The Union Budget 2023-24 lays out the framework for powering sustainable and equitable economic growth for the country with a sharp focus on accelerating the energy transition. It is really encouraging to see green growth as one of the seven priorities (Saptarishi) of the Budget.

In the background of continued economic growth at a time when major world economies are facing strong head winds, a Budget that signals a significant step up in capital expenditure and puts more money in the hands of consumers will revitalise private investment and stir demand.

Building on the Government’s green growth agenda, the Budget outlines concrete investment plans and key policy instruments encompassing segments such as green hydrogen and clean energy storage. The Budget augments renewable transmission infrastructure and green mobility and will result in accelerating and enabling an effective energy transition which supports India’s net zero ambition out to 2070. The ₹35,000 crore capital investment towards energy security and energy transition will provide impetus to this ambition.

The recently announced financial outlay of ₹19,744 crore for the Green Hydrogen Mission paves the way to build a green hydrogen ecosystem in the country. Targeting a production of 5mmtpa by 2030, Green Hydrogen will help the hard to abate sectors, especially steel and cement in drastically reducing their carbon footprint.

While these announcements clearly augur well for India’s renewables sector, the industry will continue to look forward to the allocation of viability gap funding for offshore wind projects as the government readies for the first 4 GW offshore wind tender. Financial support for such nascent capital-intensive technologies will be critical in growing the sector.

On the green mobility front, the customs duty exemption on capital goods and machinery required to manufacture lithium-ion cells for batteries used in EVs, the proposed 5 per cent compressed biogas (CBG) mandate for all gas marketing entities in India and the exemption of excise duty on GST paid CBG will certainly help to drive much needed transport decarbonissation.

Another area that will enable faster decarbonisation is the support being provided to biofuels. Incentivising collection of biomass and distribution of bio-manure will ensure the healthy development of a sustainable supply chain for the biofuel sector.

While the industry would welcome the strong focus on building low carbon energy systems, reinstating customs duty exemptions previously provided to oil and gas companies for critical imports could drive investor confidence and competitiveness.

In conclusion, the Budget is encouraging in its focus on maintaining India’s growth momentum and addressing the energy trilemma - the need for secure, affordable, and low carbon energy. We strongly believe renewables, hydrogen and biogas will lead the transition, with natural gas continuing to play a key role as India achieves its net zero ambition out to 2070.

The author is President, bp India

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