India's Thermal Power Dilemma and the Need for Equitable Compensation
For Prelims:
- What: India's commitment under its Nationally Determined Contribution (NDC) includes reducing emissions intensity of GDP by 45% by 2030 and achieving 50% cumulative electric power installed capacity from non-fossil fuels by 2030. Thermal power currently dominates India's electricity generation.
- Why: Thermal power generation, heavily reliant on coal, is a major source of carbon emissions. The burden of this pollution disproportionately falls on states where thermal power plants are located, even though the electricity is consumed across the country.
- Who: Central and State governments, private power producers, electricity consumers.
For Mains:
- GS III: Environment - Pollution, Climate Change; Economy - Resource Allocation
Highlights of the Article:
- Disproportionate pollution burden on thermal power producing states.
- Lack of compensation mechanisms for these states.
- Recommendations for compensation through taxation or Finance Commission transfers.
Context:
India's ambitious climate goals necessitate a shift away from thermal power. However, the existing system creates an inequitable distribution of costs and benefits, where producing states bear the environmental burden while consuming states enjoy the electricity. This analysis explores the issue and proposes solutions.
UPSC EXAM NOTES ANALYSIS:
1. India’s Climate Goals and the Role of Thermal Power
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India aims to reduce carbon intensity but still relies on thermal power due to its abundant coal reserves (378.21 billion tonnes).
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Coal contributes about 59.12% of India’s total energy supply.
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States like Maharashtra, Uttar Pradesh, and Gujarat have the highest non-renewable electricity generation capacities.
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Renewable energy adoption is growing, but coal remains crucial for energy security.
2. Disproportionate Burden on Thermal Power-Producing States
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Some states generate more electricity than they consume, exporting power to others.
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Data from the Central Electricity Authority (CEA) shows that states like Chhattisgarh, Jharkhand, and Odisha bear the maximum pollution burden.
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These states contribute significantly to national electricity supply but face lower per capita consumption.
3. Absence of Compensation Mechanism for Producing States
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India’s regulatory framework does not compensate states for the environmental impact of thermal power production.
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Electricity-producing states do not receive tax benefits from generation but only from consumption.
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While the National Clean Energy and Environment Fund exists, it does not adequately support pollution-affected states.
4. Recommendations for a Fair Compensation Mechanism
A. Taxation on Thermal Power Generation:
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Producing states could levy a tax on electricity generation to compensate for environmental damage.
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Alternatively, the Union Government could collect a generation tax and distribute funds to affected states.
B. Finance Commission Grants:
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The Finance Commission should allocate funds to thermal power-producing states under environmental and climate change criteria.
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Past Finance Commissions have included climate-linked grants, which should be expanded.
C. Corporate Social Responsibility (CSR) and Green Investments:
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Private power producers should invest more in pollution mitigation and sustainable development initiatives in affected states.
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Strengthening the Renewable Energy Fund can further support transition efforts
5.Conclusion
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India must balance its energy security with climate commitments.
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A structured compensation framework for thermal power-producing states is necessary to ensure environmental justice.
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The Finance Commission, central taxation mechanisms, and CSR investments can help mitigate the economic and environmental burdens on these states while facilitating India’s clean energy transition
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Mains Answer Writing Practice
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