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Union Cabinet of India likely to discuss use of Rs. 31.24 billion National Clean Energy Fund

National Clean Energy Fund was set up to serve as a separate non-lapsable corpus for funding green energy projects with the broader objective of cutting down India’s carbon footprint. Collections for the fund are made from the clean energy cess of Rs 50 per tonne on coal, lignite and peat.

Earlier this year there was a  proposal to allocate a sum of Rs. 200 crore from the National Clean Energy Fund as Centre’s contribution in 2011-12 for launching environmental pollution remediation programmes in the union budget.

The Prime Minister, Dr. Manmohan Singh, has earlier said that, India has been trying to establish the principle that the polluter must pay though that is much more difficult to achieve in all cases and that last year, for example, the  cess of 5% on the use of coal- both domestic or imported- was used to build the corpus of a National Clean Energy Fund.

Earlier, Pramod Deo, chairman of the Central Electricity Regulatory Commission, has told Bloomberg that the finance ministry is considering a plan to give the money to states that don’t have the infrastructure to move the power from planned renewable-energy plants.  “It would provide viability funding to those states” to extend their transmission networks to solar plants, wind farms and other clean-energy projects being built, Deohad further said.

“This is a real need the central government must look into,” Deepak Gupta, secretary at the Ministry of New and Renewable Energy, told a conference in Delhi last week. “This money should probably come from the clean energy fund.”

“The Cabinet will discuss the modalities for operation of the fund. This could include the framework for allocation of the money in different projects or fields,” said a senior official who did not want to be identified told Business Standard.

The allocation pattern to be decided by the Cabinet will be closely watched by sector experts as it will spell out the future course of the government’s investments in clean energy. Interestingly, while the original purpose of the Clean Energy Fund, according to Finance Minister Pranab Mukherjee’s speech was “for funding research and innovative projects in clean energy technologies”, allocation from the fund made so far has gone only to the environment ministry’s schemes.

Asked for a response on the issue, a senior official from the renewable energy ministry — which could be the biggest beneficiary of the fund — declined comment, saying, “The finance ministry has drafted the note.” The finance ministry is the nodal agency for administering the fund and has drafted the Cabinet note outlining its framework.

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