Overall, India's subsidies for fossil fuels have dropped notably by 72 per cent to Rs 68,226 crore during the seven-year period between 2014 and 2021, said the study by the Council on Energy, Environment and Water (CEEW) and the International Institute for Sustainable Development (IISD).
May 31, 2022, New Delhi—Renewable energy subsidies in India have fallen by 59% to INR 6,767 crore after peaking at INR 16,312 crore in FY 2017 as deployment slowed during COVID-19 pandemic-induced lockdowns and grid-scale solar photovoltaic and wind achieved cost parity, according to a joint independent study released today by the Council on Energy, Environment and Water (CEEW) and the International Institute for Sustainable Development (IISD). To achieve the 2030 clean energy targets, more support—which may include subsidies—will be needed to scale up solar manufacturing, green hydrogen, and promising decentralized renewable energy technologies.
The report, titled Mapping India’s Energy Policy 2022: Aligning Support and Revenues with a Net-Zero Future, found that overall, India’s subsidies for fossil fuels, such as coal, oil, and gas, dropped notably by 72% to INR 68,226 crore during the 7 years between 2014 and 2021. However, fossil fuel subsidies in FY 2021 are still nine times higher than renewable energy subsidies. The country, therefore, needs to shift support away from fossil fuels and toward clean energy technologies to reach 500 GW of non-fossil power capacity by 2030 and net-zero emissions by 2070.
Overall, India provided over INR 540,000 crore to support the energy sector in FY 2021, including nearly INR 218,000 crore in the form of subsidies. Most notably, in May 2022, India reintroduced liquefied petroleum gas (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 decarbonization goals. Our policy-makers should also find ways to offer affordable clean cooking energy to the poor and vulnerable sections. Targeted LPG subsidy in the short term is the only solution to ensure that the program goals of PMUY—which help pay the cost of using LPG for the first time—are not left by the wayside,” said co-author of the study Karthik Ganesan, Fellow and Director of Research Coordination at CEEW.
The study further notes that electric vehicle (EV) subsidies have more than tripled since FY 2017 to INR 849 crore in FY 2021. During the year, India announced a production-linked incentive program 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.
The report highlights that India’s non-banking financial companies are now playing a major role in shifting public finance away from fossil fuels, but as of today, no public finance institutions (PFIs) have established clear plans for phasing out finance for fossil fuels. In fact, annual disbursements by the largest PFIs were three times higher for fossil generation than renewable energy in FY 2021, according to the report. While several public sector undertakings (PSUs) announced new clean energy partnerships and targets, they need to set out clear strategies for adjusting business models to clean energy transition and net-zero, experts recommend.
“To accelerate the pace of India’s energy transition, public finance institutions need to increase the clean energy sector lending targets, in line with stated policy targets, and develop a medium- to long-term roadmap for phasing out public finance for fossil fuels and managing possible stranded assets,” said co-author of the report Swasti Raizada, Policy Advisor at IISD. “They 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.”
Riddhima Sethi (CEEW) – riddhima.sethi@ceew.in; +91 99020 39054
Swasti Raizada (IISD) – sraizada@iisd.org
The Council on Energy, Environment and Water (CEEW) is one of Asia’s leading not-for-profit policy research institutions. The Council uses data, integrated analysis, and strategic outreach to explain—and change—the use, reuse, and misuse of resources. It prides itself on the independence of its high-quality research, develops partnerships with public and private institutions, and engages with the wider public. In 2021, CEEW once again featured extensively across 10 categories in the 2020 Global Go To Think Tank Index Report. The Council has also been consistently ranked among the world’s top climate change think tanks. Follow us on Twitter @CEEWIndia for the latest updates.
Fossil fuel subsidies by the Union government have fallen 742% since 2014 but the subsidies on coal, oil and gas increased by nine times in 2021-22, a new study said. Researchers from International Institute of Sustainable Development (IISD) and Council on Energy, Environment and Water (CEEW) on Tuesday released its study 'Mapping India's Energy Policy 2022: Aligning support and revenues with net-zero future'.
Aligning support and revenues with a net-zero future
Carefully designed energy support measures—subsidies, public utilities' investments, and public finance institutions' lending—and government's energy revenues play a key role in India's transition to clean energy and reaching net-zero emissions by 2070. Looking at how the Government of India has supported different types of energy from FY 2014 to FY 2021, the study aims to improve transparency, create accountability, and encourage a responsible shift in support away from fossil fuels and toward clean energy.
India's subsidies for renewable energy fell 59% in FY 2017-2021 as deployment has slowed and grid-scale PV solar and wind reached cost parity.
In India, subsidies for fossil fuels were 9 times higher than clean energy subsidies in FY 2021; they were 7.3 times higher in FY 2020. The country needs to shift support away from fossil fuels and toward clean energy technologies.
India's three largest public finance institutions lent three times more capital to fossil fuels than renewable energy in FY 2021. Public finance institutions must establish #NetZero roadmaps for phasing out fossil fuel finance and ramping up support for clean energy.
Mapping India's Energy Subsidies 2022 covers India’s subsidies to fossil fuels, electricity transmission and distribution, renewable energy, and electric vehicles between fiscal year (FY) 2014 and FY 2021.
We found that fossil fuels continue to receive far more subsidies than clean energy in India. This disparity became even more pronounced from FY 2020 to FY 2021, going from 7.3 times to 9 times the amount of subsidies to renewables.
