Advocating a complete revamp of the country’s energy taxation system, economist Montek Singh Ahluwalia on Monday said the world should not get the impression that India was emerging as the second largest emitter of pollutants but was doing little to tackle emission levels.
At a conference here on India’s energy and climate policy hosted by the Council on Energy, Environment and Water (CEEW), the former deputy chairperson of the Planning Commission (now NITI Ayog) said revamped energy taxation could discourage the use of coal.
Referring to India’s position on future climate change negotiations, Ahluwalia said New Delhi should have a clear strategy that envisaged more action on its part if other countries committed to do more.
“We need to go into forthcoming negotiations with a clear strategy which says that we know this is not enough, we are going to do more. We are willing to do even more if you are willing to do more,” he said at the dialogue initiated by the policy research institute.
“I think the world should not get the impression that India is becoming the second largest emitter in the world and does not want to do anything. I do not mind people saying that India is willing to do more if we do more.”
Advocating a “complete revamp” of the energy taxation system, he said coal consumption could be reduced through it.
“We need to completely revamp the system of energy taxation. There is no reason why we tax energy the way we do, which is that petroleum and diesel bear a huge cost, kerosene is subsidised and coal bears a minor cost,” he said.
He added that a coal cess was introduced in the 12th Five Year Plan at a very low level. The cess has now been raised to Rs 400 per tonne, he said.
“If you relate it to the cost of carbon, it should be about Rs 3,000. We are overtaxing petrol and diesel and massively undertaxing coal. For the shift where less coal is used, the most sensible instrument is a taxation policy,” he said.
Ahluwalia suggested that in view of growing energy consumption, there was need to tax carbon dioxide-emitting fuels through a restructuring of energy tax.
A restructured energy taxation system where resources that do not emit carbon dioxide are not taxed and those that do are taxed will make coal “much more expensive” and liquid fuels probably less expensive, he held.
A report titled ‘Sustainable Development, India’s Climate Policy: Pathways towards nationally determined contribution and mid-century strategy’ was released at the event.