GS (M) Paper-3: “Environmental pollution and degradation”
Carbon Tax in India: India’s de facto carbon tax is excessive
- Twenty years after Kyoto, there is much greater awareness and support for measures to mitigate climate change.
- A total of 194 countries have enthusiastically signed the Paris Agreement, and have promised to aggressively cut greenhouse gas emissions in a time-bound manner.
- Presidents Barack Obama and Xi Jinping together signed up to the Paris deal, in a great symbolic ceremony last year. But currently under President Donald Trump there is apprehension that the US may back out of even the international Paris Agreement.
- Even China is proactively trying to bring an emission trading system that will put an implicit price on carbon.
What is carbon tax?
- A carbon tax is a fee for making users of fossil fuels pay for climate damage their fuel use imposes by releasing carbon dioxide into the atmosphere, and for motivating switches to clean energy.
- A carbon tax is a tax levied on the carbon content of fuels. It is a form of carbon pricing. Carbon is present in every hydrocarbon fuel (coal, petroleum, and natural gas) and converted to carbon dioxide (CO2) and other products when combusted.
- India introduced a nationwide carbon tax in 2010, which is currently Rs.400/tonne
Where does India stand on climate change?
- The National Action Plan on Climate Change was launched in 2008.
- It has eight vertical missions on water, energy efficiency, solar, sustainable habitat, agriculture, forestry, Himalayan ecology and strategic knowledge on climate change. India’s ambition for renewable energy production is well known.
- Under Prime Minister Narendra Modi, the timelines to achieve renewable capacity has been aggressively advanced, and the scale vastly enlarged.
- So, India’s commitment for action on greening, to mitigate climate change and to act against global warming is not in doubt.
- Indeed, by some reckoning, India’s initiatives and leadership for environmental activism dates back to the 1972 UN conference in Stockholm.
Is India overdoing its bit in greening its energy?
- In the aggregate terms, India is now in the third highest emitter of carbon dioxide. (not in per capita terms)
- Firstly, the coal cess that was introduced a few years ago is now at Rs400 per tonne, almost one-fifth the cost of mining coal. This is something like a 20% carbon tax.
- India has the world’s third largest endowment of coal, which can help double our per capita electricity usage at a relatively low cost.
- Due to the coal bidding scams and the coal cess, India now might have become the most expensive place to produce coal-fired electricity.
- It is greatly hurting our competitiveness, and will directly undermine industry as it faces an onslaught of imports from China and other trade partners.
- Also, we already have a system of renewable purchase obligations (RPOs) on all electricity distribution companies and also captive producers.
- There is often not enough solar or wind energy available for purchase, within state boundaries.
- Across states, wheeling of solar is not yet possible and the RPOs burden goes up steadily every year. This increases the cost of energy.
- It is not as if India should stay away from global joint efforts at curbing greenhouse gases.
- Green energy, apart from mitigating climate change has great potential for job creation.
- India is uniquely blessed with sunshine almost all the time, and hence solar can contribute hugely to our energy needs.
- Electric vehicles are a nascent industry, which eventually can change the economics of oil and geopolitics.
- But it is not necessary for India, whose per capita consumption of electricity is barely half the world average, to embrace the highest rate of carbon taxes in the world.
- Success in mitigating climate change requires global and absolute cooperation.
- India needs to cautiously calibrate its “greening pace” and de facto carbon taxation.