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India Doubles Coal Tax, Invests in Renewables

Indian Finance Minister Arun Jaitley has unveiled a 2015/16 budget that doubles the tax on coal production and allocates much of the resulting revenue to promote electric vehicles and renewable energy projects.

The budget, which takes effect April 1, increases the duty on coal to 200 rupees (US$3.20) per ton. “There’s a need to find a balance between taxing pollution and the price of power,” Jaitley said. “I intend to start on that journey, too.”

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Bloomberg reports that India is scaling down fuel subsidies and introducing new gasoline and diesel taxes to fund new roads. The country has also committed to 175 gigawatts of new renewable electricity capacity by 2022, although Greentech Media’s Katherine Tweed reports concerns [2] that India’s power grid won’t be able to accept the additional load. “Even if you get a fraction of what was committed, the grid cannot handle it,” Rahul Tongia, non-resident fellow at Brookings India, told the RE-Invest 2015 summit in Delhi last month.

“Prime Minister Narendra Modi’s government, which swept to power in May, has set itself unprecedented targets for clean energy and has increased taxes on use of fossil fuels such as coal and petroleum amid mounting international pressure to curb emissions,” Singh writes.