The period after Covid-19 will give the Indian government a chance to reset its energy policies and increase focus on clean energy, says a report.
There is a big opportunity for India to transition into clean energy as it copes with the Coronavirus outbreak, a recent report by the International Institute for Sustainable Development (IISD) and the Council on Energy, Environment and Water (CEEW), that examines India’s energy policies, said.
The report said that India should prioritise health and economic recovery as it navigates the Covid-19 crisis. “The period post-Covid-19 will give the Indian government a chance to reset its energy policies and increase focus on clean energy,” it said.
Both think tanks are of the view that the impacts of Covod-19 will be “significant and prolonged” and it will have implications on energy transition in India.
The crash in world crude oil prices, the report said, could free up revenue to help tackle the crisis, by temporarily eliminating petroleum product subsidies and enabling higher tax rates. “At the same time, there will be increasing demand to support energy producers, as profits fall, demand falters, and perceptions of risk rise,” the report said.
If India considers economic stimulus, it should carefully assess how different interventions for producers will undermine or support the clean energy transition, the report said. Another implication will be an increase in demand for social protection and effective and efficient public services. “Investments in these areas can create new options to target energy access subsidies, allowing benefits to be clustered on those most in need.”
IISD and CEEW recommend that India needs to further swap public resources from fossil fuels to clean energy, going forward. They also said electric vehicles (EVs) are another area of focus. “Policies should be monitored to ensure effective, efficient, and equitable support for two-wheelers, public transport, waste treatment, and battery recycling. Support may still not be sufficient to reach 2030 targets.”
The report suggested that clean electricity is another area India needs to focus on. Other sectors, such as transport and cooking, will rely on electrification to deliver clean energy. “The price competitiveness of on-grid solar and wind power has brought into question the need for continued RE (renewable energy) subsidies. But new cost barriers can quickly alter competitiveness, and emerging technologies still need assistance,” the report said. To achieve 450 GW by 2030, the government must develop quality interstate grid transmission and storage—little support was identified in these areas, it said.
The think tanks said that India’s subsidy policies have also changed over the years. While renewable energy subsidies are down by 35%, it is likely to rise again; renewable energy subsidies fell from ₹15,313 crore to ₹9,930 in FY19. “This reflects falling renewable energy costs but also a slowdown driven by policy decisions, such as the solar safeguard duty and price caps in auctions. Several new, large policies have been confirmed since FY19, so subsidies are expected to rise again in FY20,” the report said. Even in EVs, subsidies have grown over 11 times since FY17. “This reflects the fact that India has only very recently stepped up its support levels for EV. Growth is expected to continue,” it said.
In the context of the Covid-19 crisis, the clean energy transition should be reflected in coping strategies and support measures in India, IISD and CEEW said.