to carbon market-based regulations.
  • This shift aims to drive investments in sustainable technologies and establish a framework for carbon market development, crucial for decarbonization efforts.
• Promotion of Pumped Hydro Storage: To address the intermittency of renewable energy sources like solar and wind, the government plans to promote pumped hydro storage projects. This technology helps store renewable energy for use during periods when solar and wind energy are not available.
• Development of Small Nuclear Reactors:The government will collaborate with the private sector to set up small nuclear reactors. Research and development efforts will focus on small modular reactors and other advanced technologies for nuclear energy.
• Renewable Energy Targets: India aims to add 50 GW of renewable energy capacity annually from FY24 to FY28. By 2030, the country targets achieving 500 GW of installed electricity capacity from non-fossil fuel sources, including renewable energy and nuclear power.
• Development of Pathways: The government is advancing energy transition through initiatives such as advanced ultra super critical thermal power plants and modular nuclear reactors. Fiscal support is also extended to technologies like pumped storage and rooftop solar, reflecting a comprehensive approach to diversifying the energy mix.
• Solar Energy Focus: In the solar sector, the government is expanding the list of exempted capital goods used in manufacturing solar cells and panels within the country.
  • Customs duty exemptions on solar glass and tinned copper interconnects for solar cells and modules imported into India are being removed.
  • Despite short-term cost implications for domestic power producers, these measures aim to strengthen the domestic supply chain to support India's ambitious goal of achieving 50 GW of renewable energy annually.

PM Surya GharMuftBijliYojana: Finance Minister Nirmala Sitharaman highlighted the positive response to the PM Surya GharMuftBijliYojana, aimed at promoting rooftop solar panel installations with subsidies for up to 1 crore households. The scheme has garnered over 1.28 crore registrations and 14 lakh applications, underscoring its role in democratizing access to clean energy and reinforcing India's commitment to an inclusive energy future.