New Delhi, 24 July 2024: The Union Budget tabled by Indian Finance Minister Nirmala Sitharaman has made some promising provisions when it comes to mitigating the impacts of climate change, but climate action appears to have found limited space overall.
Dr. Divya Sharma, India Executive Director, Climate Group said: There certainly are some encouraging announcements in the Budget and among them are the energy transition for the country’s energy security, as well as a push to decarbonise hard-to-abate sectors. The preparation of a taxonomy for climate finance that could support adaptation strategies too is welcome. The taxonomy's classification of climate relevant economic activities will support commitments. But climate change will need a more concerted push, fast. Climate plans must be embedded across sectors now which does not appear to be the case. The Interim Budget presented earlier this year was sharper in focus on climate action, presented a beginning, and that could have been built on.
In her Budget speech, the Finance Minister also expected nuclear energy to be a ‘very significant part of the energy mix for Viksit Bharat'. While this energy source is seen as a contributor to India’s energy needs, large-scale deployment of nuclear technology will take time. The country must not lose sight of developing renewables to meet emission reduction and overall climate goals.
On energy security and the renewables transition, Atul Mudaliar, Director of Systems Change, India at Climate Group said: The Budget has underscored the need for an energy transition that ensures affordability, accessibility and availability, and at the same time helps in meeting growth, jobs and environmental sustainability. To aid this, there is a push for renewable energy but also for pumped storage so that there is seamless integration of higher shares of renewable energy in the future.
With an outlook to address climate, it demonstrates seriousness to tackle emissions head on. The Budget announced work on hard-to-abate sectors (like steel, cement etc.) where emission reduction has become even more central. With an emissions first approach, Indian industries and corporates would intrinsically be prepared for a carbon market in India, and other global markets in the future.
As much as our big corporates drive India’s energy transition and lead the fight on climate, there is a high risk that small and medium scale enterprises in the supply chain might be left behind. The Budget makes a welcome move by promising financial support to such enterprises for them to shift to cleaner forms of energy and for energy efficiency improvements.
What remarkably is not clear though is the future of budgetary support for adoption of electric vehicles, which has historically been delivered in the form of demand incentives through the national programme on FAME. This is especially important to accelerate the adoption of electric vehicles not just from an emissions point of view but also at a time when air pollution is a problem in many cities across the country.
