In yet another initiative favoring renewable energy projects in India, the Finance Minister has announced plans to impose higher tax on coal so as to fund clean energy and environmental projects.
Total coal consumption of India was 298.3 million tons in 2012. Presently, Clean Energy Cess is levied for coal, peat and lignite in order to economically promote clean energy investments with adequate funding research programs, observed Minister Arun Jaitley.
“I propose to expand the scope of purposes of levying the said cess to include financing and promoting clean environment initiatives and funding research in the area of clean environment. To finance these additional initiatives, I propose to increase the Clean Energy Cess from 50 per ton to 100 per ton,” explained the Minister.
Financers who have invested in environmental projects like cleaning of India’s polluted rivers, including the Ganga are sure to cheer the new initiative.
The initiative proves that India maintains a clear approach towards coal while continuing its export and import activities. The government is expected to make huge revenue with this tax hike. In a period of one year, this tax amount may total up to $1.2 billion.
The recent budget has made provisions for four mega solar parks, 100,000 solar powered water pumps and 1 MW solar parks on the banks of canals. National Clean Energy Fund has to collect and provide fund for all these announced clean energy development programs.
The budget has allocated USD $250 million on solar power uptake initiatives and improvement of supply of electricity for Indian farmers. Another $67 million will be invested for installing 100,000 solar powered water pumps and irrigation systems.
The Jawaharlal Nehru National Solar Mission further evokes future hopes of renewable energy development with a target of achieving 20,000 MW of grid connected solar power by 2022. By 2019, the government wants to provide 400 million homes in India with solar power.
The decision to raise tax on coal adds another feather on the cap of new BJP government in India. Narendra Modi, the new PM, has been promoting renewable energy projects in his home state Gujarat, where he reined as the Chief Minister, before becoming the Prime Minister. Gujarat now contributes almost 2/3 share of the total solar capacity in India.
In another major initiative recently, India has agreed upon funds for the improvement of international sustainability bank, initiated by the BRICS group, for global investment of sustainable energy and infrastructure expansion.
These developments happen at a time when Australian government recently repealed the carbon tax on fossil fuels, which is believed to assist companies exporting coal from Australia. With this announcement, Australia has become the first country in the world to abolish a price on the carbon.