India doubles tax on coal

India has proposed to double its tax on coal to 400 rupee ($6) per tonne for the next financial year. The rise, which will increase the country’s wholesale cost of coal by 30%, marks the third time that the tax on the fuel has doubled since 2010.

The tax rise will apply to all domestic and imported coal in India. Domestic coal sells for an average of $20 per tonne.

The tax is part of India’s aim to level its energy market and provide the environment to scale up renewable energy and energy efficiency without relying on new subsidies. The Indian government is also reducing its subsidies for imported oil.

The doubling of the coal tax means that solar, wind and hydro electricity are now already competitive in the Indian electricity market with unsubsidised new imported coal-fired power generation, according to Tim Buckley at the Institute for Energy Economics and Financial Analysis.

The news is positive for those interested in reducing emissions, as India was highlighted last year by the International Energy Agency as becoming the dominant source of energy demand growth by 2040.

India has big plans for solar power – the country has an aim of installing 100 GW by 2022. Around 10 GW of this was planned to be sourced domestically, but the World Trade Organisation has recently ruled that such action to ring-fence this to local suppliers goes against its competition laws.