Even as Narendra Modi-led government has announced the detailed plan to not only reach but to cross the 175 GW renewable energy capacity target by 2022, the proposed carbon tax waiver may act as a roadblock. With the new proposal, the government aims to give more money in the hands of industrialists to arrange better equipment to control carbon-emission. However, with this new ease, the coal-powered sector may regain the momentum that was hit by cancellations of projects and stiff competition from non-hydro renewable sources after the cost of renewables in India fell below that of coal and gas.
Fitch Solutions has said that the centre’s proposed carbon tax waiver on coal may pose substantial downside risks to India’s renewable sector growth, reported by PTI. Earlier, the government had proposed to waive carbon taxes on coal by Rs 400 per tonne. Lower tariffs have already made India’s renewable energy market too stiff to compete and now the increased possibility of rising profit margins may further demoralize the renewable businesses in India.
More than 60 percent of the power generated in India is still obtained from non-renewable sources such as coal, lignite, gas, and diesel, out of which coal has the maximum share. Energy obtained from coal is nearly 54 percent of the total energy produced in the country, according to the Central Electricity Authority.
Meanwhile, the government had also set a deadline of December 2019 to cut emissions of sulphur dioxide but the coal-powered plants failed to comply. They also showed their high debt levels and rising payment dues from the government-owned power discoms. The government data also showed that the dues of power producers rose over $11 billion by October last year.