Renewable energy: Funding to depend on coal cess kitty

The budgetary allocation to the ministry of new and renewable energy (MNRE) has increased 26 per cent to Rs 10,814 crore for 2017-18. However, the projects would have to depend on the coal cess pool, as more than half of the ministry’s budget would come from the National Environment Fund (NEF).
 
Close to Rs 5,341 crore worth of funding would be sourced from the NEF (earlier called the National Clean Energy Fund). NEF is collected by imposing cess of Rs 400 a tonne on domestically produced and imported coal, lignite and pite. The coal cess estimated to be collected in the coming year is Rs 29,700 crore.
 

Projects lined to be funded from NEF are grid-connected solar projects, green corridor projects and wind and small hydro units. Of these, grid-connected solar projects would get the lion’s share, followed by the green corridors.
 
Every year, the share of NCEF as budgetary allocation to the MNRE has increased but the disbursement has remained in the slow lane. The amount of budgetary grant to the MNRE was Rs 1,977 crore in 2014-15. It increased to Rs 4,000 crore in 15-16 and Rs 4,947 crore in 16-17 — 98 per cent of the MNRE’s budget this financial year.
 
Of the cess pool of Rs 54,000 crore collected since 2011-12, only half of it has been transferred to the NEF yet. Out of that, barely Rs 9,000 crore has been used to “finance clean energy projects” in the past six years — according to the date collated by the finance ministry.
 
The cess was originally proposed for clean energy and its ambit was enhanced for environment conservation in the Budget last year, changing the name to Clean Environment Fund (CEF).
 
Coal cess was announced in the 2011-12 Budget as a levy of Rs 50 a tonne on domestically produced and imported coal, lignite and pite production to build the NCEF. In its maiden Budget in July 2014, the NDA government had increased it to Rs 100 a tonne. It was raised to Rs 200 a tonne in 2015 and to Rs 400 a tonne in 2016-17.
 
The allocation to grid-connected solar power projects was the highest in the MNRE’s Budget —close to Rs 2,800 crore. This was followed by Rs 500 crore for green corridor projects and Rs 400 crore for the wind power sector. For off-grid projects — all clean energy sources — the allocation was Rs 918 crore. The government also allocated Rs 76 crore for the ambitious International Solar Alliance programme. The alliance, announced during the Climate Change Summit in Paris, is a partnership of solar resource-rich countries.