Government to put a cap on energy usage by companies
Programme will create world’s largest energy saving certificate-trading platform.
Big corporations in India, including Tata Steel, Jindal Power and NTPC, will have to keep a tab on power usage at their plants as the government is setting a cap on the energy consumption of large corporations.
According to officials, the Bureau of Energy Efficiency (BEE) has drawn a list of about 477 plants belonging to different corporations and has set targets on their energy consumption. The move is aimed at improving the energy efficiency of the Indian industry.
Companies overshooting their cap will be penalised while those achieving the target will be rewarded with tradable permits.
The programme is expected to create the world’s largest energy saving certificate-trading platform. Once implemented, companies that achieve their target would be given permits. Corporations that fail to achieve their target have to compensate for their failure by buying permits. If they fail to do either of this, they may have to pay penalties.
The energy consumption reported by plants will be based on audit by any of the BEE accredited agencies. The programme includes plants across eight sectors, including steel, fertilizer, oil refineries, paper mills, thermal power plants and others. Some of the plants included in the initial list belongs to Tata Steel Ltd, Tata Power, Jindal Steel and Power, Jindal Power, Reliance Energy Ltd, Reliance Industries Ltd, Hindalco Industries Ltd, Birla Corporation Ltd among others.
Even PSUs like NTPC, Rashtriya Chemicals and Fertilisers Ltd, etc, are part of the list. The Bureau of Energy Efficiency will be the implementing and regulatory agency for the same.
“The programme has been designed after broad industry consultations. Initially, companies were worried about the base period and the methodology followed for arriving at the targets. But the issues have been resolved and the government would soon come out with a gazette notification,” said Prodipto Ghosh, chairman (environment committee) of FICCI.
Globally, there are small energy saving certificate-trading platform in Netherlands and Germany. But, this would be the largest such trading platform in the globe, Ghosh added.
According to a senior official at the BEE, “The industry consultation is over. We will notify the companies about the energy cap soon. The process would start in March, 2012.”
The companies would be given a time-period of three years to achieve their targets. The first tradable certificate is likely to be issued in 2013. The energy permits would be traded monthly.
The initiative is a part of the government‘s National Mission on Enhanced Energy Efficiency (NMEEE), which is one out of the eight missions planned under the National Action Plan on Climate Change.
The Perform, Achieve and Trade scheme is a market-based mechanism to enhance energy efficiency in large energy-intensive industries and facilities. According to Professor Shreekant Gupta of Delhi School of Economics, “This is a very progressive idea. The perform, achieve, trade scheme focuses on the aggregate target rather than individual quota. It also offers flexibility to the companies. Firms failing to meet their targets can buy certificates from firms which are more energy efficient.”
Considering the vast potential of energy savings and benefits of energy efficiency, the Energy Conservation Act 2001, was amended in 2010. One of the key amendments was that the government might issue energy savings certificate to the designated consumer whose energy consumption is less than the prescribed norms and standards.