New Energy Efficiency Scheme to Start in India

THE Indian Power Minister, Sushilkumar Shinde, inaugurated the ‘Perform, Achieve, Trade’ (PAT) scheme in New Delhi today.

The PAT Mechanism is an important initiative under the Indian National Mission for Enhanced Energy Efficiency (NMEEE) programme, of the Government of India, under the eight national missions of NAPCC. It is a market based mechanism to further accelerate as well as incentivize energy efficiency in the large energy-intensive industries.

The scheme provides the option to trade any additional certified energy savings with other designated consumers to comply with the Specific Energy Consumption reduction targets. The Energy Savings Certificates (ESCerts) so issued to those who exceed their saving targets, will be tradable on special trading platforms to be created in the two power exchanges (Indian Energy Exchange and Power Exchange India).

The Government of India notified the energy efficiency improvement targets (under the Energy Conservation Act, 2001) for 478 industrial units and thermal power stations in India on 30th March, 2012. These targets are to be achieved by the units up to 2014-15.

The PAT scheme is a unique and innovative programme with no precedence anywhere else in the world. PAT would become a valuable model for other countries to adopt for their own energy efficiency programmes with a business perspective. In particular, developing countries would have a proven framework to study and incorporate, with the knowledge that emerging economies can achieve energy savings in a cost-effective way that boosts economic growth. It is expected to bring a transformational change in energy efficiency through energy intensive industries.

The relevance of PAT should be seen in the backdrop of India , where the present level of energy intensity, by world standards, is very low. It is definitely going to increase in the near future considering the growth of the Indian Economy in recent years. This will also usher the surge in Energy Consumption and ultimately increase the pressure on Energy Sources.

India relies on indigenous coal, and to a lesser extent oil, to meet its energy demand. While the country has large reserves of coal, it relies on imported oil for more than 70 percent of its oil needs, possesses limited natural gas reserves, and faces chronic electricity shortages. The gap between electricity supply and demand has been steadily growing in India.

Policies to promote energy efficiency, along with high energy prices and structural changes in the Indian economy towards the energy intensive industries resulted in the sharp and declining energy intensity of the Indian economy. Recognizing the formidable challenges of meeting the energy needs, providing adequate and varied energy of desired quality to users in a sustainable manner and at reasonable costs and improving efficiency has become an important component of India’s energy policy.

The success of PAT means the meeting of such an ambitious goal which would indeed become a model instrument under India’s National Mission on Enhanced Energy Efficiency (NMEEE) and would contribute significantly to making India’s National Action Plan on Climate Change a true blueprint for strong and effective climate mitigation actions.

Picture of India Gate New Delhi by David Castor.

Wednesday 4th July 2012

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