The government today proposed a coal cess of Rs 50 to create a fund

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for promoting clean energy, a move which may push up fossil fuel prices.

"To build the corpus of the National Clean Energy Fund announced earlier. I propose to levy a clean energy cess on coal produced in India at a nominal rate of Rs 50 per tonne," Finance Minister Pranab Mukherjee said while presenting Union Budget 2010-11.

"This cess will also apply to imported coal," he added.

After the last year's hike by Coal India Ltd (CIL), the domestic coal prices are currently hovering in the range of Rs 448-Rs 2,500 per tonne.

The National Clean Energy Fund, is being created to fund research and innovative projects in clean energy technologies, he added.

"There are many areas of the country where pollution levels have reached alarming proportions. While we must ensure that the principle of polluter pays remains the basic guiding criteria for pollution management, we must also give a positive thrust to development of clean energy," Mukherjee said.

Coal, he said, is the "mainstay of India's energy sector and 75 per cent of the power generation is currently coal based."