"The major coal bearing states -- Odisha, Jharkhand and Chhattisgarh -- have been airing their concerns about negative externalities they face in connection with coal mining and thermal power generation and have been demanding equitable compensation to host power generating states and levy duty on generation," Power Minister Piyush Goyal said in a written reply in Rajya Sabha.

In this regard, the Planning Commission engaged TERI (The Energy and Resources Institute) to suggest a suitable methodology for compensation to the states.

Thereafter, TERI submitted its report to the Planning Commission.

"The report has not recommended the use of free power to cover negative externalities as the same may create different implications for power deficit and power surplus states," Goyal said.

He added that the government had already introduced in 2010 a Clean Energy Cess for which a levy of Rs 100 is now imposed on every tonne of coal.

The amount collected is provided to National Clean Energy Fund (NCEF) which aims to fund projects on clean energy, including the host states.

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