Introduction to Energy and

Environment Economics

Sourav Mohanty
Assistant Professor
Gokhale Institute of Politics and Economics
Historical Evolution of Global Renewable Energy Initiatives

• The promotion of renewable energy has evolved significantly over the past
century, driven by technological advancements, environmental concerns, and
policy shifts.

• Overview of key historical milestones in the development of global

renewable energy initiatives.

1. Early Renewable Energy Developments (Pre-20th Century)

• Ancient Civilizations: Used water wheels, windmills, and passive solar
heating for energy needs.
19th Century:
• Hydropower became an essential source of mechanical and later electrical
power.
• The photovoltaic effect was discovered by Edmond Becquerel in 1839,
laying the foundation for solar energy.
2. Early 20th Century: Industrialization and Fossil Fuel Dominance

1900s-1950s:
• Renewable energy took a backseat as coal, oil, and natural gas became
dominant due to industrialization.
• Hydropower expanded significantly, with major projects such as the
Hoover Dam (1930s).
• Early solar cells were developed, but efficiency remained low.

1954: Bell Labs developed the first practical silicon solar cell.
3. 1970s: Oil Crisis and Renewable Energy Awareness
1973 & 1979 Oil Crises: Triggered global interest in alternative energy sources.

1978: The U.S. introduced the Public Utility Regulatory Policies Act (PURPA),
promoting renewable energy generation.

1970s-1980s:
• The first modern wind turbines were developed.
• The solar industry gained traction with government research programs.
• Hydropower continued expanding globally.
4. 1990s: Climate Change Awareness and Early Global Agreements

• 1992: Earth Summit in Rio de Janeiro led to Agenda 21, emphasizing

sustainable energy.
• 1997: Kyoto Protocol was adopted, setting emission reduction targets and
encouraging renewable energy investment.
• 1990s: Wind and solar technologies advanced, with Europe leading the push
for large-scale renewable deployment.

5. 2000s: Expansion of Global Renewable Energy Policies

• 2004: International Renewable Energy Agency (IRENA) was proposed.

• 2005: Kyoto Protocol came into effect, accelerating clean energy adoption.
• 2007-2008: The global financial crisis led to green stimulus packages in
some countries.
• Late 2000s: Major wind and solar farms emerged, with China, the EU, and
the U.S. increasing investments.
6. 2010s: Accelerated Growth and Cost Reduction

2015: Paris Agreement adopted, marking a historic commitment to limiting

global warming below 2°C.
2010s:
• Solar and wind energy became cost-competitive with fossil fuels.
• Battery storage and grid modernization efforts accelerated.
• Corporations began committing to 100% renewable energy via
initiatives like RE100.

7. 2020s-Present: Clean Energy Transitions and Net-Zero Goals

2021: COP26 reinforced commitments to phase out coal and increase renewable
energy financing.
2022-Present:
• Nations pledge net-zero emissions by 2050-2060.
• Massive investments in offshore wind, green hydrogen, and energy storage.
• Technological breakthroughs in floating solar, tidal energy, and smart grids.

Future Outlook
• Increasing investment in energy storage and grid integration.
• Expansion of decentralized renewable systems (e.g., microgrids).
• Green hydrogen expected to play a significant role in decarbonizing
industries.
Renewable Energy Policies: A Comparative Analysis – India vs. the
Rest of the World
Introduction
• The transition to renewable energy is a global priority, driven by climate
change concerns, energy security, and economic development.
• India, as one of the fastest-growing economies, has made significant strides
in renewable energy, but its policies differ in approach, scope, and impact
compared to other leading nations.
• This analysis compares India's renewable energy policies with those of key
global players, highlighting differences in incentives, regulatory frameworks,
and implementation strategies.
1. India's Renewable Energy Policies

India's renewable energy sector has expanded rapidly, guided by ambitious government
policies and international commitments. Key aspects of India's policies include:

a. National Targets and Commitments

∙ Nationally Determined Contributions (NDCs): India has committed to achieving

50% of its energy needs from renewables by 2030 and reaching net-zero emissions
by 2070.

∙ Renewable Energy Capacity: India aims for 500 GW of non-fossil fuel energy
capacity by 2030, including solar, wind, and hydroelectric power.
b. Government Initiatives and Incentives
∙ Faster Adoption and Manufacturing of Electric Vehicles (FAME) Scheme: Supports EV
adoption through subsidies and infrastructure development.
∙ Production-Linked Incentive (PLI) Scheme: Encourages domestic manufacturing of solar
photovoltaic (PV) modules and batteries.
∙ Solar Parks and Ultra Mega Renewable Energy Parks: Large-scale renewable energy zones to
attract investment.
∙ Renewable Energy Certificates (RECs): A market-based mechanism promoting renewable
power generation.
c. Key Challenges
∙ Grid Integration and Stability: Managing intermittent power supply from renewables.
∙ Land Acquisition and Infrastructure: Difficulty in acquiring land for large projects.
∙ Investment and Financing: Need for stronger private sector participation.
2. Global Renewable Energy Policies – A Comparative View
a. European Union (EU)
∙ Green Deal and Fit for 55 Package: Aims to reduce emissions by 55% by 2030 and achieve
carbon neutrality by 2050.
∙ Emissions Trading System (ETS): Cap-and-trade mechanism to reduce carbon emissions.
∙ Feed-in Tariffs (FiTs) and Contracts for Difference (CfDs): Financial support mechanisms for
renewable energy projects.
b. United States (US)
∙ Inflation Reduction Act (IRA) 2022: Provides $369 billion in clean energy investments, tax
credits, and incentives.
∙ State-Level Renewable Portfolio Standards (RPS): Mandates specific renewable energy targets
for utilities.
∙ Federal Investment and Production Tax Credits (ITC & PTC): Subsidies for solar and wind
projects.
c. China
∙ World Leader in Renewable Energy: Largest installed capacity for solar, wind, and
hydro.
∙ State-Owned Enterprise (SOE) Dominance: Heavy government involvement in
energy projects.
∙ Five-Year Plans: Strong policy-driven growth with strategic renewable energy goals.
d. Other Countries
∙ Germany: Energiewende policy focuses on a nuclear-free, renewable-driven energy
transition.
∙ Brazil: Leading in bioenergy and hydropower, with strong ethanol-based fuel
policies.
∙ Australia: Rapid solar and wind adoption, driven by Renewable Energy Target
(RET) and Carbon Pricing Mechanism.
3. India vs. Rest of the World: Key Differences

