India's interim budget for 2024-25 proposes incentives for wind, solar, biofuels growth

India's interim budget for 2024-25 proposes incentives for rooftop solar and offshore wind besides a scheme for biogas in what is indicative of the decarbonization policies to be adopted in the final budget after a new government is elected mid-year.

India's interim budget proposes free power for consumption of 300 kWh of electricity under a rooftop solar plan and viability gap funding to encourage setting up of 1 GW offshore wind.

"Through rooftop solarization, one crore (10 million) households will be enabled to obtain up to 300 units (300 kWh) free electricity every month," Finance Minister Nirmala Sitharaman said. The measures will contribute "towards meeting our commitment for 'net-zero' by 2070."

The rooftop solar plan would lead to savings for households, feeding of the surplus power to the distribution companies as well as boosting charging infrastructure for electric vehicles, according to Sitharaman.

Coal gasification and liquefaction capacity of 100 million mt will also be set up by 2030, a move that will help to reduce imports of natural gas, methanol and ammonia, Sitharaman said.

The budget fell short on unveiling major new budgetary proposals, though it continued to highlight the government's commitment to addressing climate change, said Sandiip Bhammer, founder and co-managing partner of Green Frontier Capital.

"The move to provide electricity through rooftop solarization stands out as a dual-benefit initiative," Bhammer said. "It not only lessens environmental impact but also alleviates financial burdens on households, embodying a model for sustainable development."

According to Bhammer, the decision to bolster charging infrastructure is expected to generate employment opportunities and accelerate the transition to electric vehicles.

Biogas, biomass

The minister said there would be a phased mandatory blending of compressed biogas in CNG for transport and piped natural gas for domestic use.

To help the supply side of biogas, financial assistance will be provided for procurement of biomass aggregation machinery to support collection of the raw materials.

"India witnesses the generation of approximately 500 million mt/year of agricultural residue, offering a substantial business opportunity estimated at around Rupees 500 billion ($6 billion)," said Ashvin Patil, founder and director of Biofuels Junction.

"Unfortunately, nearly 200 million mt of this resource remain unused... this underscores the untapped potential for converting agricultural residues into biofuels."

A new scheme of bio-manufacturing and bio-foundry will be launched, to provide environment friendly alternatives such as biodegradable polymers, bio-plastics, bio-pharmaceuticals and bio-agri-inputs, Sitharaman said.

"This scheme will also help in transforming today's consumptive manufacturing paradigm to the one based on regenerative principles," she said.

For electric vehicles, the government will expand and strengthen the e-vehicle ecosystem by supporting manufacturing and charging infrastructure, the minister said. Greater adoption of e-buses for public transport networks will be encouraged through payment security mechanism.

"Integrating" the measures announced with "with the carbon credits mechanism, which are under development in the country, will prove to be feasible for its own funding," said Manish Dabkara, chairman and MD EKI Energy Services and President Carbon Markets Association of India.

In a reference scenario, S&P Global Commodity Insights forecasts India's carbon emissions rising from 2.48 billion mt/year in 2023 to 2.9 billion mt/year in 2030, and on to 3.37 billion mt/year in 2045.