Budget 2022: Climate change, energy transition take front seat in FM's future oriented budget

The Union Budget 2022-23, presented by Finance Minister Nirmala Sitharaman in the Parliament, has identified sunrise opportunities, energy transition and climate action among seven focus areas for future growth.

The FM said these seven engines are supported by the complementary roles of energy transmission, IT communication, bulk water & sewerage, and social infrastructure. Finally, the approach is powered by clean energy and Sabka Prayas – the efforts of the central government, the state governments, and the private sector together – leading to huge job and entrepreneurial opportunities for all, especially the youth.

In this direction, considering the constraint of space in urban areas for setting up charging stations at scale, a battery swapping policy will be brought out and interoperability standards will be formulated. The private sector will be encouraged to develop sustainable and innovative business models for ‘Battery or Energy as a Service’. This will improve efficiency in the EV ecosystem", announced the FM.

The budget also said 5-7% biomass pellets will be co-fired in thermal power plants resulting in CO2 savings of 38 MMT annually. This will also provide extra income to farmers and job opportunities to locals and help avoid stubble burning in agriculture fields. Further, four pilot projects for coal gasification and conversion of coal into chemicals required for the industry will be set-up to evolve technical and financial viability. "Saving energy is an important aspect of energy management. Hence, energy efficiency and savings measures will be promoted. This will be done in large commercial buildings through the Energy Service Company (ESCO) business model. It will facilitate capacity building and awareness for energy audits, performance contracts, and common measurement & verification protocol," said the FM in her budget speech.

To facilitate domestic manufacturing of solar equipment, the FM made an additional allocation of ₹19,500 crore for production linked incentive for manufacture of high efficiency modules, with priority to fully integrated manufacturing units from polysilicon to solar PV modules. "The Productivity Linked Incentive in 14 sectors for achieving the vision of AtmaNirbhar Bharat has received excellent response, with potential to create 60 lakh new jobs, and an additional production of ₹30 lakh crore during next 5 years," she said.

The FM's speech also focussed on mobility as an area of focus in carbon control and energy transition and improving efficiency. She said 400 new-generation Vande Bharat trains with better energy efficiency and passenger riding experience will be developed and manufactured during the next three years. "We will promote a shift to use of public transport in urban areas. This will be complemented by clean tech and governance solutions, special mobility zones with zero fossil-fuel policy, and EV vehicles," she said.

The Finance Minister said the country will also launch sovereign green bonds for projects that will help reduce carbon intensity of the economy. Sovereign green bonds will be part of the government's borrowing programme in FY23. Proceeds to be deployed in public sector projects.

She noted that the risks of climate change are the strongest negative externalities that affect India and other countries. "As the Hon'ble Prime Minister said at the COP26 summit in Glasgow last November, “what is needed today is mindful and deliberate utilisation, instead of mindless and destructive consumption.” The low carbon development strategy as enunciated in the ‘panchamrit’ that he announced is an important reflection of our government’s strong commitment towards sustainable development", said the FM. This strategy opens up huge employment opportunities and will take the country on a sustainable development path and this budget proposes several near-term and long-term actions accordingly, she said.

In the proposed ₹44,605 crore Ken-Betwa Link Project, the FM said the project will include 103 MW of Hydro, and 27 MW of solar power.