The Budget 2021-22 lacks a green touch. In the place of a big push for a host of climate actions and green initiatives, which was cued by the Prime Minister’s commitments at the Glasgow climate talks of last November, all the Budget has to offer are some platitudes.
The only concrete measure in it is the ₹19,500 crore additional allocation to the ‘production-linked incentives’ scheme for solar manufacture—over and above the ₹4,500 crore earmarked earlier, taking the total allocation to R24,000 crore. This, of course, was expected because the Power Minister, R K Singh, has been saying that the additional allocation would happen.
Whether giving away 24,000 crore to solar manufacture is good or not is a moot point, because of the uncertain outcomes. For reasons detailed in another article in B usiness Line, it is very unlikely that manufacturers in India would ever be able to match the Chinese on prices and certainly not after the incentives expire.
Then there is a reference in the finance minister’s speech to a new policy for battery-swapping. Oil marketing companies, such as IOC and BPCL, have big plans for setting up EV charging stations or battery-swapping centers at their retail outlets; battery-swapping is a better option because the vehicles would need much lesser time to get a fully-recharged battery and drive away. However, the details of the proposed policy are yet to be revealed.
Then, the finance minister spoke about biomass pellets fired in thermal power plants, which would slash carbon dioxide emissions by 38 million tons. India spews about 3 billion tons of CO2 into the atmosphere—what is 38 million tons as a proportion of it? The proposed move could, however, put a few more rupees into the pockets of some farmers, but is not a sit-up-and-take-notice kind of a measure. It is too small a move to have merited a mention in the budget speech, as is the 27MW of solar that would be set up if the Ken-Betwa river link project ever becomes a reality.
Protocol for ESCOs
And then, there is a reference to bringing about energy efficiency in buildings by designing a protocol for energy services companies (ESCOs) to operate. ESCOs have failed in India because there are always disputes between the service provider and the receiver over whose efforts caused the energy savings and how much. A protocol for common measurement and verification could solve this problem. This is therefore a welcome move, but again, one must wait for the details to emerge.
There is also a push for blended fuels inasmuch as unblended fuels would be costlier by ₹2 per litre from October 1. This should galvanize oil marketing companies to move towards more blended fuels, and perhaps also higher blends, like 20 per cent ethanol.
And then there is this talk of a sovereign green bond issue. Nirmala Sitaraman had spoken about this in an earlier budget speech, but nothing came out of it. Apparently, the idea has been thought-through and revived. However, the benefits of the move would become evident only after more details emerge. Clearly, there is no significant advantage in the pricing of the bonds. The real advantage lies in the government not borrowing from the domestic market, leaving more money with the lenders for domestic borrowers. For this to make an impact, the government should move a significant portion of its borrowing program to green bonds, or else it is neither here nor there.
What the budget clearly missed is a big push for green hydrogen. Everybody was expecting some oomph to be put onto electrolyzer manufacture in India, so that India does not miss the electrolyzer bus as it did solar modules and lithium-ion. This expected push has not happened.
Overall, a big-ticket thrust on cleantech in the budget could have helped the twin goals of providing tailwinds to the economy and helping India meet global climate action commitments.