Carbon taxation became an important tool in the war against climate change. Carbon tax has formed a crucial part of efforts by governments to recover the external costs that result from the emitting of greenhouse gases, henceforth encouraging the use of alternative, cleaner sources of energy and practices. Even if many developed countries have laid down well-developed carbon-tax frameworks, India's is only in development. This article discusses the carbon tax in India, its integration with the Carbon Capture, Utilization, and Storage (CCUS) framework, interplay with Goods and Services Tax (GST), and global practices to draw lessons for India's roadmap.

Understanding Carbon Tax

A carbon tax directly imposes a fee on carbon dioxide (CO2) emissions. This imparts an economic incentive to the emitters to reduce their carbon footprint by assigning a price to emissions. It fulfils the twin objectives of mitigating climate change and generating revenue for green initiatives.

Key Benefits of the Carbon Tax Launch:

1. Reduction of Emission: Direct emissions dissuading and raising the price at which industries purchase fossil fuels more significantly higher relative to clean energy sources creates the incentive for the operation industries and consumers to gravitate toward renewable alternatives to get out of this non-productive use of equipment to solar power, wind, or other energy that saves and reduces harmfulness into its output streams.
2. Revenue Generation: Revenue generated from a carbon tax can be substantial and strategically used to fund green infrastructure projects, such as renewable energy installations, energy storage systems, and sustainable transportation networks. Revenue can also be used to support public awareness programs that educate citizens on the benefits of low-carbon lifestyles.
3. Behavioral Change: It encourages businesses and consumers to live cleaner lives by including carbon-related environmental cost in the price of goods and services through a carbon tax. This may take different forms for businesses, such as using cleaner technologies or streamlining the operations to minimize waste products for consumers. This would perhaps be taking public means, conserving energy, or consuming ecologically friendly products.
4. Market Efficiency: A clear carbon tax framework gives businesses the certainty they need to plan their long-term investments in green technologies and energy substitutes. It creates a fair competitive environment, allowing market forces to determine the most cost-effective strategies for reducing emissions. Over time, this fosters innovation and competitiveness in the green economy sector.
    

Current Indian Structure Regarding Carbon Pricing

There is no official carbon tax in India, however indirect mechanisms act as a source for carbon pricing instruments:

1. Coal Tax: India had introduced the Clean Energy Cess based on the Clean Energy Cess structure in 2010. The cess was ₹50 per ton initially, which became ₹400 per tonne by 2016. The collected cess funds went into the National Clean Energy and Environment Fund for funding renewable energy projects. But the coming of GST in 2017 merged this cess with GST Compensation Cess, which redirected the cess funds to compensate states for revenue losses.
    
2. Performance, Achievement, and Trade Scheme (PAT): The PAT scheme, implemented by the Bureau of Energy Efficiency (BEE), is a market-based mechanism promoting energy efficiency in large industries. Though not a direct carbon tax, it indirectly prices carbon by requiring industries to reduce their energy consumption or trade energy efficiency credits.
    
3. Renewable Energy Obligations: India enforces regulations requiring specific sectors to source a percentage of their energy from renewable resources. This indirect strategy seeks to redirect consumption away from fossil fuel dependence.

The case for an independent carbon tax in India

Despite these initiatives, India's carbon pricing remains fragmented and lacks the direct impact of a dedicated carbon tax. The following factors necessitate its introduction:

1. Environmental Accountability: India is one of the world's third largest emitters of CO2 and one of the major contributors to climate change. Carbon tax imposition will help India achieve its commitments towards the reduction in emissions intensity by 33-35% by 2030 as per the Paris Agreement and also provide leadership to the country in global climate action. This will be an attempt to make India accountable towards reducing its carbon footprint and shifting to a more sustainable model of development.
   
   In Vellore Citizens Welfare Forum v. Union of India (1996), the Supreme Court emphasized the need for sustainable development and, accordingly, the principle of making the polluter pay so that a basis was created for environmental responsibility within India.
    
2. Economic Transition: The finance of a low-carbon economy involves a huge investment. A well-designed carbon tax may become one of the most critical revenue sources that will make it possible to implement green infrastructure projects, encourage renewable energy consumption, and support improvements in energy efficiency. This can also help cut down fiscal deficits caused by the inexplicable change of international energy prices.
   
   The case of MC Mehta v. Union of India (1986) showcased judicial intervention in addressing pollution and highlighted the need for innovative solutions like carbon taxation.
    
3. Health Benefits: The air pollution in India has become alarmingly high, and the situation is causing a grave public health crisis. Carbon emissions from coal and oil further exacerbate the problem of air quality. Curbing these emissions through a carbon tax would lead to cleaner air, reducing respiratory diseases, cutting healthcare costs, and improving the overall quality of life of the citizens of India.
    
4. Global Competitiveness: The European Union's Carbon Border Adjustment Mechanism (CBAM) and analogous regulations implemented by other countries may impose tariffs on Indian exporters should domestic industries continue to be carbon-intensive. The introduction of a proactive domestic carbon tax would facilitate the adaptation of Indian industries to these global changes by motivating them to embrace cleaner technologies, consequently maintaining their competitiveness in the international market and mitigating the risk of carbon leakage.

Carbon Capture, Utilization and Storage (CCUS)

CCUS Overview: Carbon Capture, Utilization, and Storage is a technological suite that captures CO2 emissions from industrial processes or power generation and either reuses or stores it underground. CCUS can play a critical role in mitigating emissions, especially in hard-to-abate sectors like steel, cement, and chemicals.

