What is Clean Environment Cess? How has it performed and what is the way forward?

The clean environment cess or the green cess is a form of tax levied by the government with the purpose of environment conservation. It is a fiscal tool to reduce dependence on coal and other fossil fuels. It is in accordance with the ‘polluter pays principle’.

The revenue generated from the stakes are used for financing and promoting clean environment initiatives, like creation of green energy infrastructure, combating environmental pollution, a forestation and other such purposes. 

Performance of Clean Environment Cess:

• GST has subsumed several environmental related cess in itself.
• A green cess is applied on use of coal, however, there is no incentive to switch to higher quality of coal with lower emissions.
• The funds that are designated for clean energy and environment initiatives are now at the discretion of the states.
• Under utilization of funds for intended purpose.
• The study shows that the effect of cess on emissions reduction is very minuscule and it has not been very useful in reducing the intensity of emissions.

Way forward:

• Price rationalization and promotion of low emission technologies.
• Proactive measures to fight pollution.
• Coordinated efforts with active involvement of all stakeholders.
• Implementation of a Green Tax Council on the lines of the GST Council.
• Providing industries a proper incentive to move away from polluting processes.