Mapping India's Energy Policy 2022
Aligning support and revenues with a net-zero future
India's subsidies for renewable energy fell 59% in FY 2017-2021 as deployment has slowed and grid-scale PV solar and wind reached cost parity.
In India, subsidies for fossil fuels were 9 times higher than clean energy subsidies in FY 2021; they were 7.3 times higher in FY 2020. The country needs to shift support away from fossil fuels and toward clean energy technologies.
India's three largest public finance institutions lent three times more capital to fossil fuels than renewable energy in FY 2021. Public finance institutions must establish #NetZero roadmaps for phasing out fossil fuel finance and ramping up support for clean energy.
Mapping India's Energy Subsidies 2022 covers India’s subsidies to fossil fuels, electricity transmission and distribution, renewable energy, and electric vehicles between fiscal year (FY) 2014 and FY 2021.
We found that fossil fuels continue to receive far more subsidies than clean energy in India. This disparity became even more pronounced from FY 2020 to FY 2021, going from 7.3 times to 9 times the amount of subsidies to renewables.
- India provided over INR 540,000 crore (USD 77 billion) to support the energy sector in FY 2021, including nearly INR 218,000 crore in the form of subsidies, INR 140,000 crore as investments by public sector utilities (PSUs), and at least INR 190,116 crore lent by three biggest public finance institutions to the power sector.
- The subsidies for fossil fuels were nine times higher than clean energy subsidies in FY 2021; they were 7.3 times higher in FY 2020, yet overall fossil fuel subsidies have fallen 72% between 2014 and 2021. To reach 500 GW of non-fossil power capacity by 2030 and net-zero emissions by 2070, the country needs to shift support away from fossil fuels and toward clean energy technologies.
- Coal subsidies fell to their lowest level since at least 2014, hitting INR 12,976 crore. To ensure affordable power for all, it is not effective to subsidize coal. The government can provide technology-neutral electricity subsidies instead.
- Oil and gas subsidies fell 4% to INR 55,250 crore in FY 2021. India removed a major liquefied petroleum gas subsidy, before reintroducing it in a more targeted form in May 2022. Targeting, however, can still be greatly improved, and support is also needed for non-fossil cooking solutions.
- Low-priced electricity makes up 65% of all subsidies, at INR 141,895 crore. The shift to clean energy will require cost-reflective electricity tariffs, increasing the pressure for reforms in years to come.
- Subsidies for renewable energy fell 59% in FY 2017-2021 as deployment has slowed and grid-scale photovoltaic solar and wind reached cost parity. The government must refocus its support for clean energy technologies to reach 500 GW of non-fossil power capacity by 2030.
- Subsidies for electric vehicles have tripled to INR 849 crore between 2017 and 2021. India announced a production-linked incentive program last year to attract investments in domestic manufacturing of electric vehicles and components.
- In 2021, several PSUs announced new clean energy partnerships and targets, but most have not set out clear strategies for adjusting business models to clean energy transition and net-zero. In FY 2020, India’s 7 Maharatna PSUs invested 11 times more in fossil projects than renewable energy.
- In FY 2021, annual disbursements by the largest power finance institutions were three times higher for fossil generation than renewable energy. While these institutions play a major role in shifting public finance away from fossil fuels, they have no clear strategy to adapt their lending practices to the clean energy transition.
The report is accompanied by an interactive online database to help users browse the subsidy data in detail and includes detailed spreadsheets and annexes for policy-makers and researchers. The analysis is the latest update in the India's Energy Transition series from the International Institute for Sustainable Development's (IISD) Global Subsidies Initiative (GSI) and the Council on Energy, Environment and Water (CEEW). For previous iterations of this study, see:
- Mapping India's Energy Subsidies 2021: Time for renewed support to clean energy
- Mapping India's Energy Subsidies 2020: Fossil fuels, renewables, and electric vehicles
- India's Energy Transition: Subsidies for Fossil Fuels and Renewable Energy, 2018 Update
- India's Energy Transition: Mapping subsidies to fossil fuels and clean energy in India
You might also be interested in
G20 energy ministers call for cooperation on nuclear energy & low-emission hydrogen
The Group of 20 energy ministers' meeting concluded in Goa on July 22, 2023, with the final summary failing to include language on the phase-down of unabated fossil fuels.
Fighting for a place to breathe
In the shadow of a retired coal-fired power plant in India's capital, Meena Devi tries to make her family home -- four brick walls with a tin roof -- a safe place to breathe.
Subsidies for renewable energy and EVs more than double: Study
Nagpur: India’s subsidies for renewable energy and electric vehicles more than doubled this fiscal, according to a new study by independent think-tank International Institute for Sustainable Development (IISD). However, it also found that it will be critical for the government to build this momentum over the coming years to reach the country's climate targets.
EV subsidies in India doubled in FY 2022: IISD report
According to a recent study conducted by IISD (International Institute for Sustainable Development) subsidies for renewable energy and EVS in India have more than doubled in FY 2022. India still allocated four times more support to fossil fuels than clean energy, although the gap narrowed significantly since FY 2021 when support was nine times greater.