Can PSUs become 'green champions' to reach India's net-zero target?
Historically, to meet its energy needs and to support development, India has used PSUs to rationalise and subsidise the production of fossil fuels. Transitioning them to a greener path is critical for achieving India's ambitious goals, in addition to making them the mascot for climate change.
Oil PSUs in India have been the drivers of energy generation.
To achieve India's ambitious goal of achieving net zero by 2070, oil PSUs need to become energy PSUs with the primary focus on RE. Such a transformation is already underway with oil PSUs venturing into RE, including solar energy.
However, while India seems to be progressing well towards achieving its emissions intensity targets, despite a projected reduction in its emissions intensity, its greenhouse gas emissions are projected to increase due to a continued expansion of the use of natural gas and other non-renewable sources of energy.
Taxes are often used by governments as a devise to shape public behaviour. A big mismatch in the carbon taxation policy of India, though, is the higher tax cost on renewables.
For example, the equipment necessary for the generation of RE are subject to a 12% GST. However, coal and coal products are subject to 5% GST. This mismatch is further compounded by the lack of a uniform carbon tax that is applicable on the basis of the carbon emissions of a product.
India imposes an additional compensation cess under GST on coal.
