In order to encourage companies to step up investment in green technologies, the government is planning to provide tax benefits to firms that prove their carbon content to be on the lower side. The tax breaks are likely to be spelt out in the Budget for 2011-12.
According to sources, the government is considering several options to sensitise the industry on the dangers of high carbon emissions. The ministry of corporate affairs is looking to direct companies to clearly state in their annual reports the quantum of carbon emitted in the course of their operations in a financial year.
These attempts form part of the government?s efforts to cut carbon intensity of the country?s GDP by up to 25% as proposed by it during the Copenhagen Summit earlier this year. ?We are trying to encourage companies to move towards greener technologies. One option is to ask companies to state clearly the total carbon emited in their annual results,? a source said.
The source also added that the government was keen to use an incentive-based policy to fight carbon emissions. ?Companies need to be given ample incentives for using greener technologies otherwise it would not be possible,? the source said. According to MCA officials, the green technology investment for large companies could run into millions and the government would have to compensate a part of it.
In line with this strategy, the upcoming India Corporate Week, to be kicked off by Prime Minister Manmohan Singh in mid-December, will also have a ?Green India Inc? theme to it. ?We are not going to compromise the interests of the Indian firms by putting strict limits as is the case in the West. It would be an attempt to encourage greater use of energy saving techniques that?s all,? the source added.
Corporate affairs minister Salman Khurshid had earlier said the government would weigh the option of asking companies what steps are being undertaken to check carbon emissions. An incentive-driven policy to cut carbon emissions is not a new concept. Following the Kyoto Protocol in 1997, several countries adopted the concept of carbon credits which form a part of the international emission trading norms.
Under this scheme, the carbon emissions are capped and companies below the threshold level are given credits or incentives. The credits then become a marketable commodity which can be traded in the international markets.
Over the last one year, developed regions, led by the US and EU, have been pushing India, China and Brazil to cut carbon emissions. In February this year, India proposed to cut carbon intensity of GDP by 20-25% by 2020; however refused to accepted binding cuts.
