Union Budget 2024: Renewable Energy Horizon and Expectations
September 3, 2024
The Union Budget for 2024, presented by Finance Minister Nirmala Sitharaman on 23rd July 2024, strongly emphasises renewable energy. The government has introduced several measures to boost clean energy development, particularly in the solar, wind, and hydropower sectors. These initiatives aim to achieve India's environmental targets, including achieving 500 GW of non-fossil fuel energy capacity by 2030 and ensuring that at least 50% of its electricity requirements are met from renewable sources. The long-term impact of this shift is expected to bring considerable benefits to both the environment and the economy.
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Focus on Renewable Energy in Union Budget 2024:
The 2024 budget places renewable energy at the forefront of India's development strategy. Several significant measures have been introduced to drive growth in this sector:
National Green Hydrogen Mission:
The National Green Hydrogen Mission is one of the standout features of this budget. The government has significantly increased funding for NGHM, allocating INR 600 crore, a substantial increase from INR 100 crore last year. This funding is part of a larger allocation of INR 19,744 crore, planned to be spent until FY 2029-30.
This mission aims to establish India as a global leader in green hydrogen. It targets industries like steel and cement, which are traditionally heavy polluters, to adopt green hydrogen as an alternative fuel. This shift is expected to reduce the carbon footprint of these sectors and open up new opportunities in both domestic and global markets.
Solar and Wind Energy
The allocation for grid-based solar power schemes has doubled to INR 10,000 crore for the year 2024-25, up from INR 4,757 crore in the previous year. In solar energy, India stands fifth among all nations. One major initiative is the Pradhanmantri Suryodaya Yojana, which plans to equip 10 million households with rooftop solar installations. The scheme offers 300 units of free electricity each month, potentially saving households up to INR 18,000 annually. This approach reduces the burden on the national grid and allows millions of households to support the clean energy transition.
In the wind energy sector, the budget has allocated INR 930 crore, a slight increase from last year. A key new measure is the introduction of Viability Gap Funding (VGF). VGF is a financial support tool where the government helps cover the initial costs of a project. This funding makes it easier for companies to invest in offshore wind energy, which can be expensive to set up. The goal is to develop 1 GW of offshore wind capacity. This is important for adding variety to India’s energy sources, especially with the large potential for wind energy along the coastline.
Climate Finance Taxonomy and Carbon Markets
The introduction of a new climate finance taxonomy is another significant step in the Union Budget 2024. This is a system that classifies and defines what qualifies as a green investment. It establishes clear standards, making it easier to attract international climate financing. Investors can be confident that their funds are genuinely supporting sustainable projects. This reduces the risk of greenwashing, where companies might falsely claim to be environmentally friendly to attract investment.
In addition, the government is focusing on carbon markets. These are trading systems where companies can buy and sell carbon credits. These credits represent a reduction in greenhouse gas emissions, either because a company has reduced its own emissions or because it has invested in projects that cut emissions elsewhere. The idea is to create a financial incentive for companies to reduce their carbon footprint. India's carbon market is set to replace the existing Performance, Achieve, and Trade (PAT) scheme. The shift from energy-efficiency targets to emission-based targets is significant, moving the focus from merely being energy-efficient to actually reducing emissions.
However, the success of these systems depends on how well they are implemented. If the standards are too loose or enforcement is weak, the risk of greenwashing remains.
Critical Mineral Mission
To secure a reliable supply chain for critical minerals, the budget has announced the Critical Mineral Mission. This mission focuses on domestic production, recycling, and overseas acquisition of essential minerals required for clean energy technologies. The government has waived customs duties on 25 critical minerals and reduced duties on materials such as graphite and silicon, which are crucial for manufacturing solar panels and batteries.
Focus on Energy Storage and Nuclear Power
In the Union Budget 2024, energy storage has received a strong focus. The budget has allocated INR 96 crore specifically for battery energy storage systems (BESS). These systems are crucial for balancing the ups and downs in power generation from renewable sources like solar and wind. When there's extra energy being generated—say, on a particularly sunny or windy day—BESS can store that energy. Later, when energy production dips, the stored power can be used. This helps keep the electricity grid stable and reliable, even when renewable sources aren't generating power.
Alongside BESS, the government is also focusing on pumped hydro energy storage. There are plans to develop India's potential in this area, which could add up to 103 GW to the grid. This will further strengthen the grid and make it easier to incorporate more renewable energy.
Nuclear Power Developments
The budget also highlights nuclear energy, with plans to partner with the private sector to develop Bharat Small Reactors and Small Modular Reactors (SMRs). These reactors are expected to reduce reliance on fossil fuels. They’re also seen as a key part of producing green hydrogen, essential for reducing carbon emissions.
Support for Coal Gasification and Liquefaction
The budget also mentions plans to set up coal gasification and liquefaction projects with a capacity of 100 tonnes by 2030. These projects aim to reduce the environmental impact of coal while still utilizing it as an energy source
Environmental and Renewable Energy Ministries’ Budgets
The Union Ministry of Environment, Forests, and Climate Change (MoEFCC) saw its budget increase to INR 3,265.53 crore, up from INR 3,079.4 crore in the previous year. Similarly, the Union Ministry of New and Renewable Energy’s (MNRE) budget increased to INR 12,850 crore, from INR 10,222 crore last year.
Transport and e-Mobility
The budget discussed support for the e-vehicle ecosystem, particularly through payment security mechanisms (PSM) for scaling up e-buses. However, the allocation for the Scheme for Faster Adoption and Manufacturing of (Hybrid and) Electric Vehicles in India (FAME-India) was reduced to INR 2,671 crore for 2024-25, down from INR 4,807 crore in 2023-24. Despite this reduction, the government continues to emphasize the development of charging infrastructure and the expansion of the e-buses network.
In terms of biofuels, the budget includes a phased mandate for blending compressed biogas (CBG) with compressed natural gas (CNG) for transportation and piped natural gas (PNG) for domestic purposes.
Long-Term Benefits for Environment and Economy
Switching to renewable energy is expected to have big benefits for both the environment and the economy. By using less fossil fuel, India can cut down on its carbon emissions and help fight climate change. More renewable energy could also mean cleaner air and water, which would be good for public health and could lower healthcare costs.
Economically, using more renewable energy could make the country’s energy supply more secure by reducing our reliance on imported fuels. The growth of the renewable energy sector could also attract investments, create jobs, and boost economic growth. However, there are challenges to consider. Building renewable energy infrastructure is expensive, and it might take a while before we see the benefits. Plus, the uneven distribution of renewable resources could mean that some regions benefit more than others.
Even though the cost of renewable energy technologies is expected to drop over time, the overall cost of energy might not go down as quickly as we’d like. In the short term, the transition to renewable energy could be costly for both consumers and businesses if the government doesn’t manage the process carefully.
While the government’s push towards renewable energy offers a lot of promise, there are some significant challenges that need to be addressed to ensure everyone benefits.
Meghna is a highly motivated and experienced freelance content creator with a Master's degree in History and ongoing studies in International Relations from Amity University, Noida. Her commitment lies in making valuable contributions to discussions surrounding climate change and other challenging social concerns. With a strong background in research and writing, Meghna is adept at conducting research, synthesizing information, and creating compelling content that informs, educates, and engages her readers. She has contributed to several academic journals in the past, and her writing reflects a deep understanding of complex social problems and their potential solutions. Meghna's expertise in writing and research, combined with her strong work ethic and attention to detail, make her an asset to any organization or individual looking to create high-quality content that resonates with their target audience. In summary, Meghna is a talented and committed freelance content creator who bring
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