11 Oct 2017 15:11 IST

Saving energy, with a little help from friends

Energy saving certificates promise to enhance industry’s efficiency scenario

After carbon credits, it is energy-saving certificates (ESCerts) that are creating a buzz.

The country’s Perform, Achieve & Trade (PAT) Scheme is moving energy efficiency to the next level for industry, where companies get to trade these certificates.

The certificates will enable designated industries, in high energy consuming sectors such as cement, iron & steel and paper to buy and sell ESCerts at the energy exchanges — Indian Energy Exchange and Power Exchange India Limited.

A designated company after achieving savings targets set by the Government, and if it surpasses the targets, would be able to sell the ESCerts issued by the Ministry of Power to industries who could not achieve targets, in spite of making efforts.

“The PAT scheme launched in 2012 by BEE brought about significant changes across sectors,” said Abhay Bakre, Director General, Bureau of Energy Efficiency (BEE). “And we are now looking at further building up on the progress industries have made over the years. Through a rolling mechanism for PAT II, we plan to further improve their efficiencies.”

To save

Each company was set a target based on the potential for savings. “And when they brought about changes, we then verified what they achieved. For those who exceeded expectations, they would be able to trade the surplus in these exchanges with companies who could not achieve the set target in spite of best efforts,” Bakre explained.

“The PAT scheme helped save 8.67 million tonnes of oil equivalent (as against target of 6.68 million tonnes), which is about 30 per cent more than the target set,” he said. “This has helped reduce emission by 31 million tonnes of CO2 and save ₹9,500 crore due to reduction in energy consumption. These ESCerts will enable industries to reap the benefits of monetisation of energy saving initiatives.” Under the PAT Scheme, 478 ‘Designated Consumers’ from eight energy intensive sectors were identified and given targets to reduce power consumption by bringing about efficiencies in the processes.

The sectors included aluminum, cement, chlor-alkali, fertiliser, iron and steel, pulp and paper, textiles and thermal power plant, which covered about 33 per cent of the country’s total industrial energy consumption. The scheme, which ended in 2015, showed significant savings from these designated industries.

Perform and achieve

The PAT scheme is a market-based mechanism to reduce the specific energy consumption use per unit of production of energy-intensive large industries. Those who consume more are given higher savings targets.

The PAT scheme and ESCerts are among initiatives taken up under the National Mission for Enhanced Energy Efficiency and have a significant role to play in the country’s effort to achieve its commitment to clean energy. Under this initiative innovative policy measures, regulatory regimes, financing mechanism and business models, which create sustainable markets for energy efficiency in a transparent manner are addressed. The Ministry of Power issued ESCerts to designated companies of PAT Cycle I after they managed to bring about energy savings. This was based on assessment and recommendations by the BEE. About 38.25 lakh ESCerts were issued to 306 industries and 110 designated consumers are entitled to purchase about 14.25 lakh ESCerts.

An institutional framework has been established to facilitate trading of these certificates. While the Central Electricity Regulatory Commission is the market regulator for trading of these certificates, BEE serves as the administrator.

The PAT Cycle II, notified in April 2016 for a period of three years, covers 11 sectors. These include eight sectors from PAT I and three new sectors — railways, discoms and petroleum refineries. The scheme is now being implemented as a rolling cycle where every year new units will be notified for a period of three years.

(The article first appeared in The Hindu BusinessLine.)