Context:
A recent report called ‘Low-cost finance for energy transition,’ released by the International Renewable Energy Agency (IRENA), has recognized and praised India’s outstanding progress in expanding its renewable energy capacity.
Relevance:
GS III: Indian Economy
Dimensions of the Article:
- Key Highlights of the Report
- About International Renewable Energy Agency (IRENA)
- About Indian Renewable Energy Development Agency Ltd. (IREDA)
Key Highlights of the Report:
Unprecedented Growth in Renewable Energy Sector:
- India has set ambitious targets of achieving 175 GW of renewable energy capacity by 2022 and 500 GW of non-fossil fuel capacity by 2030.
- The country aims to achieve net-zero greenhouse gas emissions by 2070, requiring significant investment of around $10 trillion.
Renewable Energy Attractive Index:
- India ranked third on the index in 2021, reflecting its strong commitment to renewable energy development.
- The country possesses the fourth-largest solar and wind power base globally and has experienced rapid growth.
- Comprehensive government policies have played a crucial role in supporting the achievement of national targets.
Praiseworthy role played by :
- IREDA (Indian Renewable Energy Development Agency) has played a crucial role in financing and commissioning approximately 20 GW of renewable energy capacity.
- Green bonds have attracted private sector investment, reducing the cost of capital for green projects.
- The cumulative green bond issuance in India has reached $18.3 billion, with a record issuance of $7 billion in 2021.
- IREDA has actively promoted emerging technologies such as battery energy storage systems, green hydrogen electrolysers, e-mobility, and waste-to-energy through innovative financing policies.
Supportive Government:
- The Indian government’s sovereign bond issuance aims to reduce the supply of non-green bonds, resulting in lower overall bond yields.
- Local banks and insurance companies have shown significant interest in purchasing green bonds, with some involvement from foreign banks as well.
- Investments in green bonds qualify towards the Reserve Bank of India’s statutory liquidity ratio and are classified as infrastructure investments by insurance companies.
- Investment in sovereign green bonds is categorized as specified securities, allowing unlimited investment by foreign investors.
About International Renewable Energy Agency (IRENA)
- Introduction to IRENA: IRENA is an intergovernmental organization that assists countries in their transition towards a sustainable energy future.
- Establishment and Headquarters: IRENA was established on January 26, 2009, in Bonn, Germany. Its headquarters are located in Abu Dhabi, United Arab Emirates.
- Membership: IRENA has a membership of 167 countries and the European Union, working together to promote the use of renewable energy worldwide.
- India’s Membership: India joined IRENA in 2009 as the 77th Founding Member of the organization.
- UN Observer Status: IRENA is an official United Nations observer, which allows it to participate in UN General Assembly meetings, as well as the United Nations Framework Convention on Climate Change.
About Indian Renewable Energy Development Agency Ltd. (IREDA)
- The Indian Renewable Energy Development Agency Limited (IREDA) was established on 11th March, 1987 as a Public limited Government Company under the Companies Act, 1956 and it promotes, develops and extends financial assistance for Renewable Energy and Energy Efficiency/Conservation Projects.
- The IREDA’s Motto is “Energy for Ever.”
- The Indian Renewable Energy Development Agency (IREDA) is a Non-Banking Financial Institution under the administrative control of this Ministry for providing term loans for renewable energy and energy efficiency projects.
- It offers a credit enhancement guarantee scheme to support the issuance of bonds by wind and solar energy project developers.
- By providing unconditional and irrevocable partial credit guarantees, IREDA aims to enhance the credit rating of bonds for renewable energy projects, thereby improving their marketability and liquidity, and attracting lower-cost and longer-term funding for project developers.
- The amount raised by credit enhanced bonds shall only serve to repay existing debt partially or fully.
- IREDA’s long-term objective is to contribute to the development of a bond market for renewable energy projects in India.
-Source: The Hindu
