India’s energy transition is not a linear march from coal to renewables. It is a high-wire act where efficiency, geopolitics, and industrial decarbonisation collide. From the creation of a revolving fund for energy efficiency to the scramble for discounted Russian oil, and from solar and hydrogen pushes to aluminium’s green makeover, the country’s choices are shaping both domestic industry and global trade flows.
Image source: JMK Research
Revolving capital, not one-off grants
At the heart of India’s efficiency strategy is the Energy Efficiency Revolving Fund (EERF), seeded with USD 13 million from the Global Environment Facility (GEF). Managed by Energy Efficiency Services Limited (EESL) with support from the Asian Development Bank (ADB), the fund deploys capital into efficient motors, cooling systems, smart meters, and grid innovations.
Unlike traditional donor grants that vanish once used, the EERF recycles repayments into new projects. The broader GEF–EESL programme is mobilising over USD 453 million in blended capital, creating a self-sustaining mechanism that lowers upfront risks and keeps money flowing into demand-reducing technologies. For energy-intensive industries, including aluminium, this lowers barriers to adopting efficiency at scale.
The Russian oil discount and its ripple effect
However, efficiency gains are being tested against volatile crude markets. Before 2022, Russian oil barely figured in India’s energy mix, accounting for less than 1 per cent of imports. Today, it makes up 36-38 per cent, driven by discounts of USD 1.5-2 per barrel. That pricing advantage has shielded Indian refiners in the short term, but it has also drawn fire from Washington.
The US slapped 50 per cent tariffs on Russian crude imports, forcing Indian refiners to hedge against the risk of over-dependence. For public-sector firms like Indian Oil Corporation, rebalancing toward costlier West African and Latin American barrels means thinner margins. For Reliance Industries, with diversified sourcing and trading sophistication, the shock is more manageable.
Renewables grow, policy matures
On the one hand, where crude remains volatile, policy certainty comes from renewables. India has crossed the halfway mark of its non-fossil power capacity and is charging toward 500 GW by 2030. The government has extended the 100 per cent transmission waiver until June 2028, but crucially only for projects with storage, forcing developers to move beyond standalone solar and wind into hybrid, dispatchable assets.
The Approved List of Models and Manufacturers (ALMM) regime, reinstated in 2024, is nudging procurement toward domestic solar producers even as India builds up gigawatt-scale module capacity. With 100 per cent FDI permitted in renewables, global investors from BlackRock to Brookfield continue to anchor large projects.
Meanwhile, the National Green Hydrogen Mission, with INR 17,490 crore (USD 2.1 billion) allocated until 2029-30, is laying the foundation for industrial hydrogen use. Incentives for electrolyser manufacturing and hydrogen offtake are designed to create a dual benefit: decarbonising hard-to-abate sectors and creating an export opportunity in low-carbon fuels. Adani Green Energy, with 15.5 GW operational capacity, is already positioning itself to integrate storage and hydrogen-linked PPAs. Enel Green Power, through partnerships, is expanding multi-gigawatt pipelines in India.
Aluminium’s survival test: decarbonise or lose markets
Few industries face more pressure to decarbonise than aluminium. The sector is responsible for 2 per cent of global CO₂ emissions and remains heavily coal-reliant in India. Yet, the pivot is visible.
A JMK Research estimate suggests India’s aluminium sector is on the track to add 18-20 GW of renewable capacity by 2030, with 104 MW/416 MWh of storage, mobilising investments worth over USD 5 billion (INR 42,500 crore).
- Vedanta Aluminium, which produces half of India’s aluminium, has pledged to raise renewables from 5 per cent today to 30 per cent by 2030. It has already contracted 1.3 GW of renewable capacity from Serentica Renewables and consumes 2 billion units of green energy annually. On Akshay Urja Diwas 2025, it announced 1,335 MW of solar and wind, enough to cut 3.2 million tonnes of CO₂ per year. It has also launched Restora, India’s first low-carbon aluminium brand.
- Hindalco Industries has begun integrating renewables into smelter operations and is exploring backwards integration into solar manufacturing.
- NALCO operates 198 MW of wind capacity, while Jindal Aluminium powers two plants fully with green energy.
- Global entrants are circling with businesses like Rio Tinto, partnering with AMG Metals & Materials, exploring a 1 Mtpa green aluminium smelter and 2 Mtpa alumina refinery in India, powered by solar, wind, and pumped hydro.
The external push comes from Europe’s Carbon Border Adjustment Mechanism (CBAM), which will penalise carbon-intensive imports from 2026. Indian aluminium exports worth billions risk losing competitiveness unless smelters accelerate the switch to low-carbon power.
Recycling, approvals, and the unfinished agenda
Even as renewables gain traction, bottlenecks persist. Industry leaders flag that slow mining approvals, regulatory uncertainty on captive renewables, and the absence of a comprehensive recycling mandate limit India’s ability to close the green loop. Secondary aluminium remains under-leveraged, even though it uses 95 per cent less energy than primary production. Without aggressive recycling targets, India risks importing low-carbon scrap while exporting high-carbon ingots.
The balance sheet of transition
India’s energy economy is being pulled in three directions:
- Short-term relief from discounted Russian oil, with all the geopolitical risks it carries.
- Medium-term policy-driven expansion of renewables and hydrogen, supported by capital inflows and maturing domestic manufacturing.
- Long-term survival of heavy industries like aluminium hinges on their ability to decarbonise before global carbon tariffs bite.
The Russian oil story is a testament to the fragility of depending on geopolitical discounts. And aluminium’s pivot to green energy shows that survival in a carbon-constrained world is no longer optional. The message is blunt to make the transition not about adding cheap megawatts, but about securing firm, clean megawatt-hours and carbon-neutral materials. India’s ability to weave together revolving funds, renewable capacity, and low-carbon aluminium will decide its place in the fractured global energy order.
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