The report titled ‘Mapping India’s Energy Subsidies 2020’ said that there were already signs that support for renewable energy would increase again, but with the shocks from COVID-19 it is now critical to stay on track.“Policy decisions such as the solar safeguard duty and tariff caps on auctions meant that there was a slowdown in new capacity addition and as a result lower state subsidy outgo as well,” said Karthik Ganesan, research fellow, CEEW.
He added that resources post-COVID-19 would see an unprecedented crunch.“It presents a good opportunity for the government to rein in specific fossil fuel subsidies while creating more fiscal room for promoting renewables and other welfare schemes,” said Ganesan.
According to the report, in the past six years, India has shifted significant public resources toward clean energy. Since 2014, fossil fuel subsidies have fallen by more than half, while subsidies for renewable energy and electric vehicles have increased more than three and a half times. The report expects that long-term ambitions can still be maintained.
“Over the past few years, India has stood out for its incredible steps forward with renewable energy deployment… There are uncertain times ahead, and the first priority has to be health and helping people meet their essential needs. At the same time, we can’t lose sight of ambition for a clean energy transition,” said Christopher Beaton of IISD.
It further said that oil and gas subsidies, however, increased by 65 per cent in the same period.
According to the report, the health and economic crisis caused by COVID-19 will influence subsidy expenditure. The crash in world oil prices and the government’s economic stimulus packages will be key factors shaping the energy sector in the upcoming months.
Vibhuti Garg of IISD, the study’s co-author, said that rising oil prices and initiatives to promote clean cooking were the main drivers of growing support to fossil fuels since FY2017.
“After the COVID-19 crisis, petroleum product subsidies will undoubtedly fall significantly in 2020 and other energy markets will be shaken. Fossil fuels are already being taxed more to help plug holes in revenue. Government stimulus needs to first help people cope, but stimulus for the energy sector must avoid new fossil fuel subsidies that lock in air pollution and greenhouse gas emissions for years to come,” said Garg.
The report said that the manner in which the government tackles the COVID-19 crisis and economic recovery would determine future trends in the energy sector.
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