Energy Transition and Climate Action Find Special Focus in Union Budget 2022-23

The Union Budget 2022-23, which was tabled in the Parliament by Finance Minister Nirmala Sitharaman, emphasized the vision of promoting energy transition and climate action in the next 25 years.

In line with this, the Finance Minister has proposed an additional allocation of Rs 19,500 crore for Production Linked Incentive (PLI) for the manufacture of high-efficiency modules. This will also ensure the domestic manufacturing required for achieving the ambitious goal of 280 GW of installed solar capacity by 2030.

Besides, the co-firing of 5 to 7 per cent biomass pellets in thermal power plants has been proposed by the Union Minister that will result in CO2 savings of 38 MMT annually.

“This will also provide extra income to farmers and job opportunities to locals and help avoid stubble burning in agriculture fields,” the Finance Minister added.

Significantly, the energy efficiency and saving measures via setting up of Energy Service Company (ESCO) business model in large commercial buildings will also facilitate capacity building and awareness for energy audits, performance contracts, and common measurement & verification protocol, FM said.

Moreover, four pilot projects for coal gasification and conversion of coal into chemicals required for the industry have also been proposed to evolve technical and financial viability.

Additionally, the Government will also contribute for R&D in Sunrise opportunities, in addition to efforts of collaboration among academia, industry and public institutions.

She said that Artificial Intelligence, Geospatial Systems and Drones, Semiconductor and its eco-system, Space Economy, Genomics and Pharmaceuticals, Green Energy, and Clean Mobility Systems have immense potential to assist sustainable development at scale and modernize the country.

The Finance Minister also announced that in 2022-23, in accordance with the recommendations of the 15th Finance Commission, the States will be allowed a fiscal deficit of 4% of GSDP of which 0.5% will be tied to power sector reforms, for which the conditions have already been communicated in 2021-22.

She re-iterated the low carbon development strategy, announced by the Prime Minister, as an important reflection of our government’s strong commitment towards sustainable development.

FM also highlighted the constraint of space in urban areas for setting up charging stations at scale and announced the proposal of bringing out Battery Swapping Policy and inter-operability standards. “The private sector will be encouraged to develop sustainable and innovative business models for ‘Battery or Energy as a Service”, the Minister noted. She also said that this will improve efficiency in the EV ecosystem.

The Finance Minister also stated that we will promote a shift to the use of public transport in urban areas. This will be complemented by cleantech and governance solutions, special mobility zones with zero fossil-fuel policy, and EV vehicles, she added.

As a part of the government’s overall market borrowings in 2022-23, sovereign Green Bonds will be issued for mobilizing resources for green infrastructure. The proceeds will be deployed in public sector projects which help in reducing the carbon intensity of the economy, the Finance Minister said.