How Green is the Budget 2010?

When the Budget 2010 is examined in terms of its potential of lowering carbon dioxide emission and promotion of green economy, it seems to be quite promising. It provides several incentives to renewable sources of energy and energy conserving technologies. Both these routes are touted as green options. The budget allocates necessary resources to achieve the targets submitted to UNFCCC of 20-25% emission intensity cuts. The increase in budgetary allocation for the Jawaharlal Nehru National Solar Mission from Rs. 620 crores to Rs. 1,000 crores would give a boost to the emerging solar sector. It may herald manufacturing of solar equipments and products in India in a bigger way. Moreover for the first time the government has agreed to the principle of ‘polluter pays’. The National Clean Energy Fund shall be investing in innovative clean energy technologies. This fund shall be generated by taxing coal (indigenous as well as imported) at Rs. 50/ tonne.  This will result in an estimated additional tariff of about 3 paisa per KWh. It is to be noted that coal is the dirtiest source. Considering the electricity generation end-use of fossil fuel, the carbon dioxide emissions/unit of electricity generation is 1.18 kg for coal, 0.85 kg for petroleum and 0.53 kg for natural gas. It is a well known fact that it is negligible for renewable sources like hydro, wind or Solar.  It is however to be noted that renewable sources of energy are not fully green. The devices and technologies like water turbine, wind electric generator, solar cells etc. which are used to harness renewable energy, consume lots of conventional energy while fabrication and installation. This is known as their embodied energy. They become green only when they payback this energy. This coal cess is going to promote fuel switching in favour of green energy by industrial sector. The reduction in the customs duty and excise duty for the Solar, Wind and Geo Thermal sector would ensure that the renewable energies become cost effective and attract additional investments. Energy efficiency technologies would receive an impetus as the excise duty on compact fluorescent lamps (CFL) and white Light Emitting Diode (LED) Lamps has been brought down to 4%. This would help in phasing out the ubiquitous energy guzzler incandescent bulbs. It is to be noted that CFLs are roughly 10 times expensive than incandescent lamps and LED lamp is 10 times expensive than CFL.  Focusing on renewable energy, the Finance Minister stated in the budget session, “The Jawaharlal Nehru National Solar Mission envisages establishing India as a global leader in solar energy.  An ambitious target of 20,000 MW of solar power by the year 2022 has been set under the mission. I propose to increase the plan outlay for the Ministry of New and Renewable Energy by 61 per cent from Rs.620 crore in 2009-10 to Rs.1,000 crore in 2010-11.  In pursuance of Government’s resolve to implement the National Solar Mission, I propose to provide a concession on customs duty of 5 per cent to machinery, instruments, equipment and appliances etc. required for the initial setting up of photovoltaic and solar thermal power generating units. I also propose to exempt them from Central Excise duty”. Similarly, ground source heat pumps used to tap geo-thermal energy would be exempt from basic customs duty and special additional duty, he added. Wind energy has shown promising growth in the country in recent years. As a measure of further relief, I propose to exempt a few more specified inputs required for the manufacture of rotor blades for wind energy generators from Central Excise duty, the Finance Minister added. To encourage the use of bio-degradable materials, the Finance Minister proposed to exempt the import of compostable polymer from basic customs duty. Not forgetting to mention about the Ladakh region of Jammu and Kashmir, Mr. Mukherjee said that the area faces an extremely harsh climate and suffers from energy deficiency. To address this problem, it is proposed to set up solar, small hydro and micro power projects at a cost of about Rs.500 crore. Showing concern towards the environment, Mr. Mukherjee proposed to provide a concessional excise duty of 4 per cent to an innovative product called ‘soleckshaw’ designed by CSIR to replace manually-operated rickshaws. Its key parts and components are also being exempted from customs duty. Full exemption from Central Excise duty was provided to electric cars and vehicles that offer an eco-friendly alternative to petrol or diesel vehicles. Considering the request of the manufacturers of such vehicles, who were finding difficulty in neutralising the duty paid on their inputs and components, the Finance Minister proposed to remedy this by imposing a nominal duty of 4 per cent on such vehicles. He also proposed to exempt some critical parts or sub-assemblies of such vehicles from basic customs duty and special additional duty subject to actual user condition. These parts would also enjoy a concessional CVD of 4 per cent.

Budget 2010 cannot be called a fully green budget but it has shades of green.  It seems to be able to give a momentum to the fight against global warming and also mark the rise of the green sector as a significant contributor to the economy. It is now up to industry and entrepreneurs to tap this potential and go green.