In a significant push to bolster the country's clean energy portfolio, India's Power Ministry is actively advocating for nuclear power to be officially recognized with green energy status. Power Secretary Pankaj Agarwal has formally communicated this request to the Department of Expenditure, emphasizing the critical need for nuclear energy's inclusion in the national green taxonomy.
Unlocking Climate Finance for Nuclear Projects
The primary motivation behind this initiative is to ensure the bankability of nuclear projects and attract crucial climate finance. Granting green energy status would open doors for nuclear power ventures to access a range of financial instruments, including green bonds, green loans, and blended finance, which are currently unavailable due to their exclusion from existing green finance frameworks.
Currently, India's Sovereign Green Bond Framework, RBI green deposit rules, and SEBI green debt securities explicitly exclude nuclear power. This exclusion limits the availability of low-cost capital for a sector known for its high initial investment and long gestation periods.
Department of Atomic Energy's Parallel Efforts
The Department of Atomic Energy (DAE) has been pursuing similar objectives, seeking various fiscal and non-fiscal incentives for the industry. Sandeep Raj, Joint Secretary and Financial Advisor at DAE, confirmed that an internal committee has submitted suggestions for nuclear's inclusion in the green taxonomy.
“We had a meeting with very senior functionaries of the Department of expenditure, and they felt that even if, for various reasons, nuclear is not coming under green, it should not in any way affect the cost of borrowing. So even if it (the Department of Expenditure) doesn't classify (nuclear) in the green taxonomy, everybody knows that nuclear is one of the cleanest,” stated Raj at an industry event.
Proposed Incentives and Global Context
Beyond green status, the DAE has also proposed reducing the Goods and Services Tax (GST) on nuclear power from 18% to 5%, aligning it with renewable energy sources like solar. Additionally, they seek a mandate for purchase obligations in nuclear power, similar to those for solar energy, and are exploring viability gap funding based on indigenization and construction costs.
Internationally, the classification of nuclear power varies. While the European Union has included certain nuclear activities in its green taxonomy, Raj noted that Korea is one of the few countries where nuclear is consistently treated as green. Globally, it is often categorized as 'red' in finance frameworks despite being a baseload fuel with minimal pollution.
As India finalizes the rules and regulations under the SHANTI Act, paving the way for private sector participation in civil nuclear power generation, the government's support through green energy status and other incentives is seen as crucial for attracting investment and accelerating the nation's clean energy transition.