The United Nations has predicted that renewable energy sources could provide up to 90% of the world’s electricity by 2050.v This transition, however, hinges on bold government policies and incentives that favour new-age green energy companies. India, as one of the world’s largest energy consumers, plays a critical role in this transformation, but there are obstacles to overcome.
India’s green energy strides
India has made commendable progress in the renewable energy sector. In just eight years, from 2015 to 2023, the country’s renewable energy capacity has increased from 34 GW to over 150 GW. This is a staggering fivefold leap. Moreover, the government’s commitment to “green growth” was reinforced in the Union Budget 2023-24, where INR 35,000 crore (USD 4.4 billion) was allocated for priority investments in energy transition and net-zero objectives. Yet, despite these advancements, a critical challenge persists: the continued support for fossil fuels.
Fossil fuel subsidies: A major roadblock
In FY 2023, India’s fossil fuel subsidies surged to a nine-year high of INR 3.2 lakh crore (USD 39.3 billion), with oil and gas subsidies rising by 63%. Even more concerning, coal subsidies increased by 17%, reaching INR 50,000 crore (USD 6.2 billion). These subsidies, while providing short-term economic relief, hinder the long-term goal of reducing carbon emissions and promoting clean energy. This allocation of resources perpetuates the reliance on fossil fuels, making the energy transition slower and more expensive.
Electricity subsidies, especially for consumers, are the largest subsidy mechanism, representing about 50% of all energy subsidies in FY 2023. This not only distorts market dynamics but also reduces the competitiveness of renewable energy sources.
Shifting the paradigm: What needs to be done
If India is to lead the global green energy revolution and meet the United Nations’ ambitious targets, several key measures must be taken:
- Rationalizing Fossil Fuel Subsidies: Shifting subsidies away from fossil fuels is paramount. By redirecting financial support from traditional energy sources to clean energy technologies, the government can stimulate private investments in renewable energy and facilitate a socially responsible transition that accounts for the needs of displaced workers and communities.
- Promoting Transparency: There is a need for greater transparency in the use of tax revenues collected from petroleum cesses, levies, and surcharges. Ensuring that these funds are channelled into clean energy projects or carbon mitigation strategies would build public trust and accelerate the shift towards renewables.
- Incubating New Technologies: The government must use scarce public resources to foster innovation in green technologies. For instance, investments in electric cooking stoves could reduce India’s dependence on imported LPG, while funds directed towards hydrogen fuel cells, energy storage, and advanced geothermal could position India at the forefront of global green tech development.
- Carbon Pricing: The introduction of a well-structured carbon pricing mechanism can ensure that fossil fuel prices reflect their true environmental costs. By doing so, India would incentivize both businesses and consumers to switch to cleaner alternatives.
- Incentivizing Emerging Technologies: Technologies like floating offshore wind farms, green hydrogen, and energy storage solutions will be pivotal in the coming decade. By providing targeted incentives and subsidies to these emerging fields, the government can encourage early adoption and technological breakthroughs.
The payoff: a cleaner, more prosperous future
The rewards of such a transition are immense. The International Renewable Energy Agency (IRENA) estimates that transitioning to a fully renewable global energy system by 2050 would create 46 million new jobs and boost global GDP by 1.1%. For India, this would mean enhanced energy security, reduced import dependence, and improved public health through cleaner air.
But beyond economic and environmental gains, there is a moral imperative. The shift to green energy is not just about climate change—it is about securing a liveable planet for future generations. India, with its vast renewable potential and growing green economy, stands at the precipice of greatness. It is time to act decisively, to embrace this moment in history, and to lead the world into a sustainable energy future.
The transition to a sustainable future won’t happen all at once, but India’s role in leading this shift is crucial and substantial. With the right government policies and incentives, we can redefine our energy landscape. The choice before us is clear: we can either seize this moment to forge a greener, more prosperous future, or remain tethered to outdated energy systems. The time to act is now—boldly and decisively.
The author is the CEO of Juniper Green Energy.
The views and opinions expressed in this article are the author’s own, and do not necessarily reflect those held by pv magazine.
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