Everyone around was looking forward to US Federal Budget, because it was accepted that President Obama's government would definitely unveil sops for the companies in the clean energy sector and they can take advantage by buying those stocks. I am not very sure what was the extent of sops offered and the stock market impact on the companies in US.
However, not much attention was given the Indian Budget presented by Mr. Mukherjee which surprisingly offered a plenty of sops for the clean energy sector. Though he allocated a small proportion of its stimulus measures to climate investment but on the back of its new carbon-intensity target, the government has included a range of measures in the 2010-11 budget. Some of the key ones are:
- National Clean Energy Fund has been announced for research and innovation. This will be financed by a dedicated levy of INR50 (USD1.1) per ton of coal produced or imported. With annual coal demand of 550m tons in 2008- 09, the new clean- energy fund is expected to reach at least USD550m annually
- Photovoltaic and solar-power equipment has received a 5% excise duty exemption. Excise has also been reduced on environmentally friendly LED lights by 4%
- The budget also allocates INR14bn (cUSD300m) to environmental and clean energy projects with USD110m going for renewables and the rest for waste and water
- Finally, the allocation for India’s Ministry of New and Renewable Energy has been increased by more than 60% to USD220m in 2010-11
In total, the budget allocates over USD1bn for clean energy and other climate-related measures and thus I believe one theme that could be worked on for a long term period is this clean energy sector. The only problem I see with this is that the companies model is a high risk high return one and so the gestation period can be longer than estimate.
Happy Investing...!!!
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