Clean Energy and Indian Economy
#GS-03 Climate Change, Clean Energy
Expense on Crude by Indian Companies
- As per the individual loans and bonds, it has been found that 60% of the lending to the mining sector was for oil and gas extraction.
- In this value, about one-fifth of the manufacturing sector debt is for petroleum refining and related industries.
- Electricity production has been the largest source of carbon emissions which accounts for 5.2% of outstanding credit, however, only 17.5% of this lending is for pure-play renewables.
- Currently coal amounts for almost 44% of India’s primary energy sources along with about 70% of its power generation.
Financial Market on Environment
- Less than half of the 154 finance professionals surveyed had any familiarity with environmental issues, including greenhouse gas emissions, climate change mitigation and adaption, or transition risks.
- Of the 10 major financial institutions surveyed, only four collect information on environmental, social and governance (ESG) risks.
Measures taken by government
- India in 2021 had given commitments to reach net-zero emissions by 2070.
- Government has also declared its plans to source half of India’s electricity needs from non-fossil fuel sources by 2030.
- However, it has also been established that India will need financing to the order of at least a trillion dollars to meet these commitments.
- Hence it is very evident that India’s financial sector is heavily exposed to potential transition risks.
- India is expected to launch its first-ever sovereign green bonds auction by the end of January 2023.
- The Reserve Bank of India expected to launch five- and 10-year green bonds worth ₹40 billion.
- India’s Presidency of the G-20 can also be used to focus on the energy transition and mobilising sustainable finance.
- The Draft National Electricity Plan, 2022 is expected to reduce the share of coal in the electricity generation to 50% by the year 2030.
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