Cabinet likely to discuss National Clean Energy Fund today

The Union Cabinet is likely to discuss the operation of a National Clean Energy Fund in its meeting tomorrow. The fund was set up to serve as a separate non-lapsable corpus for funding green energy projects with the broader objective of cutting down India’s carbon footprint.

Collections for the fund are made from the clean energy cess of Rs 50 per tonne on coal, lignite and peat last year. “The Cabinet will discuss the modalities for operation of the fund. This could include the framework for allocation of the money in different projects or fields,” said a senior official who did not want to be identified.

While the government collected over Rs 3,124 crore from coal cess in 2010-11, it is yet to draw a firm roadmap for investing the money. The corpus under the fund is expected to swell to over Rs 6,500 crore in 2011-12.

The allocation pattern to be decided by the Cabinet will be closely watched by sector experts as it will spell out the future course of the government’s investments in clean energy. Interestingly, while the original purpose of the Clean Energy Fund, according to Finance Minister Pranab Mukherjee’s speech was “for funding research and innovative projects in clean energy technologies”, allocation from the fund made so far has gone only to the environment ministry’s schemes.

The cess is levied as a duty of excise on coal, lignite and peat since last year. It applies to the gross quantity of these raw materials raised and dispatched from a coal mine except on coal produced in Meghalaya.

Asked for a response on the issue, a senior official from the renewable energy ministry — which could be the biggest beneficiary of the fund — declined comment, saying, “The finance ministry has drafted the note.” The finance ministry is the nodal agency for administering the fund and has drafted the Cabinet note outlining its framework.

No deduction from this quantity is allowed for loss on account of washing of coal or its conversion into any other product or form prior to its dispatch from the mine. To avoid double levy, the cess is not chargeable on washed coal or any other form. Imported coal, including washed coal, also attracts cess in the form of additional duty of Customs.