Modelling the impact of the clean environment cess on India: an environmentally- extended input–output approach

Rajat Verma and Ganesh Sivamani

Economic Systems Research, 2026, vol. 38, issue 2, 235-250

Abstract: The Clean Environment Cess (CEC) was a tax levied in India on the total sales of all types of coal to reduce emissions and tackle climate change. This paper seeks to simulate the impact of this cess on greenhouse gas emissions and GDP, using an environmentally extended input–output table. The Rs 180/tonne ($2.7) increase to the actual tax rate of CEC in 2016 resulted in a 0.09% reduction in GDP, a 0.90% reduction in emissions from burning coal and petroleum products, and a 0.80% reduction in the emissions intensity. According to our estimates, the coal electricity sector would be most affected by the cess, with a 1.5% reduction in Gross Value Added (GVA). A study found that the cess leads to a 0.47–1.2% reduction in the GVAs of the coal and lignite, cement, crude petroleum, and iron and steel sectors, with emissions reducing across sectors in the same order.

Date: 2026
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DOI: 10.1080/09535314.2025.2580317

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