Budget rolls out the red carpet for green growth | The Financial Express

Budget rolls out the red carpet for green growth

Related allocations at Rs 70,000 crore; VGF for battery energy storage.

budget 2023, budget
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As India moves to cut the carbon intensity of its gross domestic product by 45% from the 2005 levels by 2030, the expert consensus is that Budget has firmly established ‘green growth’ as a key pillar of the government’s economic vision, with related allocations reaching as much as Rs 70,000 crore.

A number of announcements can help India meet its renewable energy targets and generate ‘green’ jobs in the process. “It’s truly a dream Budget for the environment sector, be it the announcements on battery storage, sustainable agriculture, or even conservation,” says Chandra Bhushan, CEO of iFOREST.

Apart from reiterating the Green Hydrogen Mission goal of 5 million metric tonne by 2030, with an allocation of Rs 19,744 crore, the Budget also provides Rs 35,000 crore ($4 billion) to the petroleum and natural gas ministry for capital investment in energy security and energy transition. Of this, Rs 30,000 crore is earmarked for projects by oil-marketing companies that have energy transition and meeting India’s ‘net zero by 2070’ goal as the focus. For perspective, to reach net zero by 2070, India may need investment of close to $30 billion a year, as per an estimate by the World Resources Institute.

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The Budget also provides for viability gap funding (VGF) for battery energy storage systems (BESS) with a 4GWh capacity. Government sources say this could be close to Rs 3,500 crore. With the power ministry having released energy storage targets for state electricity utilities last year, the budgetary support for developing energy storage could prove to be quite a boost. However, some experts say that the 4GWh cap could be an impediment. While the VGF announcement is welcome, believes Vibhuti Garg of Institute for Energy Economics and Financial Analysis, the 4GWh restriction needs a relook.

“The cap could make the move insufficient when it comes to boosting large scale deployment of BESS and channelising more private sector investment to the space,” Garg says.

How the VGF allocation will be used also needs to be spelt out, more so if the cap robs the attractiveness of the support. “The VGF support should be leveraged to increase our understanding of the technology and application, and should not be considered as a continuous tool for support,” maintains Rishabh Jain, senior programme lead, Council on Energy, Environment, and Water (CEEW).

“The Budget will lead to significant job creation through the green economy. The allocation for evacuation and grid integration infrastructure in Ladakh can be expected to spur the economic development of this region, which has been neglected for the last few decades,” says Vaibhav Chaturvedi, fellow, CEEW. The region has one of the highest number of sunny days per year in the country, while the absence of dust and heat pushes up its potential for solar generation.

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The move to exempt capital goods and machinery used in manufacture of lithium-ion batteries from customs duty, with a focus on improving electric mobility, has also been welcomed. India currently imports nearly 70% of Li-ion battery requirement, which stands at 3GWh and is expected to reach 20GWh in three years, as per a report by consulting firm Arthur D Little.

The Budget also announced a Green Credit Programme under the Environment (Protection) Act “for encouraging behavioural change” by incentivising sustainable action by companies, individuals, and local bodies; there could be possible monetisation of such credits as the programme is expected to help mobilise additional resources for such activities.

Various other initiatives announced, such as Mishti and Amrit Dharohar, that are aimed at conservation efforts in mangrove-rich areas and wetlands can prove to be considerable green boosts. “These are important programmes, especially with respect to our disaster management strategy in the face of climate change,” Bhushan says.

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First published on: 02-02-2023 at 00:40 IST