Why in news
A panel of officials from Indian Ministries has called for a bigger carbon tax on higher quality imported coal while cutting rates for domestic coal, in a bid to slash shipments of the polluting fuel, the Coal Ministry said on Thursday.
Coal is among India’s top five commodity imports by value.
Despite surging local output, mainly of low-quality coal with high ash content, it failed to cut back on imports and ranks as the world’s second-largest importer.
India’s imports of thermal coal rose nearly 10% in 2023 to 176 million tonne.
What is carbon tax
A carbon tax is a fee placed on businesses and sometimes individuals based on the amount of greenhouse gasses they emit.
Its typically measured per ton of carbon dioxide (CO2).
The goal is to discourage the use of fossil fuels like coal, oil and natural gas by making them more expensive, which in turn reduces greenhouse gas emissions and combats climate change.
Here's a breakdown of how it works:
Tax on Emissions: A government sets a price for each ton of CO2 or other greenhouse gas emitted.
Businesses Pay: Businesses that produce these emissions are responsible for paying the tax.
This could be fossil fuel companies, manufacturers, or power plants.
Disincentive to Pollute: The tax makes it more expensive to pollute, encouraging businesses to find ways to reduce emissions.
This can involve becoming more energy efficient, switching to cleaner fuels, or investing in renewable energy sources.
Potential Price Increases: The cost of the tax may be passed on to consumers through higher prices for goods and services that rely on fossil fuels like electricity or gasoline.
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