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Q. Coal cess from green projects: Discuss the issue related to utilisation of coal cess from green projects.
Nov 28, 2016 Related to : GS Paper-3

Ans :

Introduction-

Recently some news agencies have reported that central governments is planning to compensate the states for any revenue shortfall in the changeover to the goods and services through the money collected as green cess on coal mining. Many objected for such possible diversion, because funds for fiscal compensation would defeat the very purpose of the cess and to fund green projects and penalise environmental damage. 

Analysis-

  • The clean energy cess, which has rightly been raised from Rs 200 per tonne of coal lately, would now add up to over Rs 20,000 crore per annum, and it would be in interest of the nation to use the funds for a dedicated purpose. 
  • The fund must be used to provide viability gap funding for green energy projects, such as solar and wind power facilities. Government needs to fund smart grids and invest in reliable line capacity for the green power in the offing.
  • Given that renewable power projects have high output variability, it is vital that we have sound evacuation facilities for transmitting and supplying such power cross-country. 
  • It is also important that we use the green cess funds to adopt and widely diffuse new technology to significantly shore up thermal efficiency in conventional power plants. 
  • It would proactively reduce carbon emissions and strengthen India’s climate action. Hence central government should not divert the fund for its fiscal compensation.


Conclusion-


The report of possible diversion of green fund for fiscal compensation if true, needs to be reviewed. Green cess that is collected from coal mining, must used only for compensating the environmental damages.  The fund should not be used for any other purposes, else it will defeat the very purpose of green cess. We are witnessing techno-economic paradigm shift away from coal and other fossil fuels, and we do need to better allocate resources to boost systemic efficiency and remove energy poverty.


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