In a groundbreaking move toward a sustainable future, India has undertaken extensive reforms to transition from fossil fuels to clean energy, guided by an ambitious goal of reaching net-zero emissions by 2070. In its recent report, the Asian Development Bank (ADB) highlights India’s significant strides, which include an 85% reduction in fossil fuel subsidies and a “remove, target, and shift” strategy to repurpose funds for renewable energy projects. This multi-faceted approach reflects India’s evolving commitment to sustainability, offering a blueprint for other nations grappling with climate challenges.
A Strategic Shift Away from Fossil Fuels
India’s efforts to reduce dependency on fossil fuels date back to 2010, with decisive steps taken between 2014 and 2018 to phase out petrol and diesel subsidies and raise fuel taxes. This adjustment freed up funds to support renewable energy projects on an unprecedented scale. For instance, the tax revenues from fuel hikes provided fiscal support for solar energy initiatives, electric vehicle infrastructure, and essential upgrades to India’s power grid. In total, these reforms have led to a substantial reduction in subsidies in the oil and gas sector, from a peak of $25 billion in 2013 to just $3.5 billion by 2023.
The ADB’s Asia-Pacific Climate Report commends India’s approach, noting that these subsidy cuts created essential fiscal space for green initiatives. Under the guidance of the Ministry of New and Renewable Energy, India has reallocated these resources to enhance solar parks, support distributed energy systems, and bolster state-owned enterprises’ involvement in clean energy production. These actions underscore India’s determination to replace fossil fuels with cleaner, more sustainable energy sources.
Taxation’s Role in Supporting Renewable Energy
To further promote clean energy, India implemented a coal cess from 2010 to 2017, earmarking 30% of the collections for the National Clean Energy and Environment Fund. This revenue helped fund flagship initiatives such as the Green Energy Corridor and the National Solar Mission, both of which have significantly lowered the cost of solar energy production and expanded access to off-grid renewable solutions. However, with the introduction of the Goods and Services Tax (GST) in 2017, the coal cess was absorbed into the GST compensation mechanism, posing new challenges in ensuring continued support for clean energy through tax revenues.
Key Initiatives Driving the Transition
India’s commitment to clean energy is evident in multiple large-scale government programs designed to reduce fossil fuel dependency. Major initiatives include:
- National Green Hydrogen Mission – This mission aims to position India as a leader in green hydrogen production, which holds promise as a clean alternative for heavy industries.
- PM-KUSUM Scheme – Targeting rural energy needs, this scheme supports solar installations for agricultural use, reducing farmers’ reliance on diesel for irrigation.
- PM Surya Ghar: Muft Bijli Yojana – Focused on promoting solar power at the household level, this initiative works to make renewable electricity accessible to a broader population, reducing dependence on conventional grid power.
These initiatives, combined with incentives for renewable energy projects, contribute to India’s progressive energy landscape. They support a robust transition, reduce greenhouse gas emissions, and create opportunities for green employment.
A Model for Climate Action
The ADB’s report emphasizes the urgency of addressing climate change impacts in the Asia-Pacific region and lauds India’s efforts as a strong example for other nations. India’s achievements in subsidy reform and clean energy financing showcase how strategic adjustments can drive significant progress in sustainable development. The report notes that India’s actions also support resilience against climate change, including addressing heat waves and minimizing economic and social disruptions from climate-related challenges.
Conclusion: A Path Toward a Resilient Future
India’s commitment to a sustainable energy future, demonstrated through major policy reforms and clean energy initiatives, exemplifies its role as a climate leader. With reductions in fossil fuel subsidies, targeted taxation for clean energy funding, and the roll-out of ambitious renewable energy programs, India is setting a high standard for environmental responsibility and economic adaptability. As the world grapples with climate change, India’s actions stand as a testament to the possibilities of integrating green strategies into national growth, fostering resilience, and inspiring a global shift toward sustainability.
