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As India’s Finance Minister changes the National Clean Energy Fund to National Clean Environment Fund, greens are worried about how the money will be spent

Arun Jaitley, India's Finance Minister (center) doubled coal cess to fund green initiatives as he announced country's national budget on 29 February. (Image by Press Information Bureaue, Government of India)

Arun Jaitley, India’s Finance Minister (centre), doubled coal cess to fund green initiatives in the country’s 2016-17 budget (Image by Press Information Bureau, Government of India)

As Arun Jaitley, India’s Finance Minister, announced the country’s annual budget on the last day of February, the biggest green initiative was a doubling of the cess on every tonne of coal used — from Rs 200 ($2.97) to Rs 400 ($5.94).

The coal cess was introduced in 2010 at Rs 50 ($0.74) per tonne. It has been doubled every year since 2014 — to Rs 100 ($1.49), 200 and now 400. Till now, the money has been going to the National Clean Energy Fund (NCEF) which has a kitty of around Rs 20,000 crore ($2.98 billion) already. Of this, it has allocated around Rs 4,700 crore ($0.7 billion) in renewable energy projects; 56 more projects are awaiting approval. The government estimates it will gather an additional Rs 30,000 crore ($4.47 billion) in coal cess this financial year (April 2016 to March 2017).

Big change

There is also a big change on how the money will be spent. The renaming of the fund to National Clean Environment Fund (also NCEF) means the government can and will use this money for all green initiatives — cleaning the Ganga and other rivers, saving forests, the tiger and other wildlife, tackling air pollution in cities, improving solid waste management and so on.

The NCEF allocation in this year’s Budget includes:

Last year, the funding for India’s flagship Project Tiger was cut by 15% — from Rs 161.46 crore ($24 million) to Rs 136.46 crore ($20.4 million), leaving conservationists worried.

Read: Budgeting for the demise of the tiger

This year Project Tiger funding has been more than doubled. All this money is to come from the new NCEF, the Finance Minister said.

Environmentalists — whether working on pollution control, conservation or renewable energy — would like a clearer road map on how the money will be spent.

Srinivas Krishnaswamy of the Vasudha Foundation — a New Delhi-based think tank that works largely on clean energy — told, “The renaming is fine as long as there is a clear definition of what it will fund and clear earmarking and pathway of the fund itself. They need to earmark cess proportionally, say 30% for clean energy, 20% for clean rivers, 10% for animal conservation and so on. And there needs to be proper monitoring of the usage to make sure it is not used to supplement budgetary deficit in general.”

India has a very ambitious target of producing 100 GW of solar power, 60 GW from wind and 10 GW from biomass by 2022.

Krishnaswamy said India would need around Rs 82,000 crore ($12 billion) to meet the solar target, and the elevated coal cess could help meet a fair amount of this requirement, especially since solar tariff had come down from Rs 18 ($0.27) to Rs 5-6 ($0.07-0.09) per unit in the last few years.

“They need to sort it out because the money involved is large,” he pointed out. “If they are widening the scope of the (coal) cess, then they have to consider other cesses like the Swachch Bharat Mission. They need to properly define where each project will get its funding.”

All environmentalists are calling for robust monitoring, accounting, reporting and transparency on how each cess is spent.

Anumita Roychowdhury, Executive Director, Research and Advocacy, Centre for Science and Environment, welcomed the doubling of coal cess. She said, “It is a good move as it applies the polluters pay principle to clean environment in general and for pollution control. It will mobilize resources for a good environment. However they need to come up with a protocol of the programme for effective planning and speedy transition of funds.”

Roychowdhury felt the push for renewable energy had not been commensurate with the money already in the NCEF. “We didn’t get the kind of transition to renewable energy as was expected with this sort of funding. We need to approach it in a time-bound, target-oriented manner.”

Himanshu Thakkar of the South Asia Network on Dams, Rivers and People said the clean Ganga mission already has funding, but that “has not made a difference to the river. It is a good idea to increase the (coal) cess but we don’t have a clearly defined policy on how it will be spent.”

“There is a mention (in the Budget) that funds will be used for inland waterways, which will be detrimental to the health of rivers. In fact instead of giving this money for Ganga, this money should be used to boost rooftop solar systems in India in a big way. This is because rooftop solar is clearly the most undisputable clean source of energy that we have.”

He was worried that a lot of the money allocated to clean the Ganga would go to create more sewage treatment plants. “That has failed to deliver results. It will be futile and will just fill the coffers of the contractors.”

Wildlife experts are worried too. Ravi Singh, CEO of WWF-India, said, “You need to understand first that there is no clarity on this. Plus, funds from cess are always fungible. It can go for anything right from plantation to anything else. The resources in the country are scarce and the government needs to raise resources for future in country.”

He added, “First you destroy tiger habitat (through coal mining) and then you give money to save tigers. This is no way to fund Project Tiger.”

Ministry budget

Apart from the money from the coal cess, in this year’s Budget the Ministry of Environment, Forests and Climate Change has been given Rs 2,250 crore ($335 million), an increase of around Rs 600 crore ($89 million). Of this, Rs 15 crore ($2.24 million) is for building the capacity of forestry personnel; Rs 15 crore for hazardous substances management; Rs 223.98 crore ($33.4 million) for National Coastal Management Project (NCMP); Rs 0.01 crore ($150,000) for afforestation; Rs 12 crore ($1.79 million) for biodiversity conservation and rural livelihood improvement; and Rs 25 crore ($3.73 million) to clean the Mula Mutha River in Pune.

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