Union Budget 2024-2025 initiatives on critical minerals and energy security

Finance Minister Nirmala Sitharaman presented the Union Budget 2024-25 in the Lok Sabha on July 23, 2024. Though no direct benefits for electric vehicles were announced, the key highlights of the budget in the Critical Minerals and Energy Security sector are as follows:

1. Critical Mineral Mission

Critical minerals like lithium, copper, cobalt, and rare earth elements are essential for sectors such as nuclear energy, renewable energy, space, defence, telecommunications, and high-tech electronics.

The government will establish a Critical Mineral Mission to focus on:

• Domestic Production and Recycling of critical minerals.

• Overseas Acquisition of critical mineral assets.

• Technology Development for extraction, processing, and recycling.

• Skilled Workforce training.

• Extended Producer Responsibility Framework.

• Suitable Financing Mechanism.

• Full exemption of customs duties on 25 critical minerals.

• Reduction of Basic Customs Duty (BCD) on two critical minerals.

The establishment of a Critical Mineral Mission, emphasizes the focus on developing and recycling essential materials needed for EV batteries, which is crucial for the growth of the EV sector.

Commenting on the budget, Prassann Daphal, CEO, Recyclekaro said, “The government’s announcement of a 25% waiver on customs duty for nearly 25 critical minerals is poised to drive demand across various renewable sectors, including energy storage solutions, electric vehicles (EVs), high-tech electronics, defense, and space. This initiative will bolster the refining and processing of these minerals, strengthening a resilient supply chain ecosystem.

Additionally, the establishment of a ‘Critical Mineral Mission’ aims to oversee domestic production, recycling, and international acquisition of critical mineral assets. The mission will prioritize technology development, skilled labor, and an expanded producer responsibility framework, including Extended Producer Responsibility (EPR), which will benefit the e-waste and battery recycling sectors.”

2. Energy Security and Transition

The government will focus on balancing employment growth and environmental sustainability through a comprehensive energy transition strategy, which includes:

• Energy Transition Pathways

   – Developing a policy document outlining appropriate energy transition pathways.

• PM Surya Ghar Muft Bijli Yojana

   – Installing rooftop solar plants to provide free electricity up to 300 units per month for 1 crore households.

   – The scheme has received over 1.28 crore registrations and 14 lakh applications.

• Pumped Storage Policy

   – Promoting pumped storage projects to facilitate the integration of renewable energy.

• Nuclear Energy

   – Partnering with the private sector for setting up Bharat Small Reactors.

   – R&D for Bharat Small Modular Reactors and new nuclear technologies.

• Advanced Ultra Super Critical (AUSC) Thermal Power Plants

   – Developing indigenous AUSC thermal power plants with higher efficiency.

   – A joint venture between NTPC and BHEL will set up an 800 MW commercial plant.

   – Government support for developing high-grade steel and advanced metallurgy materials for these plants.

• Roadmap for ‘Hard to Abate’ Industries

– Transition from energy efficiency targets to emission targets for ‘hard to abate’ industries.

– Implementation of regulations to shift from the ‘Perform, Achieve and Trade’ model to the ‘Indian Carbon Market.’

• Support for Micro and Small Industries

– Investment-grade energy audits for micro and small industries in 60 clusters, including brass and ceramic.

– Financial aid for transitioning to cleaner energy and implementing energy efficiency measures, with plans to expand to 100 more clusters.

These initiatives aim to highlight the government’s commitment to energy security, promote renewable energy, and support sustainable economic growth.

Abhishek Agashe, Co-Founder & CEO at Elima said, “The focus on waste management and renewable energy, particularly through initiatives like “PM Surya Ghar Muft Bijli” for rooftop solar installations underscores our commitment to cleaner energy solutions. The government’s plan to promote sewage treatment and solid waste management projects with 100 large cities through bankable projects is a crucial step towards improving urban infrastructure. Additionally, the full exemption of custom duties on lithium and other critical minerals is a game-changer for the EV battery industry, accelerating our transition to electric vehicles.“

Also read: Impact of Union Budget 2023-24 on the Indian EV Industry