Unused Money For Fight Against Climate Change Diverted To GST Compensation
India’s biggest source of domestic public fund to propagate renewable energy and protect the environment, the National Clean Energy and Environment Fund, has been diverted to compensate states for revenue lost after instituting the goods and services tax (GST) regime.
Previously, the tax collected on production and import of coal was funneled into the National Clean Energy and Environment Fund, but now it is used for compensating states post the GST reform.
As per data collected from the finance ministry under the Right to Information Act, 2005, even the unused and unspent amount in the National Clean Energy and Environment Fund has been diverted. The unspent money amounts to about Rs 56,700 crore.
As per a report by Scroll.in, “A steady stream of funds for clean energy, amounting to more than Rs 1 lakh crore over next five years will also dry up from next financial year,” and from next year, the government will not have the National Clean Energy and Environment Fund.
These dedicated funds linked to a specific cess are termed as “non-lapsable”, where cess collected in a financial year, if unspent, are to be retained specifically for that purpose the next financial year. However with reassessment of priorities, the central government which is not supposed to use that pool of funds for any other purpose but for clean energy and environment, is deciding to use it for other purposes.
This will be a huge blow to the Indian effort to move towards a greener economy as funds amount to Rs 56,700 crore and an additional Rs 29,700 crore to be collected through cess in 2017-18 will be diverted away from the fight against climate change. This is double the budget of Modi’s Skill India Mission. Even though the coal cess collected should be used for the energy sector, more specifically for pushing clean energy and protecting the environment, it has not been ploughed back to the energy sector as expected.
The coal cess or the Clean Energy Cess was first started in 2010, by the Congress government, which charged an Rs 50 tax per ton of coal produced or imported. With this taxation of coal, the price of dirty energy increases, and thus the demand for coal decreases and burning coal is known to increase carbon dioxide emissions (hence causing global warming and climate change). “This gives renewable and clean energy a level field to compete financially against fossil fuels. Fossil fuel prices have traditionally remained low because governments do not include the cost of consequent air pollution and public health crisis when determining the selling price of these fuels. The cess would not only increase the price of coal, the previous government had decided, the fund created from it would be used to support research and development of clean technologies”, the report adds.
The coal cess progressively increased under the BJP government, from Rs 100 in 2014, to Rs 200 in 2015 and Rs 400 in 2016. Naturally with this eight-fold increase, the National Clean Energy and Environment Fund too increased rapidly, with the government collecting a whopping Rs 56,740 crore by 2017, which is 20 times the budget of the Ministry of Environment, Forest and Climate Change.
“Of the total cess collected from 2010 to 2017, the government allocated only 37 per cent to the National Clean Energy and Environment Fund. It spent even less – under 30 per cent – on clean energy and environmental projects. The rest lay unused”, the report adds. With India’s requirement to meet its Nationally Determined Contribution targets in the Paris Agreements and it’s strive towards a greener economy, the diversion of this fund for GST compensation will pose a hurdle. The Ministry of New and Renewable Energy as well as the Ministry of Environment, Forest ad Climate Change must strive to achieve their targets despite the loss of this fund, which will definitely pose a severe challenge.
