Analysis | Why not everyone will benefit equally from a transition to a low-carbon economy Premium

While covering policy and investment ground, the 2023 Budget doesn’t discuss the social justice aspect of a shift to a green economy.

The 2023-2024 Union Budget, presented by Finance Minister Nirmala Sitharaman on February 1, 2023, depicts the Union government’s long-term vision of a technology-driven, knowledge-based economy that banks on citizen engagement, youth empowerment, employment generation, and creating a robust macroeconomic environment. At the heart of this vision are four transformative opportunities: women empowerment, green growth, tourism and aiding indigenous knowledge by integrating them into the MSME value chain.

The Budget set the stage for a timely and indispensable policy discourse on green growth, with a focus on several key areas, including green energy, green farming, green mobility, green buildings, energy efficiency, and lifestyle and behavioural changes – on the road to sustainable consumption practices. The focus on energy transitions is central to the green-growth narrative. The Centre has envisioned financial flows towards energy transitions to achieve net-zero targets by 2070.

Although mobilising and scaling up finance for renewable energy infrastructure has multiple consequences for socio-economic and human wellbeing, there is growing consensus worldwide that the costs and benefits of such a massive transition aren’t equally distributed. Specifically, the transition to non-conventional resources has the potential to reproduce the power asymmetries of the fossil-fuel regime, in which marginalised communities, women, the elderly, and children have often been the worst-hit by infrastructure reconfigurations.

We argue that in order to ensure that the structural inequities and power asymmetries of the fossil-fuel regime are not replicated through this emerging asset class, it is important to recognise that not everyone will benefit equally from a transition to a low-carbon economy. In particular, those who rely on fossil-fuel production for their livelihoods or money flows through the fiscal route, or who were anticipating using fossil-fuel energy to meet their development needs, may carry a disproportionate share of the energy transition burden.

This in turn calls for clear directives and frameworks to consciously embed ‘justice’ elements in financing India’s energy transition.

Provisions to finance transitions

Given the rapidly growing renewable-energy market, with a target to achieve 500 GW generation by 2030, India has emerged as the fourth most attractive renewable energy market worldwide. There are multiple provisions in the 2023-2024 Budget to prioritise investment towards energy transitions and achieve net-zero commitments.