A subject that has found consistent mention in Finance Minister Nirmala Sitharaman’s successive Budget speeches is: energy security and energy transition. In her latest Budget speech too, while listing out the nine priorities for generating ample opportunities for all, energy has prominently featured in the journey towards ‘Viksit Bharat.

“In the Interim Budget, I had announced our strategy to sustain high and more resource-efficient economic growth, along with energy security in terms of availability, accessibility and affordability. We will bring out a policy document on appropriate energy transition pathways that balances the imperatives of employment, growth and environmental sustainability,” she said in her speech.

This is not the first time that a policy document for energy transition pathway has been spoken about. So, how is it different now?

According to decision-makers, this will work as an umbrella policy, as currently segment-specific reports or policy statements have come out. For example, the one for the Petroleum and Natural Gas Ministry talks about companies in fossil fuel business and their green transition.

“Now that it has been spoken about in the Budget speech, the nuances and the terms of reference will be worked out for the Committee that will work on the policy,” a senior official said.

Thrust on nuclear energy

Sitharaman, in her speech, also spoke about PM Surya Ghar Muft Bijli Yojana, a policy for promoting pumped storage projects, and small and modular nuclear reactors as nuclear energy is expected to form a significant part of the energy mix for Viksit Bharat. Her speech also mentioned advanced ultra super critical thermal power plants.

Prime Minister Narendra Modi also, when addressing India Inc at a recent CII event on the Budget, referred to the work being done on small nuclear reactors. He said it will not only benefit industry in the form of energy access but also the entire supply chain related to the sector, which will get new business opportunities.

According to Gauri Jauhar, Executive Director, Energy Transition and Cleantech Consulting, S&P Global Commodity Insights: “It is important for any energy transition pathway to balance the ambition and vision for a new energy system based on lower emissions, with the realities of an existing energy system which, well into this decade and next, will be largely contingent on fossil fuel sources.”

Also, any energy transition pathway “should take into account a full life-cycle analysis in order to understand the extent of embedded carbon that comes with the new energy system that is under construction,” she added.

When working on policy, what should India look out for? According to Umud Shokri, energy strategist and senior visiting fellow at George Mason University, “Several critical issues need to be addressed to ensure a balanced approach that promotes employment, growth and environmental sustainability. Key areas for consideration include infrastructure development, technology and innovation, economic considerations, policy and regulatory frameworks, environmental sustainability, and securing supply chains.”

For infrastructure development, there is a pressing need for robust refuelling and charging infrastructure to support hydrogen and other renewable energy sources, he said, adding, “This includes establishing hydrogen refuelling stations and expanding electric vehicle (EV) charging networks. Enhancing the electricity grid to accommodate a higher share of renewable energy is essential, and investments in smart grid technologies and energy storage solutions, such as pumped hydro and battery storage, will help manage the intermittent nature of renewable sources.”

All these are a part of the segment which the policy should ideally touch upon. The policy should also speak in terms of technology and innovation, continued investment in R&D for hydrogen technologies, energy storage, and renewable energy generation.

“Developing domestic capabilities to produce critical minerals needed for battery production and hydrogen fuel cells will reduce reliance on imports. Encouraging collaboration between the government and private sector through public-private partnerships can accelerate the development of innovative technologies and solutions for energy transition, including engaging private players in nuclear energy projects and advanced renewable technologies,” Shokri said.

Besides, he added that the policy should touch upon economic issues, including addressing the high costs associated with hydrogen fuel cell vehicles and renewable technologies.

Financial incentives, subsidies, and tax breaks can help make these technologies more accessible and attractive to businesses and consumers, he said, adding that “transitioning traditional industries to cleaner energy sources requires financial support and incentives, with programmes aimed at decarbonising micro, small, and medium enterprises (MSMEs) facilitating this transition while ensuring job security.”

Establishing a clear and stable policy environment is essential for attracting investment in the energy sector. Revisiting customs duties and tax structures related to renewable energy components can help stimulate domestic manufacturing and reduce costs, he said.

Preserve biodiversity

It is crucial to ensure that energy transition efforts do not compromise environmental sustainability. Policies should promote not just the adoption of renewable energy but also the preservation of ecosystems and biodiversity. Securing supply chains involves securing access to essential minerals like lithium, nickel, and cobalt, which are critical for battery production, he pointed out. Developing domestic sources and establishing international partnerships will be key to ensuring a stable supply chain as well as promoting recycling of materials used in renewable technologies. These can help mitigate supply chain risks and reduce environmental impact, Shokri added.

Therefore, the entire energy transition process requires a multifaceted approach that addresses infrastructure, technology, economic factors, policy frameworks, environmental sustainability, and supply chain security. And only then can India effectively balance the imperatives of employment, growth, and environmental sustainability in its pursuit of energy security.

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