All set for coal tax

The Indian government will start levying the Clean Energy Cess, or coal tax, on all the coal mined in the country or imported from July 1, 2010. A tax of Rs. 50 would be levied on every tonne of coal mined in the country as well as that imported from abroad. The Indian government announced the coal tax in order to generate funding for the research, development and deployment of cleaner and renewable energy technologies.

As of April 1 2009, India’s coal reserves stood at 267 billion tonnes. There has been a steady increase in the coal production over the years. The government has a target of mining 461 million tonnes in 2007-08 as against the actual production of 430 million tonnes in 2006-07.

Coal is the primary source of power generation in India with more than 70 percent of the total electricity generated coming from coal-fired power plants. However, with India already committed to reducing its carbon intensity by 20 to 25 percent by 2020 from 2005 levels, coal is not the way. The government must invest heavily in the renewable energy technologies. Therefore, the need of a National Clean Energy Fund.