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Economic Survey: India gears up to deal with climate change

The Times of India, New Delhi, 27th February, 2015

Vishwa Mohan

NEW DELHI: India will move on low-carbon growth path by taking strong pro-green actions like imposing significantly higher tax fossil fuels (petrol and diesel) and re-energizing the renewable energy sector. This twin actions of 'taxing carbon' and 'pushing solar power' will be the bedrock of the country's contributions to save the world from disastrous consequences of climate change.

The government gave a clear indication of this in the Economic Survey 2014-15, which enlisted all that measures which are being taken in India to cut carbon emissions and move on clean energy path in a big way.

It said, "The move to substantial carbon taxation combined with ambitious solar power program suggests that India can make substantial contributions to the forthcoming Paris negotiations on climate change".

Acknowledges green actions taken by India, the Survey said, "India shifted from a carbon subsidization regime to one of significant carbon taxation regime, from a negative price to an implicit positive price on carbon emissions.

"India has cut subsidies and increased taxes on fossil fuels (petrol and diesel), turning a carbon subsidy regime into one of carbon taxation, by putting an effective price on emissions. This has significantly increased petrol and diesel price while serving as price signal to reduce fuel burnt and hence carbon dioxide emissions".

It noted that calculating carbon dioxide emission reductions from measures taken for petrol and diesel suggests that there will be a net reduction of 11 million tons of CO2 emissions in less than a year compared to the baseline or 0.6% of India's annual emissions.

Pointing at action taken by the government during the current fiscal, the Survey said India has increased the coal cess from Rs 50 per ton to Rs 100 per ton, which is equivalent to a carbon tax of about US$ 1 per ton.

It emphasized that a higher tax on coal offsets the domestic health cost of coal for power generation.

The Survey pointed out that any rationalization of coal pricing must take account of the implications for power prices and hence access to energy for the poorest in India which is and must remain a fundamental objective of policy.

It also observes that there is still a long way to go with potential large gains which are to be reaped from reform of coal pricing and further reform of petroleum pricing policies.