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Indian Coal Tax To Fund Clean Energy

by Mary Swire, Tax-News.com, Hong Kong

23 February 2011


The Indian Finance Ministry is looking at using some of the 25 bn rupees (USD555m) revenue raised from its coal tax to invest in new power transmission lines which would distribute power from clean energy projects.

The levy on coal producers started on July 1 last year, and was the first step by one of Asia’s largest energy consumers to charge companies for fossil fuel pollution. Coal is taxed at INR50 per metric ton and this also applies to imported fossil fuel.

The plans were revealed by Pramod Deo, chairman of the Central Electricity Regulatory Commission, who said that the money would be given to states without the infrastructure to move the power from planned renewable-energy plants.

Deepak Gupta, secretary at the Ministry of New and Renewable Energy, told a conference, organized by the Associated Chambers of Commerce and Industry of India (ASSOCHAM), in Delhi last week that nearly 40% of the population still has no access to power. The consumption of diesel, kerosene and furnace oil must come down, and renewable energy is the only option, he said.

The challenge to India is the lack of a suitable nationwide electricity grid, with the current grid only supplying one in three of the population. It is hoped that the extra coal tax revenue would fund clean-energy projects such as solar plants and wind farms.

TAGS: environment | tax | business | India | environmental tax

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