The Finance Minister announced Rs 35,000 crore for priority capital investment towards energy transition and net zero objectives and energy security by the ministry of petroleum and natural gas.

India has targeted to reach net-zero carbon emissions by 2070. "India is firmly moving towards the net-zero carbon emission target of 2070 to usher in green industrial and economic transition. This budget builds on our focus on green growth," the Finance Minister said.

The Finance Ministry clarified that as part of the Rs 35,000 capital expenditure announced, Rs 5,000 crore was for strategic storage filling of oil reserves and Rs 30,000 crore capital support would be for oil marketing companies (OMCs) to take up projects which contribute towards the goals of energy transition, security and net-zero carbon emissions target by 2070.

The same cannot be used for compensation, the ministry clarified.

In the last Budget, the FM had an extensive plan for transitioning towards a carbon neutral economy — such as five to seven percent pellets would be co-fired in thermal power plants, which would result in CO2 savings of 38 MMT annually; four pilot projects for coal gasification, policies and necessary legislative changes to promote agro forestry as well as private forestry, among others. However, a few months later in September, she also mentioned that with there were uncertainties in the energy sector after the Russia-Ukraine war, and that many governments are now talking about going back to coal because of global uncertainties, and India, too, will have to fall back on coal for its energy needs for some more time.

The Finance Minister also announced Rs 20,700 crore for renewable energy plan in Ladakh.

Talking about the Green Hydrogen Mission, the Finance Minister said it will facilitate the transition of the economy to low carbon intensity, reduce dependence on fossil fuel imports and make the country assume technology and market leadership in this sunrise sector. "Our target is to reach an annual production of 5 MMT by 2030," she said.

Last month, the Union cabinet also approved an initial outlay of Rs 19,744 crore for the National Hydrogen Mission. Union minister Anurag Thakur had said that incentives worth over Rs 17,000 crore will be allotted for electrolyser and green hydrogen manufacturing in the country, while "Rs 400 crores will be spent on developing green hydrogen hubs in the country."

Essar Power CEO Kush Singh told CNBC-TV18 that the green hydrogen would emerge as an important instrument to decarbonise the energy value chain, including the corporate sector. "The amalgamated steps taken will not only help reduce carbon intensity of the economy but will simultaneously help create job opportunities. The ultimate goal is to reduce dependence on fossil fuel inputs and make the country assume technology and market leadership in this sunrise sector. This is a growth-oriented Budget and the efforts made towards green growth including policies and fund allocations will help us achieve the target of green hydrogen production of 5 MMT by 2030.”

"In this budget, there was a clear focus on green economy, with green growth being identified as part of the seven priority areas or ‘Saptrarishis’ for the government to guide India through the Amrit Kaal. Allotment of Rs 35,000 crore for priority capital investment for energy transition and net zero will help with the multiplier effect spanning sectors such as green fuel, green energy, green farming, green mobility, green buildings and green equipment," said Vineet Mittal, Chairman of Avaada Group.

While the Finance Minister emphasised a lot on the government's intent to enable India's transition to cleaner sources of energy, the Budget itself has not set any target for the amount of green bonds that will issued in the financial year starting April 2024.

Green bonds such financial instruments that generate proceeds for investment in environmentally-sustainable and climate-suitable projects.

Last week, the government sold its first sovereign green bonds worth Rs 8,000 crore at yields below comparable government bonds. The Reserve Bank of India auctioned Rs 4,000 crore of five-year bonds at a coupon rate of 7.1 percent and another Rs 4,000 crore of 10-year bonds at a 7.29 percent.

The yield on green bonds are five to six basis points below normal government securities. The proceeds will be utilised for funding public sector projects seeking to reduce carbon emissions. -

Another auction is scheduled to take place on February 9.

Click here for Budget 2023 LIVE updates

First Published:Feb 1, 2023 11:55 AM IST