Introduction

The year 2024 has etched itself in history as the warmest year globally since 1850.[1] This stark reality is an essential reminder the challenges humans face due to climate change are immediate and significant. The Economic Survey 2024-25 has identified India as the seventh most susceptible nation to ramifications of climate change, underscoring the country’s vulnerability to acute meteorological phenomena, gradual adversities such as rising sea levels, loss of biodiversity, and escalating water insecurity.[2] India finds itself at crossroads, tasked with fostering economic growth and addressing environmental sustainability. India’s position as the third-largest emitter of greenhouse gases[3] amplifies an urgency, prompting discourse around effective climate strategies.

Recent Union Budget for 2025-26 signals an openness to shape fiscal measures that align with national and international climate commitments, promoting synergy between economic growth and sustainability.[4] India’s commitment to reducing carbon emissions intensity by 33-35% from 2005 levels by 2030, as stipulated in the Paris Accord, underscores the significance of tax incentives as vital instruments in realising this ambitious objective.