Pay Carbon Tax

Polluting power cos may pay carbon tax

29 Jul, 2008, 0205 hrs IST,Subhash Narayan, ET Bureau

NEW DELHI: The energy coordination committee headed by Prime Minister Manmohan Singh has suggested imposition of a carbon tax on polluting power stations. The proposal would club India with a select group of countries that tax carbon emissions directly and boost the renewable energy initiative. The initiative could turn Indian power stations more efficient and less polluting; it could push up power tariffs. “A proposal to levy carbon tax on polluting power stations is on the table. The move would also enable the country to begin work on containing pollution at an early stage itself. While we are sitting on huge carbon credits now, it is feared that rising pollution could change the situation soon. The new tax would provide more funds for renewable energy initiative whose share in total power mix is dismal at present,” an official source told ET . However, implementation of the proposal would depend on how fast the country progresses in having benchmarks for efficiency that would be important for levying a carbon tax. It is also felt that the carbon tax should not be additional burden on utilities. The ECC has also suggested that carbon tax should not be a standalone initiative and there was also a need for introducing a system of emission trading in order to avoid problems in the country’s negotiating position on climate change. Most countries in the European Union have a system of penalising polluting industries, forcing them to buy carbon credits from efficient industries. India proposes to add 78,577 mw of additional power generation capacity during the 11th Plan. Around 70% of this capacity would come from the thermal sector. The gross installed capacity of grid interactive renewable power in the country is estimated at 11,273 mw, 8% of the total installed generation capacity in the country.