CleanTechnica is the #1 cleantech-focused
website
 in the world. Subscribe today!


Clean Power Coal_lump

Published on March 3rd, 2010 | by Mridul Chadha

13

India Announces Coal Tax To Fund Renewable Energy Projects

Share on Google+Share on RedditShare on StumbleUponTweet about this on TwitterShare on LinkedInShare on FacebookPin on PinterestDigg thisShare on TumblrBuffer this pageEmail this to someone

March 3rd, 2010 by  

In a landmark announcement the Indian Finance Minister, in his annual Budget speech, put forward the proposal of setting of National Clean Energy Fund which would be constituted through tax lieved on coal usage in the country. The quantum of tax would be INR 50 per ton of coal used, which would generate an annual revenue of around $600 million.

[social_buttons]

The announcement is extremely important and a major step in India’s endeavor to promote renewable energy infrastructure. India is heavily dependent on coal for power generation with 75% of the power generated coming from coal-fired power plants.

The National Clean Energy Fund would provide finance for the National Solar Mission through which India plans to install 20,000 MW of solar energy by 2022. If implemented the project would potentially make India the largest producer of solar energy worldwide. The finances for such an enormous project has aways been a major hurdle. Ever since its announcement the government has been looking at various options to finance the project.

While the government wanted the developed countries to share the burden of the estimated $100 billion required for the implementation of the project, through the proposed Climate Adaptation Fund – agreed upon in the Copenhagen Accord, some government officials pointed out that the country could finance the entire project on its own.

With no clarity on the Adaptation Fund and pressure on developing countries to contribute to the Adaptation Fund in order to help the poor countries gain easy and cheap access to renewable energy technologies, the government seems to have decided to go ahead and arrange at least part of the funding on its own.

In addition to the coal tax, the government also announced a number of financial incentives for the renewable energy sector.

Last year, the government also announced the National Mission on Energy Efficiency under which the most energy intensive industrial sectors would be required to energy efficiency certificates from the industries which have used less energy than the quota specified to them. A press release from the Prime Minister’s Office said,

(T)he “Perform, Achieve and Trade” (PAT) mechanism ….. would assign energy efficiency improvement targets to the country’s most energy-intensive industrial units, with the provision of allowing them to retain any energy-efficiency improvements in excess of their target in the form of Energy Savings Certificates, called ESCerts. Units will also be allowed to use purchased ESCerts to meet their targets.

The mission includes setting up of two funds, one to provide guarantees to banks providing loans to energy efficiency projectas and the other, to support investment in the manufacturing of energy-efficient products and provision of energy-efficiency services. The energy efficiency trading scheme would potentially generate transactions close to $15 billion by 2015.

The government was in the process of identifying 714 energy intensive industrial sectors which would be allotted maximum energy usage limits last year and the trading of the ESCerts could start from next month.

It is heartening to see the Indian government proactively initiating financing schemes to support its ambitious renewable energy projects. India’s energy demand, carbon emissions and per captia emissions output are going to increase rapidly with its rapid economic growth in the coming decades. Therefore, it is important that India lays a solid foundation for the timely implementation of such projects. And as far as the policy frameworks and financial support is concerned, India seems to be heading in the right direction.

via United Press International

Image Credit: Nostrifikator (Creative Commons License; Wikimedia Commons)

The views presented in the above article are author’s personal views and do not represent those of TERI/TERI University where the author is currently pursuing a Master’s degree.

Keep up to date with all the hottest cleantech news by subscribing to our (free) cleantech newsletter, or keep an eye on sector-specific news by getting our (also free) solar energy newsletter, electric vehicle newsletter, or wind energy newsletter.



Share on Google+Share on RedditShare on StumbleUponTweet about this on TwitterShare on LinkedInShare on FacebookPin on PinterestDigg thisShare on TumblrBuffer this pageEmail this to someone

Tags: , , , ,


About the Author

currently works as Head-News & Data at Climate Connect Limited, a market research and analytics firm in the renewable energy and carbon markets domain. He earned his Master’s in Technology degree from The Energy & Resources Institute in Renewable Energy Engineering and Management. He also has a bachelor’s degree in Environmental Engineering. Mridul has a keen interest in renewable energy sector in India and emerging carbon markets like China and Australia.



  • baldev

    Hi Mridul , can you please contact me at baldev.mamtani@copperalliance.asia

  • http://acnechannel.net Acne Channel

    You sure got have a lot of knowledge about finance..I got a lot of info from this post.

  • http://acnechannel.net Acne Channel

    You sure got have a lot of knowledge about finance..I got a lot of info from this post.

  • http://www.unepfi.org Affan Mohamed Kolandaiveedu

    Dear Mridul,

    indeed a very informative article, especially for a research i am doing for the United Nations Environment Programme’s Green Economy Report. The same applies to many of the articles that you have written for this webpage and others that i have been reading. I would like to ask you for the sources of your numbers especially from this article as i need to reference them for the report.

    I would most appreciate it, if you can contact me via email, which i have provided.

    I look forward to your reply.

    My Best

    Affan

  • http://www.unepfi.org Affan Mohamed Kolandaiveedu

    Dear Mridul,

    indeed a very informative article, especially for a research i am doing for the United Nations Environment Programme’s Green Economy Report. The same applies to many of the articles that you have written for this webpage and others that i have been reading. I would like to ask you for the sources of your numbers especially from this article as i need to reference them for the report.

    I would most appreciate it, if you can contact me via email, which i have provided.

    I look forward to your reply.

    My Best

    Affan

  • Mridul Chadha

    Taxes are much better than the complicated cap and trade schemes, since people can understand them better and thus it’s easier to garner support for them as opposed to cap and trade.

    Indian coals are of poorer quality and hence they sell for lower price, around $38-40 per ton.

  • Mridul Chadha

    Taxes are much better than the complicated cap and trade schemes, since people can understand them better and thus it’s easier to garner support for them as opposed to cap and trade.

    Indian coals are of poorer quality and hence they sell for lower price, around $38-40 per ton.

  • http://cleantechnica.com/author/susan Susan Kraemer

    Tax to fund renewable projects. Great idea: cap and trade but more direct, so people understand it better. Make coal power plants eligible too, as long as they invest in renewable energy.

    Mridul, what does coal sell for per ton in India?

  • http://cleantechnica.com/author/susan Susan Kraemer

    Tax to fund renewable projects. Great idea: cap and trade but more direct, so people understand it better. Make coal power plants eligible too, as long as they invest in renewable energy.

    Mridul, what does coal sell for per ton in India?

  • Ben

    50 IRN per ton of coal is only $1 USD.

    I like the idea, but it needs more bite.

  • Mridul Chadha

    For a start it’s good. India is heavily dependent on coal for power generation and since it has a long way to go in ensuring electricity for all, I believe $1 per ton is quite reasonable.

  • Mridul Chadha

    For a start it’s good. India is heavily dependent on coal for power generation and since it has a long way to go in ensuring electricity for all, I believe $1 per ton is quite reasonable.

  • Ben

    50 IRN per ton of coal is only $1 USD.

    I like the idea, but it needs more bite.

Back to Top ↑