Can the Learning’s from International Examples Make the ‘Perform Achieve and Trade (PAT) Scheme’
Perform Better for India
Perform, Achieve & Trade (PAT) scheme, promoted under the National Mission on Enhanced Energy Efficiency (NMEE), will help energy-intensive large industry units in India enhance cost effectiveness in terms of energy efficiency.A Discussion Paper by
Sanjay Dube
Ritesh Awasthi
Vivek Dhariwal
Perform Better for India
Perform, Achieve & Trade (PAT) scheme, promoted under the National Mission on Enhanced Energy Efficiency (NMEE), will help energy-intensive large industry units in India enhance cost effectiveness in terms of energy efficiency.A Discussion Paper by
Sanjay Dube
Ritesh Awasthi
Vivek Dhariwal
Executive Summary
1 esignated Consumers (DCs) account for 25% of the national gross domestic product (GDP) and about 45% of Dcommercial energy use in India. Since 2000, industrial GDP has been growing at 8.6% annually and energy use in industry at 5.8%. The lower rate of growth of industrial energy use can be attributed to many reasons. It has been observed that in recent years, industry has been choosing state-of-the-art technologies, which are more energy-efficient. Also, there have been many in-house efforts made by the industry to become more energy-efficient. In order to further accelerate as well as incentivize energy efficiency, the Government of India is designing a Perform Achieve and Trade (PAT) Scheme. PAT is a market based mechanism to enhance cost effectiveness of improvements in energy efficiency in energyintensive large industries and facilities, through certification of energy savings that could be traded. The genesis of the PAT mechanism flows out of the provision of the Energy Conservation Act, 2001. The Ministry of Power (MoP) has notified industrial units and other establishments consuming energy more than the threshold in 9 industrial sectors namely Thermal Power Plants, Fertilizer, Cement, Pulp and Paper, Textiles, Chlor-Alkali, Iron & Steel, Aluminum and Railways in March, 2007 as 2 DCs under PAT Scheme .
1 esignated Consumers (DCs) account for 25% of the national gross domestic product (GDP) and about 45% of Dcommercial energy use in India. Since 2000, industrial GDP has been growing at 8.6% annually and energy use in industry at 5.8%. The lower rate of growth of industrial energy use can be attributed to many reasons. It has been observed that in recent years, industry has been choosing state-of-the-art technologies, which are more energy-efficient. Also, there have been many in-house efforts made by the industry to become more energy-efficient. In order to further accelerate as well as incentivize energy efficiency, the Government of India is designing a Perform Achieve and Trade (PAT) Scheme. PAT is a market based mechanism to enhance cost effectiveness of improvements in energy efficiency in energyintensive large industries and facilities, through certification of energy savings that could be traded. The genesis of the PAT mechanism flows out of the provision of the Energy Conservation Act, 2001. The Ministry of Power (MoP) has notified industrial units and other establishments consuming energy more than the threshold in 9 industrial sectors namely Thermal Power Plants, Fertilizer, Cement, Pulp and Paper, Textiles, Chlor-Alkali, Iron & Steel, Aluminum and Railways in March, 2007 as 2 DCs under PAT Scheme .
Requirements of the EC Act for DCs
The Energy Conservation Act 2001, herein referred as the EC Act, enacted by the Government of India in 2001, provides for the overall framework for efficient use of energy and its conservation in India. The Act provisioned for various sectors to adopt measures for ensuring energy efficiency and also led to the formation organization such as the Bureau of Energy Efficiency (BEE). Identifying 15 energy intensive sectors as Designated Consumers, the Act provided regulations for these DCs to:
3 ?Furnish report of energy consumption to the Designated Authority of the State as well as to Bureau of Energy Efficiency (BEE).?Designate or appoint an Energy Manager who will be in-charge of submission of annual energy consumption returns of the Designated Agencies and BEE.
?Comply with the energy conservation norms and standards prescribed under section 14 (g) of the Act.
?Purchase Energy Saving Certificates (ESCerts) for compliance to section 14 (g) in the event of default. The Act has been amended with the addition of new sub-section 14A to enable this and section 14A (2)
allows such trading. EScerts are defined by adding a new sub-section 2(ma). ?Monitoring and Verification of compliance by Designated Energy Auditors (DENA) which will be prescribed the Government/ BEE under
section 14A/13 (p) of the Act. ?Excess achievement of the target set would entail issuance of ESCerts
under section 14A (1). ?Penalty for non-compliance being Rs. 10 lakhs and the value of noncompliance
measured in terms of the market value of tones of oil equivalent by inserting a new section 26(1A).
4 BEE was made to be the overall regulator and dispute resolution agency and The Energy Efficiency Service Limited (EESL), a public sector undertaking to be the process manager Perform Achieve and Trade (PAT) a result of the National Mission on Enhance Energy Efficiency (NMEEE) under the National
Action Plan on Climate Change (NAPCC) is an ambitious project of GOI given its scale, complexities, timelines and absence of precedence.The design phase of PAT is the most crucial phase as it would largely ensure successful implementation and operation of thescheme. This paper discusses key design issues about boundary and target setting and performance of the scheme in the market. The paper also presents international case examples to suggest possible modifications in the current format of the PAT Scheme.
The Energy Conservation Act 2001, herein referred as the EC Act, enacted by the Government of India in 2001, provides for the overall framework for efficient use of energy and its conservation in India. The Act provisioned for various sectors to adopt measures for ensuring energy efficiency and also led to the formation organization such as the Bureau of Energy Efficiency (BEE). Identifying 15 energy intensive sectors as Designated Consumers, the Act provided regulations for these DCs to:
3 ?Furnish report of energy consumption to the Designated Authority of the State as well as to Bureau of Energy Efficiency (BEE).?Designate or appoint an Energy Manager who will be in-charge of submission of annual energy consumption returns of the Designated Agencies and BEE.
?Comply with the energy conservation norms and standards prescribed under section 14 (g) of the Act.
?Purchase Energy Saving Certificates (ESCerts) for compliance to section 14 (g) in the event of default. The Act has been amended with the addition of new sub-section 14A to enable this and section 14A (2)
allows such trading. EScerts are defined by adding a new sub-section 2(ma). ?Monitoring and Verification of compliance by Designated Energy Auditors (DENA) which will be prescribed the Government/ BEE under
section 14A/13 (p) of the Act. ?Excess achievement of the target set would entail issuance of ESCerts
under section 14A (1). ?Penalty for non-compliance being Rs. 10 lakhs and the value of noncompliance
measured in terms of the market value of tones of oil equivalent by inserting a new section 26(1A).
4 BEE was made to be the overall regulator and dispute resolution agency and The Energy Efficiency Service Limited (EESL), a public sector undertaking to be the process manager Perform Achieve and Trade (PAT) a result of the National Mission on Enhance Energy Efficiency (NMEEE) under the National
Action Plan on Climate Change (NAPCC) is an ambitious project of GOI given its scale, complexities, timelines and absence of precedence.The design phase of PAT is the most crucial phase as it would largely ensure successful implementation and operation of thescheme. This paper discusses key design issues about boundary and target setting and performance of the scheme in the market. The paper also presents international case examples to suggest possible modifications in the current format of the PAT Scheme.
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th 5 Floor, Universal Trade Tower, Gurgaon - Sohna Road, Sector 49,
Gurgaon - 122001, Haryana, India
Phone: 91-124-4353100, Fax: 91-124-4102980
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