Green Energy Initiatives in Budget 2021- Explained

Green energy initiatives are one of the most focused sectors in Budget 2021. India is already the 4th largest country in terms of total Renewable Energy installed capacity in the world. With the help of budgetary allocation and private participation, India has all the chances to be a global leader in green energy. But it is not an easy task as India is also facing many challenges in the implementation of its green energy initiatives.

What is Green Energy?

The power generated from natural sources is termed as green energy. For example, wind, water, sunlight etc. Green energy is clean, eco-friendly and sustainable. Green energy has a very minimal negative impact on the environment and also provides the highest environmental benefit.

Present installed capacity of India:

First, the economic survey mentions solar energy of cumulative capacity of 36.9 GW has commissioned till November 2020. Around 36 GW solar energy capacity is under installation, and an additional 19 GW capacity has been tendered.

Second, the Ministry of New and Renewable Energy (MNRE) mentions 38.6GW of Wind energy power plants has commissioned till December 2020. The MNRE also mentions around 10 GW of Biomass-based power plants has commissioned.

On an average, the renewable energy installed capacity till December 2020 stands above 91GW.

Need to focus on Green Energy:

First, green energy will reduce India’s oil import bill. India currently imports 84% of its oil needs. If India enhances its green energy capacity then the oil import bill of India will come down drastically.

Second, green energy being clean and eco-friendly will reduce the level of Pollution in India. Air pollution is the third-highest cause of death if we consider all health risks.  Apart from that, India recorded the world’s highest annual average concentration of PM 2.5 exposure in its air in 2019

Third, India’s international commitments. India being a party to Paris Climate Agreement 2015, submitted its Nationally Determined Contributions (NDC). In this India promised to increase the share of non-fossil fuels-based electricity to 40 per cent by 2030. So the focus on green energy is much needed.

Fourth, the failure of global commitments. The year 2020 was supposed to be the year by which developed countries of Paris Agreement were about to fulfil the goal of jointly mobilizing US$ 100 billion a year for climate finance. But it has not materialized. So India has to invest on its own and not rely on the global community as India is one of the most vulnerable countries to Climate Change.

Fifth, current capacity is insufficient to meet India’s target of 450 GW renewable energy by 2030. India at present has the capacity to produce 2-3 GW solar PV(Photo Voltaic) per year. But to achieve the target of 450 GW, India needs to have at least 30 to 40 GW manufacturing capacity of renewable energy per year.

Budgetary allocation on green energy:

This year’s budget primarily focuses on spending on infrastructure development and also increasing the domestic capacity of green energy manufacturing in India.

First, the budget provided the target of 100% electrification of Broad Gauge Routes in Railways by 2023. At present  63 per cent of total broad-gauge routes are being electrified in India.

Second, the budget also has a proposal for the launch of the National Hydrogen Energy Mission in 2021-22. The government stressed on the green hydrogen (Hydrogen is obtained from clean and green sources).

Third, the budget provided for more metro and community transport initiatives to reduce the carbon footprints of private transport. For example, Private financing of Rs. 80,000 crores for 20000 new busses in India and Innovative financing with Public-Private Partnership (PPP) models for the transport sector.

Fourth, the budget also provided for Voluntary Vehicle Scrapping Policy in India. This is applicable for private vehicles older than 20 years and commercial vehicles older than 15 years.

Fifth, more focus on the capacity building of solar energy. For example, duty on the solar inverter, solar lanterns were raised from 5 to 20 and 15% respectively. This will boost domestic manufacturing and deter imports.

Sixth, the government has earmarked Rs 2,217 crore for 42 urban centres with a million-plus population to focus on clean air. The overall focus will be on segregated waste management, handling of construction and demolition debris, stress on public transportation and emphasis on renewable energy.

Challenges faced by green energy initiatives:

First, currently, India imports the majority of its solar equipment from China. The domestic solar equipment manufacturing needs a boost to reduce India’s dependence.

Second, weather-dependent: Green energy sources like solar, wind, etc., are primarily dependent on weather conditions. If the favourable weather conditions are not available, it becomes inefficient and inconvenient.

Third, location and occupation of space: Most green energy plants occupy large areas. Land acquisition in India to implement projects is one of the worst-ranked factors in Ease of Doing Business Report of the World Bank. Apart from that, there is also an issue of the cost of the vast land area.

Fourth, high initial cost: The coal-based power plants require an initial investment of about Rs. 4 crores per MW, the investments required for solar and wind energy plants are even much higher.

Fifth, acceptance of green energy in society: Despite government’s incentives like installation of solar water heaters at home and solar pumps under KUSUM scheme, etc, the penetration of EVs, solar and other green energy initiatives are very low.

Suggestions to improve green energy in India:

First, India needs to promote consumer awareness. The government has to use the techniques like green labelling of products, allow more tax incentives and discouraging consumers from using conventional energy devices etc. The government can also launch a mass awareness campaign in rural India to improve penetration level.

Second, India needs to build the capacity of Green technology and associated industries. But it is only possible with proper land leasing and land acquisition policy, faster environmental clearance of projects etc.

Third, India also has to focus on research capacities. Not only we need to start manufacturing, but also we need to build research capacities in relevant technologies. So that India can be self-sufficient in long run and also avoid staying dependent on other countries like India was depending on China on solar and PV equipment.

Fourth, India has to frame an integrated approach. It should focus on the domestic and international front to get the necessary resources, market access to sell the green products and other essentials required for the improvement of green technology.

Fifth, the collaboration of states is also needed. There are 11 states that have rolled out E-mobility plans. Other states also have to release their individual State plans to support India’s National Action Plan on Climate Change (NAPCC).

In conclusion, an estimate suggests that India has the capacity to extract 900 GW energy from commercially available sources like wind energy, solar energy etc. The estimate can turn into reality only when all the stakeholders (government, private and public) work and contribute towards it.