The 2024 Budget highlights India's commitment to reducing emissions in hard-to-abate industries, a crucial step in achieving the country's Net Zero targets. With a focus on transitioning from energy efficiency to more stringent emission reduction targets, the budget introduces a range of measures designed to tackle the complex challenges of industrial decarbonisation.
Addressing Industrial Emissions
Industrial emissions, which account for 21% of India’s total emissions, present a significant challenge. Unlike the power and transport sectors, where emissions are primarily from energy consumption, industrial emissions often result from inherent processes. For instance, in cement production, nearly half of the emissions arise from the chemical process of converting limestone into lime. To address these challenges, the budget proposes enhancing carbon management through technologies like Carbon Capture, Utilization, and Storage (CCUS), though these are still developing and can be costly. The transition also involves overcoming hurdles such as high initial costs, technological uncertainty, and socio-economic impacts on labour-intensive industries.
Evolution of the Indian Carbon Market
India's current energy efficiency scheme, the Perform, Achieve, and Trade (PAT) scheme, is set to evolve into a broader Indian Carbon Market. This transition aims to shift the focus from mere energy savings to more substantial emission reductions. The Indian Carbon Market will play a pivotal role in setting and enforcing emission targets, promoting the adoption of affordable technologies, and driving innovation. Effective strategies will include dynamic target setting, cost containment measures, and sector-specific approaches to ensure that industries meet their emission reduction obligations. The budget also emphasizes the importance of supporting Micro, Small, and Medium Enterprises (MSMEs) through credit support and skills development.
Building a Robust Transition Finance Ecosystem
To support the decarbonisation effort, India needs a substantial increase in both green and transition finance. Transition Finance focuses on reducing emissions in sectors where green alternatives are not yet viable. The budget outlines plans for a comprehensive roadmap, addressing key areas such as scope and definition, transparency, cooperation, supply chain support, and financial innovation. This includes establishing clearer definitions for climate finance, improving data transparency, fostering international cooperation, supporting value chains, and encouraging financial innovation through government-backed guarantees and dedicated funding mechanisms. These efforts aim to create a conducive environment for green investment and technology adoption.
Conclusion
India's 2024 Budget represents a significant step towards tackling the complex issue of decarbonising hard-to-abate industries. Know every little detail about the budget 2024- 2025 through various articles here.
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