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India's Energy TransitionSubsidies for Fossil Fuels and Renewable Energy 2018 Update

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December 2018 |

Citation: Abhinav Soman, Ivetta Gerasimchuk, Christopher Beaton, Harsimran Kaur, Vibhuti Garg, and Karthik Ganesan (2018) 'India's Energy Transition: Subsidies for Fossil Fuels and Renewable Energy, 2018 Update', December

Overview

This study, conducted in collaboration with the International Institute for Sustainable Development (IISD) traces the most significant development in the dynamic domain of India's subsidy policies in the financial year 2017 (FY2017).

It updates the subsidy database from 2017's India's Energy Transition, mapping the magnitude and trends of India's energy subsidies up to FY2017. It also explores the role that subsidies play with respect to four themes: energy access; the role of coal; prospects for renewables; and a transport sector transition.

Key Findings

  • Total quantified energy subsidies have declined from INR 2,15,974 crore (USD 35.7 billion) in FY2014 to INR 1,51,484 crore (USD 23.0 billion) in FY2017.
  • Electricity transmission and distribution is the largest single recipient of energy subsidies, accounting for INR 83,313 crore (USD 12.9 billion) in FY2017.
  • A growing share of subsidies are dedicated to making India’s energy mix cleaner, while fossil fuel subsidies are in decline. Despite this, subsidies to oil, gas and coal were more than triple the value of subsidies to renewables and electric vehicles in India in FY2017.
  • Subsidies for oil and gas decreased by 76 per cent between FY2014 to FY2017, from INR 1,57,678 crore (USD 26.1 billion) to INR 36,991 crore (USD 5.5 billion).
  • In the same period, subsidies to coal mining and coal-fired power have remained stable, at INR 15,992 crore (USD 2.4 billion) in FY2017.
  • Government support for renewables grew almost six-fold, from INR 2,608 crore (USD 431 million) in FY2014 to INR 15,040 crore (USD 2.2 billion) in FY2017.
  • Subsidies to electric vehicles are growing, but are still relatively small in scale, at INR 148 crore (USD 22.1 million) in FY2017.
A growing share of subsidies are dedicated to making India’s energy mix cleaner, while fossil fuel subsidies are in decline. Despite this, subsidies to oil, gas and coal were more than triple the value of subsidies to renewables and electric vehicles in India in FY2017.

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