In his budget speech, Union finance minister Arun Jaitley correctly asserted that environmental degradation hurts the poor more than others. However, his assertion in the very next breath that his proposals amounted to greening the development process was pure rhetoric. The only green shoot is the doubling of the cess on coal to Rs 200 a tonne. This should give a fillip to renewables since the revenue will accrue to the National Clean Energy Fund, which has received Rs 17,000 crore since Jaitley announced a Rs 100 cess in his 2014 budget. Since one in four Indians don’t access electricity, renewables offer hope.
The NDA is gung-ho about switching to these sources. By 2022, the government wants to create a capacity of 175,000 MW in this sector. The lion’s share will go to solar, with 100,000 MW. India is more fortunate than its neighbour China in that it receives sunlight for many more days in the year. However, China is the world’s largest investor in solar and wind energy. According to the Economic Survey, India’s solar sector has grown more than a hundred times in just four years to 3,000 MW out of a total installed energy capacity of 250,000 MW. It could also generate as many as a million jobs by 2022 in project design, construction, installation and operation.
The ministry of new and renewable energy believes that the solar target can be achieved by a mix of technologies. A study by two Delhi-based think-tanks shows that roof-top panels would comprise 40% of the capacity, as will large-scale projects, while solar parks will account for the remaining 20%. Prime Minister Narendra Modi has evinced a huge interest in solar power ever since he was chief minister of Gujarat. Three years ago, he inaugurated the country’s first project where panels were erected over a Narmada river canal. It was commissioned by SunEdison, a US company.
In seven years, the NDA also envisages creating an installed capacity of 60,000 MW of wind power, 10,000 MW of biomass energy and 5,000 MW from small hydroelectric projects, which are more environment-friendly than large dams. Biogas has been neglected, although it can provide energy to cook with, an even greater necessity than electricity. Smoke from chulhas does not only expose families to pollution within homes, but contributes to the ‘Asian Brown Cloud’.
While the thrust towards renewables is praiseworthy, there may well be a huge gulf between promise and performance. By September last year, 46 clean energy projects worth Rs 16,500 crore had been sanctioned but disbursement has lagged behind. What is more, unlike rail and road projects, tax-free bonds have not been announced for renewable energy projects and resources will have to be accessed, if at all, from the new Rs 20,000-crore National Infrastructure Investment Fund.
The shift towards renewables acquires significance in the context of climate change negotiations. The protracted global deliberations will culminate in Paris this December when, by current reckoning, all countries — developed and developing — will be required to announce their commitments to reducing emissions of greenhouse gases. The Economic Survey pointed out that increasing the cess on coal three times would lead to a reduction of 129 million tonnes of carbon dioxide, a 7% reduction in the country’s total emissions. Increasing it five times would make the price of coal equal to the international price and reduce emissions by 214 million tonnes, around half the total emissions from Indonesia.
In the build-up to United States President Barack Obama’s visit in January, India called for a paradigm shift in the global approach to climate change. It asked countries that have a high solar potential to cooperate so that they could meet their global emission targets without subjecting themselves to arm-twisting by industrial countries which are reluctant to part with their patented energy technologies.
This was envisaged as a shift from carbon credits through emission cuts, which amounts to mitigation of climate change, to ‘green credits’ through energy efficiency initiatives and large-scale investment in renewables. In January, the Prime Minister’s Council on Climate Change cited wind energy as one of four new thrusts in addition to the eight existing climate missions.
In his joint press conference with Modi, Obama expressed his country’s support to India’s ambitious goal for solar energy and offered to “speed” up the expansion with additional funding. Clean energy is part of a five-year agreement for cooperation between the two countries. The Economic Survey estimates that solar energy will generate $160 billion in investments over the next five years, though the path to such growth isn’t clear.
First Solar and SunEdison are two American companies that have considerable business in India. Together with local firms, these are expected to invest $6 billion in the current financial year and $14 billion next year. SunEdison has collaborated with an Indian company to provide electricity to 5,000 remote villages which are off the grid, the largest private initiative of this kind.
After the bonhomie of Obama’s visit, officials have realised that the US government’s clean energy moves are primarily to boost its exports. The US Export-Import Bank has signed a $1 billion loan with the Indian Renewable Energy Development Agency for US solar cell manufacturing companies that will export to India. The loan comes with terms that approximate those offered by lending institutions at home.
While India plans to increase its solar power capacity by 4,500 MW this year, it can only manufacture a third of this, which indicates the huge business opportunities for global solar power companies. Half of India’s present capacity of 3,000 MW has solar cells and modules from China, one-tenth are from the US and the rest is produced domestically. Prior to signing the agreement with India, US officials had expressed their concern about the requirement under the Jawaharlal Nehru Solar Mission that there should be a mandatory domestic content. In fact, the US had earlier threatened to take India to the World Trade Organization for this ‘unfair practice’. By advocating clean energy solutions in emerging economies, therefore, the US may be attempting to prise open these markets, even while it is deflecting global attention from the need to cut its own emissions.
