Carbon Countdown Newsletter
Welcome to this new edition of the Ananta Carbon Countdown newsletter.
Finance Minister Nirmala Sitharaman has announced a major ramping-up of the flagship rooftop solar power scheme, and the Indian government continues to keep a sharp focus on the critical minerals sector.
Internationally, the China-EU tussle over electric vehicles continues, and ahead of this year’s climate change summit, host Azerbaijan has given an urgent call for stepped-up climate action.
In Budget, sunny side up
The Union Budget for 2024-25 presented on 23 July allocated Rs 19,100 crore (191 bn) to the Ministry of New and Renewable Energy, a 143% increase over the Revised Estimates for 2023-24.
The increase is primarily due to the allocation of Rs 6,250 crore (62.5 bn) for the PM Suryaghar Muft Bijli Yojana, a scheme to provide free power up to 300 units to 1 crore (10 mn) households through rooftop solar panels. The scheme was announced by Prime Minister Narendra Modi in January and will provide a major new impetus to the promotion of decentralized solar power in the country.
The Budget has also expanded the list of exempted capital goods for use in the manufacture of solar cells and panels in the country.
Push for climate finance
Finance Minister Nirmala Sitharaman announced a taxonomy for climate finance that would help increase the availability of capital for climate adaptation and mitigation. The new system will classify sustainable investments, guiding investors and banks towards funding impactful climate solutions. It is expected to support the achievement of India’s climate commitments and green transition.
Building stores of power
The Budget has announced a Pumped Storage Policy (PSP) to enhance the storage of electricity and to facilitate smooth integration of the growing share of renewable energy into India’s overall energy mix. This is in line with the strategic shift towards prioritizing the green sector and energy infrastructure.
Pumped storage is a proven and cost-effective way to store hydroelectric power using a system of interconnected reservoirs at different elevations, the force of gravity, and potential energy of water. Pumped storage plants can react quickly to stabilize fluctuations especially in grids that are reliant on intermittent sources of energy such as wind and solar.
As of June 2024, eight pumped storage projects, including both on-river and off-river projects, with a total installed capacity of 4,745.60 MW, were in operation in India, according to Central Electricity Authority data. Notably, infrastructure development, particularly in rural areas and flood management, has been allocated ₹11 lakh crore, equivalent to 3.4% of the GDP.
Joining hands on nuclear
Nuclear energy remains a very significant part of the energy mix and a major focus area of the Budget. The government will collaborate with the private sector to set up Bharat Small Reactors (modified 220 MW Pressurized Heavy Water Reactors), and in the research and development of Small Modular Reactors and newer technologies for nuclear energy, the finance minister said. With ₹1 trillion allocated for R&D, this historic move will also necessitate amendments to the Atomic Energy Act to facilitate private sector involvement. SMRs offer several advantages over traditional large reactors, including reduced construction costs, shorter build times, and greater safety features. They are seen as a solution to address the country’s growing energy needs while minimizing the risk of large-scale accidents and environmental impact.
Minerals that are critical
India is intensifying its focus on critical minerals as the cornerstone of its energy security and economic growth strategy. The Union Budget 2024-25 has announced a Critical Mineral Mission aimed at boosting domestic production and recycling of critical minerals, alongside their overseas acquisition. To support this, customs duties on 25 critical minerals have been waived entirely, and reduced on two of them.
Opportunities and challenges
In July, Union Minister Jitendra Singh announced a significant discovery of 1,600 tonnes of lithium resources in Karnataka’s Mandya district. To accelerate the mining of critical minerals, the government plans to expand the area allowed for mining leases and prospecting licenses from 10 sq km to 50, and from 25 sq km to 100 respectively.
India is also reportedly seeking licenses for deep-sea mineral exploration in the Pacific Ocean. New Delhi is pursuing collaborations with African and Latin American countries for access to critical mineral blocks, and hopes to finalize an agreement with Zambia for geological mapping and exploration for copper, zinc, nickel, gold, and cobalt resources.
The Technology Security Initiative (TSI) with the United Kingdom focuses on critical minerals cooperation, aiming to advance sustainable extraction practices, establish a Critical Minerals Recycling Centre in India, and enhance Rare Earth Elements exploration methods.
The government plans to provide financial incentives to encourage Indian public and private sector companies to acquire critical mineral assets abroad. The incentives will include targeted subsidies for mining operations and the development of evacuation infrastructure.
This is accompanied by a 25% domestic exploration incentive for agencies engaged in discovering critical and strategic minerals and a revised scheme for Partial Reimbursement of Exploration Expenses.
However, domestic challenges persist, as evidenced by the lack of bids for lithium blocks in Jammu and Kashmir, which reflects concerns over viability. The government has urged Jharkhand to auction its mineral blocks, warning of federal intervention if the state fails to do so.
Hydrogen High
Indian Railways plans to introduce its first hydrogen train in 2024, and has announced a goal of deploying 50 hydrogen trains by 2047. This initiative is part of India’s strategy to promote sustainability, reduce carbon emissions, and advance green transportation.
A special committee with stakeholders from the Ministry of Road Transport and Highways, the Ministry of New and Renewable Energy, and the Principal Scientific Adviser to the government been established to draft recommendations for creating hydrogen corridors, promoting domestic hydrogen storage, and standardizing storage pressure.
