Evaluating the performance of carbon tax on green technology: evidence from India

Abstract

Introduction of carbon tax and the resulting National Clean Energy and Environment Fund are seen as important policy reforms in India’s quest for achieving energy security and reducing the carbon intensity of energy. This study seeks to evaluate the impact of carbon tax on R & D in energy efficient technologies. To carry out the analysis, the study employed the difference-in-difference technique for the period 2005–2017. The results highlighted that there are less chances of achieving a ‘Double Dividend Hypothesis’ for carbon tax in India. Except the renewable energy sector, the support initiatives for enhancing energy efficiency have been rather limited and the government’s own revenue considerations seem to be dominating. The study holds that the NCEEF should be insulated from the vagaries of fiscal politics and that a strong reformation in guidelines, utilisation and allocation patterns is required to optimally realise the potential of the fund.