Climate action takes centre stage in Union Budget: More Intent, Less Money

Budget falls short of making significant budgetary allocation to key sectors of energy efficiency, sustainability and clean tech

The first Union Budget since India joined the bandwagon of economies committed to becoming net carbon zero, focused on energy transition and climate action. However, it fell short of making significant budgetary allocation to key sectors of energy efficiency, sustainability and clean tech.

Identifying that the “risks of climate change are the strongest negative externalities that affect India and other countries”, the finance minister Nirmala Sitharaman laid emphasis on energy transition and climate action.

In order to tap the interest of investors in the growing green energy space, the finance minister said¸ sovereign Green Bonds will be issued for mobilizing resources for green infrastructure. These would be a part of the government's overall market borrowings in 2022-23. The proceeds from the issuance however will be deployed in public sector projects which help in reducing the carbon intensity of the economy.

Additionally, services for global capital for sustainable & climate finance in the country will be facilitated in the GIFT City, the FM announced.

Prime Minister Narendra Modi in his national address at COP26 climate conference in November 2021 declared India will become a Net carbon zero economy by 2070. He also said India will have a low carbon development strategy, under which five more targets were enlisted.

The FM in her speech said, the low-carbon growth strategy opens up huge employment opportunities and will take the country on a sustainable development path. This budget proposes several near-term and long-term actions accordingly. This included push to solar power manufacturing, circular economy transition and transition to carbon neutral economy.

Among these, solar was the only one which received funding wherein the finance minister announced an additional outlay of Rs 19,500 crore for production linked incentive (PLI) scheme for manufacture of high efficiency solar PV modules.

The FM enlisted four key measures for transition to a carbon neutral economy – energy efficiency, bio-fuel blending in thermal power plants, coal gasification and agro-forestry.

“Saving energy is an important aspect of energy management. This will be done in large commercial buildings through the Energy Service Company (ESCO) business model. It will facilitate capacity building and awareness for energy audits, performance contracts, and common measurement & verification protocol,” the FM announced in her budget speech.