National Clean Energy Fund

National Clean Energy Fund (NCEF) was proposed in Union Budget 2010-11 for funding research and innovative projects in clean energy technology.

Rationale Behind NCEF

In many areas of the country pollution level has reached alarming proportions. While it must be ensured that the principal of a “polluter pays” remains the basic guiding criteria for pollution management, there should also be a positive thrust for development of clean energy. And to build the purpose of the NCEF, the Government of India proposed to levy a clean energy cess on coal produced in India at a nominal rate of Rs.50 per tonne, which will also be applicable to imported coal. By the end of March 2012, NCEF was worth Rs 3,864-crore. The latest Economic Survey said that government expects to collect Rs 10,000 crore under the Clean Energy Fund by 2015. The government has so far not declared, how they are going to use this money. An allocation of Rs 200 crore from the fund was proposed for environmental remediation programmes and another Rs 200 crore for the Green India Mission in 2011-12.

Why is it introduced?

While announcing the fund the finance minister underlined threat of alarming levels of pollution in the country. He said that while the ‘principle of Polluter pays’ should remain the basic guiding criteria for pollution management, there should also be a positive thrust for clean energy development. National Clean Energy Fund was mainly aimed to fund the entrepreneurial ventures and research towards the clean energy development.

Following the budget announcement, CCEA announced the creation of National Clean Energy Fund in 2011.

How it is financed?

In order to finance the fund a clean energy cess on coal produced or imported in India has been introduced. It is Rs.50 per tonne of coal. The fund is a non lapsable fund under Public Accounts.

It has been estimated that so far around Rs 8,200 crore have been collected. The Union Budget 2013-14 proposes to put 1650.00 crore in this fund.

Utilization of Fund

A inter ministerial group (IMG) was formed in 2011 to approve the projects/schemes eligible for the fund. Any project/scheme for innovative methods to adopt to clean energy technology and research & development shall be eligible for funding under the NCEF. The projects fields eligible are: solar, wind, tidal, geothermal, Silicon manufacturing, coal gasification, coal bed methane, shale oil, hydrogen/fuel cells, hybrid vehicles, advanced computing, nuclear technology and NAPCC projects etc.

Any individual/ consortium of organizations in the government/public sector/private sector working on projects or research can avail the finance in the form of loan or viability gap funding. The Government assistance under the NCEF shall in no case exceed 40% of the total project cost.

Criticism of NCEF

It is being criticised that the fund has been not able to achieve the objective behind the creation. The main reason is under utilization. Only one-eighth of the amount collected has been disbursed. It is also criticised on the manner of utilization and the administration of Fund.

Updates

In the Union budget 2014-15, this cess was raised to Rs. 200 per tonne.