Govt eyes millions in green funds from coal tax

NEW DELHI Fri Feb 26, 2010 5:01pm IST

Labourers break coal to be used in a steel factory in Ellikatta village, 60 km (37 miles) from the southern Indian city of Hyderabad September 2, 2009. REUTERS/Krishnendu Halder/Files

Labourers break coal to be used in a steel factory in Ellikatta village, 60 km (37 miles) from the southern Indian city of Hyderabad September 2, 2009.

Credit: Reuters/Krishnendu Halder/Files

Related Topics

NEW DELHI (Reuters) - The government proposed on Friday a small tax on production of coal to raise millions of dollars for a National Clean Energy Fund that could help the world's fourth biggest polluter to shift to a low-carbon economy.

India's growing economy has huge potential to shift to a low-carbon future, given that about 500 million Indians, or about half the population, do not have access to electricity, relying on fossil fuels such as coal to expand the power grid.

With global focus now on how developing countries tackle the use of fossil fuels -- an imperative in the fight against climate change -- measures such as taxing coal could underscore India's actions in the battle against global warming.

Presenting the country's 2010/11 budget, the finance minister proposed levying a "clean energy cess" of 50 rupees ($1) on every tonne of coal produced in the country or imported.

"While we must ensure that the principle of 'polluter pays' remains the basic guiding criteria for pollution management, we must also give a positive thrust to development of clean energy," Pranab Mukherjee told parliament.

India's coal production is expected at more than 570 million tonnes for 2010/11, raising the possibility of hundreds of millions of dollars for the corpus of the national clean energy fund.

India, the world's fourth largest greenhouse gas emitter though still low on per-capita emissions, is under pressure to cut pollution to battle climate change while demand for power increases as its middle class clamours for more cars, TVs and housing.

India has set a goal for slowing the growth of its greenhouse gas emissions, saying it was willing to rein in its "carbon intensity" -- the amount of carbon dioxide (CO2) emitted per unit of economic output -- by between 20 and 25 percent by 2020, from 2005 levels.

Mukherjee also sought to boost solar energy sector, proposing custom duty cut of five percent and exemption from federal factory gate taxes for solar power generating machinery.

The news buoyed shares in Indian firms, including Moser Baer and XL Telecom & Energy which make solar panels or have plans to do so.

Renewable energy accounts for barely 8 percent of India's total capacity of about 150,000 megawatts but the government aims to double green power generation to 25,000 megawatts in four years.

(Additional reporting by Devidutta Tripathy; Editing by Sanjeev Miglani)

For full coverage of Budget 2010 click here

FILED UNDER:
Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.

  • Most Popular
  • Most Shared

REUTERS SHOWCASE

Coal Block Allocation

Coal Block Allocation

Government urges Supreme Court to not cancel some 'illegal' coal mines  Full Article 

Modi in Japan

Modi in Japan

Japan and India agree to boost strategic ties at summit  Full Article 

Basel III Norms

Basel III Norms

RBI amends Basel III guidelines for banks  Full Article 

HSBC PMI

HSBC PMI

Factory activity expands at slower clip in August.  Full Article 

Current Account

Current Account

Balance of payments surplus for third straight quarter  Full Article 

India Infrastructure

India Infrastructure

RBI rule handicaps India's infrastructure hopes  Full Article 

Book Talk

Book Talk

Reema Abbasi and a glimpse of Pakistan’s Hindu past  Full Article 

China Economy

China Economy

Retreat in China's PMIs heightens calls for policy easing.  Full Article 

Managing Share Sales

Managing Share Sales

Govt seeks bids from banks to manage PFC, REC share sales   Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device.  Full Coverage