Green Fund From Coal Ideally, the proceeds of the coal cess should be used to finance clean energy and climate-related projects.
However, the government has decided to utilise coal cess funds to compensate states for any goods and services tax (GST) shortfall. At least after the five-year period for which the government is committed to compensating the states for a shortfall in their indirect tax collection, the funds should be utilised exclusively for such purposes.Green Fund From Coal.
That period ends in 2022. The coal cess, based on the principle of polluter pays, was introduced in 2010 and levied on domestic and imported coal. The cess accrues to the National Clean Energy and Environment Fund (NCEEF), and is an effort to tax carbon for its externalities and serve as a steady source for funding clean energy projects.
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The tussle between immediate economic challenges and the demands of transitioning to a sustainable development path confronts many developing economies. Countries will need to step up their efforts to slow down global warming over the next decade.
Green Fund From Coal
A commitment that funds collected as coal cess will be used, come 2022, exclusively for financing the country’s transition to a low-carbon and sustainable economy will be timely. India has committed to adding 175 GW renewable capacity by 2022 and then ramp it up to 450 GW. This will require higher flow of funds.
The government could raise the cess, thereby creating a corpus for the NCEEF in 2022. The cess has risen from Rs 50 per tonne in 2010 to Rs 200 per tonne in 2015 and to `400 per tonne in 2016. The coal cess collected between 2010-11 and 2017-18 amounted to Rs 86,440.21crore. Of this, Rs 29,645.29 crore was transferred to the NCEEF. Of this, sadly, only Rs 15,911.49 crore has been disbursed.
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Given the funds crunch, it makes sense to divert coal cess funds for a vital non-green purpose. That should be temporary.
Source: Economic Times | ET
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