The Evolution of the Clean Energy Cess on Coal Production in India

This case study examines the evolution of India's Clean Energy Cess on coal production from 2010 to 2018, detailing its transition from a fund for renewable energy to a mechanism for state budget compensation.

• Between fiscal years 2010/11 and 2017/18, India collected approximately USD 12 billion (INR 86,440 crore) through the Clean Energy Cess on coal production.
• The coal cess rate increased three times between 2010 and 2016, rising from INR 50 (USD 0.8) per tonne to INR 400 (USD 3.2) per tonne. The 2016 rate was considered a carbon tax equivalent of approximately USD 4 per tonne of carbon dioxide.
• Although the cess was designed to fund renewable energy via the National Clean Energy and Environment Fund (NCEEF), a significant portion of the revenue was diverted. In FY 2015/16, only 24 per cent of receipts were directed to the NCEEF for clean energy and environment projects.
• In July 2017, the Clean Energy Cess was abolished by the Taxation Laws Amendment Act, 2017, and replaced by the GST Compensation Cess at the same rate of INR 400 per tonne. This new cess was intended to address budget deficits faced by Indian states following the introduction of the Goods and Service Tax (GST).
• India's energy subsidy landscape shifted between FY 2014 and FY 2016. Oil and gas subsidies decreased from INR 157,678 crore (USD 26 billion) to INR 44,654 crore (USD 6.8 billion), while subsidies for electricity transmission and distribution increased from INR 40,331 crore (USD 6.7 billion) to INR 64,896 crore (USD 9.9 billion). Subsidies for renewables rose from INR 2,607 crore (USD 431 million) to INR 9,310 crore (USD 1.4 billion).

APA

International Institute for Sustainable Development (n.d.). The Evolution of the Clean Energy Cess on Coal Production in India. https://www.iisd.org/system/files/publications/stories-g20-india-en.pdf

Chicago

International Institute for Sustainable Development. The Evolution of the Clean Energy Cess on Coal Production in India. n.d. https://www.iisd.org/system/files/publications/stories-g20-india-en.pdf.

Wikipedia

{{cite report |author=International Institute for Sustainable Development |title=The Evolution of the Clean Energy Cess on Coal Production in India |url=https://www.iisd.org/system/files/publications/stories-g20-india-en.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{internationalinstituteforsustainabledevelopmentndevolution, author = {{International Institute for Sustainable Development}}, title = {{The Evolution of the Clean Energy Cess on Coal Production in India}}, institution = {International Institute for Sustainable Development}, url = {https://www.iisd.org/system/files/publications/stories-g20-india-en.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }