How the Union Budget can help India mitigate the climate change crisis

The world we live in today is faced with a major climate crisis that is affecting everyone in equal measure. Yet, there is not a lot of collective action being taken to tackle this issue.

Over the years, a number of climatetech companies have emerged globally to solve issues posed by climate change by leveraging advanced technologies and scientific tools. This is true even for India, where there are many passionate founders pushing to find innovative solutions to drive climate action and mitigate climate-related adversities through science and cutting-edge technology.

That being said, climatetech as a sector still remains largely underrepresented within the Union Budget and the government’s various policy initiatives.

The government has been cognisant of the threat posed by climate change and has pushed for major reforms within the power sector by investing significantly in renewable energy. In light of India’s ambitious COP27 goals and its wish to set a global example during its G20 presidency, the government needs to go much further to boost innovation within the nascent climatetech sector.

How the budget can act as a catalyst for climate change mitigation

This year the Union Budget needs to prioritise a few major aspects pertaining to climate change mitigation in order to sustainably achieve India’s audacious goal of transitioning to NetZero by 2070.

In order to do that, it is important for the government to create demand for climate solutions—often provided by climatetech startup—by actively pushing the economy towards decarbonisation.

This should begin with the government taking into consideration a sector-by-sector approach. For instance, within the power sector the government should take a three-pronged approach to drive demand, distribution, and supply. In order to create a demand, they should mandate large corporations to get at least 25% of their energy from renewable sources. This should increase to 100% over the next decade with eventually smaller enterprises also taking on alternative sources of energy.

On the distribution front, the government should ensure that every DISCOM offers a green tariff option—at a reasonable premium—to its customers to address this increased demand seamlessly.

All of this should be done in addition to funding more renewable energy projects across the country which would further encourage entrepreneurship and innovation in this space. While the uptick is electric vehicles sales in the transport sector looks strong, it is important for the government to place its focus on decarbonising much larger vehicles like trucks. It must also push for increased production capacity of green hydrogen—as committed in the National Green Hydrogen Mission—which can be used as a source of clean fuel for vehicles and industries.

To drive sustainable development and combat the climate crisis, it is imperative that the Indian government provide appropriate incentives for industries to decarbonise quickly, particularly since industries account for roughly 28% of India’s carbon emissions.

An effective way to do this would be by rolling out the carbon credit market that Bureau of Energy Efficiency (BEE) is working towards. In addition to that, the government should also consider using banks and other financial institutions to offer differential pricing on green loans, that is loans used for reducing GHG emissions, while also lowering interest rates on loans for companies setting NetZero goals and showing consistent decarbonisation towards that goal.

Waste management by industries is also another important step to ensure the country is able to achieve its NetZero targets in time. There are several different ways the government can enable this—like incentivizing Extended Producers Responsibility (EPR) initiatives for certain types of wastes produced by industries. They can also provide tax subsidies to entrepreneurs who produce goods made out of recycled waste materials.

Moving towards a NetZero Society

As a nation, India is well aware of the pitfalls caused by climate change and the imperative need for a robust climate change mitigation strategy. But to meaningfully address the challenges posed by climate change, the government needs to encourage industries to swiftly transition towards a NetZero society.

The government can help new-age founders and solution providers by being the first buyers of their solutions. This can be done by allocating a specific budget to scaling these nascent initiatives. Such budget allocations will not only bring scale and credibility to climatetech companies but will also help the Government gain access to cutting-edge solutions in the market while solving one of the biggest challenges confronting humankind.