New Delhi, December 17, 2024—India is on track to achieve many of its 2030 clean energy goals but needs to step up government support measures to accelerate the deployment of offshore wind, electric vehicles (EVs), and green hydrogen (GH2), according to a new report.

The Central Government has set ambitious goals to ramp up a range of clean technologies by 2030 as part of its strategy to increase energy independence, energy security, and energy access while promoting industrial development and reducing air pollution and greenhouse gas emissions.

The report from the Center for Study of Science, Technology and Policy (CSTEP) and the International Institute for Sustainable Development (IISD), titled, Budgeting for Net Zero: Government support needed to meet India’s 2030 clean energy goals, finds that India’s current government support measures are on track to reach goals for solar PV and battery energy storage systems (BESSs), driven by government subsidies and policy support. No additional direct financial support is required, but regulatory reforms and accelerated auctions are essential to maintain momentum.

However, emerging technologies like offshore wind and GH2 require immediate additional and sustained investment to reach cost competitiveness.

"India’s clean energy ambition is remarkable, and delivering on these goals will require bold investments and policy alignment," said Swasti Raizada, Policy Advisor at IISD and co-author of the report. "Emerging technologies like offshore wind and green hydrogen represent transformative opportunities for the country’s energy landscape but need sustained support to realize their potential."

Offshore wind accounts for the largest cost gap and current levels of government support fall short in bridging it. The cost gap identifies how much the cost of a clean technology needs to drop to reach cost parity with conventional equivalents (such as thermal power and internal combustion engine vehicles) and meet the clean energy goal for a specific technology. To tap into India’s 71 GW of offshore wind potential, additional government support of at least ~INR 9,000 crore per GW (~USD 1.08 billion per GW) will be needed.

The cost gap analysis is useful to inform future government support. The report finds that current financial support by the Central Government for solar PV and BESS is sufficient to fully cover the cost gap till 2030 of INR 14,500 crore (USD 1.76 billion) for solar PV and INR 2,637 crore (USD 0.3 billion) for BESSs respectively.

For other technologies, the cost gap until 2030 is much higher: INR 19,000 crore (USD 2.29 billion) for electric two-wheelers, INR 2.8 lakh crore (USD 34 billion) for GH2, and INR 5.1 lakh crore (USD 61 billion) for offshore wind. 

The report underscores the urgent need for both central and state governments to act now, noting that small but early investments in clean energy technologies will crowd in much larger private investments and yield long-term economic and environmental benefits. Achieving clean energy goals will drive economic growth, job creation, and increased public revenue while reducing greenhouse gas emissions and air pollution. 

“Investing now in clean energy technologies, even for high-cost sectors like offshore wind and green hydrogen, will ensure India’s global competitiveness and long-term economic and environmental resilience,” said Anasuya Gangopadhyay, Senior Associate at CSTEP and co-author of the report.

Media contacts

Swasti Raizada, Policy Advisor, IISD: sraizada@iisd.org

Aia Brnic, Communications Manager, IISD: abrnic@iisd.org

Anasuya Gangopadhyay, Senior Associate, CSTEP: anasuya.g@cstep.in

About CSTEP 

CSTEP is one of India's leading think tanks, with a mission to enrich policy-making with innovative approaches using science and technology for a sustainable, secure and inclusive society. CSTEP’s interdisciplinary research encompasses diverse fields such as energy, climate, and air pollution. CSTEP is involved in solving some of the grand challenges India faces currently. Our cutting-edge research combines emerging technologies and artificial intelligence with rigorous modelling studies and data analyses to provide effective solutions for complex developmental issues prevailing in the country. 

March 12, 2024, New Delhi—The 2022 global energy crisis, together with India’s growing energy demand, has led the country to adopt a hybrid approach, expanding all forms of supply in 2023. This approach has pushed India’s total energy subsidies to a 9-year high of INR 3.2 lakh crore (USD 39.3 billion) for the fiscal year ending 2023 (FY 2023), new research suggests.

In recent years, India has positioned itself as an international climate leader, steering the G20 under its presidency to call for global renewable energy capacity to triple by 2030 while also funding decarbonization measures to decouple the fast-growing economy from greenhouse gas emissions and reach net-zero targets.

However, clean energy subsidies accounted for less than 10% of total energy subsidies in FY 2023, while coal, oil, and gas subsidies contributed around 40%. The majority of the remaining subsidies were for electricity consumption, particularly in agriculture.

In 2023, like many countries, rising energy demands and the impact of the international energy price crisis following Russia’s invasion of Ukraine led India to put several measures in place that significantly increased support for fossil fuels. With an aim to protect low-income households, India responded to peaking fossil fuel prices in 2022/2023 by capping retail prices of petrol, diesel, and domestic liquefied petroleum gas; cutting taxes; providing direct budgetary transfers to businesses and consumers; and supporting existing energy supplies. As a result, oil and gas subsidies rose by 63% in FY 2023 compared to FY 2022, according to a report by the International Institute for Sustainable Development (IISD).

The report, titled Mapping India's Energy Policy: A Decade in Action, reveals that subsidies for coal also rose by 17% over the same period. The latest figures from the International Energy Agency also show that coal accounts for 45% of India’s total primary energy supply in 2022, up from 43% in 2020. Altogether, fossil fuel subsidies were five times greater than clean energy subsidies.

Rapid economic growth, on course to drive India to become a USD 5 trillion economy by 2027, means that the government is investing in all forms of energy supply. In FY 2023, both clean energy and fossil fuel subsidies grew by around 40%.
“While fossil fuel subsidies have reduced by 59% since their peak in 2013/2014, without further targeting and a return to a market-based pricing regime, they could mount again, resulting in budgetary impacts. This is undesirable, as untargeted fossil fuel subsidies are an inefficient way of supporting low-income households, and they shrink the fiscal space available for supporting clean energy technologies," said co-author of the report Swasti Raizada, Policy Advisor at IISD.

“The current approach not only perpetuates dependence on price-volatile and geopolitically risky fossil fuels but also delays India’s own clean energy goals for 2030. Clean energy solutions can instead deliver sustainable economic growth and reinstate India’s global climate leadership as an agenda-setting country with a practical vision for eliminating pollution and meeting essential climate goals.”

The report also recommends that the government could consider earmarking a portion of its fossil fuel tax revenues to support its emerging just transition needs.

Deepak Sharma, Policy Analyst at the IISD, said: “Previous studies show that India will require significant investment to make its energy transition just, sustainable, and inclusive. India’s state-owned enterprises will be a critical part of this shift. As their majority shareholder, the government should ensure that all fresh capital going to these entities is linked to India’s net zero commitments.”

Media Contacts:

Swasti Raizada (IISD) – sraizada@iisd.org
Harry Cockburn (IISD)– harry.cockburn@iisd.net