There are a few new initiatives in the energy sector in the union budget 2024. Except for the announcement to set up a Critical Mineral Mission for domestic production, recycling of critical minerals, and overseas acquisition of critical mineral assets, the budget provisions in the energy sector are strengthening existing schemes. However, experts are of the view that the investments envisaged in renewable energy underscore a move towards a more holistic transition to green energy.
Calling it a forward-looking budget, Vibha Dhawan, director general, TERI said, "The budget is more substantial in terms of the direction it sets for the next five years than the numbers presented."
In her budget speech, Finance Minister Nirmala Sitharaman said that the government will bring out a policy document on appropriate energy transition pathways that balances the imperatives of employment, growth and environmental sustainability. She also apprised that the PM Surya Ghar Muft Bijli Yojana which was announced in the interim budget has generated a remarkable response with more than 1.28 crore registrations and 14 lakh applications.
The scheme aims to install rooftop solar plants to enable 1 crore households to obtain free electricity up to 300 units every month and we will further encourage it. Says Preeti Bajaj, MD & CEO, Luminous Power Technologies, “The PM Surya Ghar Muft Bijli Yojana is a revolutionary initiative that has garnered an overwhelming response. This sets a strong precedent for sustainable energy adoption in India. The proposal to expand the list of exempted capital goods used in the manufacturing of solar panels is a significant step towards promoting solar energy and driving the energy transition.”
Adds Aarti Khosla, Director, Climate Trends, “The Budget 2024-25 reflects India’s commitment to sustainable development with significant allocations like Rs. 1.52 lakh crore for climate-resilient agriculture and the introduction of initiatives like the PM Surya Ghar Muft Bijli Yojana for rooftop solar. The focus on critical minerals, a policy for pumped storage projects and the decision to develop a policy document on energy transition pathways is laudable too.”
OnFM’s announcement on exploring the role nuclear energy can play by being a significant part of the energy mix for Viksit Bharat, Khosla said, “It remains to be seen how the role of nuclear power in India’s energy mix takes shape. The budget lacks timelines for announcements on taxonomy, carbon pricing mechanisms and detailed strategies for mobilizing climate finance for adaptation and mitigation efforts in vulnerable communities.”
The FM also spoke about a policy for promoting pumped storage projects for electricity storage and facilitating smooth integration of the growing share of renewable energy with its variable nature in the overall energy mix.
Other announcements made during the speech include a roadmap for moving the ‘hard to abate’ sectors - shipping, aviation, iron and steel from ‘energy efficiency’ targets to ‘emission targets’. The FM added that appropriate regulations for the transition of these industries from the current ‘Perform, Achieve and Trade’ mode to the ‘Indian Carbon Market’ mode will be put in place.
Says Suranjali Tandon, Associate Professor, National Institute of Public Finance and Policy, “Investors and industry have been demanding a taxonomy and transition pathway as guidance for the flow of finance and reorientation of economic activity. The budget announcements that clearly mention the establishment of a carbon market, taxonomy and transition pathways mark significant progress in planning towards Net Zero in 2070.”
The budget also has a provision to extend financial support to micro and small industries in 60 clusters to shift them to cleaner forms of energy and implementation of energy efficiency measures.
“The budget lays thrust on the creation of jobs and the growth of the manufacturing sector, in particular, MSMEs. This aligns well with the priorities of the wind industry for the current fiscal year. In a recent notification, the Ministry of New and Renewable Energy placed a greater emphasis on wind manufacturing as part of the ‘Make In India’ initiative. Further, as a result of the recent commitments/progress announced by the major wind companies, new opportunities will arise. These developments will assist India's vision of energy security and energy transition, which is a priority indicated in the budget,” said Martand Shardul, Policy Director- India, Global Wind Energy Council.
