An Insight on Carbon Tax Structure in Indian Context – A Theoretical Assimilation

Abstract

Global concern is raised by the rise in global temperatures and the resulting climate change. The Paris Agreement has been ratified by 175 countries under the United Nations Framework Convention on Climate Change, including India (UNFCCC). India has committed to promoting a healthy, sustainable lifestyle and to moving in a more environmentally friendly direction. More specifically, it has pledged in its Nationally Determined Contribution (NDC) to create an additional carbon sink of 2.5 to 3 billion tonnes of CO2 equivalent by 2030, achieve a cumulative electric power installed capacity of about 40% from non-fossil fuel sources by 2030, and reduce the emissions intensity of its GDP by 33 to 35% from 2005 levels. India has implemented a number of regulatory and fiscal measures to help it meet its NDC objectives. India wants to increase its installed capacity for renewable energy generation from 35 GW in March 2015 to 175 GW by 2022, a more than five-fold increase. The Perform, Achieve and Trade (PAT) Programme seeks to lower industrial energy use and thereby lower emissions. A number of additional measures, including the nation's flagship initiatives on smart cities, river cleaning, and the Swachh Bharat Mission, are in line with India's efforts to combat climate change. The NITI Aayog's National Energy Policy reaffirms the significance of achieving decarbonization through the complementary strategies of energy efficiency and renewable energy. In order to cut carbon emissions, India has also implemented fiscal measures. Coal is subject to a 400 INR per tonnecess. Additionally, the market-determined diesel and petrol prices, the elimination of subsidies (the LPG subsidy was eliminated for consumers with taxable income of more than INR 10 lakh), and the gradual rationalization of the Kerosene quota under the Public Distribution System (PDS) are all decisions that are in line with the goal of reducing carbon emissions. The effectiveness of these measures has varied, and the carbon emitters don't actively monitor and control their CO2 production. In this context, it is suggested that the Indian carbon tax structure be examined in this paper. A tax on greenhouse gas (GHG) emissions is known as a carbon tax. The carbon tax, which was first implemented by Finland in 1990, has attracted increasing attention in recent years throughout the world. Some nations view it as a practical, affordable, and transparent way to encourage carbon reduction. It can result in overall economic CO2 emission reductions as well as significant co-benefits like lowered air pollution or increased tax revenue.