Union Budget 2025: Climate Change & Nuclear Energy

KAKALI DAS

Finance minister Nirmala Sitharaman presented the budget for the financial year 2025-26 in parliament on 1st February, 2025. What did she say on the issue of Climate Change and Nuclear Energy? And what was missing?

India is rapidly emerging as a global powerhouse, holding the title of the fastest-growing major economy.

Achieving this feat is no small task—it’s like a roaring flame that must be continuously fueled. Without a steady supply of energy and innovation, the fire risks fading.

Union Budget 2025: Climate Change & Nuclear Energy

As India continues its rapid development, the need for energy remains paramount. To sustain this momentum, Finance Minister NirmalaSitharaman has emphasized the importance of fueling the nation’s growth.

Finance Minister Sitharaman announced the government’s plans to enhance the manufacturing of solar PV cells, EV batteries, wind turbines, and other clean technologies, aiming to accelerate clean energy generation in India.

She also announced the exemption of basic customs duty on critical minerals, including cobalt powder and waste, lithium-ion battery scrap, lead, and other essential minerals, to support their processing by MSMEs.

The exemption of customs duty on cobalt will facilitate lithium-ion battery manufacturing, while the removal of basic customs duty on lithium-ion battery scrap is expected to enhance EV battery recycling.

Experts say that these policy changes must be supported by infrastructure development for recycling, transportation, and streamlined import processes for lithium-ion battery scrap from other countries.

“Development of at least 100 gigawatt of nuclear energy by 2047 is essential for our energy transition efforts. For an active participant partnership with the private sector towards this goal, amendments to the Atomic Energy Act and the Civil Liability for Nuclear Damage Act will be taken up” – NirmalaSitharaman

NirmalaSitharaman aims to expand India’s nuclear power capacity to 100 gigawatts by 2047. She highlighted “energy transition efforts,” referring to the shift from fossil fuels to cleaner energy sources.

Nuclear energy is now part of the energy mix, with the goal of reaching 100 gigawatts—a highly ambitious target. Currently, India’s nuclear capacity stands at around 8.2 gigawatts, making up just 1.8% of the country’s total power generation. To truly transition to nuclear energy, substantial efforts are required, which is why the Finance Minister is calling for private sector involvement.

Currently, India’s Atomic Energy Act does not permit private sector participation. Even if it were amended, it remains uncertain whether it would be an attractive business opportunity. Nuclear companies are held liable for damages to plants, bearing significant risk if anything goes wrong. While this may seem challenging, it helps ensure that companies are incentivized to build high-quality, safe nuclear plants.

However, India’s current law is viewed as more restrictive than those in other countries. This is why the government intends to amend the Atomic Energy Act and the Civil Liability Law. Once these amendments are passed in Parliament, they will open the door for private nuclear firms to enter the market, potentially allowing foreign companies to bid for Indian nuclear contracts.

In the current global context, a nuclear scramble is unfolding, particularly in Africa. The US, Russia, France, China, and South Korea are all vying for contracts. While Russia holds a clear advantage in Africa, the other nations are eager to compete for a share of the market.

If this bidding war extends to India, it could secure modern nuclear technology at competitive prices. Therefore, the Indian government’s move appears to be both timely and strategic.However, it’s not solely about attracting foreign companies.

“A nuclear energy mission for research and development of small modular reactors with an outlay of Rs20,000 crore will be set up. At least, 5 indigenously developed small modular reactors will be operationalizes by 2033,” Finance Minister

India is seeking Small Modular Reactors (SMRs), which, as the name suggests, are smaller nuclear reactors. They generate up to 300 megawatts of power, with anything larger classified as a conventional reactor. However, SMRs have no lower size limit.

There are also tiny micro reactors capable of generating as little as 10 megawatts. However, India’s 100 gigawatt target requires the larger variety, and SMRs have been in development for some time. The “modular” aspect means they can be factory-built and then assembled on-site, significantly speeding up the construction process.

How quickly can they be set up? One South Korean company claims they can complete a 180-megawatt reactor, not the micro variety, in just 24 months. If these turnaround times prove accurate, India could soon see a surge in nuclear power plants, well in time for the 2047 target. However, before that, India aims to develop this technology domestically.

Finance Minister Sitharaman said that she aims to have 5 indigenous reactors operational by 2033, within the next 8 years. While this is an ambitious goal, it is achievable with technology transfer and an immediate start. Once again, this would require tapping into the potential of the private sector.

But does it do enough to prepare the country to cope with the adverse impacts of climate change?

In the budget document, the National Adaptation Fund, the Climate Change Action Plan, and two other schemes have been classified as non-scheme items, without clear budget estimates. This comes despite the government’s emphasis on the importance of adaptation in the Economic Survey published on January 31.

While the budget places significant emphasis on mitigating climate change in India, more efforts are needed on the adaptation front.

02-02-2025

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