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Green India Funding by Annual Billion Dollar Coal Tax a Good Move

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India hopes to derive annual revenues of more than $1 billion dollars from a new coal tax it has introduced.These revenues will go to a proposed Green Bank which will fund Green Energy Projects and R&D in the Country.While initially the funds will be managed by the government’s financial agency IREDA,later on a full fledged Green Bank will be managing the annual $1 Billion Coal Tax.Note Coal is the biggest Energy Source for India and China.Both countries are trying to diversify their dependence from Coal as it is the dirtiest form of  energy.However the cheapness and abundance has made coal indispensable to the voracious energy requirements of both countries.Coal India Limited (CIL) which came out with an IPO recently  was a resounding success in India showing that investors believe that Coal will contiue to grow and dominate the Energy Scene in India.

However both India and China recognize the harmful effects of Coal based power in increasing the Greenhouse Gas Emissions.WHile India is trying to curb it through a Coal Tax,China is investing in Clean Coal Technologies.CCS is  a Technology which is way immature and raises questions about danger of bioengineering.A Coal Tax makes much more sense IMHO than CCS which raises its own problems.The Government is levying around $1 ton in cess and with a production/import of around 500 million tons will gather $500 million annually which should grow to around  $1 billion in 5-6 years given growth in India’s coal production.The government may eventually consider converting its renewable energy lending institution Indian Renewable Energy Development Agency (IREDA) into a Green Bank as well.

Green Bank in works to power renewable energy projects – ET

The government is planning to set up a green bank by leveraging the Rs 5,000-crore national clean energy fund expected annually through a cess on domestic and imported coal.The fund set up by finance minister Pranab Mukherjee in the union budget 2010-11 , is expected to raise about Rs 4,500-5 ,000 crore this fiscal year, an official working in the finance ministry said. The government levies a Rs 50 per tonne cess on both domestically-produced and imported coal. The cess aims to fund research and innovative projects in clean energy technology.MNRE-proposed bank will be linked with the Indian Renewable Energy Development Agency (IREDA), a government-owned non-banking financial company, an official directly involved with the matter said.


Sneha Shah

I am Sneha, the Editor-in-chief for the Blog. We would be glad to receive suggestions, inputs & comments on GWI from you guys to keep it going! You can contact me for consultancy/trade inquires by writing an email to

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