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.

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.

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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