From ‘taxonomy for climate finance’ to a bumper allocation to the Ministry of New and Renewable Energy (₹19,082 crore for revenue expenditure against ₹7,833 crore in the revised estimate for 2023-24), one sees an overhang of the climate change problem on the Budget 2024-25.  

While previous budget speeches have been eloquent about renewable energy, today’s stands out in terms of its climate lingo and emphasis on energy transition—on which there is a full chapter. 

Never in the past did budget speeches contain terms like ‘mitigation’ and ‘adaptation’ and ‘hard to abate industries’. Today, Finance Minister Nirmala Sitaraman said that the government would “develop a taxonomy for climate finance for enhancing the availability of capital for climate adaptation and mitigation”. This, she said, would support India’s climate commitments and green transition.  Taxonomy for climate finance refers to a classification system that defines and categorises investments based on their impact on climate change. Notably, in June 2020, the European Union brought out its taxonomy regulations — definitions, rules and all — to enable financial flow.

Nuclear push 

Sitharaman’s speech reveals that the government recognises the role of nuclear energy in energy transition. She mentioned developing Bharat Small Reactors and Bharat Small Modular Reactors. Small modular reactors (SMRs) are the in-thing in energy; all countries are looking at them seriously. In India, there is a movement towards developing ‘Designed in India, for India’ SMRs—even micro SMRs, about 2 MW – 5 MW in size—and people like the nuclear scientist Dr Anil Kakodkar and Prof Ashok Jhunjhunwala of IIT Madras are leading the thought around this. Jhunjhunwala dreams of “tens of thousands of micro SMRs” across the country, delivering clean power locally. At least one PSU—NLC India—is working on putting up an SMR. One hears that steel plants are assessing SMRs to produce green hydrogen to manufacture green steel. 

Hi-tech thermal plant 

Also, by specifically mentioning ‘advanced ultra super critical’ (A-USC) thermal power plants, the Finance Minister has signaled how deep climate change has penetrated the minds of policymakers. A-USCs, not common anywhere in the world, operate at very high temperatures and pressures (above 700 degrees Celsius and 300 bars), so that the same quantity of coal burnt gives more power. By highlighting the joint venture of two PSUs—NTPC and BHEL—to set up an 800 MW A-USC, Sitharaman was making a point that India is in the vanguard of mitigation.   

Energy efficiency to emissions

Yet another green brushstroke in the budget is the line about moving from “energy efficiency” to “emission targets”. The Finance Minister spoke of “appropriate regulations” for the transition from the ‘Perform, Achieve and Trade’ (PAT) scheme meant to promote energy efficiency, to an ‘Indian carbon market’. Last year, the ministries of Environment and Power both announced notifications for green credit rules and the Indian carbon market, respectively. As such, the development of a domestic carbon market is in the works. The budget mentioning it is a megaphone blare about government’s seriousness about climate action.

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