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Carbon Tax

Published on July 20th, 2014 | by Smiti


India Doubles Tax On Coal To Fund Clean Energy, Environmental Projects

July 20th, 2014 by  

22,000 MW solar power capacity by 2022, a dedicated national-level program for promoting wind energy generation, implementation of the world’s largest solar power projects (with capacity of up to 4,000 MW), covering canals with solar panels, implementing dedicated transmission corridors for distributing electricity from renewable energy projects, and cleaning one of the largest rivers in India. This is just a small list of initiatives that India plans to implement in the renewable energy and the environment protection sector.

Such initiatives would require billions of dollars of investment. So India’s finance minister has decided to double the tax on every metric ton of coal mined or imported in the country. Coal mining companies and importers have paid ₹50 ($0.83) per metric of coal since 2010, this tax has now been increased to ₹100 ($1.67).


The revenue raised from this tax feeds to the National Clean Energy Fund. The fund was established to provide low-cost finance to renewable energy projects and the Green Corridors transmission project. According to media reports, the fund was no way near being utilised and had an unused corpus of ₹8,300 crore. With the new government planning to spend as much as ₹1,000 crore ($167 million) for projects earmarked for this financial year (ending March 2015), things could change rapidly.

The government has earmarked ₹500 crore for the initial implementation work for four ultra mega solar power projects, each with a capacity between 2,000 MW and 4,000 MW. Another ₹400 crore ($67 million) would be provided for installation of 100,000 solar-powered irrigation sets and water-pumping stations. The Prime Minister’s pet project, the canal-top solar power plant, would receive ₹100 crore ($17 million) this year.

The scope of expenditure from this fund has also been widened to include environmental projects and research and development projects in the clean energy and environment sectors. Probably for the first time in India’s history, a separate ministry for cleaning the Ganga river has been established. The Ganges has been on the receiving end of blatant abuse for several decades, threatening probably the single largest source of potable and irrigation water in India. Stating the Ganges is the lifeline of Bangladesh would probably a gross understatement. The aim is to clean rivers across the country and develop their banks as major tourist and pilgrimage spots.

India’s demand for coal is not likely to subside any time in the short to medium term — thus, this tax could raise massive amounts of revenue to boost India’s renewable energy and environmental protection sectors. According to some estimates, this tax could raise up to ₹7,400 crore ($1.2 billion) during a period of 12 months. This amount would only increase as the demand for coal in India has been increasing for several years.

Image Credit: Nostrifikator (CC BY-SA 3.0)

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About the Author

works as a senior solar engineer at a reputed engineering and management consultancy. She has conducted due diligence of several solar PV projects in India and Southeast Asia. She has keen interest in renewable energy, green buildings, environmental sustainability, and biofuels. She currently resides in New Delhi, India.

  • Zer0Sum

    If Phony Tony and his gang of Cronies intend to follow instead of lead they can place the same tax duties on Oz coal. Surely Australian Coal companies can afford it if the Indian Coal companies can.

  • Meer Khan

    It’s good that countries are recognizing and utilizing the sources of renewable energies.
    Pakistan’s first large-scale solar power project, Quaid-e-Azam Solar Park in Bhawalpur, is one of the largest in the world.

    The project is expected to start generating 100 MW of power by the end of the year & 1,000 MW by the end of 2016.

    The project comprises 400,000 solar panels and was built for a cost of about $ 131 Million. Once completed, the project will generate around 2.5 times the power that the massive 392 MW Ivanpah solar-thermal plant in California does — making it one of the largest solar projects in the world.

  • Reality bites

    Just PR spin by a PR savvy FM The Prime Minister of India Modi is close to a billionaire bussinessman ADANI who has started plans to create start a mega 10000 MW COAL BASED POWER PLANT to supply Coal to Pakistan Incidentally the increase in import duties will benefit this businessman who has CAPTIVE LOCAL COAL http://indianexpress.com/article/business/business-others/adani-mulls-exporting-electricity-to-pakistan/

    • Bob_Wallace

      No all caps shouting please.

  • M J Kapadia

    That’s a great step for all of us in India… what a visionary move…coal users and renewable energy users both are equally sensitised to the need of today and tomorrow! Kudos to Modi Govt!

  • rosy lily

    I’m making 90 USD an hour working at my floor. I was amazed when my neighbour told me she was averaging $90 but I see how it works now. I feel so much freedom now that I’m my own boss.

    Here ­­­­­­­­­is ­­­­­­­­­I ­­­­­started>>>>>>>>>➜➜➜➜➜➜➜

    ➜➜➜➜ W­W­W­.­N­E­T­P­A­Y­1­0­.ℭ­ℴ­m



    • JamesWimberley

      Go away.

      • Cleantechnica may need to tweak its spam filter, however that’s done. I’m sure its not like water treatment and filtration performance can be improved using a smaller mesh size media. This kind of spam is all over the blogosphere right now.

        • Ronald Brakels

          It is a hidden war being waged all over the exointelligence that is the internet. Spam vs. spam filter in an ever escalating conflict that is being taken further and further out of the hands of humans and into cold, dispassionate electronic minds that only know two states; victory or defeat. And to tell the truth I don’t even know if in the end we’ll be able to recognise who has won.

