India’s green energy transition: A vision for a sustainable future

- Enabling policies that nudge resource efficiency, while providing the right signals for pushing investments towards R&D and pilots in emerging technologies and using innovative ways to scale up the more mature clean energy options are, therefore, the need of the hour.
India plans to become a developed economy by 2047. Apart from the goal of Viksit Bharat, India has also taken on ambitious NDC (nationally determined contributions) targets of reducing emissions intensity of its GDP by 45% from 2005 levels by 2030 while ensuring that 50% of its installed power capacity comes from non-fossil fuel sources.
Further, India has set ambitious renewable energy targets, including 500 GW by 2030 and a goal of achieving net zero by 2070. Achieving these ambitious targets in the short- and long-term call for significant energy transitions towards clean energy fuels and technologies including renewables like solar and wind, nuclear, biofuels and CCUS (carbon capture, utilization, and storage), advancements in storage options and enhancing energy efficiency.
Enabling policies that nudge resource efficiency, while providing the right signals for pushing investments towards R&D and pilots in emerging technologies and using innovative ways to scale up the more mature clean energy options are, therefore, the need of the hour.
Also read | India's green energy push spawns a unique resale market
Recognizing the importance of financial backing to support the requisite nudges required in the economy at each stage, past Union budgets have demonstrated a growing commitment to clean energy and climate resilience. Key allocations include ₹35,000 crore for energy transition in 2023, ₹19,100 crore for the Ministry of New and Renewable Energy (MNRE) in 2024, ₹3,079 crore for climate action in 2023-24 (a 24% increase from the previous year), and ₹3,330.37 crore for the environment ministry in 2024-25.
The Energy and Resources Institute's (Teri) report on financing decarbonization in the industry highlights challenges faced by the hard-to-abate sectors of steel and cement. Besides, there are huge challenges with regards to the MSME sector and integrating them effectively in the decarbonization process while focusing on this sector as an important engine of industrial growth and employment. The announcement on the climate finance taxonomy last year was done with the objective of facilitating demarcation of finance and its provisioning for mitigation and adaptation actions. While progress in renewables is evident, targeted budgetary support for storage solutions, offshore wind, and hydrogen is essential. Improving power distribution companies' performance and fostering innovation will further strengthen the transition. With GDP growth slowing to 6% and over 3,200 fatalities from extreme weather in 2024, this budget presents an opportunity to reshape India's energy landscape, drive net-zero ambitions, and ensure a resilient, low-carbon future.
Alos read | Data explainer: India’s green energy goals face stiff test
The FY26 budget is crucial for advancing a green energy future amid economic and climate challenges. The emphasis on clean tech manufacturing reinforces India’s commitment to climate-friendly development. It outlines strategic support for clean energy manufacturing to strengthen domestic value chains and boost self-reliance. Key focus areas include solar PV cells, EV batteries, motors and controllers, electrolyzers, wind turbines, high-voltage transmission equipment, and grid-scale batteries.
The proposed power sector reforms align well with India's net-zero transition, with incentives for electricity distribution and expanded intra-state transmission capacity to improve financial stability and operational efficiency. States can access additional borrowing of up to 0.5% of their GSDP, contingent on reform implementation. These measures will enhance sector resilience and accelerate clean energy integration into the grid.
A significant step towards Viksit Bharat as well as the clean energy transition is the Nuclear Energy Mission, which positions nuclear power as a key driver of India’s net-zero ambitions, with a target of 100 GW by 2047. To enable private sector participation, amendments to the Atomic Energy Act and Civil Liability for Nuclear Damage Act will be pursued. Additionally, a ₹20,000 crore Nuclear Energy Mission for R&D in Small Modular Reactors (SMRs) aims to operationalize at least five indigenous SMRs by 2033, strengthening India’s clean energy transition and energy security.
Also read | Renewable energy is starting to shrink the power bills of cement, metal firms
The budget also provides a balanced focus on strengthening opportunities in rural areas, strengthening public transport and connectivity, providing an impetus to R&D and skilling, enabling livelihood creation and bringing in elements of circularity as well as robust supply chains. With focus on making the agriculture sector more resilient, and key announcements on infrastructure, artificial intelligence and urban reforms, the budget is well aligned with the Viksit Bharat goals as well as climate action preparedness. Therefore, the forward-looking, inclusive and holistic budget aims to enhance India’s agenda on its path towards green development and in meeting its goals.
Vibha Dhawan is Director General, The Energy and Resources Institute (Teri).
topics
