The world’s third-biggest emitter of greenhouse gases will raise coal duty after Finance Minister Arun Jaitley delivered his annual budget speech. He stated that the collected revenues will feed $2bn annually into the National Clean Energy Fund, which has grown to $6.7bn within its five-year existence, to promote renewable-energy projects.
Coal currently drives 60 percent of India’s electricity generation capacity
Jaitley said: “I propose to increase the Clean Energy Cess from INR 100 ($1.6) to INR 200 ($3.2) per metric tonne of coal to finance clean environment initiatives.” This clean energy cess levy, on both imported coal and coal mined in India, is expected to encourage investments to boost fuel efficiencies. The increase follows last year’s jump from $0.8 per metric tonne to $1.6 per metric tonne and signals a tax hike for the second consecutive year.
As one of the cheapest sources of energy, coal currently drives 60 percent of India’s electricity generation capacity and the higher tax is expected to see coal costs for every kilowatt hour of electricity rise by as much as $0.001. At present, only six percent of the fuel consumed by India includes renewable energy and, in a bid to double this share, the government aims to add 175 gigawatts of renewable-generation capacity by 2022.
The Economic Survey 2014-2015, released by the Indian Ministry of Finance, suggested a five-fold increase in coal cess to $8 per metric tonne in order to bring domestic prices on par with international prices and drastically reduce carbon emissions. Jaitley added: “With regard to coal, there’s a need to find a balance between taxing pollution and the price of power, I intend to start on that journey too.”
