Sunday, February 28, 2010

A Lukewarm Budget for Global Warmists

The Green element of the budget, though high on rhetoric, fell short of any spectacular budgetary allocation in terms of GDP. The government remains committed to the “polluter pays” principle. The National Clean Energy Fund (NCEF) announced will be financed by a fossil fuel - coal. The fund will establish a large enough corpus to meet India’s plans to boost solar energy production to 20% of all energy production by 2022. 

The reduced demand from OECD countries, particularly Germany, has plunged the global prices of solar panels and accessories by over 25%. This offers the country an opportunity to capitalize on low prices and hence lower capital cost for solar power projects.

On the flop-side, a Rs. 50/tonne cess on coal that will fund the NCEF is estimated to mobilize at least  Rs 2,500 crores in 2010-11. On one hand, shortages in coal supply have already resulted in a generation loss of 10.7 billion units of power at various thermal power projects in the country during April-December 2009 – meaning that unless the country plug these supply constraints, this Rs 2,500 crores maybe an over-estimation of budgetary allocation to NCEF.

On the other hand, this cess will increase power generation cost by an estimated 3.4 paisa per unit. Though less than 1% of the total cost of power generation this marginal increase will hard hurt sectors like tea, steel, cement and fertilizer as they all depend on coal in some way or other. Accentuating its inflationary effect further are the power distribution companies who are readying themselves to increase power prices by at least Rs 2 per unit. Such a development  will prompt state governments, especially in opposition ruled states to revolt, pressurizing the central government to roll back the announcement.

Through this blog, we encourage Sushma Swaraj and Arun Jaitley, leaders of the Opposition in the Lower and Upper House of Parliament to table a cut motion that seeks to reduce the Rs 50 cess placed on one ton of coal to Rs 5.

The green emphasis of the budget was essentially brought about by making dependence on fossil fuel more expensive and those related to renewable energy cheaper. Though the mainstream climate activist movement welcomed these steps as a victory, in reality, this was a slap across their faces.  Most of the negotiation for a Global Climate Treaty will now on focus on financing of the Global Climate Fund. The policy of mainstream climate activist organizations invariably supports carbon trading as a key financing mechanism. The government through the budget was making a strong statement – they gave big thumbs down for carbon trading and unequivocally opted for the taxation route.


  1. Rajan - good commentary on the budget. Have you read the latest article in the Hindu of US pressure to a binding treaty and int verification? Here's the link -

    "The U.S. attempt to sneak in the word “scrutiny” (to describe international monitoring of voluntary attempts by developing countries to reduce greenhouse gas emissions) was thwarted by India, as The Hindu reported on Sunday. However, the U.S. view of which text will form the basis of future negotiations could cause India more worry."


  2. PM says no rollback on petroleum. If that is the case, a rollback on the cess on coal is a virtual impossibility.

    The UPA lacks a majority in the Rajya Sabha and some of its own allies are unhappy. A combined opposition cut motion would be embarrassing to the Congress.

  3. Rollbacks are BJP culture. It is foolhardy for the Congress to rollback

  4. This Global Warming is turning out to be a devilish cult. In the UK parents of a toddler shot her before killing themselves. Fortunately the baby survived.

  5. Germany remains the world leader in solar panel production, but manufacturers have lost billions of euros in recent years and have been forced to cut and outsource jobs. German group Q-Cells grew significantly until posting a 1.36-billion euro ($1.84 billion) net loss in 2009.,,5279253,00.html?maca=en-newsletter_en_bulletin-2097-html-nl

  6. Thanx Pops????

    It does seem that India has taken to baling out Germany's misadventures with solar energy

  7. Looks like its a TERI-Canada Energy Efficiency Project imprint on the budget. So what's the objective of this programme can be found in their website:

    "Each year, TERI undertakes a process towards evolving sectoral green budget recommendations in consultation with stakeholders that are presented to the Finance Minister of India. These recommendations essentially relate to energy generation or use in India."

    So Pachauri is expanding exports of the West to India

  8. Electric vehicles are set to become cheaper through the budget announcement? So they raise power charges and neutralize some of the benefits offered by the budget to electric vehicles?

    What kinda of government do you have in India?

  9. I suggest you read:

    In Climate Change Denial, Money Talks

  10. @Danielle

    Why do you warmist always resort to ad hominem attacks? I suppose Rising Tide is also in the payroll of the fossil industry as well as Friends of Earth for opposing carbon trading????

    Despite billions of dollars spent over two decades in 'climate research' why there exists no empirical evidence that established CO2 as the causation of warming? The linkage with global warming is always on correlation. So what's CO2's relative correlation:

    CO2 1895-2007 .43
    Solar 1900-2004 .57
    Oceans 1900-2007 .85

    CO2 1998-2007 .20


    As you see from these figures, correlation is weakest in case of CO2 as compared to Oceans or the sun. From 1998 - the correlation value drops to 0.2 - absolutely weak.

    In an interview to the BBC. Phil Jones, Director of CRU, East Anglia, of Climategate fame, who is the gatekeeper of global temp dataset used by the IPCC, admitted that the rates of warming from 1860-1880, 1910-1940 and 1975-1998 were identical. In short - there is nothing statistically special in the case of recent warming!

    The CRU destroyed the original temp dataset to fend off right to information requests. Why should they do that unless they have something to hide?

    Think about it

  11. The he National Clean Energy Fund (NCEF)is a major shift in India's Climate policy. Before it was international funds to finance going green. Now it is our own funds.

    India plans to invest $22bn in solar energy to install 20,000MW of solar capacity by 2022. This will make solar's share in the overall energy mix to 20%.

    If we wait another 5-10 years, such investment would be more worthwhile.

  12. Funny - the UK offers long term green loans to help homes be more energy efficient. Like India consumers could end up footing the huge bill for this new strategy.