Source– The post is based on the article “Global green growth conundrum” published in the Business Standard on 10th February 2023.
Syllabus: GS3- Economy
Relevance– Green transition of economy across the globe
News– Green growth is the overarching theme across the world. Every country is wooing investment in manufacturing.There is a “buy local” wave depending on the “make at home” initiative.
What are initiatives taken by countries across the globe for domestic manufacturing of components needed for green transition?
The US climate law, the Inflation Reduction Act (IRA) passed last year offers incentives for local manufacturing of batteries and electric vehicles and also gives a boost to technologies like carbon capture.
As per BloombergNEF estimates, about $35 billion have been committed to the North American electric vehicle supply chain since the new law was passed. Over half of this is for battery manufacturing.
India’s self-reliance initiatives cover 14 sectors under the production-linked incentive scheme for domestic manufacturing including batteries and solar panels.
The European Union is planning its own set of incentives to boost local manufacturing and ensure that competitive offers by other countries do not affect investments and jobs. It has unveiled the “Green Deal Industrial Plan for the Net-Zero Age”.
Canada plans to bring its own incentives in line with those of the US. Australia, Brazil and Chile are likely to explore similar options.
China has a dominant presence in the battery as well as the solar supply chain. It is considering proposals to restrict export of certain equipment for making solar ingots and wafers.
What shows the focus of the Indian government on green growth?
Green growth is the overarching theme across the world.
It was a core part of the Indian government’s Budget for 2023-2024. There were as many as 25 mentions of “green” in the Budget speech.
Budget announced a Customs duty exemption for import of capital goods and machinery required for manufacture of lithium-ion cells for batteries used in electric vehicles.
Rs 35,000 crore were allocated for priority capital investments towards energy transition and net zero objectives, and energy security.
What are examples of countries levying carbon border tax?
The European Union has recently agreed upon a carbon border adjustment mechanism. It would tax imports into the EU according to the amount of carbon emitted in their production.
Canada plans to introduce a similar levy, and the US is exploring its options.
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