India Mops Up $2.85 Billion Clean Energy Fund from Coal Tax

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Researched by Industrial Info Resources India (Delhi, India)--India has generated about $2.85 billion in revenue during the past four years, in the form of clean energy cess, a tax levied on coal, peat and lignite.

India plans to significantly boost its renewable energy infrastructure during the next few years, and the soaring National Clean Energy Fund may turn to be a major boon for the country's clean energy program.

The Clean Energy Fund has been generated by imposing a tax on every ton of coal mined or imported into the country. Since its introduction in 2010, the tax was rupees 50, equivalent to 80 cents, per ton for four years, but the new government doubled this tax in its first union budget, last year.

In the ongoing 2014-15 fiscal year alone, the government has collected around $1.08 billion, nearly the double the amount it garnered in the previous fiscal year. In a statement to the Lower House of the Parliament, Coal, Power and Renewable Energy Minister Piyush Goyal declared that $556 million was collected in the last fiscal year as clean energy cess. In 2012-13, the amount was $480 million, while in 2011-12, it was $405 million.

The National Clean Energy Fund will be used to finance solar power projects under the National Solar Mission and set up dedicated transmission lines for renewable energy projects across the country. The funds may also be disbursed through government agencies like the Indian Renewable Energy Development Agency (IREDA) (New Delhi), which will further grant loans to renewable energy projects at concessional rates.

The government is also expected to provide Viability Gap Funding (VGF) to the ultra-mega solar power projects currently being pursued by various public sector companies and the recently announced canal-top solar power program from the Clean Energy Fund.

India plans to add 100 gigawatts (GWs) of solar power capacity by 2022, an increase of five times over its initial plan announced in 2010. This plan would require a total investment of about $100 billion. Thus, a significant amount of foreign funding in will be needed in addition to government's support.

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