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Industries that over-achieve targets will be awarded energy saving certificates that can be traded like carbon
With the aim to make the industrial sector energy efficient, India’s Bureau of Energy Efficiency (BEE) launched its 'Perform, Achieve and Trade' (PAT) scheme on July 4. The scheme has set energy efficiency targets for industries. Those that fail to achieve targets will have to pay penalty. PAT has been launched under the National Mission for Enhanced Energy Efficiency, one of the eight missions under the umbrella National Action Plan on Climate Change, launched in June 2008.
In its first cycle of three years, the scheme covers eight energy guzzling sectors—thermal power, aluminium, cement, fertilizer, iron and steel, pulp and paper, textiles and chlor-alkali. Together, these sectors account for 40 per cent of India’s primary energy consumption. The target is to save 6.68 million tonnes of oil equivalent in these eight sectors by 2015, the first cycle of the scheme. The target for each plant will vary, depending on its size, and will be set by BEE. The nation’s thermal power plants are the focus of the PAT scheme as they consume 50 per cent (3.21 million tonnes) of oil equivalent of the total 6.68 million tonnes, which is the targeted saving.
The government of India notified targets under the Energy Conservation Act, 2001 for 478 industrial units in the eight sectors in India on March 30 this year.
PAT is a market based mechanism in which sectors are assigned efficiency targets. Industries which over-achieve will get incentives in the form of energy saving certificates. These certificates are tradeable and can be bought by other industries which are unable to achieve their targets. These certificates will be tradeable at two energy exchanges: Indian Energy Exchange and Power Exchange India. The price of these certificates will be determined by the market.
Under the penalty clause, if an industry fails to achieve its target, it will be penalised. The penalty will be calculated on the basis of the what remains to be achieved to meet target. This figure is multiplied by the cost of energy today (Rs 10,154 per tonne of oil). “As each industry will be competing against itself only, it will have its energy consumption in 2010 as its baseline data, to improve upon,” said Ajay Mathur, director of BEE.
Sushil Kumar Shinde, Union minister of power who launched the scheme, said, “the scheme is very crucial in achieving energy efficiency, which is the current focus of the country to achieve sustainable growth.”