India wants to impose taxes on coal to hasten the country’s shift to renewable energy generation while raising about 25 billion rupees ($546 million) for a clean energy fund, reported United Press International.

A clean energy tax of 50 rupees per metric ton will be levied on imported and local coal, said Pranab Mukherjee, India’s finance minister.

There is no target amount for the fund but Emergent Ventures, a climate change consulting company, calculated that $546 million can be raised from the proposed coal tax collection.

India plans to reduce its coal dependence in favor of renewable energy generation. Mr. Mukherjee, in his annual budget speech to India’s parliament, said the country’s power production is 75 percent coal-based.

Sriprakash Jaiswal, state minister for coal, said coal demand from 2008 to 2009 reached 550 million tons. Mr. Jaiswal foresees the demand to rise and go beyond 2 billion tons by 2031.

India ranks fourth among the world’s top polluter and ranks third among Asia’s top energy consumers.

The coal tax will go into a National Clean Energy Fund that the government is building to finance research and development projects focused on alternative energy technologies.

"That's a good-sized fund that will help encourage the development of cleaner energies and impose some kind of cost on users of coal," Ashutosh Pandey, chief executive of the Emergent Ventures advisory practice, told Bloomberg News.

"Harnessing renewable energy sources to reduce dependence on fossil fuels is now recognized as a credible strategy for combating global warming and climate change," he said.

The government is also proposing tax incentives to attract investment to different renewable energy technologies such as geothermal, wind and solar energy.

The country is currently advocating the Jawaharlal Nehru national solar mission, named after India’s longest serving prime minister, and the centrepiece of national efforts to battle climate change. The solar mission announced last year aims to install 20,000 megawatts of clean energy by 2022.

To make renewable energy projects more attractive, the government is proposing a concessional import tax rate of 5 percent on solar power equipment and machinery.