A new scheme has been launched to identify and address the gaps in existing testing infrastructure and to foster the development of new facilities that meet the rigorous standards required for green hydrogen and its derivatives. To be helmed by the National Institute of Solar Energy, these facilities will focus on testing and certification processes for the development and deployment of green hydrogen solutions.
The government is also focused on the expansion of electric vehicle infrastructure, with plans to install 5,833 new EV charging stations on national highways. The number of public EV charging stations has increased nine-fold from 1,800 in 2022 to 16,347 in 2024, but a lot remains to be done.
A $500 million deal has been signed with the World Bank for the Green National Highway Corridors Project spanning Himachal Pradesh, Rajasthan, Uttar Pradesh, and Andhra Pradesh. The project aims to incorporate green technologies to preserve natural resources and enhance climate resilience. Finally, Indian Oil and the Indian Navy have signed an MoU to advance heavy-duty hydrogen e-mobility and promote fuel cell technology.
Energy Mix: India’s Renewables Surge, Coal Hits Record
India’s renewable energy capacity has reached 203.1 GW in 2024, a 165% increase over the last decade. The current mix stands at 85.47 GW of solar power, 46.93 GW of large hydro, 46.66 GW of wind power, 10.95 GW of biopower, and 5.00 GW of small hydropower. Notably, solar capacity grew from 2.82 GW in 2014 to 85.47 GW in 2024, and wind capacity from 21.04 GW to 46.66 GW.
The country has received ₹7 trillion worth of investment in renewable energy over the last 10 years. It has generated 61.84 billion units (BU) of renewable energy in 2024-25 up to May, the government told Parliament in July. The expansion of the transmission line network to 195,181 circuit kilometers supports this growth.However, these developments have been accompanied by record coal production. In FY 2024, India produced more than 997 million tonnes (MT) of coal, surpassing previous highs, and aims to export 15 MT of coal to neighboring countries, capitalizing on the production boost and strengthening its position in the regional energy market. Additionally, India plans to add 80 GW of coal-based capacity by 2032, with an estimated investment of ₹6.67 lakh crore. This expansion is intended to ensure energy security and reduce dependence on imports.
Europe-China EV slugfest
The European Union (EU) and China are at loggerheads once again over subsidies on electric vehicles. In July 2024, the EU imposed provisional tariffs of up to 37.6% on Chinese-produced EVs, following an investigation that revealed significant Chinese government subsidies benefiting these companies. This was aimed to addressing perceived unfair competition and to protect EU manufacturers.
China retaliated by launching investigations into brandy and pork imported from the EU. On August 9, Beijing formally challenged the EU’s tariffs at the World Trade Organization.
There is significant internal debate among EU governments about whether to impose the EV tariffs amid the broader trade dispute with China. In May, the United States had quadrupled tariffs to 100% on imports of Chinese EVs, exacerbating global trade frictions.
To tackle these restrictions, Chinese investors have increased investments in Morocco as a strategic hub to access U.S. electric vehicle (EV) subsidies. This move allows Chinese firms to bypass the high tariffs imposed on Chinese-made EVs in the US. It also highlights a broader trend of global manufacturers adapting to trade and subsidy policies to remain competitive in the expanding EV market.
COP29 call from Baku
As the COP29 climate summit approaches in November 2024, Azerbaijan, the host country, has issued a public letter urging nations to enhance their climate action efforts.
The Baku Climate Action Week, designed to boost public engagement and garner widespread support for climate initiatives, will be launched at the end of September.
In addition, the Azerbaijani Presidency has introduced the Climate Finance Action Fund (CFAF), an initiative to raise $1 billion from fossil fuel-producing countries and companies. The fund will receive annual contributions either as fixed sums or based on production volume from its members.
Wait, what?
The newly appointed Starbucks CEO, Brian Niccol will commute between the company headquarters in Seattle and his home in Newport Beach, California, instead of relocating. According to his agreement, the commute is expected to be at least three times a week. With a round trip distance of 3,200 kilometers, the commute could result in emissions of up to 8,000 kilograms of CO2 per day. This decision has ignited concerns about the environmental impact of such travel, especially as companies face increasing scrutiny over their carbon footprints. The commute starkly contrasts with the growing corporate trend toward sustainability. Critics argue that this supercommute not only undermines Starbucks’ environmental commitments but also sets a troubling example. While the company may consider offsetting these emissions down the line, such measures are insufficient, and the decision remains hypocritical given the obvious existence of more sustainable alternatives. This behavior is yet another example of American companies expecting the developing world to bear the burden, while they conveniently ignore their own carbon-spewing habits.
Check these out
- Green Transition: Changing the Energy Paradigm – Ananta Centre
- Critical Minerals Economy: Risks and Opportunities – India US Forum Essay Series- Ananta Centre
- US – India Dialogue On Climate Change And Energy – ANANTA ASPEN CENTRE
- Climate cash pours into election swing region. Will it help Harris? – POLITICO
- Five trends in India’s energy transition in 2024 | S&P Global Commodity Insights
- Why Almost Nobody Is Buying Hydrogen, Dashing Green Power Hopes – Bloomberg
- Opinion: A global price mechanism will incentivize shipping to embrace green fuels, ET EnergyWorld
Thank you for reading. Stay tuned for the next edition of the Ananta Carbon Countdown newsletter.
