The Union Budget 2024-25 clearly focused on measures to promote energy security and green energy uptake, while maintaining a stable and secure grid. This is largely in line with the country’s energy transition and energy security goals and targets. Notably, the Ministry of New and Renewable Energy has been allocated its largest-ever budget of Rs 191 billion, which is nearly double the allocation from the previous year.
These measures include the announcement to introduce of a policy document outlining energy transition pathways that harmonise employment, growth and environmental sustainability imperatives. Additionally, a roadmap will be devised to shift the focus of “hard-to-abate” industries from energy efficiency targets to emission targets. This will include the establishment of regulations for transitioning these industries from the current “perform, achieve and trade” mode to a new “Indian carbon market” framework.
In a landmark move, the finance minister has announced that the government will develop a taxonomy for climate finance to enhance The availability for climate adaptation and mitigation. The introduction of this taxonomy is expected to significantly impact India’s financial markets. It will encourage the issuance of green bonds, sustainable loans and other eco-friendly financial products.
In the pumped storage segment, which has received much attention and stakeholder interest in the last couple of years, the government has annouced that a policy will be introduced to promote pumped storage projects for electricity storage and integration of renewable energy into the energy mix. For the nuclear power segment, the government has announced plans to collaborate with the private sector for conducting research and development, and establishing Bharat Small Modular Reactors and other innovative technologies for nuclear energy.
In addition, the finance minister has announced fiscal support for setting up advanced ultra super critical thermal power plants using indigenous technology. The plants will be set up through a joint venture between NTPC Limited and Bharat Heavy Electricals Limited, promoting indigenous technology with higher efficiency.
Overall, while the Union Budget was largely in line with industry expectations and will strengthen the country’s efforts towards decarbonisation and energy transition, timely on-ground implementation of these measures is a must.