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BW Online Bureau Nov 08, 2014

<?xml version="1.0" encoding="UTF-8"?><root available-locales="en_US," default-locale="en_US"><static-content language-id="en_US"><![CDATA[Plugging The Leak: India’s severely strained power sector will get some relief if industries become more efficient (Pic BY Tribhuwan Sharma) India could soon join a small group of nations, including Italy and France, that allow intra-country trading of energy efficiency credits. A trading scheme proposed by the otherwise moribund National Action Plan on Climate Change could come to life by mid-2009. Fifteen of India’s most energy-hungry industries, including iron and steel, aluminium, railways, transport and chemicals, will fall under this scheme. Each company will have to first measure its specific energy consumption (SEC) — the amount of power it consumes to produce 1 unit of output. Based on this, the Bureau of Energy Efficiency (BEE) will give the company three years to improve its SEC by a certain amount. Companies that exceed the target savings can then sell the extra savings in the form of energy- efficiency credits to companies falling behind their targets. The non-performing companies must either buy these credits at market rates, or face stiff penalties. “We hope the first three-year cycle would begin by FY10,” says Ajay Mathur, director of the BEE. The bureau recently released an action plan on its website, inviting public comments. Besides industrial users, the BEE also wants to enlist ordinary citizens in its efficiency drive. All home appliances, for example, will have energy-efficiency labels that will help consumers find products that consume the least energy — these, in turn, could attract a lower value-added tax. Even public sector companies will be obliged to procure only the most energy-efficient technologies. Banks, too, will be covered by a ‘partial risk-guarantee fund’ when lending money to energy-efficiency projects. The BEE has its work cut out. It needs to train government employees to conduct energy audits and monitor compliance. This trained manpower will be expected to work with the thousands of factories and companies that will fall under the plan. While the Confederation of Indian Industries (CII) welcomes the proposal, it wants all companies participating in the scheme to also be eligible for the United Nations’ (UN) carbon trading scheme. “By being more energy-efficient, companies draw less electricity from coal-fired power plants, and so emit less carbon,” says V. Raghuraman, principal adviser for energy and environment to the CII. That may, however, be difficult. The UN carbon trading rules award carbon credits only to projects that would have been unaffordable were it not for the money the credits generated. Here, companies would already be earning revenues through the sale of efficiency credits. The BEE could also consider mechanisms to protect energy-efficiency credit prices from economic downturns, that often play havoc with commodity and carbon credit prices (see ‘Trapped in a Policy Haze’, BW, 8 December). Also, companies that invest in their own renewable energy power sources could be awarded extra credits, both for generating clean power and for not burdening an already overworked power grid — the primary objectives of the efficiency scheme. If these proposals are implemented, the country, according to BEE estimates, could save roughly 10,000 MW or 7 per cent of the current grid capacity by 2012. Today, India emits roughly 925 kg of carbon for every megawatt it generates. This programme could prevent more than 9 million tonnes of carbon emissions. That may be why Indian industry is supportive of the BEE’s plan. Directly capping emissions is often regarded as an economic cost, while lowering a company’s power expenses is seen as an investment. “It is in our interest to be competitive, and since energy is in short supply. It is also in our interest to use it judiciously,” says Raghuraman. pierre.fitter@abp.in (Businessworld Issue 9-15 Dec 2008)