Key figures:
The report is accompanied by an interactive online database to help users browse the subsidy data in detail and includes detailed spreadsheets and annexes for policy-makers and researchers. The analysis is the latest update in the India's Energy Transition series from the International Institute for Sustainable Development's (IISD) Global Subsidies Initiative (GSI) and the Council on Energy, Environment and Water (CEEW). For previous iterations of this study, see:
Call it an initiative to bridge the sustainability gap or something else! IIM Calcutta's Centre for Development and Environment Policy (CDEP) has now come up with a new initiative - Building Roadmaps for Industrial Decarbonisation and Green Economy (BRIDGE). CEDP has teamed up with The Climate Policy Initiative (CPI), International Institute for Sustainable Development (IISD) and the Stichting SED Fund for the BRIDGE initiative. Broadly, BRIDGE has three interrelated objectives: first, contribute to the creation of knowledge and knowledge bases on how to accomplish an effective and just carbon transition; second, build awareness and train executives of public and private energy firms in evolving best practices on transition in India and other developing nations; and third, build awareness and expertise among postgraduate students and encourage doctoral research on low carbon transition finance and strategy, top IIMC officials said.
Carefully designed government support measures for energy are a critical step on the path to net-zero emissions, particularly for achieving ambitious clean energy targets. Beyond 2030, as India’s fossil fuel use begins to peak and decline, we can also anticipate that fossil fuel revenues will fall significantly. The strategic use and diversification of revenue sources will be crucial to boosting the supply of clean energy, incentivizing its demand, and maintaining a smooth fiscal transition. In both support schemes and revenue planning, the synergy between social protection and the consumption of clean energy must be factored in as the country deliberates a new investment paradigm.
This session, organized by the Council on Energy, Environment and Water (CEEW) and the International Institute for Sustainable Development (IISD) provides an updated assessment of how the Government of India has used public resources to support fossil fuels, renewables, and electric vehicles from FY 2014 to FY 2021. The session also touches on the revenue implications of the energy transition and discusses the role of the public and private sectors in collective action toward achieving a clean energy transition.
This event will launch a new CEEW-IISD report on Mapping India’s Energy Policy 2022: Aligning Support and Revenues with a Net-Zero Future.
Christopher Beaton, Lead, Sustainable Energy Consumption, IISD
Amit Verma, Director, Energy, NITI Aayog
Swasti Raizada, Policy Advisor, IISD
Moderator
Prateek Aggarwal, Programme Associate, CEEW
Speakers
Christopher Beaton, Lead, Sustainable Energy Consumption, IISD
Heatwaves are sweeping across India, with March recording the hottest in 122 years, resulting in high energy demand touching 207GW in April-end, the worst crisis in over six years. Demand is far exceeding supply resulting in power outages by state DISCOMs.
Amidst the coal crisis where the Centre has invoked an emergency law to operate idle coal import-based utilities, energy transition experts believe the electricity generation for 1.35 billion people based on expensive imported coal for blending is commercially unviable -- both high and inflationary.
Increasing the uptake of electric vehicles (EVs) is a strategic objective of the Government of India. The development of the Indian EV landscape, however, is likely to entail momentous investment and for this level of investment to take place, India's EV ecosystem will have to be globally competitive.
In this context, this hybrid event presents detailed stylized facts on trade and tariffs of goods involved in the EV value-chain; addresses regulatory barriers to trade in services that perform complementary and enabling functions in the EV value-chain; presents key takeaways from an in-depth consultation exercise with key investors and companies; discusses existing government policies such as FAME II and PLI; identifies key barriers such as charging infrastructure, supply chains, and skill gaps; highlights new government initiatives to address these barriers; and discusses state EV policies.
This event is organized by the Indian Council for Research on International Economic Relations (ICRIER), ClimateWorks Foundation, and the International Institute for Sustainable Development (IISD), alongside knowledge partner the Shakti Sustainable Energy Foundation.
Deepak Mishra, Director and Chief Executive, ICRIER
Siddarthan Balasubramanian, Principal Strategist, ClimateWorks Foundation
Shri Amitabh Kant, CEO, NITI Aayog
Shri Sudhendu J. Sinha, Adviser, NITI Aayog
Moderator
Ruchir Shukla, Director, Electric Mobility Initiative, Shakti Sustainable Energy Foundation
Panellists
Presentation on Investment
Tom Moerenhout, Associate, IISD
Siddharth Goel, Senior Policy Advisor, IISD
Presentation on Trade
Anirudh Shingal
Prachi Agarwal
Panel Discussion
Moderator
Saon Ray, Visiting Professor, ICRIER
Panellists
Chair Remarks
A.L.N Rao, CEO, Exigo Recycling
Presentation
Amrita Goldar, Senior Fellow, ICRIER
Panel Discussion
Moderator
Amrita Goldar, Senior Fellow, ICRIER
Panellists
Tom Moerenhout, Associate, IISD
Amrita Goldar, Senior Fellow, ICRIER
India has always been a land of brutal but predictable weather. Now, the climate crisis is expected to change that, with increasingly erratic heat and water extremes unleashed at unusual times, or even simultaneously. While the country has proved to be a model of disaster preparedness in the past, the rising probability of highly disruptive compound weather events – known as 'black swans' – represents an unprecedented risk to the economy at large. And despite the mounting warnings from experts, India's big banks appear to be turning a blind eye to climate risk.