Waived carbon tax on coal, who benefits?

The Prime Minister’s Office (PMO) under Narendra Modi has proposed to waive the current tax on coal within India, according to a recent article by Reuters. Such a proposal invites the question: who would benefit?

Hardik Shah, deputy secretary at the PMO, advocated waiving the carbon tax on coal in a note sent to the top bureaucrat at India’s power ministry in October, which Reuters has seen. To waive the current 400 rupee per tonne of coal tax could empower utility and distribution companies to begin to finance emission-curbing technology, Reuters suggests. However, it has been noted by the news outlet that such a proposal could see coal become far more financially competitive, gaining an upper hand over emerging green energy sources such as wind or solar power.

It is therefore disputed whether such a move would improve India’s pollution situation at all, or whether it would empower an industry responsible for a considerable burden of India’s air pollution to simply continue with business as usual. 

India’s coal mining industry is notorious not just for the pollution it emits, but also for the dangerous workplace environments in which many under its employ operate. In addition to loosely regulated, though legally operated mines, so called ‘Rathole’ mines – given the name because of the small size of the crevices through which miners have to crawl to mine for coal – are also a pervasive issue. These illegal mines are prone to cave-ins and other hazards that are responsible for the deaths of countless workers, yet they continue to operate as coal is still a profitable industry, and is often the only option for many impoverished workers.

On a country-wide level over half of India’s coal-fired plants are already set to miss a phased deadline that started in December 2019 to cut emissions of sulfur oxides — a known risk factor in the development of lung disease. 

In 2017, the effects of pollution led to the deaths of more than 2.3 million people in India. Research indicates that India leads the world in deaths due to air pollution. This is unsurprising, given that India is home to seven of the world’s ten most polluted cities whilst rural areas also bear a considerable burden of pollution-related morbidity and mortality.

Coal is a significant contributor to the pollution burden, and it is undeniable that more needs to be done in order to install and implement pollution curbing measures. However, the removal of a tax, without any further restriction or prerequisite of contributing the money saved to green technology, will do little to alleviate this burden. In reality, such a financial boon to the coal industry could see the opposite occur, with green energy pushed to the side as coal finds its feet once more in the competitive market.