National Clean Energy Fund (NCEF)

India is said to be the largest carbon dioxide emitters in the world. In order to reduce its carbon emissions, the then Indian Finance Minister Pranab Mukherjee had announced the establishment of the National Clean Energy Fund in the Union Budget of 2010-11. 

The fund was financed by a ‘clean energy cess on coal produced in India’ and aimed at not only financing projects on clean and renewable energy but also promoted innovation and research for clean energy. 

The COVID-19 pandemic has raised concerns over the issue of climate change and the importance of the preservation of the surrounding environment. 

This has enhanced the need for the Environment Tax in the country which is an excise duty on goods that cause environmental pollutants. Read in detail about the Eco Tax at the linked article.

In this article, we shall discuss at length the aspects and objectives of the National Clean Energy Fund (NCEF) and its impact. This is an important topic from the perspective of the IAS Exam and all other major government exams held in the country. 

UPSC aspirants can also refer to the links given below:

About NCEF

It was in 2009 that India has expressed the need to reduce its carbon emission by increasing the use of solar power, taking up initiatives for higher energy efficiency and making use of carbon sinks. 

The Government had then announced its plan of reducing carbon intensity by 24 per cent from the 2005 levels by the end of 2020. It was the result of this plan that NCEF was introduced. Given below are the key aspects of the fund:

• The National Clean Energy Fund was created in 2010 by introducing a ‘clean energy cess’ on every tonne of lignite or coal sold
• The coal tax, a tax on domestic as well as imported coal came into force on 1 July 2010
• It was built on the ‘polluter pays’ principle to hold emitters of carbon dioxide responsible for the pollution
• At its initial stage, the cess applicable was Rs.50 per tonne, but after its inception, it had been increased multiple times. It was revised to Rs.100 per tonne in July 2014, followed by Rs.200 per tonne from March 2015 and the final increase was made from March 2016 when the cess was increased to Rs.400 per tonne
• Along with the NCEF, a National Solar Mission was also launched in 2010 with a target of 20,000 MW of grid-connected solar power by 2022

UPSC aspirants can also refer to the List of Solar Plants in India at the linked article.

Objectives of National Clean Energy Fund

• The key objective of the fund was to finance projects on clean and renewable energy and promote innovation and research for clean energy
• The fund was used to assist projects supporting the development and demonstration of integrated community energy solutions, smart grid technology renewable applications with solar, wind, tidal and geothermal energy
• A particularly beneficial use of NCEF was to clean the coal-based power sector of the country
• Mission projects identified in the National Action Plan on Climate Change (NAPCC) that use more environmentally friendly technologies were also given assistance

Impact of the NCEF

• The Ministry of Finance in 2016 had released the usage of funds accumulated through the coal cess. The image given below displays the same (Values in Rs crores):

(Image Source: https://www.cseindia.org/)

• As a part of the fund, the cleaning up of coal-based thermal power plants was also promoted. The MoEF&CC had notified new environmental standards for the sector in December 2015 to cut the Particulate Matter, Oxides of Nitrogen and Sulphur Dioxide emissions by 65 per cent, 70 per cent and 85 per cent respectively by 2026–27 compared to the 2016 statistics. The image given below shows the stats of coal-based thermal power plants emissions as of 2016:

(Image Source: https://www.cseindia.org/)

• Given below are a few important projects for which fund was approved under NCEF:
  • Solar water heaters
  • Green India Mission
  • Fuel gas-based aqua ammonia power cycle
  • Establishment of 1200 KV National Test Station
  • Financial support for extending subsidy for installation of PV lights and small systems through NABARD
  • Bihar Saur Kranti Sinchai Yojana; and many more projects

Also, refer to:

National Clean Energy Fund (NCEF) [UPSC Notes]:-Download PDF Here

Also, candidates looking forward to applying for the upcoming civil services exam, can visit the UPSC Syllabus page and get the detailed and topic-wise syllabus and exam pattern for the IAS Exam. 

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