          • Bob_Wallace

            If you see ’em, flag ’em.

            I generally smite the bulk spammers fairly quickly but was away from the web for a couple of days and Zach is busy doing family duty. The pantry was left unguarded and rats gnawed the cheese.

  • DoRightThing

    It’s a good step in the right direction, but still not enough.

    • Offgridman

      As the old saying goes ‘even a journey of a thousand miles must begin with a single step’. Thus far Narindi has continued going in the right direction since his start in his home state and now on the national level.
      Unlike the politicians in the US and Australia that once it started to influence their fossil fuel friends who didn’t want to change with the times. Are now putting the brakes on their own countries switch to renewable energy.
      Rather than concentrating on the length of India’s journey we should be concerned about the progress of our own.

      • JamesWimberley

        By all accounts, Narendra Modi is unprincipled and ruthless. But as you say he is, unlike Tony Abbott, highly intelligent and politically skilful. Modi has promised mass access to electricity, and the only realistic way to deliver on this is through massive investment in renewables. (Don’t let’s start on Indian nuclear, the epitome of jam tomorrow.) The tax on coal is small – estimates of an optimum carbon tax start at $10 a tonne and go up to $80 – but it’s a clear signal to the Indian coal industry that it’s out of favour at court, with worse to come.

        • Calamity_Jean

          Considering that coal mining and coal-fired power plants are mega-unpopular in India, this is a very smart move. Yay, Modi!

          Now raise the tax on petroleum and promote rooftop solar with batteries as a replacement for gasoline or diesel generators.

          • Matt

            Saw a lot of battery power rickshaws and mopeds on my trip to China this month. Guess that they are popping up in India too; or could be if grid stabilizes. I know in the west are are focus on cars/trucks; but EVs are happening in other ways. I think I spooked my drive a bit when I got on my knees to check it out before paying her.

          • No way

            You must have been very lucky to be able to spot one of China’s… 150 million… electric vehicles 😛

    • Matt

      Its a clear sign to coal that they are out of favor. And step by step.
      Was $0.83 (US), now $1.67, maybe double again in 6-12 months once he gets the install train moving. And so on.

      Would love to see US do a $X/ton, twice if out of federal land or imported. And an additional $2*X/ton if exported. Start X at 10 and raise it every year. But still years at best from that. 🙁

      • IMPOed

        I love an optimist,,, but the Koch Bros. will live underground before letting a dollar of profit escape their grasp!

    • phoenix

      I agree. They burn a ton (2,000 kWh electricity) of coal today and collect money to install perhaps 0.4 watt of solar power, which will yield some 0.6 kWh/year. That doesn’t go anywhere.

  • bugwan

    I presume the use of solar panels over canals would also reduce evaporation. That’s a clever idea.

    • Steve Grinwis

      That was the point. They have water issues, so, they made a plan to cover them. Then some brilliant fellow said: now put solar panels on them. Mind blown. Whole room.

      • Patrick Linsley

        Interestingly enough the idea of covering irrigation canals has a very long history in Persia (in fact Persians have used them for over 2000 years) and that spread to India over time. The idea was usually make an aquaduct underground to avoid 100+ degree temperature under unrelenting sun to transport water long distance. Here’s a few links on them (from Wikipedia since I’m being lazy).
        Persian Qanat

        Indian Suranga

  • Alexander Dudley

    Such a brilliant policy- if only Australia had a leader with a brain.

    • Omega Centauri

      Or any English speaking country? (OK, maybe Scotland and/or New Zealand?)
      It has less to do with the brains of the leaders, than of the uninformed populace they play to.

      • Ross

        Unfortunately it is the vested fossil fuel interests they’re playing to. “In surveys” most people support clean energy.

      • Matt

        Sorry to disagree, and meaning no disrespect to all the India people, but I don’t think it was a massive out cry from the masses in the country that lead to this policy. The leader saw that in-country coal could not keep up (lets ignore the bad air for a minute). And said long term if I don’t break the coal habit I sink India into a hole. And the coal lobby, didn’t have enough power to stop him. Not down playing what he did, it is a great move. And maybe that bad air did play a role.
        In US there is a lot of money from coal, and it finds it’s way into pockets in DC and to the state capitals of many (most states). Oz has same problem.

      • Ronald Brakels

        The UK is light years, maybe even parsecs ahead of Australia. However, some decisions they make in the UK on clean energy are really head banging. (I realize it’s not actually physically possible to see Germany from England, but they should realize that it is there and that it won’t take long to get solar installation costs down to German levels plan accordingly.)

  • Patrick Linsley

    More proof that the Liberal party of Australia royally screwed the pooch going all in on coal exports (especially since India was supposed to be a fall back position for declining exports to China). If this tax has staying power the more coal exports ramp up to India the quicker it’s decline on the tail end.

  • IMPOed

    Wow, a country with a brain, Kudos India!!

    • Matthew

      A country without republicans.

      • IMPOed

        Oooo, Ya!!

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