India eyes clean energy sources to tackle tariffs

The government is considering revising its industrial electrification strategy to prioritize adopting cleaner energy sources, such as green hydrogen and battery storage, over fossil fuels amid the need to meet net-zero targets and the potential imposition of taxes on products based on their carbon emissions by developed nations.

- Rituraj Baruah

The government plans to develop a long-term strategy to transition industries that use fossil fuels to cleaner energy sources. The move comes as the steel and aluminium sectors, which predominantly use gas and captive coal-based power plants, will need to shift to cleaner fuels like green hydrogen to align with India’s net-zero goals and global mandates like the European Union’s Carbon Border Adjustment Mechanism (CBAM).

“The strategy is being looked at, as round-the-clock reliable power cannot be assured for all the industries, and industries like steel need 24/7 power. Further, even if they get connected to the grid, most of the supply would be through coal-based power, and only some of it would be through solar, which does not help these businesses on the decarbonization front. When storage comes up, they will be able to take it from open access, but storage cost would come down only gradually,” said one of the people aware of the developments.

The focus on electrification may now be further narrowed down to renewable energy.