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India to double tax on coal

India’s Finance Minister recently announced plans to substantially increase the nation’s tax on coal in order to help finance renewable energy projects.

“Clean Energy Cess* is presently levied on coal, peat and lignite for the purposes of financing and promoting clean energy initiatives and funding research in the area of clean energy,” said Minister Arun Jaitley.

“I propose to expand the scope of purposes of levying the said cess to include financing and promoting clean environment initiatives and funding research in the area of clean environment. To finance these additional initiatives, I propose to increase the Clean Energy Cess from 50 per tonne to 100 per tonne.”

100 rupees is around AUD $1.76. India’s total coal consumption in 2012 was 298.3 million tonnes.

The news would have taken some of the shine off Australia’s subsequent carbon tax repeal last week, which is believed will assist companies exporting coal from Australia.

A report published earlier this year warned international coal projects, including Australia’s Galilee Basin project, that rely on new export markets such as India face major financial risks.

India’s new Prime Minister, Narendra Modi, has been described as a “champion of solar” and already had a solid track record for establishing renewables projects prior to his ascendancy to Prime Minister. 

The recent budget announcements also included plans for four mega solar farms, 100,000 solar powered water pumps and a series of 1 MW solar parks on the banks of canals. 

All told, Prime Minister Narendra Modi’s government’s first budget seeks to spend USD $250 million on initiatives to increase solar power uptake and reform electricity supply to farmers in order to end blackouts that plague India.

The bigger picture for India is the Jawaharlal Nehru National Solar Mission. Launched on 11th January, 2010 by then Prime Minister Dr. Manmohan Singh;  the Mission has a target of deploying 20,000 MW of grid connected solar power by 2022. 

*Cess means a tax or levy in Scotland, Ireland and India

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