Why India Should Script a Roadmap For Green Growth, Energy Security and Carbon market In 2023
Through ambitious goals, forward-thinking programs, and creative strategies, India has rapidly progressed its efforts to develop renewable energy during the past few years
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Thanks to its G20 chair, India now has a fantastic opportunity to further demonstrate its dedication to sustainability. A significant step in this approach will be the development of a carbon market architecture as an avenue to channelize the country's development towards a sustainable, environment, resource-friendly and secured pathway.
Strong Focus on Green Energy in Addition to Other Important Measures
Through ambitious goals, forward-thinking programs, and creative strategies, India has rapidly progressed its efforts to develop renewable energy during the past few years. The government actively encouraged the creation of renewable energy, the production of solar equipment, and the building of energy storage facilities in 2022 in order to meet its 500 GW renewable energy generation target by 2030.
Currently, the country has a clean energy capacity of 173 GW, and projects with a capacity of 80 GW are being developed. If India is to achieve its ambitious development and environmental goals, it must give renewable energy production a higher priority in 2023 and beyond.
Additionally, there is hope for a sizeable investment in "make-in-India" programs or production-linked incentives (PLI) to support India's goal of becoming "Aatmanirbhar" and developing Smart-electricity distribution systems. The expansion of the infrastructure sector in a way that is consistent with techniques for reducing climate change must also be carefully taken into account in the budget for this year.
There should be strong provisions for Round-the-clock (RTC) power supply and development of indigenous grid-level energy storage technology, which should address energy security and material recyclability. The infrastructure sector awaits its salvation from incentives for aligning themselves to climate change approach. The initiatives for causing minimum intervention with the surroundings as well as sustainable housing solutions would be seeking recognition from the Government very soon.
Development of Indian Carbon Market (ICM)
As the Government is expediting to set up Indian Carbon Market (ICM), preparing a market-stabilization fund to maintain the prices of carbon credits in its proposed carbon market above a specific threshold is key. This move is critical to ensure that carbon credits continue to be appealing to investors to make long-term investment commitments towards carbon-neutral technologies and processes in addition to taking a positive step ahead towards a net-zero future.
In an effort to enhance sustainability, a comprehensive framework should be set up to develop a voluntary carbon market in India.
Further, ICM should be supported with indigenous high-quality methodology development for Carbon Emission Reduction project registration, verification and issuance of certificates.
Policy Measures to Ensure Green Development
Income from Carbon Credit monetization should be tax-free to encourage enhanced investment in carbon-neutral technologies and processes. It will be a significant step by GOI if Carbon Credit sale/purchase gets exempted from GST including reverse GST obligation for importers.
Further, Carbon credit export, a major source of Green FDI in supporting India's carbon-neutral development, should be incentivized by the Director General of Foreign Trade (DGFT). It should also be given a specific Inward / Outward remittance code by RBI as well as GST Council.
With regard to CBAM [Carbon Border Adjustment Mechanism], which, is especially evolving in Europe, Indian suppliers should be supported with capacity development programs. This is important, especially for Small and Medium Enterprises (SMEs) to ensure their long-term business sustainability and their effective and smooth participation in the upcoming Indian Carbon Market (ICM).
Hopes are High
Overall, the year 2023 seems to hold a lot of promises for the renewable energy industry. In order to support India's sustainability objectives, it will continue on the previously established course while also implementing new strategies. Energy generation will increase and expand significantly with the inflow of capital, technological developments brought on by research and innovation, and support from the government in the form of innovative legislation and programs.
The authors of this article, Manish Dabkara and Pankaj Pandey, are EKI Energy Services Ltd's chairman & MD and director of business development, respectively