Indian Coal Tax Nets $850 Million for Environment

06/05/2013 11:11 am ET | Updated Aug 03, 2013

In an effort to finance green energy and clean up vast deposits of toxic wastes, India has imposed an innovative one dollar tax per ton of coal mined or burned. In just two years the environmental tax fund has grown to nearly $1 billion.

The decision by India to create the clean energy and toxic clean up fund came after lobbying by an international NGO that has discovered thousands of toxic waste sites in dozens of developing countries.

Officials of the Blacksmith Institute have already identified and tested hundreds of sites in India that are poisoning local children and others with lead from car battery recycling, hexavalent chromium from leather tanneries and other pollutants.

So when Karti Sandilya, a former Asian Development Bank official, Richard Fuller and other Blacksmith officials met with India's environment minister two years back, they were able to drop on his table a list of pollution sites that threaten millions of Indians.

The minister immediately got the seriousness of this problem, which is expanding daily as India industrializes. India may be behind China in growth but the country is each year increasing production, energy consumption, sales of cars and all the other drivers of modern economies. And this growth has a toxic backdraft.

Western countries such as the United States discovered that backdraft in the 1970s and 1980s. Thousands of children had suffered intellectual impairment from low level lead poisoning from dust and air contaminated by leaded gasoline, lead paint, smelters and other industrial sites. After curbing lead in gasoline, and paint, and spending billions in Superfund clean up projects, American children greatly reduced their exposure to toxic metals and other pollutants. Now India and other developing countries are finding they need to finance similar cleanups.
"The National Clean Energy Fund was set up in India in 2010," said Sandilya. But it aimed mainly at reducing greenhouse gas emissions. "After the environment minister saw a presentation by Fuller, the Blacksmith president, he added 'toxic pollution' to the fund's responsibilities."

The fund has already collected $850 million, said Sandilya in an interview.
And the first project the Indian fund is financing is the clean-up of the top ten worst polluted Indian sites on the Blacksmith registry of such sites.

The Indian federal government also decided to involve state governments and persuaded them that if the New Delhi government puts up 40 percent of the cost of a cleanup, states must put up the remaining 60 percent.

"All 10 states with the worst pollution sites agreed to share the costs," said Sandilya.
The site that will be most costly to clean up is in southern Tamil Nadu state and will cost $30 million. A plume of pollution is moving across the water table towards a river that supplies water to millions of people. The polluted earth will be removed to a concrete lined and covered landfill.

Blacksmith is encouraged by the Indian decision to tax coal at $1 or 50 rupees per ton. It sets a standard for governments with similar problems to observe the Indian example and consider energy or similar taxes to finance clean up of toxic pollution.

But the coal tax in India, and the U.S. Superfund, will not solve all these pollution problems. Even after the Superfund tackled some of the most expensive and dangerous sites in the U.S., an estimated 300,000 polluted sites remain in need of monitoring, isolation and clean up,.
And in developing countries, even when laws are passed ordering clean ups and a halt to further pollution, there is a lack of law enforcement. There is also corruption and ongoing pollution. People know the location of a polluted site and they figure they will just add some more to it. If you clean up a site, you must prevent re-pollution.

A key to making clean ups effective and permanent is public opinion. Local people who are informed of the threats from toxic wastes and the benefits of clean ups -- such as increasing value of nearby land -- drive local governments to prevent pollution.

"People were apathetic -- it is always that way," said Sandilya. "A clean up makes people feel that things can change."

In the case of highly toxic hexavalent chromium use in tanneries, he noted that it can be converted to non-toxic trivalent chromium by adding molasses.

Lead, which is spread by small-scale backyard recycling of car batteries, needs to be fought by pushing battery sellers to provide recycling at large-scale, safe factories.

At least India has a vibrant, unfettered press that can report on health threats from pollution and build support for change. Especially when the government knows it must face the voters every few years.

But every developing nation is learning that the cost of cleaning up pollution from industrial growth must be paid, one way or another. The costs of caring for damaged people and polluted land and water are far greater than the costs of prevention and clean ups.

India may be the first to show the way in its massive fund gathered through its coal tax.

Ben Barber is a communications adviser to the Blacksmith Institute