India Potential for CCUS

1. Industrial Applications: India's reliance on coal for power generation underscores the critical importance of CCUS technologies. Given that coal accounts for nearly 55% of India's energy production, implementing CCUS can significantly reduce emissions from power plants and other heavy industries such as steel, cement, and chemicals. These sectors are vital to India's economic growth but are among the hardest to decarbonize. By capturing and utilizing CO2 emissions, these industries can achieve sustainability without compromising productivity.
   
   In Orissa State Pollution Control Board v. M/s. Orient Paper Mills (2003), the courts strengthen compliance with environmental standards through facilitation of innovative technologies, for example, CCUS.
2. Policy Framework: The 2022 "India CCUS Policy Framework and Deployment Roadmap" is an excellent document that sets up a framework for integrating CCUS technologies with emission-intensive industries. The roadmap places the emphasis on research and development, partnerships with the private sectors, and international collaborations to scale up the implementation of CCUS. It also identifies the financial and technical challenges that require solutions to make CCUS more feasible across the industry.
    
3. Pilot Projects: Pioneer enterprises such as NTPC and Indian Oil Corporation are leading the way with piloting CCUS projects in the country. For example, NTPC has launched programs to capture CO2 from the power plants and find various applications in the manufacture of methanol and other more valuable products. In the case of Indian Oil Corporation, emissions from refineries are captured with a view to their usage for enhanced oil recovery and to produce green hydrogen. These efforts have put the building blocks for higher spread of CCUS technology globally in India.

Carbon Tax and CCUS: Synergizing for Emission Reduction and Technological Innovation

A carbon tax can play a pivotal role in complementing Carbon Capture, Utilization, and Storage (CCUS) technologies by creating a financial and policy-driven framework that encourages industries to adopt and invest in emission-reducing solutions. The synergy between a carbon tax and CCUS can accelerate India's transition to a low-carbon economy, ensuring both environmental and economic benefits. Here's how a carbon tax can complement CCUS:

1. Offering Financial Incentives to Industries for Using CCUS Technologies
   The implementation of a carbon tax increases the cost of carbon emissions, which directly affects industries relying largely on fossil fuels. This heightened cost incentivizes these industries to seek cleaner, more efficient technologies to reduce their carbon footprint. CCUS technologies, which capture and either store or repurpose CO2 emissions, present an effective solution for industries in hard-to-abate sectors like steel, cement, and power generation.
   
   By imposing a carbon tax, industries are economically compelled to adopt CCUS technologies to mitigate the financial burden of the tax. This makes the adoption of CCUS more attractive as a cost-saving measure, reducing long-term emissions while preserving the industry's competitiveness. Industries with high emissions can integrate CCUS as part of their overall carbon management strategy, which would ultimately lower the tax liability they face.
    
2. Generating Income for CCUS related Research, Infrastructure, and Facilities
   A wide portion of the revenue collected from the carbon tax can be allocated to support the research, development, and deployment of CCUS technologies throughout the country, as these technologies are still evolving, significant investment in innovation, initial developmental projects, and infrastructure is needed to scale them up and make them commercially viable.
   
   The funds raised through a carbon tax can be utilized to create a dedicated research and development (R&D) structure that grants for CCUS technologies the fostering collaboration between academic institutions, research organizations, and private companies. These funds can also support the development of local capabilities for capturing, storing, and utilizing CO2, which is crucial for building a sustainable CCUS ecosystem.
   
   The carbon tax revenue can be channeled toward building the necessary infrastructure for large-scale CCUS development, such as CO2 transport pipelines, storage facilities, and utilization hubs. These facilities are essential for the widespread adoption of CCUS technologies, as they provide the pivotal and logistical frameworks needed to capture and store or repurpose CO2 emissions from various industrial sectors.
    

Conclusion
The introduction of a particular carbon tax in India holds considerable promise in addressing the dual issue of the country - mitigating climate change and attaining sustainable economic growth. Although the current frameworks, such as the Clean Energy Cess and the Perform, Achieve, and Trade (PAT) Scheme, have gone a long way in setting up carbon pricing, a formal carbon tax would be a more direct and efficient means of reducing emissions, encouraging cleaner energy sources, and generating considerable revenue for environmentally sustainable initiatives. Thus, through the emerging CCUS technology streams, India can actually come at the forefront while fostering innovation and competitiveness into industries.

It would align with India's obligations under the Paris Agreement and reinforce its contribution to international climate efforts. It could further also advance better public health through reduced adverse impacts from air pollution while keeping Indian industries competitive in a rising carbon-conscious global market.

The way ahead necessitates a thorough examination of the distinct obstacles encountered by India, which encompass economic inequalities and reliance on carbon-heavy industrial practices. Nevertheless, through meticulous strategic planning, clear policy structures, and investment in technological innovations, India has the potential to establish a sustainable route towards a low-carbon future. In integration with CCUS, the carbon tax might make it possible for the nation of India to pursue its interests in climate mitigation alongside stimulating economic growth, innovativeness, and providing future generations with the most wholesome and prosperous options possible.

Sources:

• https://www.carbonpricing.org
• https://www.teriin.org
• https://www.indialawjournal.org
• https://www.thehindubusinessline.com
• https://www.ncbi.nlm.nih.gov

Books:

• "The Carbon Economy: Energy and the Environment" by Georis G. R. Chapman
• "CCUS in the Global Energy Transition: New Market Opportunities" edited by Michael D. Hannon
• "The Future of Carbon Markets in India: Emissions Trading and Beyond" by Meenakshi Sundaram