The Union Budget 2024-25, recently presented by Finance Minister Nirmala Sitharaman, reflects India’s strong commitment to sustainable development and green growth. As the world grapples with climate change, energy transition, and environmental sustainability challenges, this budget significantly emphasises renewable energy and the strategic shift towards a greener economy.
Let’s review the key announcements made in the Union Budget 2024-25 concerning green projects in India, highlighting their potential impact on India’s energy landscape.
Policy Document on Energy Transition Pathways
One of the most notable announcements in the budget is introducing a policy document focused on appropriate energy transition pathways. The goal is to strike a balance between employment, economic growth, and environmental sustainability. This initiative underscores the government’s intent to sustain high economic growth while ensuring that it is resource-efficient and energy-secure.
The policy aims to address the dual challenges of energy accessibility and affordability. By outlining clear pathways for the energy transition to options such as solar open access projects, it will provide a roadmap for integrating renewable energy into India’s energy mix while safeguarding the interests of workers and industries dependent on traditional energy sources.
Supporting Domestic Solar Manufacturing
Finance Minister Sitharaman has proposed expanding the list of exempted capital goods used in producing solar cells and panels to bolster India’s domestic solar manufacturing capabilities. This move is expected to help domestic manufacturers such as AMPIN Energy Transition manufacture affordable cells and modules, thereby making solar energy more accessible.
However, with sufficient domestic capacity now available, the exemption of customs duties for solar glass and tinned copper interconnects will not be extended. This decision indicates the government’s confidence in the domestic industry’s ability to meet the growing demand for solar components without relying on imports.
Promoting Pumped Storage Projects
As renewable energy’s share of India’s energy mix grows, the need for efficient energy storage solutions becomes increasingly critical. In response, the Union Budget 2024-25 includes a proposal to introduce a policy for promoting pumped storage projects. These projects are essential for managing the variable and intermittent nature of renewable energy sources like solar and wind.
Pumped storage systems allow excess energy generated during periods of low demand to be stored and released during peak demand, ensuring a stable and reliable energy supply. This initiative is expected to facilitate the smooth integration of renewable energy into the grid, enhancing energy security and reliability.
Transitioning ‘Hard to Abate’ Industries
The budget also addresses the challenges faced by ‘hard to abate’ industries, which are typically heavy polluters and energy-intensive. Finance Minister Sitharaman announced that a roadmap will be formulated to transition these industries from energy efficiency targets to emission targets.
To facilitate this transition, appropriate regulations will be implemented to shift industries from the current ‘Perform, Achieve and Trade’ (PAT) framework to the ‘Indian Carbon Market’ mode. This shift is expected to incentivise industries to reduce their carbon emissions, contributing to India’s overall climate goals.
Industry Expectations and Recommendations
While the Union Budget 2024-25 has laid a solid foundation for green growth and renewable energy, industry experts have also voiced their expectations and recommendations. SK Gupta, CFO of AMPIN Energy Transition, has highlighted several key steps for promoting renewable energy in India:
- Priority Sector Lending: Classify the renewable energy industry as part of ‘Priority Sector Lending’ to facilitate project financing at competitive rates.
- Tax Rationalisation: Rationalise indirect tax-GST rates on turbines and modules to 5 percent each from the existing 12 percent.
- ALMM Exemption: Exempt Approved List of Models and Manufacturers (ALMM) requirements for Corporate and Industrial projects.
- R&D Support: Provide greater support for developing in-house R&D facilities for the latest technologies in cell and module manufacturing.
- Promote Domestic Manufacturing: Encourage in-house manufacturing of capital goods to reduce reliance on imports from third countries.
If addressed, these recommendations could further accelerate the growth of the renewable energy sector in India and position the country as a global leader in clean energy.
Way Forward
The Union Budget 2024-25 is a testament to India’s unwavering commitment to green growth and renewable energy. With initiatives ranging from rooftop solar adoption to advanced thermal power technologies, the budget lays out a comprehensive strategy for achieving a sustainable and energy-secure future.
As the world increasingly turns to renewables to combat climate change, India’s focus on green growth in this budget aligns with global trends and sets the stage for a cleaner, greener, and more prosperous future for all.
