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Renewable Energy
Published on: June 1, 2022, 1:10 p.m.
RE subsidies needed to meet 2030 target
  • The Centre and the states must ensure adequate support and financing models for clean energy in the medium-and long-term

By Business India Editorial

More support, including subsidies, is needed to scale up renewables to achieve the country’s 2030 target of clean energy, said a new study.

“Renewable energy subsidies in India have fallen by 59 per cent to Rs6,767 crore after peaking at Rs16,312 crore in FY17 as deployment slowed during Covid-19 pandemic-induced lockdowns and grid-scale solar PV and wind achieved cost parity. To achieve the 2030 clean energy targets, more support will be needed to scale up solar manufacturing, green hydrogen, and promising de-centralised renewable energy technologies,” said study ‘Mapping India's Energy Policy 2022: Aligning Support and Revenues with a Net-Zero Future’.

The study was done by the Council on Energy, Environment and Water (CEEW), a non-profit research body, and the International Institute for Sustainable Development (IISD).

The report found that overall India’s subsidies for fossil fuels, such as coal, oil and gas, have dropped notably by 72 per cent to Rs68,226 crore during the seven-year period between 2014 and 2021. However, subsidies in FY21 are still nine times higher than renewable energy subsidies.

“The country, therefore, needs to shift support away from fossil fuels and towards clean energy technologies to reach 500 GW of non-fossil power capacity by 2030 and Net-Zero emissions by 2070,” the report said.

Overall, India provided over Rs5,40,000 crore to support the energy sector in FY21, including nearly Rs2,18,000 crore in the form of subsidies.

Most notably, in May 2022, India reintroduced LPG subsidies for the beneficiaries of the Pradhan Mantri Ujjwala Yojna (PMUY) scheme in an attempt to target the subsidies to low-income consumers.

“The Centre and the states must ensure adequate support and financing models for clean energy in the medium-and long-term, in line with India's stated de-carbonisation goals. Our policymakers should also find ways to offer affordable clean cooking energy to the poor and vulnerable sections,” said co-author of the study Karthik Ganesan, fellow and director of Research Coordination at the CEEW.

The study further notes that electric vehicle (EV) subsidies have more than tripled since FY17 to Rs849 crore in FY21.

During the year, India announced a production-linked incentive (PLI) programme to attract investments in domestic manufacturing of EVs and components. With manufacturing receiving a boost, clean energy financing will be the next step to further scale up deployment.

No public finance institutions (PFIs) have established clear plans for phasing out finance for fossil fuels, the report said, adding: “The annual disbursements by the largest PFIs were three times higher for fossil generation than renewable energy in FY21.”

“They (PFIs) should seek to swiftly end new public finance for coal-based power plants or mining to minimize the already high levels of exposure to fossil assets,” said co-author of the report Swasti Raizada, Policy Advisor at IISD.


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