The spotlight on energy transition, climate action and electrification in the latest Union budget is encouraging; but needs committed strategy and upscaled funding for transformative action
The Union Budget of 2022-23 was tabled by Union Finance Minister Nirmala Sitharaman February 1, 2022. Now, the primary question is how the priorities and funds committed in the budget will match the scale and cost of change needed for clean and low carbon pathways.
There are several strands in the new budget, which, if implemented at scale, can add up to augment clean air and low carbon gains. But this needs more committed funding across sectors for priorities related to clean air and panchamrit climate action promises.
There is reason for optimism. But it is the finer details of the resource allocation, nature of spending and scope of action that will determine the scale and speed of change. There are many aspects of this budget that will influence sustainability pathways, especially the categorical focus on energy transition and climate action.
Let us deep dive into the urban development sector — a difficult sector — where so far, it has been challenging to show real scalable change to prevent lock in of carbon and pollution intensity of urban growth.
The budget has put a spotlight on urban development, anticipating that India at 100 will have half of its population in cities. It has attempted to mainstream sectoral policies and inter-link sub-sector programmes to align for leveraging funding. This can activate multiple funding levers for clean air and low carbon gains, if done well.
This is important as the 2024 clean air targets of 20-30 per cent pollution reduction in cities under the National Clean Air Programme are only two years away.
Also, India’s panchamrit pledges of non-fossil fuel capacity of 500 GW, 50 per cent energy requirement from renewable sources, reducing total projected carbon intensity by one billion tonnes and carbon intensity of the economy to less than 45 per cent and signing of the global zero emission vehicle pledge in Glasgow, calls for a resetting of the economy.
The budget, while advocating decentralised urban development in Tier 2 and 3 cities, has recognised the importance of moving beyond the ‘business as usual’ approach to ‘reimagining cities’.
This has created opportunity for several new generation urban development policies including modernisation of building byelaws, town-planning schemes and transit-oriented development (TOD), energy efficiency in buildings and infrastructure for circular economy that cities are struggling to implement.
The new budget is now linked with reforms for people to live and work closer to mass transit systems, promote use of public transport and leverage the central government’s financial support for mass transit projects and AMRUT scheme for implementation in states.
This will be guided by the high-level committee and centre for excellence to provide urban planning support for special mobility zones with zero fossil-fuel policy and electric vehicles. In fact, green energy and clean mobility systems are listed as ‘sunrise sectors’.
But past experience has shown that despite having these policies in place for a while, cities have not been able to operationalise the framework for large-scale implementation.
Planning and designing of these schemes have gaps and fall short of improving accessibility for people and restraining personal vehicle usage. Also, while promoting densification strategies, they often do not adhere to the key design principles of TOD. Therefore, quality of funding will matter a lot to prevent energy and carbon intensity of urban growth.
Hopefully, the ‘Scheme for Financial Assistance to States for Capital Investment’ that has allocated Rs 15,000 crore for reforms related to implementation of building byelaws, town planning schemes, TOD and transferable development rights along with PM GatiShakti-related capital investment, PM Gram Sadak Yojana, etc will bridge the gap.
And hopefully, Gatishakti, the national multi-modal transport scheme, will augment the share of railways on clean fuels vis-a-vis roadways to tame carbon intensity.
The zero emissions promise
This time, there were great expectations regarding electric mobility. The budget puts out its good intent. Interestingly, deployment of electric vehicle programmes has been linked explicitly with urban planning strategies of zero emissions public transport and low emission zones.
Also, battery swapping strategy is proposed to overcome the limitation of land-constrained cities. The private sector is expected to develop business models for ‘Battery or Energy as a Service’ to improve the electric vehicle ecosystem.
Dense charging infrastructure is proposed as part of the harmonised infrastructure development for energy storage, grid scale battery system for renewable energy and data centres.
Though encouraging, the budget is once again silent on zero emissions target and mandate and the expected scale of market penetration in the coming years.
But it is now understood that either the ongoing production-linked incentive programme for battery manufacturing, or the dense charging schemes, or the proposed battery swapping system require huge private sector investment.
This can be viable only if matching market demand can be stimulated with sustained targets to bring more certainty in investment decisions. This is also needed to be consistent with India’s signing of zero emissions vehicle pledge in Glasgow.
Even for a minimum 30 per cent electrification of new fleet in 2030, cumulative battery requirement will have to be 824.7 gigawatt hour (GWh) — a massive leap from base level of 2.2 GWh in 2020, as estimated by the International Council on Clean Transportation. But private investment can be hugely uncertain if target and zero emissions mandate do not provide the milestones.
Make it happen
Bracketing of energy transition, climate action and electrification as a sunrise sector builds hope. The budget has also incited interest around climate finance and green bonds for green infrastructure. But this has also triggered a lot scepticism as there are questions about real new money for climate action.
The fiscal strategy is still shy of ‘polluter pays’ strategy, either for polluting vehicles or dirty energy that is needed for steady revenue flow to meet green infrastructure costs and to prevent emissions and carbon leakages in the system.
Each annual budget this decade will have to build ambition for transformational changes. At the same time, the unfinished agenda of the last budget has to accelerate.
Just to rejig the memory, the advisory to shut down old thermal power plants and stranded assets in the power sector, enhanced swachhta programme and the still-awaited bus scheme programme need upscaled implementation. The outcome budget that is yet to come, will show how well-prepared we are to accelerate progress.
This budget is a good step forward but needs committed strategy, milestones and upscaled funding to make ambitious clean air and climate action more real.
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