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India's journey toward a sustainable energy future has gained significant momentum with a series of policy reforms designed to reduce reliance on fossil fuels and accelerate the shift to clean energy. The recent Asia-Pacific Climate Report from the Asian Development Bank (ADB) highlights India's remarkable progress in reforming its fossil fuel subsidy system and its efforts to foster renewable energy, positioning the country as a leader in the region's green transformation.

Key Highlights from the Report:

India's Fossil Fuel Subsidy Reform

• India has successfully reduced fossil fuel subsidies by 85%, from a peak of $25 billion in 2013 to just $3.5 billion by 2023.
• The reform strategy is built on a "remove, target, and shift" approach, which involved phasing out subsidies on petrol and diesel from 2010 to 2014, followed by incremental tax hikes on these fuels through 2017.
• These fiscal changes created space for funding renewable energy projects, such as solar parks, electric vehicle initiatives, and infrastructure improvements.

Role of Taxation in Supporting Clean Energy

• Between 2010 and 2017, India introduced a cess on coal production and imports, which contributed significantly to funding clean energy projects. Approximately 30% of the cess was directed to the National Clean Energy and Environment Fund.
• This funding supported major renewable energy initiatives, including the National Solar Mission and Green Energy Corridor project, helping reduce the cost of utility-scale solar energy and expand off-grid renewable energy solutions.
• The introduction of the Goods and Services Tax (GST) in 2017 altered the financial landscape, redirecting the cess funds to GST compensation rather than directly to clean energy.

Government Schemes and Initiatives

• India is advancing its clean energy agenda through several key government schemes:
  • National Green Hydrogen Mission: Aimed at establishing India as a leader in green hydrogen production.
  • PM-KUSUM Scheme: Focused on promoting solar energy among farmers, allowing them to produce renewable power.
  • PM Surya Ghar: Muft Bijli Yojana: A program designed to provide solar energy access to rural communities, reducing dependency on fossil fuels.

A Strategic Shift: From Subsidies to Clean Energy

• India’s subsidy reforms are an important part of its strategy to transition from a reliance on fossil fuels to a focus on renewable energy investments.
• These changes reflect India’s long-term goal of achieving net-zero emissions by 2070, as outlined in its climate action plans.

Global Significance of India’s Efforts

• The reduction in fossil fuel subsidies and the surge in clean energy investment serve as a model for other nations seeking to balance economic development with climate action.
• India’s approach demonstrates that policy reforms and innovative financing mechanisms can be used to accelerate the transition to a cleaner, greener economy while creating job opportunities and fostering economic growth.