Factor India Developed Countries (EU, US, China)

Expansion of renewable capacity, Decarbonization, energy efficiency,

Policy Focus
domestic manufacturing carbon pricing
Tax benefits, subsidies, state-funded Carbon markets, green bonds, private
Financial Support
projects sector incentives
Mix of nuclear, hydro, offshore wind,
Energy Mix Solar and wind dominance
hydrogen
Developing, with storage and smart Well-integrated, advanced grid
Grid Infrastructure
grids in progress technology
REC markets, renewable purchase FiTs, ETS, carbon credits, strict
Regulatory Mechanisms
obligations (RPOs) emission controls
Public-private partnerships, FDI Private sector-led investments, strong
Investment Sources
incentives VC & PE funding
Land acquisition, financing, Grid congestion, regulatory complexity,
Challenges
infrastructure higher costs
4. Key Takeaways & Future Outlook
• India’s rapid growth in renewable energy is commendable, but its approach differs
from developed economies, which have stronger carbon pricing mechanisms and
private sector investment.
• Policy integration is key: India must enhance energy storage, smart grids, and
transmission infrastructure for long-term sustainability.
• Global cooperation and knowledge-sharing can accelerate India's energy transition,
leveraging best practices from countries with established renewable markets.
• Innovations in green hydrogen, battery storage, and carbon capture will shape the
next phase of the renewable revolution.
India's trajectory in renewable energy remains strong, but aligning with global best
practices while addressing local challenges will determine the country's success in
achieving energy security and sustainability.
The Role of IREDA in India's Renewable Energy Growth

Introduction

• The Indian Renewable Energy Development Agency (IREDA) plays a critical role in
financing and promoting renewable energy projects across India.

• Established in 1987 as a Public Sector Enterprise under the Ministry of New &
Renewable Energy (MNRE)

• IREDA provides financial assistance to projects in solar, wind, biomass, small hydro,
and emerging clean technologies.
1. IREDA’s Key Functions and Objectives
IREDA acts as a key financial institution to accelerate renewable energy adoption in
India. Its primary functions include:
a. Financing Renewable Energy Projects
∙ Provides low-cost loans and funding for solar, wind, biomass, and hydropower
projects.
∙ Supports energy efficiency initiatives to reduce carbon emissions.
∙ Offers refinancing options for banks and NBFCs involved in green energy projects.
b. Policy Implementation and Support
∙ Acts as a nodal agency for government schemes like the Production Linked
Incentive (PLI) Scheme and other renewable energy subsidies.
∙ Works closely with MNRE, SECI, and private developers to implement policies.
c. Encouraging Private Sector Investment
∙ Facilitates Foreign Direct Investment (FDI) in India’s renewable energy
sector.
∙ Provides Green Bonds and other innovative financial instruments to attract
global capital.
∙ Collaborates with multilateral institutions like World Bank, ADB, and
KfW for project funding.
d. R&D and Capacity Building
∙ Promotes innovation in solar PV, wind technology, hydrogen energy, and
battery storage.
∙ Funds pilot projects and research in emerging technologies like floating
solar and offshore wind.
2. IREDA’s Impact on India’s Renewable Energy Market
∙ Financial Support: IREDA has sanctioned over ₹1.5 lakh crore in loans
for green energy projects.
∙ Solar and Wind Growth: Funded large-scale solar parks and wind farms,
helping India become the 4th largest in renewable capacity globally.
∙ Energy Access: Financed off-grid and rooftop solar projects, improving
rural electrification.
∙ Job Creation: Supported the renewable sector in generating millions of
jobs in manufacturing, installation, and maintenance.
3. Challenges and Future Outlook
Challenges:
∙ High Non-Performing Assets (NPAs) due to project delays and financing risks.
∙ Limited capital base, requiring diversification of funding sources.
∙ Grid integration issues affecting renewable energy absorption.
Future Outlook:
∙ IPO Plans: IREDA is set to go public, expanding its financial capacity.
∙ Green Hydrogen Financing: Supporting India’s push for hydrogen-based energy solutions.
∙ Global Collaborations: Strengthening partnerships with international climate funds.
Conclusion

IREDA is a backbone institution in India's renewable energy transition, bridging policy and finance.
As India moves towards its 500 GW non-fossil fuel goal by 2030, IREDA’s role in financing,
innovation, and infrastructure development will be crucial.